Document:

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                                                                   EXHIBIT 10.26

                           SECOND AMENDED AND RESTATED

                                CREDIT AGREEMENT

                                     BETWEEN

                       CABOT MICROELECTRONICS CORPORATION

                                       AND

                        LASALLE BANK NATIONAL ASSOCIATION

                            DATED AS OF JULY 10, 2001

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                                TABLE OF CONTENTS

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SECTION 1         DEFINITIONS.....................................................................................1

   1.1        Definitions.........................................................................................1

   1.2        Other Interpretive Provisions......................................................................11

SECTION 2         DESCRIPTION OF TERM LOAN; CONVERSION AND CONTINUATION PROCEDURES...............................11

   2.1        Term Loan..........................................................................................11

   2.2        Loan Procedures....................................................................................11
              2.2.1      Various Types of Loans..................................................................11
              2.2.2      Conversion and Continuation Procedures..................................................12
              2.2.3      Conversion and Continuation Procedures..................................................12
              2.2.4      Any conversion of a Eurodollar Loan on a day other than the last day of an Interest
                         Period therefor shall be subject to Section 7.4.........................................13

   2.3        Certain Conditions.................................................................................13

SECTION 3         NOTE; RECORDKEEPING............................................................................13

   3.1        Note...............................................................................................13

   3.2        Recordkeeping......................................................................................13

SECTION 4         INTEREST.......................................................................................14

   4.1        Interest Rates.....................................................................................14

   4.2        Interest Payment Dates.............................................................................14

   4.3        Setting and Notice of Eurodollar Rates.............................................................14

   4.4        Computation of Interest............................................................................15

SECTION 5         PREPAYMENTS....................................................................................15

   5.1        Prepayments........................................................................................15

   5.2        All Prepayments....................................................................................15

SECTION 6         MAKING OF PAYMENTS; SETOFF; TAXES..............................................................15

   6.1        Making of Payments.................................................................................15

   6.2        Application of Certain Payments....................................................................15
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   6.3        Due Date Extension.................................................................................15

   6.4        Setoff.............................................................................................15

   6.5        Taxes..............................................................................................16

SECTION 7         INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR
                  LOANS..........................................................................................16

   7.1        Increased Costs....................................................................................16

   7.2        Basis for Determining Interest Rate Inadequate or Unfair...........................................17

   7.3        Changes in Law Rendering Eurodollar Loans Unlawful.................................................18

   7.4        Funding Losses.....................................................................................18

   7.5        Right of the Bank to Fund through Other Offices....................................................18

   7.6        Discretion of the Bank as to Manner of Funding.....................................................19

   7.7        Mitigation of Circumstances........................................................................19

   7.8        Conclusiveness of Statements; Survival of Provisions...............................................19

SECTION 8         REPRESENTATIONS AND WARRANTIES.................................................................19

   8.1        Organization.......................................................................................19

   8.2        Authorization; No Conflict.........................................................................20

   8.3        Validity and Binding Nature........................................................................20

   8.4        Financial Condition................................................................................20

   8.5        No Material Adverse Change.........................................................................20

   8.6        Litigation and Contingent Liabilities..............................................................21

   8.7        No Materially Adverse Contracts, etc...............................................................21

   8.8        Compliance.........................................................................................21

   8.9        Taxes..............................................................................................21

   8.10       Information........................................................................................21

   8.11       Solvency...........................................................................................22

   8.12       No Default.........................................................................................22

   8.13       Use of Proceeds....................................................................................22

   8.14       Subsidiaries.......................................................................................22

   8.15       Ownership of Properties; Liens.....................................................................22

   8.16       Intellectual Property..............................................................................22

   8.17       Insurance..........................................................................................22
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   8.18       Investment Company Act; Public Utility Holding Company Act.........................................23

   8.19       Regulations T, U and X.............................................................................23

   8.20       Securities Matters.................................................................................23

   8.21       Pension and Welfare Plans..........................................................................23

   8.22       Environmental Matters..............................................................................23

   8.23       Labor Matters......................................................................................25

   8.24       Disclosure.........................................................................................25

   8.25       Survival of Warranties.............................................................................25

SECTION 9         COVENANTS......................................................................................25

   9.1        Reports, Certificates and Other Information........................................................25
              9.1.1      Annual Report...........................................................................25
              9.1.2      Interim Reports.........................................................................26
              9.1.3      Compliance Certificates.................................................................26
              9.1.4      Reports to the SEC and to Shareholders..................................................26
              9.1.5      Notice of Default, Litigation and ERISA Matters.........................................26
              9.1.6      Management Reports......................................................................27
              9.1.7      Projections.............................................................................27
              9.1.8      Debt Notices............................................................................27
              9.1.9      Other Information.......................................................................27

   9.2        Books, Records and Inspections.....................................................................27

   9.3        Compliance with Laws; Payment of Taxes and Liabilities.............................................28

   9.4        Maintenance of Property; Insurance.................................................................28

   9.5        Maintenance of Existence, etc......................................................................28

   9.6        Financial Covenants................................................................................28
              9.6.1      Leverage Ratio..........................................................................28
              9.6.2      Debt Service Coverage Ratio.............................................................29
              9.6.3      Minimum Net Worth.......................................................................29

   9.7        Limitations on Debt................................................................................29

   9.8        Liens..............................................................................................30

   9.9        Operating Leases...................................................................................31

   9.10       Restricted Payments................................................................................31

   9.11       Mergers, Consolidations, Acquisitions, Sales.......................................................31

   9.12       Modification of Documents..........................................................................33

   9.13       Use of Proceeds....................................................................................33

   9.14       Further Assurances.................................................................................33
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<S>           <C>                                                                                              <C>
   9.15       Transactions with Affiliates.......................................................................33

   9.16       Employee Benefit Plans.............................................................................33

   9.17       Environmental Matters..............................................................................33

   9.18       Inconsistent Agreements............................................................................34

   9.19       Investments........................................................................................34

   9.20       Fiscal Year........................................................................................35

SECTION 10        EFFECTIVENESS; CONDITIONS OF LENDING, ETC......................................................35

   10.1       Deliveries.........................................................................................35
              10.1.1     Loan Documents..........................................................................35
              10.1.2     Guaranty................................................................................35
              10.1.3     Credit Agreement........................................................................35
              10.1.4     Insurance...............................................................................35
              10.1.5     Payment of Attorney Costs...............................................................35
              10.1.6     Other...................................................................................35

   10.2       Compliance with Warranties, No Default, etc........................................................35

SECTION 11        EVENTS OF DEFAULT AND THEIR EFFECT.............................................................36

   11.1       Events of Default..................................................................................36
              11.1.1     Non-Payment of the Term Loan, etc.......................................................36
              11.1.2     Non-Payment of Other Debt...............................................................36
              11.1.3     Other Material Obligations..............................................................36
              11.1.4     Bankruptcy, Insolvency, etc.............................................................36
              11.1.5     Non-Compliance with Loan Documents......................................................37
              11.1.6     Representation and Warranties...........................................................37
              11.1.7     Pension Plans...........................................................................37
              11.1.8     Judgments...............................................................................37
              11.1.9     Rodel Litigation........................................................................37
              11.1.10    Invalidity of Guaranty, etc.............................................................38
              11.1.11    Change of Control.......................................................................38
              11.1.12    Injunctions.............................................................................38
              11.1.13    Work Stoppages..........................................................................38
              11.1.14    Loss of Licenses or Permits.............................................................38
              11.1.15    Forfeitures.............................................................................39
              11.1.16    Cancellation, Invalidity of Loan Documents..............................................39

   11.2       Effect of Event of Default.........................................................................39

SECTION 12        GENERAL........................................................................................39

   12.1       Waiver; Amendments.................................................................................39
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   12.2       Confirmations......................................................................................39

   12.3       Notices............................................................................................39

   12.4       Computations.......................................................................................40

   12.5       Regulation U.......................................................................................40

   12.6       Costs, Expenses and Taxes..........................................................................40

   12.7       Subsidiary References..............................................................................40

   12.8       Captions...........................................................................................40

   12.9       Succesors, Participants and Assigns................................................................41

   12.10      Governing Law......................................................................................41

   12.11      Counterparts.......................................................................................41

   12.12      Indemnification by the Company.....................................................................41

   12.13      Nonliability of the Bank...........................................................................42

   12.14      Forum Selection and Consent to Jurisdiction........................................................42

   12.15      Waiver of Jury Trial...............................................................................43

   12.16      Confidentiality....................................................................................43

              [Remainder of page left intentionally blank.]......................................................43
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SCHEDULES

PRICING SCHEDULE

SCHEDULE 8.6                        Litigation and Contingent Liabilities
SCHEDULE 8.14                       Subsidiaries
SCHEDULE 8.16                       Intellectual Property
SCHEDULE 8.17                       Insurance
SCHEDULE 8.21                       Pension and Welfare Plans
SCHEDULE 8.22                       Environmental Matters
SCHEDULE 9.7                        Existing Debt
SCHEDULE 9.8                        Existing Liens
SCHEDULE 9.9                        Existing Operating Leases
SCHEDULE 9.19                       Investments
SCHEDULE 12.3                       Addresses for Notices

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                                    EXHIBITS

EXHIBIT A           Form of Term Note (Section 3.1)

EXHIBIT B           Form of Compliance Certificate (Section 9.1.3)

EXHIBIT C           Form of Guaranty (Section 1.1)

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                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

     THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 10, 2001
(this "Agreement") is entered into between CABOT MICROELECTRONICS CORPORATION
(the "Company") and LASALLE BANK NATIONAL ASSOCIATION (the "Bank").

                              PRELIMINARY STATEMENT

     A. The Company and the Bank are parties to an Amended and Restated Credit
Agreement dated as of July 5, 2000 (as amended, supplemented or otherwise
modified from time to time, the "Existing STEP Credit Agreement"), under which
the Bank has made available to the Company a Term Loan and a revolving credit
facility upon the terms and conditions set forth therein.

     B. Concurrently herewith, the Company, the financial institutions from time
to time parties thereto, the Bank, as administrative agent for such financial
institutions, and National City Bank of Michigan/Illinois, a national banking
association, as syndication agent for such financial institutions, have entered
into a Credit Agreement (such Credit Agreement, as the same hereafter may be
amended, modified, supplemented or restated from time to time, hereinafter is
referred to as the "Credit Agreement"), pursuant and subject to the terms and
conditions of which such financial institutions have agreed to extend certain
financing arrangements to the Company;

     C. One of the conditions precedent to the obligations of the financial
institutions from time to time parties to the Credit Agreement is that the
Company and the Bank amend and restate the Existing STEP Credit Agreement in its
entirety on the terms and conditions set forth herein.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, and in consideration of the mutual
agreements herein contained, the Existing STEP Credit Agreement is amended and
restated in its entirety as follows:

                                    SECTION 1
                                   DEFINITIONS

     1.1 Definitions. When used herein the following terms shall have the
following meanings:

     Acquisition means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of all or substantially all
of any division of a Person, (b) the acquisition of in excess of 50% of the
capital stock, partnership interests, membership interests or equity of any
Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger
or consolidation or any other combination with another Person.

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     Affected Loan - see Section 7.3.

     Affiliate of any Person means (i) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person and (ii) any officer or director of such Person. A Person shall be deemed
to be "controlled by" any other Person if such Person possesses, directly or
indirectly, power to vote 5% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managers or
power to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.

     Agreement - see the Preamble.

     Attorney Costs means, with respect to any Person, all reasonable fees and
charges of any counsel to such Person, the reasonable allocable cost of internal
legal services of such Person, all reasonable disbursements of such internal
counsel and all court costs and similar legal expenses.

     Bank - see the Preamble.

     Base Rate means at any time the greater of (a) the Federal Funds Rate plus
0.5% and (b) the Prime Rate.

     Base Rate Loan means any portion of the Term Loan which bears interest at
or by reference to the Base Rate.

     Base Rate Margin - see the Pricing Schedule.

     Business Day means any day on which the Bank is open for commercial banking
business in Chicago, Illinois and, in the case of a Business Day which relates
to a Eurodollar Loan, on which dealings are carried on in the London interbank
eurodollar market.

     Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person, other than the Tuscola Unit C Agreement.

     Cash Equivalent Investment means, at any time, (a) any evidence of Debt,
maturing not more than one year after such time, issued or guaranteed by the
United States government or any agency thereof (or, in the case of foreign
operations, any country that is a member of the Organisation for Economic
Co-operation and Development), (b) commercial paper, maturing not more than one
year from the date of issue, or corporate demand notes, in each case rated at
least A-l by Standard & Poor's Ratings Group or P-l by Moody's Investors
Service, Inc., (c) any certificate of deposit (or time deposits represented by
such certificates of deposit) or banker's acceptance, maturing not more than one
year after such time, or overnight Federal Funds transactions that are issued or
sold by the Bank or its holding company or by a commercial banking institution
that is a

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member of the Federal Reserve System (or, in the case of foreign operations, a
commercial banking institution organized under the laws of a country that is a
member of the Organisation for Economic Co-operation and Development) and has a
combined capital and surplus and undivided profits of not less than $500,000,000
and (d) any repurchase agreement entered into with the Bank (or other commercial
banking institution of the stature referred to in clause (c)) which (i) is
secured by a fully perfected security interest in any obligation of the type
described in any of clauses (a) through (c) and (ii) has a market value at the
time such repurchase agreement is entered into of not less than 100% of the
repurchase obligation of the Bank (or other commercial banking institution)
thereunder.

     CERCLA - see Section 8.22.

     Closing Date - means July 10, 2001.

     Code means the Internal Revenue Code of 1986.

     Company - see the Preamble.

     Computation Period means each period of four consecutive Fiscal Quarters
ending on the last day of a Fiscal Quarter.

     Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the consolidated net income (or loss) of the
Company and its Subsidiaries for such period, plus non-cash losses from sales,
exchanges and other dispositions of assets and other non-cash losses and minus
any gains from sales, exchanges and other dispositions of assets, any other
gains and any gains from discontinued operations.

     Controlled Group means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Company, are treated
as a single employer under Section 414 of the Code or Section 4001 of ERISA.

     Credit Agreement - see the Preliminary Statement.

     Debt of any Person means, without duplication, (a) all indebtedness of such
Person for borrowed money, whether or not evidenced by bonds, debentures, notes
or similar instruments, (b) all obligations of such Person as lessee under
Capital Leases which have been or should be recorded as liabilities on a balance
sheet of such Person in accordance with GAAP, (c) all obligations of such Person
to pay the deferred purchase price of property or services (excluding trade
accounts payable in the ordinary course of business), (d) all indebtedness
secured by a Lien on the property of such Person, whether or not such
indebtedness shall have been assumed by such Person, (e) all obligations,
contingent or otherwise, with respect to the face amount of all letters of
credit (whether or not drawn) and banker's acceptances issued for the account of
such Person, (f) all Hedging Obligations of such Person, (g) all Suretyship
Liabilities of such Person and (h) all Debt of any partnership of which such
Person is a general partner.

     Debt Service Coverage Ratio means, as of the last day of any Fiscal
Quarter, the ratio of (i) EBIT for the Computation Period ending on such day to
(ii) the sum of (A) Interest Expense

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for such Computation Period plus (B) required payments of principal of Funded
Debt (including the term loans but excluding the revolving loans under the
Credit Agreement) for the succeeding Computation Period.

     Disposal - see the definition of "Release".

     Dollar and the sign "$" mean lawful money of the United States of America.

     Domestic Subsidiary means each Subsidiary of the Company incorporated or
organized in the United States of America or any State or territory thereof.

     EBIT means, for any period, Consolidated Net Income for such period plus,
to the extent deducted in determining such Consolidated Net Income, Interest
Expense and income tax expense. EBIT for any period in which one or more
Acquisitions permitted under Section 9.11 have been consummated shall be
calculated on a pro forma basis so as to include the effect such Acquisitions
would have had on EBIT if such Acquisitions had been consummated on the first
day of such period. Such pro forma calculation shall be made only on the basis
of historical audited or reviewed financial statements, without any adjustment,
of the Person acquired or from whom the assets which were the subject of such
Acquisition were acquired, prepared by an accounting firm of national
recognition or otherwise reasonably acceptable to the Bank and broken down by
fiscal quarter in a manner consistent with GAAP.

     EBITDA means, for any period, Consolidated Net Income for such period plus,
to the extent deducted in determining such Consolidated Net Income, Interest
Expense, income tax expense, depreciation and amortization for such period.
EBITDA for any period in which one or more Acquisitions permitted under Section
9.11 have been consummated shall be calculated on a pro forma basis so as to
include the effect such Acquisitions would have had on EBITDA if such
Acquisitions had been consummated on the first day of such period. Such pro
forma calculation shall be made only on the basis of historical audited or
reviewed financial statements, without any adjustment, of the Person acquired or
from whom the assets which were the subject of such Acquisition were acquired,
prepared by an accounting firm of national recognition or otherwise reasonably
acceptable to the Bank and broken down by fiscal quarter in a manner consistent
with GAAP.

     Environmental Claims means all claims, however asserted, by any
governmental, regulatory or judicial authority alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.

     Environmental Laws means all present or future federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any governmental authority,
in each case relating to Environmental Matters.

     Environmental Matters means any matter arising out of or relating to health
and safety, or pollution or protection of the environment or workplace,
including any of the foregoing relating

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to the presence, use, production, generation, handling, transport, treatment,
storage, disposal, distribution, discharge, release, control or cleanup of any
Hazardous Substance.

     ERISA means the Employee Retirement Income Security Act of 1974.

     Eurocurrency Reserve Percentage means, with respect to any Eurodollar Loan
for any Interest Period, a percentage (expressed as a decimal) equal to the
daily average during such Interest Period of the percentage in effect on each
day of such Interest Period, as prescribed by the FRB, for determining the
aggregate maximum reserve requirements applicable to "Eurocurrency Liabilities"
pursuant to Regulation D or any other then applicable regulation of the FRB
which prescribes reserve requirements applicable to "Eurocurrency Liabilities"
as presently defined in Regulation D.

     Eurodollar Loan means any portion of the Term Loan which bears interest at
a rate determined by reference to the Eurodollar Rate (Reserve Adjusted).

     Eurodollar Margin - see the Pricing Schedule.

     Eurodollar Office means the office or offices of the Bank which shall be
making or maintaining the Eurodollar Loans hereunder. A Eurodollar Office of the
Bank may be, at the option of the Bank, either a domestic or foreign office.

     Eurodollar Rate means, with respect to any Eurodollar Loan for any Interest
Period, a rate per annum equal to the offered rate for deposits in Dollars for a
period equal or comparable to such Interest Period which appears on Telerate
page 3750 as of 11:00 A.M. (London time) two Business Days prior to the first
day of such Interest Period. "Telerate Page 3750" means the display designated
as "Page 3750" on the Telerate Service (or such other page as may replace page
3750 on that service or such other service as may be nominated by the British
Bankers' Association as the information vendor for the purpose of displaying
British Bankers' Association Interest Settlement Rates for Dollar deposits).

     Eurodollar Rate (Reserve Adjusted) means, with respect to any Eurodollar
Loan for any Interest Period, a rate per annum (rounded upwards, if necessary,
to the nearest 1/16th of 1%) determined pursuant to the following formula:

          Eurodollar Rate           =      Eurodollar Rate
          (Reserve Adjusted)               1-Eurocurrency
                                           Reserve Percentage

     Event of Default means any of the events described in Section 11.1.

     Existing STEP Credit Agreement - see the Preliminary Statement.

     Federal Funds Rate means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor
publication, "H.15(519)") on the preceding Business

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Day opposite the caption "Federal Funds (Effective)"; or, if for any relevant
day such rate is not so published on any such preceding Business Day, the rate
for such day will be the arithmetic mean as determined by the Bank of the rates
for the last transaction in overnight Federal funds arranged prior to 9:00 A.M.
(New York City time) on that day by each of three leading brokers of Federal
funds transactions in New York City selected by the Bank.

     Fiscal Quarter means a fiscal quarter of a Fiscal Year.

     Fiscal Year means the fiscal year of the Company and its Subsidiaries,
which period shall be the 12-month period ending on September 30th of each year.
References to a Fiscal Year with a number corresponding to any calendar year
(e.g., "Fiscal Year 2000") refer to the Fiscal Year ending on September 30th of
such calendar year.

     FRB means the Board of Governors of the Federal Reserve System or any
successor thereto.

     Funded Debt means, as to any Person, all Debt of such Person that matures
more than one year from the date of its creation (or is renewable or extendible,
at the option of such Person, to a date more than one year from such date).

     GAAP means generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.

     Group - see Section 2.2.1.

     Guarantor Subsidiary means each Subsidiary of the Company which executes a
Guaranty.

     Guaranty means a guaranty substantially in the form of Exhibit C.

     Hazardous Substances - see Section 8.22.

     Hedging Agreement means any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices.

     Hedging Obligation means, with respect to any Person at any time, the
liability of such Person under any Hedging Agreement at such time as determined
on a mark-to-market basis.

     Indemnified Liabilities - see Section 12.12.

     Interest Expense means for any period the consolidated interest expense of
the Company and its Subsidiaries for such period (including all imputed interest
on Capital Leases).

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     Interest Period means, as to any Eurodollar Loan, the period commencing on
the date the applicable portion of the Term Loan is continued as or converted
into a Eurodollar Loan and ending on the date one, two, three or six months
thereafter as selected by the Company pursuant to Section 2.2.2 or 2.2.3, as the
case may be; provided that:

               (i) if any Interest Period would otherwise end on a day that is
          not a Business Day, such Interest Period shall be extended to the
          following Business Day unless the result of such extension would be to
          carry such Interest Period into another calendar month, in which event
          such Interest Period shall end on the preceding Business Day;

               (ii) any Interest Period that begins on a day for which there is
          no numerically corresponding day in the calendar month at the end of
          such Interest Period shall end on the last Business Day of the
          calendar month at the end of such Interest Period;

               (iii) the Company may not select any Interest Period for any
          portion of the Term Loan if, after giving effect to such selection,
          the aggregate principal amount of the Term Loan having Interest
          Periods ending after any date on which an installment of the Term Loan
          is scheduled to be repaid would exceed the aggregate principal amount
          of the Term Loan scheduled to be outstanding after giving effect to
          such repayment.

     Investment means, relative to any Person, any investment in another Person,
whether by acquisition of any debt or equity security, by making any loan or
advance or by becoming obligated with respect to a Suretyship Liability in
respect of obligations of such other Person (other than travel and similar
advances to employees in the ordinary course of business).

     Leverage Ratio means, as of the last day of any Fiscal Quarter, the ratio
of (i) the remainder of (A) Total Debt as of such day minus (B) the aggregate
amount of all cash on hand and Cash Equivalent Investments of the Company and
its Subsidiaries as of such day to (ii) EBITDA for the Computation Period ending
on such day.

     Lien means, with respect to any Person, any interest granted by such Person
in any real or personal property, asset or other right owned or being purchased
or acquired by such Person which secures payment or performance of any
obligation and shall include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.

     Loan Documents means this Agreement, the Note and the Guaranty.

     Loan Party means the Company and each Subsidiary.

     Margin Stock means any "margin stock" or "margin security" as such terms
are defined in Regulations U and X of the FRB.

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     Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets,
business, properties or prospects of the Company and its Subsidiaries taken as a
whole, (b) a material impairment of the ability of the Company or any Subsidiary
to perform any of its obligations under any Loan Document or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability
against the Company or any Subsidiary of any Loan Document.

     Maturity Date means the earlier to occur of (a) April 3, 2005 and (b) such
other date on which obligations hereunder become due and payable pursuant to
Section 11.

     Mortgage Debt means Debt secured by Mortgage Liens.

     Mortgage Liens means Liens granted by the Company or any Subsidiary which
attach solely to real estate and the improvements thereon.

     Multiemployer Pension Plan means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Company or any member of the
Controlled Group may have any liability.

     Net Worth means at any date the consolidated net worth of the Company and
its Subsidiaries as of such date as determined in accordance with GAAP.

     Note - see Section 3.1.

     Operating Lease means any lease of (or other agreement conveying the right
to use) any real or personal property by the Company or any Subsidiary, as
lessee, other than any Capital Lease.

     PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

     Pension Plan means a "pension plan", as such term is defined in Section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
Pension Plan), and to which the Company or any member of the Controlled Group
may have any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.

     Person means any natural person, corporation, partnership, trust, limited
liability company, association, governmental authority or unit, or any other
entity, whether acting in an individual, fiduciary or other capacity.

     Pricing Schedule - the Pricing Schedule attached hereto.

     Prime Rate means, for any day, the rate of interest in effect for such day
as publicly announced from time to time by the Bank as its prime rate (whether
or not such rate is actually

                                       8
<PAGE>   17

charged by the Bank). Any change in the Prime Rate announced by the Bank shall
take effect at the opening of business on the day specified in the public
announcement of such change.

     RCRA - see Section 8.22.

     Regulation D means Regulation D of the FRB.

     Regulation T means Regulation T of the FRB.

     Regulation U means Regulation U of the FRB.

     Regulation X means Regulation X of the FRB.

     Release has the meaning specified in CERCLA and the term "Disposal" (or
"Disposed") has the meaning specified in RCRA; provided that in the event either
CERCLA or RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply as of the effective date of such
amendment; and provided, further, that to the extent that the laws of a state
wherein any affected property lies establish a meaning for "Release" or
"Disposal" which is broader than is specified in either CERCLA or RCRA, such
broader meaning shall apply.

     Rodel Litigation means the actions pending in the United States District
Court for the District of Delaware entitled Rodel, Inc. v. Cabot Corporation
(Civil Action No. 98-352) and Rodel, Inc. v. Cabot Corporation (Civil Action No.
99-256) and any other litigation or cause of action against Cabot Corporation or
the Company based upon the same patents at issue in such actions.

     SEC means the Securities and Exchange Commission or any other governmental
authority succeeding to any of the principal functions thereof.

     Securities Laws - see Section 8.20.

     STEP means the State of Illinois State Treasurer's Economic Program.

     STEP Rate means a fixed interest rate equal to (i) 6.37% per annum until
April 3, 2002 and (ii) from and after April 3, 2002, 1.75% per annum plus 70% of
the "three year treasury rate." For purposes of this definition, "three year
treasury rate" means the rate for U.S. Treasury Bonds maturing closest to the
Maturity Date announced in the Wall Street Journal or any similar publication on
April 3, 2002 unless a different rate per annum is designated by the Treasurer
of the State of Illinois as the interest rate contemplated by STEP with respect
to the funds maintained by the State of Illinois on deposit with the Bank in an
amount at least equal to the then outstanding principal amount of the Term Loan
for the purpose of funding the Company under STEP.

     Subsidiary means, with respect to any Person, a corporation, partnership,
limited liability company or other entity of which such Person and/or its other
Subsidiaries own, directly or indirectly, such number of outstanding shares or
other ownership interests as have more than

                                       9
<PAGE>   18

50% of the ordinary voting power for the election of directors or other managers
of such corporation, partnership, limited liability company or other entity.
Unless the context otherwise requires, each reference to Subsidiaries herein
shall be a reference to Subsidiaries of the Company.

     Suretyship Liability means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person's obligation in respect of any Suretyship Liability at any time shall
(subject to any limitation set forth therein) be deemed to be the maximum amount
of the debt, obligation or other liability supported thereby, or, in the case of
contingent or unliquidated indemnification obligations, the amount which has
been, or, in accordance with GAAP should be, recorded as a liability on or
reserved for in such Person's balance sheet at such time. Notwithstanding
anything in this definition to the contrary, the term "Suretyship Liability"
shall not include any amount paid or payable by the Company or any Subsidiary
(a) to or for the benefit of any officer, director or employee of the Company or
any Subsidiary or (b) to any customer, supplier, vendor or other Person arising
in the ordinary course of the Company's or such Subsidiary's business and
consistent with its prior practices.

     Term Loan - see Section 2.1.

     Total Debt means all Debt of the Company and its Subsidiaries, determined
on a consolidated basis, excluding (a) contingent or unliquidated obligations in
respect of Suretyship Liabilities (except to the extent (i) the amount thereof
has been, or in accordance with GAAP should be, recorded as a liability on or
reserved for in the Company's consolidated balance sheet at such time and the
validity thereof is not being contested by the Company, such Subsidiary or the
party in interest in good faith by appropriate proceedings diligently conducted
or (ii) constituting Suretyship Liabilities in respect of Debt of a Person other
than the Company or any Subsidiary), (b) Hedging Obligations, and (c) Debt of
the Company to Subsidiaries and Debt of Subsidiaries to the Company or to other
Subsidiaries.

     Tuscola Unit C Agreement means the agreement contemplated between the
Company and Cabot Corporation whereby Cabot Corporation has constructed, and
owns, and will operate and maintain a commercial production unit at its
production facilities in Tuscola, Illinois for the primary purpose of producing
fumed alumina to be sold by Cabot Corporation to the Company and purchased by
the Company from Cabot Corporation subject to the terms of such agreement.

     Unmatured Event of Default means any event that, if it continues uncured,
will, with lapse of time or notice or both, constitute an Event of Default.

     Wholly-Owned Subsidiary means, as to any Person, another Person all of the
shares of capital stock or other ownership interests of which (except directors'
qualifying shares) are at the

                                       10
<PAGE>   19

time directly or indirectly owned by such Person and/or another Wholly-Owned
Subsidiary of such Person.

     1.2 Other Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.

          (b) Section, Schedule and Exhibit references are to this Agreement
     unless otherwise specified.

          (c) The term "including" is not limiting and means "including without
     limitation."

          (d) In the computation of periods of time from a specified date to a
     later specified date, the word "from" means "from and including"; the words
     "to" and "until" each mean "to but excluding", and the word "through" means
     "to and including."

          (e) Unless otherwise expressly provided herein, (i) references to
     agreements (including this Agreement) and other contractual instruments
     shall be deemed to include all subsequent amendments and other
     modifications thereto, but only to the extent such amendments and other
     modifications are not prohibited by the terms of any Loan Document, and
     (ii) references to any statute or regulation shall be construed as
     including all statutory and regulatory provisions amending, replacing,
     supplementing or interpreting such statute or regulation.

          (f) This Agreement and the other Loan Documents may use several
     different limitations, tests or measurements to regulate the same or
     similar matters. All such limitations, tests and measurements are
     cumulative and each shall be performed in accordance with its terms.

          (g) This Agreement and the other Loan Documents are the result of
     negotiations between and have been reviewed by counsel to the Company and
     the Bank and are the work product of all parties. Accordingly, they shall
     not be construed against the Bank merely because of the Bank's involvement
     in their preparation.

                                   SECTION 2
        DESCRIPTION OF TERM LOAN; CONVERSION AND CONTINUATION PROCEDURES

     2.1 Term Loan. The Term Loan consists of a term loan in the amount of
$3,500,000, which amount represents the outstanding principal balance on the
date hereof of the term loan made by the Bank to the Company under the Existing
STEP Credit Agreement.

     2.2 Loan Procedures.

          2.2.1 Various Types of Loans. During any period that the Company is
ineligible to receive funds from STEP or the State of Illinois ceases to
maintain funds on deposit

                                       11
<PAGE>   20

with the Bank in an amount at least equal to the then outstanding principal
amount of the Term Loan for the purpose of funding the Company under STEP, the
Term Loan will be, divided into tranches which are either a Base Rate Loan or a
Eurodollar Loan, as the Company shall specify in the related notice of
conversion pursuant to Section 2.2.2 or 2.2.3. Eurodollar Loans having the same
Interest Period are sometimes called a "Group" or collectively "Groups." Base
Rate Loans and Eurodollar Loans may be outstanding at the same time, provided
that not more than three (3) Groups of Eurodollar Loans shall be outstanding at
any one time.

          2.2.2 Conversion and Continuation Procedures.

          (a) The Company shall give written notice or telephonic notice
     (followed immediately by written confirmation thereof) to the Bank of any
     conversion or continuation of any portion of the Term Loan to or as a Base
     Rate Loan or a Eurodollar Loan not later than (a) in the case of a Base
     Rate Loan, 11:00 A.M., Chicago time, on the proposed date of such Base Rate
     Loan, and (b) in the case of a Eurodollar Loan, 11:00 A.M., Chicago time,
     at least three Business Days prior to the proposed date of such Eurodollar
     Loan. Such notice shall be effective upon receipt by the Bank, shall be
     irrevocable, and shall specify the date, amount and type of borrowing and,
     in the case of a Eurodollar borrowing, the initial Interest Period
     therefor. Any conversion shall be on a Business Day. Each Base Rate Loan
     shall be in an aggregate amount of at least $100,000 and an integral
     multiple of $10,000, and each Eurodollar Loan shall be in an aggregate
     amount of at least $1,000,000 and an integral multiple of at least
     $500,000.

          2.2.3 Conversion and Continuation Procedures. (a) Subject to Section
     2.2.1, the Company may, upon irrevocable written notice to the Bank in
     accordance with clause (b) below:

               (i) elect, as of any Business Day, to convert any Eurodollar Loan
          or Base Rate Loan (or any part thereof in an aggregate amount not less
          than $1,000,000 or a higher integral multiple of $500,000) into loans
          of the other type; or

               (ii) elect, as of the last day of the applicable Interest Period,
          to continue any Eurodollar Loans having Interest Periods expiring on
          such day (or any part thereof in an aggregate amount not less than
          $1,000,000 or a higher integral multiple of $500,000) for a new
          Interest Period;

     provided that after giving effect to any prepayment, conversion or
     continuation, the aggregate principal amount of each Group of Eurodollar
     Loans shall be at least $1,000,000 and an integral multiple of $500,000.

          (b) The Company shall give written or telephonic (followed immediately
     by written confirmation thereof) notice to the Bank of each proposed
     conversion or continuation not later than (i) in the case of conversion
     into Base Rate Loans, 11:00 A.M., Chicago time, on the proposed date of
     such conversion and (ii) in the case of conversion into or continuation of
     Eurodollar Loans, 11:00 A.M., Chicago time, at least

                                       12
<PAGE>   21

     three Business Days prior to the proposed date of such conversion or
     continuation, specifying in each case:

               (i) the proposed date of conversion or continuation;

               (ii) the aggregate amount of Base Rate Loans or Eurodollar Loans
          to be converted or continued;

               (iii) whether the proposed conversion or continuation results in
          one or more Base Rate Loans or Eurodollar Loans; and

               (iv) in the case of conversion into, or continuation of,
          Eurodollar Loans, the duration of the requested Interest Period
          therefor.

          (c) If upon the expiration of any Interest Period applicable to
     Eurodollar Loans, the Company has failed to select timely a new Interest
     Period to be applicable to such Eurodollar Loans, the Company shall be
     deemed to have elected to convert such Eurodollar Loans into Base Rate
     Loans effective on the last day of such Interest Period.

          2.2.4 Any conversion of a Eurodollar Loan on a day other than the last
day of an Interest Period therefor shall be subject to Section 7.4.

     2.3 Certain Conditions. Notwithstanding any other provision of this
Agreement, the Bank shall not have an obligation to permit the continuation of
or any conversion into any Eurodollar Loan, if an Event of Default or Unmatured
Event of Default exists.

                                   SECTION 3
                               NOTE; RECORDKEEPING

     3.1 Note. The Term Loan shall be evidenced by a promissory note (the
"Note") substantially in the form set forth in Exhibit A, payable to the order
of the Bank in a face principal amount equal to $3,500,000. The unpaid principal
balance of the Term Loan of the Bank shall be paid in full on the Maturity Date.

     3.2 Recordkeeping. The Bank shall record in its records, or at its option
on the schedule attached to the Note, the date and amount of the Term Loan made
by the Bank, each repayment or conversion thereof and, in the case of any
Eurodollar Loan, the dates on which each Interest Period for such Eurodollar
Loan shall begin and end. The aggregate unpaid principal amount so recorded
shall be rebuttable presumptive evidence of the principal amount owing and
unpaid on the Note. The failure to so record any such amount or any error in so
recording any such amount shall not, however, limit or otherwise affect the
obligations of the Company hereunder or under the Note to repay the principal
amount of the Term Loan evidenced by the Note together with all interest
accruing thereon.

                                       13
<PAGE>   22

                                    SECTION 4
                                    INTEREST

     4.1 Interest Rates. The Company promises to pay interest on the unpaid
principal amount of the Term Loan until the Term Loan is paid in full as
follows:

          (a) so long as the Company remains eligible to receive funds from STEP
     and so long as the State of Illinois maintains funds on deposit with the
     Bank in an amount at least equal to the then outstanding principal amount
     of the Term Loan for the purpose of funding the Company under STEP at the
     interest rates contemplated by STEP, at the STEP Rate; or

          (b) during any period that the Company is ineligible to receive funds
     from STEP or the State of Illinois ceases to maintain funds on deposit with
     the Bank in an amount at least equal to the then outstanding principal
     amount of the Term Loan for the purpose of funding the Company under STEP
     at the interest rates contemplated by STEP, (i) until the Bank has received
     notice from the Company of any conversion under Section 2.2.3 of a portion
     of the Term Loan to one or more Eurodollar Loans, at a rate per annum equal
     to the Base Rate from time to time in effect plus the Base Rate Margin, and
     (ii) from and after the date the Bank has received such a notice, (A) for
     each Base Rate Loan, the sum of the Base Rate from time to time in effect
     plus the Base Rate Margin from time to time in effect and (B) for each
     Eurodollar Loan, at a rate per annum equal to the sum of the Eurodollar
     Rate (Reserve Adjusted) applicable to each Interest Period for such
     Eurodollar Loan plus the Eurodollar Margin from time to time in effect;

provided that at any time an Event of Default exists the above interest rates
shall be increased by 2% per annum.

     4.2 Interest Payment Dates. Accrued interest on the Term Loan (to the
extent calculated at the STEP Rate) and each Base Rate Loan shall be payable in
arrears on the last day of each calendar quarter and at maturity. Accrued
interest on each Eurodollar Loan shall be payable on the last day of each
Interest Period relating to such Eurodollar Loan (and, in the case of a
Eurodollar Loan with a six-month Interest Period, on the three-month anniversary
of the first day of such Interest Period) and at maturity. After maturity, all
accrued interest on the Term Loan shall be payable on demand. All accrued
interest not paid when due shall, to the extent permitted by law, bear interest
from the date due until paid at the Base Rate from time to time in effect plus
the Base Rate Margin from time to time in effect plus 2% per annum.

     4.3 Setting and Notice of Eurodollar Rates. The applicable Eurodollar Rate
for each Interest Period shall be determined by the Bank. Each determination of
the applicable Eurodollar Rate by the Bank shall be conclusive and binding upon
the parties hereto, in the absence of demonstrable error. The Bank shall, upon
written request of the Company, deliver to the Company a statement showing the
computations used by the Bank in determining any applicable Eurodollar Rate
hereunder.

                                       14
<PAGE>   23

     4.4 Computation of Interest. Interest shall be computed for the actual
number of days elapsed on the basis of a year of 360 days. The applicable
interest rate for each Base Rate Loan shall change simultaneously with each
change in the Base Rate.

                                    SECTION 5
                                   PREPAYMENTS

     5.1 Prepayments. The Company may from time to time prepay the Term Loan in
whole or in part; provided that the Company shall give the Bank notice thereof
not later than 11:00 A.M., Chicago time, on the day of such prepayment (which
shall be a Business Day), specifying the amount of the Term Loan to be prepaid
and the date and amount of prepayment. Any such partial prepayment shall be in
an amount equal to $100,000 or a higher integral multiple of $10,000. The
Company shall not be entitled to reborrow any portion of the Term Loan which is
repaid or prepaid.

     5.2 All Prepayments. Any partial prepayment of a Group of Eurodollar Loans
shall be subject to the proviso to Section 2.2.3(a). Any prepayment of a
Eurodollar Loan on a day other than the last day of an Interest Period therefor
shall include interest on the principal amount being repaid and shall be subject
to Section 7.4.

                                   SECTION 6
                        MAKING OF PAYMENTS; SETOFF; TAXES

     6.1 Making of Payments. All payments of principal of or interest on the
Note shall be made by the Company to the Bank in immediately available funds at
the office specified by the Bank not later than noon, Chicago time, on the date
due; and funds received after that hour shall be deemed to have been received by
the Bank on the following Business Day.

     6.2 Application of Certain Payments. Each payment of principal shall be
applied to the Term Loan as the Company shall direct by notice to be received by
the Bank on or before the date of such payment or, in the absence of such
notice, as the Bank shall determine in its discretion. Notwithstanding the
foregoing, after an Event of Default has occurred and is continuing, the Bank
may apply any payments as the Bank shall determine in its sole discretion.

     6.3 Due Date Extension. If any payment of principal or interest with
respect to the Term Loan falls due on a day which is not a Business Day, then
such due date shall be extended to the immediately following Business Day
(unless, in the case of a Eurodollar Loan, such immediately following Business
Day is the first Business Day of a calendar month, in which case such due date
shall be the immediately preceding Business Day) and, in the case of principal,
additional interest shall accrue and be payable for the period of any such
extension.

     6.4 Setoff. The Company agrees that the Bank has all rights of set-off and
bankers' lien provided by applicable law, and in addition thereto, the Company
agrees that at any time any Event of Default exists, the Bank may apply to the
payment of any obligations of the Company hereunder, whether or not then due,
any and all balances, credits, deposits, accounts or moneys of the Company then
or thereafter with the Bank.

                                       15
<PAGE>   24

     6.5 Taxes. All payments of principal of, and interest on, the Term Loan and
all other amounts payable hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes and
other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, excluding franchise taxes and taxes
imposed on or measured by any Bank's net income or receipts (all non-excluded
items being called "Taxes"). If any withholding or deduction from any payment to
be made by the Company hereunder is required in respect of any Taxes pursuant to
any applicable law, rule or regulation, then the Company will:

          (a) pay directly to the relevant authority the full amount required to
     be so withheld or deducted;

          (b) promptly forward to the Bank an official receipt or other
     documentation satisfactory to the Bank evidencing such payment to such
     authority; and

          (c) pay to the Bank such additional amount or amounts as is necessary
     to ensure that the net amount actually received by the Bank will equal the
     full amount the Bank would have received had no such withholding or
     deduction been required.

Moreover, if any Taxes are directly asserted against the Bank with respect to
any payment received by the Bank hereunder, the Bank may pay such Taxes and the
Company will promptly pay such additional amounts (including any penalty,
interest or expense arising due to any act or omission of the Company) as is
necessary in order that the net amount received by the Bank after the payment of
such Taxes (including any Taxes on such additional amount) shall equal the
amount the Bank would have received had such Taxes not been asserted. If the
Company fails to pay any Taxes when due to the appropriate taxing authority or
fails to remit to the Bank, the required receipts or other required documentary
evidence, the Company shall indemnify the Bank for any incremental Taxes,
interest or penalties that may become payable by the Bank as a result of any
such failure.

                                   SECTION 7
            INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS

     7.1 Increased Costs. (a) If, after the Closing Date, the adoption of, or
any change in, any applicable law, rule or regulation, or any change in the
interpretation or administration of any applicable law, rule or regulation by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank (or any
Eurodollar Office of the Bank) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency:

               (i) shall subject the Bank (or any Eurodollar Office of the Bank)
          to any tax, duty or other charge with respect to its Eurodollar Loans,
          its Note or its obligation to make Eurodollar Loans, or shall change
          the basis of taxation of payments to the Bank of the principal of or
          interest on its Eurodollar Loans or any other amounts due under this
          Agreement in respect of its Eurodollar Loans or its obligation to make
          Eurodollar Loans (except for changes in the rate of tax on the

                                       16
<PAGE>   25

          overall net income of the Bank or its Eurodollar Office imposed by the
          jurisdiction in which the Bank's principal executive office or
          Eurodollar Office is located);

               (ii) shall impose, modify or deem applicable any reserve
          (including any reserve imposed by the FRB, but excluding any reserve
          included in the determination of interest rates pursuant to Section
          4), special deposit or similar requirement against assets of, deposits
          with or for the account of, or credit extended by the Bank (or any
          Eurodollar Office of the Bank); or

               (iii) shall impose on the Bank (or its Eurodollar Office) any
          other condition affecting its Eurodollar Loans, its Note or its
          obligation to make Eurodollar Loans;

and the result of any of the foregoing is to increase the cost to (or to impose
a cost on) the Bank (or any Eurodollar Office of the Bank) of making or
maintaining any Eurodollar Loan, or to reduce the amount of any sum received or
receivable by the Bank (or its Eurodollar Office) under this Agreement or under
its Note with respect thereto, then upon demand by the Bank (which demand shall
be accompanied by a statement setting forth the basis for such demand and a
calculation of the amount thereof in reasonable detail), the Company shall pay
directly to the Bank such additional amount as will compensate the Bank for such
increased cost or such reduction.

     (b) If the Bank shall determine that the adoption or phase- in of, any
applicable law, rule or regulation regarding capital adequacy or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank or any
Person controlling the Bank with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on the Bank's or such controlling Person's capital as a consequence of
the Bank's obligations hereunder to a level below that which the Bank or such
controlling Person could have achieved but for such adoption, phase-in, change
or compliance (taking into consideration the Bank's or such controlling Person's
policies with respect to capital adequacy) by an amount deemed by the Bank or
such controlling Person to be material, then from time to time, upon demand by
the Bank (which demand shall be accompanied by a statement setting forth the
basis for such demand and a calculation of the amount thereof in reasonable
detail), the Company shall pay to the Bank such additional amount as will
compensate the Bank or such controlling Person for such reduction.

     7.2 Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period:

          (a) deposits in U.S. dollars (in the applicable amounts) are not being
     offered to the Bank in the interbank eurodollar market for such Interest
     Period, or the Bank otherwise determines (which determination shall be
     binding and conclusive on the Company) that by reason of circumstances
     affecting the interbank eurodollar market

                                       17
<PAGE>   26

     adequate and reasonable means do not exist for ascertaining the applicable
     Eurodollar Rate; or

          (b) due to economic or other conditions affecting generally the
     eurodollar market which are not due to any act, omission, event or
     determination within the direct control of the Bank, the Eurodollar Rate
     (Reserve Adjusted) as determined by the Bank will not adequately and fairly
     reflect the cost to the Bank of maintaining or funding Eurodollar Loans for
     such Interest Period or that the making or funding of Eurodollar Loans has
     become impracticable as a result of an event occurring after the date of
     this Agreement;

then the Bank shall promptly notify the Company and, so long as such
circumstances shall continue, (i) the Bank shall be under no obligation to make
or convert into Eurodollar Loans and (ii) on the last day of the current
Interest Period for each Eurodollar Loan, such Eurodollar Loan shall, unless
then repaid in full, automatically convert to a Base Rate Loan.

     7.3 Changes in Law Rendering Eurodollar Loans Unlawful. If any change in
(including the adoption of any new) applicable law or regulation, or any change
in the interpretation of any applicable law or regulation by any governmental or
other regulatory body charged with the administration thereof, should make it
(or in the good faith judgment of the Bank cause a substantial question as to
whether it is) unlawful for the Bank to make, maintain or fund Eurodollar Loans,
then the Bank shall promptly notify the Company and, so long as such
circumstances shall continue, (a) the Bank shall have no obligation to convert
Base Rate Loans into or continue Eurodollar Loans as, Eurodollar Loans and (b)
on the last day of the current Interest Period for each Eurodollar Loan then
outstanding (or, in any event, on such earlier date as may be required by the
relevant law, regulation or interpretation), such Eurodollar Loan shall, unless
then repaid in full, automatically convert to a Base Rate Loan. Each Base Rate
Loan made by the Bank which, but for the circumstances described in the
foregoing sentence, would be a Eurodollar Loan (an "Affected Loan") shall remain
outstanding for the same period as the Group of Eurodollar Loans of which such
Affected Loan would be a part absent such circumstances.

     7.4 Funding Losses. The Company hereby agrees that upon written demand by
the Bank (which demand shall be accompanied by a statement setting forth the
basis for the amount being claimed), the Company will indemnify the Bank against
any net loss or expense that the Bank may sustain or incur (including any net
loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by the Bank to fund or maintain any Eurodollar
Loan), as reasonably determined by the Bank, as a result of (a) any payment,
prepayment or conversion of any Eurodollar Loan of the Bank on a date other than
the last day of an Interest Period for such Eurodollar Loan (including any
conversion pursuant to Section 7.3) or (b) any failure of the Company to convert
or continue any Eurodollar Loan on a date specified therefor in a notice of
conversion or continuation pursuant to this Agreement. For this purpose, all
notices to the Bank pursuant to this Agreement shall be deemed to be
irrevocable.

     7.5 Right of the Bank to Fund through Other Offices. The Bank may, if it so
elects, fulfill its commitment as to any Eurodollar Loan by causing a foreign
branch or Affiliate of the

                                       18
<PAGE>   27

Bank to make such Eurodollar Loan; provided that in such event for the purposes
of this Agreement such Eurodollar Loan shall be deemed to have been made by the
Bank and the obligation of the Company to repay such Eurodollar Loan shall
nevertheless be to the Bank and shall be deemed held by it, to the extent of
such Eurodollar Loan, for the account of such branch or Affiliate.

     7.6 Discretion of the Bank as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, the Bank shall be entitled to fund
and maintain its funding of all or any part of the Term Loan in any manner it
sees fit, it being understood, however, that for the purposes of this Agreement
all determinations hereunder shall be made as if the Bank had actually funded
and maintained each Eurodollar Loan during each Interest Period for such
Eurodollar Loan through the purchase of deposits having a maturity corresponding
to such Interest Period and bearing an interest rate equal to the Eurodollar
Rate for such Interest Period.

     7.7 Mitigation of Circumstances. The Bank shall promptly notify the Company
of any event of which it has knowledge which will result in, and will use
reasonable commercial efforts available to it (and not, in the Bank's sole
judgment, otherwise disadvantageous to the Bank) to mitigate or avoid, (i) any
obligation by the Company to pay any amount pursuant to Section 6.5 or 7.1 or
(ii) the occurrence of any circumstances described in Section 7.2 or 7.3 (and,
if the Bank has given notice of any such event described in clause (i) or (ii)
above and thereafter such event ceases to exist, the Bank shall promptly so
notify the Company). Without limiting the foregoing, the Bank will designate a
different funding office if such designation will avoid (or reduce the cost to
the Company of) any event described in clause (i) or (ii) of the preceding
sentence and such designation will not, in the Bank's sole judgment, be
otherwise disadvantageous to the Bank. The Bank shall not request that the
Company pay any amount pursuant to Section 6.5 or 7.1, or advise the Company as
to its determination under Section 7.2(b), unless it is generally making similar
requests of, or determinations with respect to, other borrowers similarly
situated, and the Bank agrees to use a reasonable basis for calculating such
amounts and making such determinations.

     7.8 Conclusiveness of Statements; Survival of Provisions. Determinations
and statements of the Bank pursuant to Section 7.1, 7.2, 7.3 or 7.4 shall be
conclusive absent demonstrable error. The Bank may use reasonable averaging and
attribution methods in determining compensation under Sections 7.1 and 7.4, and
the provisions of such Sections shall survive repayment of the Term Loan,
cancellation of the Note and termination of this Agreement.

                                   SECTION 8
                         REPRESENTATIONS AND WARRANTIES

     To induce the Bank to enter into this Agreement, the Company represents and
warrants to the Bank that:

     8.1 Organization. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware. Each Subsidiary is
validly existing and in good standing under the laws of the jurisdiction of its
organization. The Company and each

                                       19
<PAGE>   28

other Loan Party has all requisite corporate power to own its property and
conduct its business as now conducted and as presently contemplated. The Company
is in good standing and is duly qualified to do business in the States of
Arizona, California, Colorado, Illinois, Indiana and Texas, the Commonwealth of
Massachusetts and each other jurisdiction where, because of the nature of its
activities or properties, such qualification is required, except for such
jurisdictions where the failure so to qualify would not have a Material Adverse
Effect.

     8.2 Authorization; No Conflict. Each of the Company and each other Loan
Party is duly authorized to execute and deliver each Loan Document to which it
is a party, the Company is duly authorized to borrow monies under this Agreement
and each of the Company and each other Loan Party is and will continue to be
duly authorized to perform its obligations under each Loan Document to which it
is a party. The execution, delivery and performance by the Company of this
Agreement and by each of the Company and each other Loan Party of each Loan
Document to which it is a party, and the borrowings by the Company under this
Agreement, do not and will not (i) require any consent or approval of any
governmental agency or authority that has not been obtained or (ii) conflict
with (a) any provision of law, (b) the articles of incorporation or by-laws of
the Company or any other Loan Party, (c) any agreement, indenture, instrument or
other document binding upon the Company or any other Loan Party or any of their
respective properties or assets or (d) any court or administrative order or
decree applicable to the Company, and do not and will not require, or result in,
the creation or imposition of any Lien on any asset of the Company or any other
Loan Party.

     8.3 Validity and Binding Nature. Each of this Agreement and each other Loan
Document to which the Company or any other Loan Party is a party is the legal,
valid and binding obligation of such Person, enforceable against such Person in
accordance with its terms.

     8.4 Financial Condition. The audited consolidated financial statements of
the Company and its Subsidiaries as of and for the fiscal years ended September
30, 1999 and September 30, 2000, and unaudited consolidated financial statements
of the Company for the portion of fiscal year 2001 up to and including March 31,
2001, copies of which have been furnished prior to the Closing Date to the Bank,
have been prepared in accordance with GAAP and fairly present the consolidated
financial condition of the Company and its Subsidiaries as of such dates and the
results of their operations for the periods then ended. Except as reflected and
accrued for or reserved against in the Company's consolidated financial
statements, or as disclosed in the notes thereto, neither the Company nor any
Subsidiary has any material liabilities, known or unknown, matured or unmatured,
absolute, contingent or otherwise which might reasonably be expected to have a
Material Adverse Effect.

     8.5 No Material Adverse Change. Since September 30, 2000, there has been no
event that has had or might reasonably be expected to have a Material Adverse
Effect. Since September 30, 2000, the Company has not (i) paid or declared any
dividend on or in respect of any shares of any class of capital stock of the
Company (other than dividends payable solely in shares of common stock of the
Company), (ii) purchased, redeemed or otherwise retired any shares of any class
of capital stock of the Company, directly or indirectly through a Subsidiary or

                                       20
<PAGE>   29

otherwise, (iii) returned capital to its shareholders as such, or (iv) made any
other distribution on or in respect of any shares of any class of capital stock
of the Company.

     8.6 Litigation and Contingent Liabilities. Except as set forth in Schedule
8.6, no litigation (including derivative actions), arbitration proceeding or
governmental investigation or proceeding is pending or, to the Company's
knowledge, threatened against the Company or any Subsidiary which might
reasonably be expected to have a Material Adverse Effect. Other than any
liability incident to such litigation or proceedings, neither the Company nor
any Subsidiary has any contingent liabilities not listed on Schedule 8.6 or
permitted by Section 9.7 which has had or might reasonably be expected to have a
Material Adverse Effect.

     8.7 No Materially Adverse Contracts, etc. Neither the Company nor any of
its Subsidiaries is subject to any charter, corporate or, to the Company's
knowledge, other legal restriction, or any judgment, decree, order, rule or
regulation that has or is expected in the future to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is a party to any
contract or agreement that has or is expected to have any Material Adverse
Effect.

     8.8 Compliance. Neither the Company nor any of its Subsidiaries is in
violation of any provision of its articles of incorporation, bylaws, or any
agreement or instrument to which it may be subject or by which it or any of its
properties may be bound or any statute, license, rule or regulation applicable
to it, or, to the Company's knowledge, any decree, order or judgment, in any of
the foregoing cases in a manner that could result in the imposition of
substantial penalties or result in a Material Adverse Effect. No contract or
other agreement to which the Company or any Subsidiary is a party has been
terminated if such termination could result in a Material Adverse Effect.

     8.9 Taxes. Each of the Company and each Subsidiary has filed all tax
returns and reports (federal, state, local, foreign and other applicable tax
returns) required to be filed by or on behalf of it and has paid or caused to be
paid all taxes and other governmental charges due for the periods covered
thereby, including interest and penalties, other than any such taxes or charges
(i) for which a timely and proper extension has been obtained and (ii) that are
being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained to the extent required by GAAP, unless
and until any Lien resulting therefrom attaches to its property and becomes
enforceable against its other creditors. The Company has set aside reserves on
its balance sheet for the payment of all liabilities for all taxes (whether or
not disputed) of the Company accrued through the date of such balance sheet to
the extent required by GAAP.

     8.10 Information. All information heretofore or contemporaneously with this
Agreement furnished in writing by the Company or any other Loan Party to the
Bank for purposes of or in connection with this Agreement and the transactions
contemplated hereby is, and all written information hereafter furnished by or on
behalf of the Company or any other Loan Party to the Bank pursuant hereto or in
connection herewith will be, true and accurate in every material respect on the
date as of which such information is dated or certified, and none of such
information is or will be incomplete by omitting to state any material fact
necessary to make such information not misleading in light of the circumstances
under which made (it being

                                       21
<PAGE>   30

recognized by the Bank that any projections and forecasts provided by the
Company are based on good faith estimates and assumptions believed by the
Company to be reasonable as of the date of the applicable projections or
assumptions and that actual results during the period or periods covered by any
such projections and forecasts may differ from projected or forecasted results).

     8.11 Solvency. On the Closing Date, and immediately prior to and after
giving effect to the transactions contemplated by this Agreement (i) the
Company's and each other Loan Party's assets will exceed its liabilities and
(ii) each of the Company and each other Loan Party will be solvent, will be able
to pay its debts as they mature, will own property with fair saleable value
greater than the amount required to pay its debts and will have capital
sufficient to carry on its business as then constituted.

     8.12 No Default. No Event of Default or Unmatured Event of Default exists
or would result from the incurring by the Company of any Debt under this
Agreement or under any other Loan Document.

     8.13 Use of Proceeds. The Company shall use the proceeds of the Term Loan
solely for the purposes permitted under the Existing STEP Credit Agreement,
working capital and for other general corporate purposes.

     8.14 Subsidiaries. Except as set forth on Schedule 8.14 hereto, the Company
has no Subsidiaries.

     8.15 Ownership of Properties; Liens. Except as permitted pursuant to
Section 9.8 and subject to Section 8.16, each of the Company and each Subsidiary
owns good title to all of its properties and assets, tangible and intangible, of
any nature whatsoever (including patents, trademarks, trade names, service marks
and copyrights), free and clear of all Liens, charges and claims (including
infringement claims with respect to patents, trademarks, service marks,
copyrights and the like).

     8.16 Intellectual Property. To the best of the Company's knowledge after
due inquiry, and except as set forth in Schedule 8.16, the Company and each of
its Subsidiaries owns and possesses or has a license or other right to use all
such patents, patent rights, trademarks, trademark rights, trade names, trade
name rights, service marks, service mark rights and copyrights as are necessary
for the conduct of the business of the Company and its Subsidiaries as conducted
on the Closing Date, without any infringement upon rights of others which might
reasonably be expected to have a Material Adverse Effect.

     8.17 Insurance. Set forth on Schedule 8.17 is a complete and accurate
summary of the property and casualty insurance program of the Company and its
Subsidiaries as of the Closing Date (including the names of all insurers, policy
numbers, expiration dates, amounts and types of coverage, annual premiums,
exclusions, deductibles, self-insured retention and a description in reasonable
detail of any self-insurance program, retrospective rating plan, fronting
arrangement or other risk assumption arrangement involving the Company or any
Subsidiary).

                                       22
<PAGE>   31

     8.18 Investment Company Act; Public Utility Holding Company Act. Neither
the Company nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940. Neither the Company nor any Subsidiary is a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935.

     8.19 Regulations T, U and X. None of the transactions contemplated by this
Agreement or any of the other Loan Documents, including the use of the proceeds
of the Term Loan, will violate or result in a violation of any regulation issued
pursuant to Section 7 of the Securities Exchange Act of 1934, as amended,
including, without limitation, Regulations T, U and X and the Company is not
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.

     8.20 Securities Matters. The making of the Term Loan, the application of
the proceeds and repayment thereof by the Company and the consummation of the
transactions contemplated by this Agreement and the other Loan Documents will
not violate any provision of any federal or state securities statutes, rules or
regulations, or any order issued by the Securities and Exchange Commission
(collectively, the "Securities Laws).

     8.21 Pension and Welfare Plans. (a) Except as set forth in Schedule 8.21,
during the twelve-consecutive-month period prior to the date of the execution
and delivery of this Agreement, (i) no steps have been taken to terminate any
Pension Plan and (ii) no contribution failure has occurred with respect to any
Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA. No
condition exists or event or transaction has occurred with respect to any
Pension Plan which could result in the incurrence by the Company of any material
liability, fine or penalty. The Company has no contingent liability with respect
to any post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Subtitle B of Title I of ERISA.

     (b) Except as set forth in Schedule 8.21, all contributions (if any) have
been made to any Multiemployer Pension Plan that are required to be made by the
Company or any other member of the Controlled Group under the terms of the plan
or of any collective bargaining agreement or by applicable law; neither the
Company nor any member of the Controlled Group has withdrawn or partially
withdrawn from any Multiemployer Pension Plan, incurred any withdrawal liability
with respect to any such plan, received notice of any claim or demand for
withdrawal liability or partial withdrawal liability from any such plan, and no
condition has occurred which, if continued, might result in a withdrawal or
partial withdrawal from any such plan; and neither the Company nor any member of
the Controlled Group has received any notice that any Multiemployer Pension Plan
is in reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of any excise tax, that any such
plan is or has been funded at a rate less than that required under Section 412
of the Code, that any such plan is or may be terminated, or that any such plan
is or may become insolvent.

                                       23
<PAGE>   32

     8.22 Environmental Matters.

          (a) To the best of the Company's knowledge based upon a good faith
     review, neither the Company nor any Subsidiary, nor any operator of the
     Company's or any Subsidiary's properties, is in violation, or alleged
     violation, of any judgment, decree, order, law, permit, license, rule or
     regulation pertaining to environmental matters, including those arising
     under the Resource Conservation and Recovery Act ("RCRA"), the
     Comprehensive Environmental Response, Compensation and Liability Act of
     1980 ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986
     or any other Environmental Law which individually or in the aggregate might
     reasonably be expected to have a Material Adverse Effect.

          (b) Neither the Company nor any Subsidiary has received notice from
     any third party, including any federal, state or local governmental
     authority (i) that any one of them has been identified by the United States
     Environmental Protection Agency as a potentially responsible party under
     CERCLA with respect to a site listed on the National Priorities List, 40
     C.F.R. Part 300 Appendix B, (ii) that any hazardous waste, as defined by 42
     U.S.C.ss.6903(5), any hazardous substance as defined by 42
     U.S.C.ss.9601(14), any pollutant or contaminant as defined by 42
     U.S.C.ss.9601 (33) or any toxic substance, oil or hazardous material or
     other chemical or substance regulated by any Environmental Law (all of the
     foregoing, "Hazardous Substances"), which any one of them has generated,
     transported or disposed of has been found at any site at which a federal,
     state or local agency or other third party has conducted a remedial
     investigation, removal or other response action pursuant to any
     Environmental Law, (iii) that the Company or any Subsidiary must conduct a
     remedial investigation, removal, response action or other activity pursuant
     to any Environmental Law or (iv) of any Environmental Claim.

          (c) To the best of the Company's knowledge, except as set forth on
     Schedule 8.22, (i) no portion of any real property or other assets of the
     Company or any Subsidiary has been used for the handling, processing,
     storage or disposal of Hazardous Substances except in accordance in all
     material respects with applicable Environmental Laws, and no underground
     tank or other underground storage receptacle for Hazardous Substances is
     located on such properties, (ii) in the course of any activities conducted
     by the Company, any Subsidiary or the operators of any real property of the
     Company or any Subsidiary, no Hazardous Substances have been generated or
     are being used on such properties except in accordance in all material
     respects with applicable Environmental Laws, (iii) there have been no
     Releases or threatened Releases of Hazardous Substances on, upon, into or
     from any real property or other assets of the Company or any Subsidiary,
     which might individually or in the aggregate reasonably be expected to have
     a Material Adverse Effect, (iv) there have been no Releases on, upon, from
     or into any real property in the vicinity of any real property or other
     assets of the Company or any Subsidiary which, through soil or groundwater
     contamination, may have come to be located on, upon or into any real
     property or other assets of the Company or any Subsidiary, and which might
     reasonably be expected to have a Material Adverse Effect and (v) any
     Hazardous Substances generated by the Company and its Subsidiaries have
     been transported offsite only by properly licensed carriers and delivered
     only to treatment or disposal facilities maintaining valid permits as
     required under applicable Environmental Laws, which

                                       24
<PAGE>   33

     transporters and facilities have been and are operating in compliance in
     all material respects with such permits and applicable Environmental Laws.

     8.23 Labor Matters. Neither the Company nor any Subsidiary is subject to
any labor or collective bargaining agreement. There are no existing or
threatened strikes, lockouts or other labor disputes involving the Company or
any Subsidiary that singly or in the aggregate might reasonably be expected to
have a Material Adverse Effect. Hours worked by and payment made to employees of
the Company and its Subsidiaries are not in violation of the Fair Labor
Standards Act or any other applicable law, rule or regulation dealing with such
matters.

     8.24 Disclosure. None of this Agreement or any of the other Loan Documents
contains any untrue statement of a material fact or omits to state a material
fact (known to the Company or any of its Subsidiaries in the case of any
document or information not furnished by it or any of its Subsidiaries)
necessary in order to make the statements herein or therein not misleading.
There is no fact known to the Company or any of its Subsidiaries which
materially adversely affects, or which is reasonably likely in the future to
materially adversely affect, the business, assets, financial condition or
prospects of the Company or any of its Subsidiaries, exclusive of effects
resulting from changes in general economic conditions, legal standards or
regulatory conditions.

     8.25 Survival of Warranties. All representations contained in this
Agreement and the other Loan Documents survive the execution and delivery of
this Agreement.

                                    SECTION 9
                                    COVENANTS

     Until the Maturity Date and thereafter until all obligations of the Company
hereunder and under the other Loan Documents are paid in full, the Company
agrees that, unless at any time the Bank shall otherwise expressly consent in
writing, it will:

     9.1 Reports, Certificates and Other Information. Furnish to the Bank:

          9.1.1 Annual Report. Promptly when available and in any event within
90 days after the close of each Fiscal Year a copy of the annual audit report of
the Company and its Subsidiaries for such Fiscal Year, including therein
consolidated balance sheets and statements of earnings and cash flows of the
Company and its Subsidiaries as at the end of such Fiscal Year, certified
without qualification by PriceWaterhouseCoopers LLP or other independent
auditors of recognized standing selected by the Company and reasonably
acceptable to the Bank, together with a written statement from such accountants
to the effect that in making the examination necessary for the signing of such
annual audit report by such accountants, nothing came to their attention that
caused them to believe that the Company was not in compliance with any provision
of Section 9.6, 9.7, 9.9 or 9.10 of this Agreement insofar as such provision
relates to accounting matters or, if something has come to their attention that
caused them to believe that the Company was not in compliance with any such
provision, describing such non-compliance in reasonable detail.

                                       25
<PAGE>   34

          9.1.2 Interim Reports. Promptly when available and in any event within
45 days after the end of each Fiscal Quarter (except the last Fiscal Quarter of
each Fiscal Year), consolidated balance sheets of the Company and its
Subsidiaries as of the end of such Fiscal Quarter, together with consolidated
statements of earnings for each Fiscal Quarter in such Fiscal Year and cash
flows for the period beginning with the first day of such Fiscal Year and ending
on the last day of such Fiscal Quarter, together with a comparison with the
corresponding period of the previous Fiscal Year.

          9.1.3 Compliance Certificates. Contemporaneously with the furnishing
of a copy of each annual audit report pursuant to Section 9.1.1 and each set of
quarterly statements pursuant to Section 9.1.2, a duly completed compliance
certificate in the form of Exhibit B, with appropriate insertions, dated the
date of such annual report or such quarterly statements and signed by the Chief
Financial Officer or Treasurer of the Company, containing a computation of each
of the financial ratios and restrictions set forth in 9.6 and to the effect that
such officer has not become aware of any Event of Default or Unmatured Event of
Default that has occurred and is continuing or, if there is any such event,
describing it and the steps, if any, being taken to cure it.

          9.1.4 Reports to the SEC and to Shareholders. Promptly upon the filing
or sending thereof, copies of all regular, periodic or special reports of the
Company or any Subsidiary filed with the SEC; copies of all registration
statements of the Company or any Subsidiary filed with the SEC (other than on
Form S-8); and copies of all proxy statements or other communications made to
security holders generally.

          9.1.5 Notice of Default, Litigation and ERISA Matters. Promptly upon
becoming aware of any of the following, written notice describing the same and
the steps being taken by the Company or the Subsidiary affected thereby with
respect thereto:

          (a) the occurrence of an Event of Default or an Unmatured Event of
     Default;

          (b) any litigation, arbitration or governmental investigation or
     proceeding not previously disclosed by the Company to the Bank which has
     been instituted or, to the knowledge of the Company, is threatened against
     the Company or any Subsidiary or to which any of the properties of any
     thereof is subject which might reasonably be expected to have a Material
     Adverse Effect;

          (c) the institution of any steps by any member of the Controlled Group
     or any other Person to terminate any Pension Plan, or the failure of any
     member of the Controlled Group to make a required contribution to any
     Pension Plan (if such failure is sufficient to give rise to a Lien under
     Section 302(f) of ERISA) or to any Multiemployer Pension Plan, or the
     taking of any action with respect to a Pension Plan which could result in
     the requirement that the Company furnish a bond or other security to the
     PBGC or such Pension Plan, or the occurrence of any event with respect to
     any Pension Plan or Multiemployer Pension Plan which could result in the
     incurrence by any member of the Controlled Group of any material liability,
     fine or penalty (including any claim or demand for withdrawal liability or
     partial withdrawal from any Multiemployer Pension

                                       26
<PAGE>   35

     Plan), or any material increase in the contingent liability of the Company
     with respect to any post-retirement welfare plan benefit, or any notice
     that any Multiemployer Pension Plan is in reorganization, that increased
     contributions may be required to avoid a reduction in plan benefits or the
     imposition of an excise tax, that any such Pension Plan or Multiemployer
     Pension Plan is or has been funded at a rate less than that required under
     Section 412 of the Code, that any such Pension Plan or Multiemployer
     Pension Plan is or may be terminated, or that any such Pension Plan or
     Multiemployer Pension Plan is or may become insolvent;

          (d) any cancellation or material change in any insurance maintained by
     the Company or any Subsidiary; or

          (e) any other event (including (i) any violation of any Environmental
     Law or the assertion of any Environmental Claim or (ii) the enactment or
     effectiveness of any law, rule or regulation) which might reasonably be
     expected to have a Material Adverse Effect.

          9.1.6 Management Reports. Promptly following receipt by the Company,
copies of all detailed management reports submitted to the Company by
independent auditors in connection with each annual or interim audit made by
such auditors of the books of the Company.

          9.1.7 Projections. As soon as practicable, and in any event within 45
days after the commencement of each Fiscal Year, financial projections for the
Company and its Subsidiaries for such Fiscal Year and the next two succeeding
Fiscal Years prepared in a manner consistent with the projections delivered by
the Company to the Bank prior to the Closing Date or otherwise in a manner
reasonably satisfactory to the Bank, accompanied by a certificate of the Chief
Financial Officer or Treasurer of the Company on behalf of the Company to the
effect that (i) such projections were prepared by the Company in good faith,
(ii) the Company has a reasonable basis for the assumptions contained in such
projections and (iii) such projections have been prepared in accordance with
such assumptions.

          9.1.8 Debt Notices. Promptly following receipt by the Company or any
of its Subsidiaries, copies of any material notices (including notices of
default or acceleration) received from any holder or trustee of, under or with
respect to any Debt of the Company or such Subsidiary.

          9.1.9 Other Information. Promptly from time to time, such other
information concerning the Company and its Subsidiaries as the Bank may
reasonably request.

     9.2 Books, Records and Inspections. Keep, and cause each Subsidiary to
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
GAAP; permit, and cause each Subsidiary to permit, the Bank or any
representative thereof to inspect the properties and operations of the Company
or such Subsidiary; and permit, and cause each Subsidiary to permit, at any
reasonable time and with reasonable notice (or at any time without notice if an
Event of Default exists), the Bank or

                                       27
<PAGE>   36

any representative thereof to visit any or all of its offices, to discuss its
financial matters with its officers and its independent auditors (and the
Company hereby authorizes such independent auditors to discuss such financial
matters with the Bank or any representative thereof), and to examine (and, at
the expense of the Company or the applicable Subsidiary, photocopy extracts
from) any of its books or other records. All such inspections or audits by the
Bank if an Event of Default exists shall be at the Company's expense.

     9.3 Compliance with Laws; Payment of Taxes and Liabilities. (a) Comply, and
cause each Subsidiary to comply, in all material respects with all applicable
laws, rules, regulations, decrees, orders, judgments, licenses and permits,
except where failure to comply could not reasonably be expected to have a
Material Adverse Effect; and (b) pay, and cause each Subsidiary to pay, prior to
delinquency, all taxes and other governmental charges against it or any of its
property, as well as claims of any kind which, if unpaid, might become a Lien on
any of its property; provided that the foregoing shall not require the Company
or any Subsidiary to pay any such tax or charge so long as it shall contest the
validity thereof in good faith by appropriate proceedings and shall set aside on
its books reserves with respect thereto to the extent required by GAAP.

     9.4 Maintenance of Property; Insurance.

          (a) Keep, and cause each Subsidiary to keep, all property useful and
     necessary in the business of the Company or such Subsidiary in good working
     order and condition, ordinary wear and tear excepted.

          (b) Maintain, and cause each Subsidiary to maintain, with responsible
     insurance companies, such insurance as may be required by any law or
     governmental regulation or court decree or order applicable to it and such
     other insurance, to such extent and against such hazards and liabilities,
     as is customarily maintained by companies similarly situated, but which
     shall insure against all risks and liabilities of the type identified on
     Schedule 8.17 and shall have insured amounts no less than, and deductibles
     no higher than, those set forth on such schedule; and, upon request of the
     Bank, furnish to the Bank a certificate setting forth in reasonable detail
     the nature and extent of all insurance maintained by the Company and its
     Subsidiaries.

     9.5 Maintenance of Existence, etc. Maintain and preserve, and (subject to
Section 9.2) cause each Subsidiary to maintain and preserve, (a) its existence
and good standing in the jurisdiction of its organization and (b) its
qualification to do business and good standing in each jurisdiction where the
nature of its business makes such qualification necessary (except in those
instances in which the failure to be qualified or in good standing does not have
a Material Adverse Effect).

     9.6 Financial Covenants.

          9.6.1 Leverage Ratio. Not permit the Leverage Ratio on the last day of
     each Fiscal Quarter to be greater than 2.25 to 1.00.

                                       28
<PAGE>   37

          9.6.2 Debt Service Coverage Ratio. Not permit the Debt Service
     Coverage Ratio on the last day of each Fiscal Quarter to be less than 3.50
     to 1.00.

          9.6.3 Minimum Net Worth. Not permit Net Worth as of the last day of
     (i) the Fiscal Quarter ending June 30, 2001 to be less than the sum of (A)
     $104,459,000 plus (B) 50% of the consolidated net income, exclusive of
     losses, of the Company and its Subsidiaries for each of the two Fiscal
     Quarters ending June 30, 2001 and (ii) any Fiscal Quarter thereafter to be
     less than the sum of (A) the amount required hereunder for the last day of
     immediately preceding Fiscal Quarter plus (B) 50% of the consolidated net
     income, exclusive of losses, of the Company and its Subsidiaries for such
     Fiscal Quarter.

     9.7 Limitations on Debt. Not, and not permit any Subsidiary to, create,
incur, assume or suffer to exist any Debt, except:

          (a) obligations under the Credit Agreement or under this Agreement and
     the other Loan Documents;

          (b) Debt secured by Liens permitted by Section 9.8(d), and extensions,
     renewals and refinancings thereof; provided that the aggregate amount of
     all such Debt at any time outstanding shall not exceed $10,000,000;

          (c) Debt of Guarantor Subsidiaries to the Company;

          (d) unsecured Debt of the Company to Subsidiaries;

          (e) unsecured subordinated Debt of the Company (other than to
     Subsidiaries) in an aggregate amount not to exceed $100,000,000 at any time
     outstanding which has subordination terms, covenants, pricing and other
     terms and conditions which have been approved in writing by the Bank in
     advance of the incurrence thereof, which approval shall not be unreasonably
     withheld so long as (1) such Debt matures after all obligations under this
     Agreement and the other Loan Documents have matured and become due and
     payable in full, (2) the subordination terms provide that no payment shall
     be made on such Debt, and no enforcement or collection action shall be
     taken by the holder of such Debt, if any Event of Default exists and is
     continuing under this Agreement and are otherwise consistent with then
     prevailing subordination terms and conditions, (3) the covenants and events
     of default with respect to such Debt are less restrictive than those
     contained in this Agreement and the other Loan Documents and (4) the
     pricing and other terms and conditions of such Debt are consistent with
     then prevailing market terms applicable to Debt of such character and type;

          (f) other senior unsecured Debt of the Company (other than to
     Subsidiaries) or of any Subsidiary (other than to the Company or any
     Subsidiary) in an aggregate amount not to exceed $10,000,000 at any time
     outstanding on terms and conditions which are approved in writing by the
     Bank in advance of the incurrence thereof, which approval shall not be
     unreasonably withheld so long as (1) such Debt matures after all
     obligations under the Credit Agreement have matured and become due and
     payable in full, (2) the

                                       29
<PAGE>   38

     covenants and events of default with respect to such Debt are not more
     restrictive than those contained in this Agreement and the other Loan
     Documents and (3) the pricing and other terms and conditions of such Debt
     are consistent with then prevailing market terms applicable to Debt of such
     character and type;

          (g) Mortgage Debt of the Company (other than to Subsidiaries) or of
     any Subsidiary (other than to the Company or any Subsidiary) in an
     aggregate amount not to exceed $25,000,000 at any time outstanding on terms
     and conditions which are approved in writing by the Bank in advance of the
     incurrence thereof, which approval shall not be unreasonably withheld so
     long as the pricing and other terms and conditions of such Debt are
     consistent with then prevailing market terms applicable to Debt of such
     character and type;

          (h) Hedging Obligations incurred for bona fide hedging purposes and
     not for speculation; and

          (i) Debt described on Schedule 9.7 and any extension, renewal or
     refinancing thereof so long as the principal amount thereof is not
     increased.

     9.8 Liens. Not, and not permit any Subsidiary to, create or permit to exist
any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (whether now owned or hereafter acquired), except:

          (a) Liens for taxes or other governmental charges not at the time
     delinquent or thereafter payable without penalty or being contested in good
     faith by appropriate proceedings and, in each case, for which it maintains
     reserves to the extent required by GAAP;

          (b) Liens arising in the ordinary course of business (such as (i)
     Liens of carriers, warehousemen, mechanics and materialmen and other
     similar Liens imposed by law and (ii) Liens incurred in connection with
     worker's compensation, unemployment compensation and other types of social
     security (excluding Liens arising under ERISA) or in connection with surety
     bonds, bids, performance bonds and similar obligations) for sums not
     overdue or being contested in good faith by appropriate proceedings and not
     involving any deposits or advances or borrowed money or the deferred
     purchase price of property or services and, in each case, for which it
     maintains reserves to the extent required by GAAP;

          (c) Liens described on Schedule 9.8;

          (d) subject to the limitation set forth in Section 9.7(b), (i) Liens
     arising in connection with Capital Leases (and attaching only to the
     property being leased), (ii) Liens existing on property at the time of the
     acquisition thereof by the Company or any Subsidiary (and not created in
     contemplation of such acquisition) and (iii) Liens that constitute purchase
     money security interests on any property securing debt incurred for the
     purpose of financing all (but not greater than the cost thereof) or any
     part of the cost

                                       30
<PAGE>   39

     of acquiring such property, provided that any such Lien attaches to such
     property within 60 days of the acquisition thereof and attaches solely to
     the property so acquired;

          (e) attachments, levied judgments and other similar Liens arising in
     connection with court proceedings with respect to which no Event of Default
     would exist under Section 11.1.8 or 11.1.9;

          (f) easements, rights of way, restrictions, minor defects or
     irregularities in title and other similar Liens not interfering in any
     material respect with the ordinary conduct of the business of the Company
     or any Subsidiary;

          (g) subject to the limitations set forth in Section 9.7(g), Mortgage
     Liens; and

          (h) other Liens, in addition to the Liens listed above, provided that
     the aggregate amount of all Debt or other obligations secured thereby at
     any time outstanding shall not exceed $500,000.

     9.9 Operating Leases. Not permit the aggregate amount of all rental
payments under Operating Leases other than those described on Schedule 9.9 made
(or scheduled to be made) by the Company and its Subsidiaries (on a consolidated
basis) to exceed $5,000,000 in any Fiscal Year.

     9.10 Restricted Payments. Not, and not permit any Subsidiary to, (a) make
any dividends or distributions to any of its shareholders (other than dividends
and distributions in the form of its own capital stock) or purchase or redeem
any of its capital stock or other equity interests or any warrants, options or
other rights in respect thereof, except that (i) any Subsidiary may make
dividends or distributions to the Company or to a Wholly-Owned Subsidiary and
(ii) so long as no Event of Default or Unmatured Event of Default exists or
results therefrom, the Company may make dividends and distributions to its
shareholders and may purchase or redeem its capital stock, other equity
interests, warrants, options and other rights in respect thereof so long as the
aggregate amount paid in respect of such dividends, distributions, purchases and
redemptions from the Closing Date through the date such dividends,
distributions, purchases and redemptions are made does not exceed $10,000,000
plus fifty percent (50%) of the consolidated net income of the Company and its
Subsidiaries for the period commencing December 31, 2000 through the date such
dividends, distributions, purchases or redemptions are made, (b) pay any
management fees or similar fees to any of its shareholders or any Affiliate
thereof other than those which arise pursuant to bona fide arm's length
transactions in the ordinary course of business and reasonable and customary
directors' fees, (c) make any redemption, prepayment, defeasance or repurchase
of any Debt other than Debt permitted under Section 9.7(a), 9.7(b), 9.7(c),
9.7(d) or 9.7(h) or (d) set aside funds for any of the foregoing.

     9.11 Mergers, Consolidations, Acquisitions, Sales. Not, and not permit any
Subsidiary to, be a party to any merger or consolidation, purchase or acquire
all or substantially all of the assets of any other Person, all or substantially
all of any division of any other Person or, except as permitted under Section
9.19, any stock of any class of, or any partnership or joint venture interest
in, any other Person, or, except in the ordinary course of its business, sell,
transfer,

                                       31
<PAGE>   40

convey or lease all or any substantial part of its assets, or sell or assign
with or without recourse any receivables, except for (a) any such merger,
consolidation, sale, transfer, conveyance, lease or assignment of or by any
Wholly-Owned Subsidiary into the Company or into, with or to any other
Wholly-Owned Subsidiary; (b) any such purchase or other acquisition by the
Company or any Wholly-Owned Subsidiary of the assets or stock of any
Wholly-Owned Subsidiary; (c) any Acquisition by the Company or any Wholly-Owned
Subsidiary where:

          (1) immediately before and after giving effect to such Acquisition, no
     Event of Default or Unmatured Event of Default shall exist;

          (2) the aggregate consideration to be paid by the Company and its
     Subsidiaries (including any Debt assumed or issued in connection therewith
     and the value of all capital stock issued in connection therewith, the
     amount thereof to be calculated in accordance with GAAP) in connection with
     such Acquisition (or any series of related Acquisitions) does not exceed
     $35,000,000 individually and $75,000,000 in the aggregate when taking into
     consideration the aggregate purchase price of all other purchases and
     acquisitions consummated after the Closing Date;

          (3) not less than five (5) Business Days prior to entering into any
     definitive agreement in connection with such Acquisition, the Company shall
     have delivered to the Bank a reasonably detailed description of such
     Acquisition, together with historical audited or reviewed financial
     statements of the Person to be acquired or from whom the assets which are
     the subject of such Acquisition are to be acquired and, without any
     adjustment to the historical financial performance of the Company, such
     Person or assets, projections of the effect of such Acquisition on the
     Company's financial performance, demonstrating to the satisfaction of the
     Bank that both before and after giving effect to such Acquisition, the
     Company is and will be in pro forma compliance with all the financial
     ratios and restrictions set forth in Section 9.6;

          (4) in the case of the Acquisition of any Person, the Board of
     Directors, and, if required by applicable law, the shareholders of the
     Company and the Person so acquired have approved the acquisition; and

          (5) immediately before and after giving effect to such Acquisition,
     the Revolving Commitment Amount (as defined under the Credit Agreement)
     shall exceed the Revolving Outstandings (as defined under the Credit
     Agreement) by at least $15,000,000 less any cash on hand and Cash
     Equivalent Investments of the Company; and

(d) sales and dispositions of assets (including the stock of Subsidiaries) for
at least fair market value (as determined by the Board of Directors of the
Company for any such sale or disposition outside the ordinary course of
business) so long as the net book value of all assets sold or otherwise disposed
of prior to the fifth anniversary of the Closing Date does not exceed the
remainder of (1) 10% of the net book value of the consolidated tangible assets
of the Company and its Subsidiaries as of the most recently ended Fiscal Quarter
minus (2) the aggregate value of all such sales and dispositions since the
Closing Date.

                                       32
<PAGE>   41

     9.12 Modification of Documents. Not permit the Certificate or Articles of
Incorporation, By-Laws, other organizational documents or any documents,
instruments or agreements evidencing, securing or governing the terms of
repayment of any Debt of the Company or any Subsidiary or the Tuscola Unit C
Agreement to be amended or modified in any way which might reasonably be
expected to materially adversely affect the interests of the Bank.

     9.13 Use of Proceeds. Use the proceeds of the Term Loan solely for the
purposes permitted under the Existing STEP Credit Agreement, working capital and
for other general corporate purposes; and not use or permit any proceeds of the
Term Loan to be used, either directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of "purchasing or carrying" any Margin Stock.

     9.14 Further Assurances. Take, and cause each Subsidiary to take, such
actions as are necessary or as the Bank may reasonably request from time to time
to ensure that the obligations of the Company hereunder and under the Loan
Documents are guaranteed, by causing the execution and delivery to the Bank of
(a) a counterpart of the Guaranty, by all Subsidiaries (including, promptly upon
the acquisition or creation thereof, each Subsidiary acquired or created after
the date hereof) other than Subsidiaries who collectively own less than 5% of
the consolidated tangible assets of the Company and its Subsidiaries as
determined in accordance with GAAP and (b) concurrently with such execution of a
counterpart of the Guaranty by any Subsidiary, copies of the articles of
incorporation and by-laws of such Subsidiary and resolutions of the board of
directors (or similar governing body) of such Subsidiary authorizing the
execution and delivery of the Guaranty, certified, in each case, by a duly
authorized officer of such Subsidiary and an opinion of counsel (which may be
the Company's general counsel) substantially in the form of Exhibit D to the
Credit Agreement, with appropriate insertions, pertaining to such Subsidiary and
its execution of a counterpart of the Guaranty.

     9.15 Transactions with Affiliates. Not, and not permit any Subsidiary to,
enter into, or cause, suffer or permit to exist any transaction, arrangement or
contract with any of its other Affiliates (other than the Company and its
Subsidiaries) which is on terms which are less favorable than are obtainable
from any Person which is not one of its Affiliates.

     9.16 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in substantial compliance with all applicable
requirements of law and regulations.

     9.17 Environmental Matters. (a) If any Release or Disposal of Hazardous
Substances shall occur or shall have occurred on any real property or any other
assets of the Company or any Subsidiary, the Company shall, or shall cause the
applicable Subsidiary to, cause the prompt containment and removal of such
Hazardous Substances and the remediation of such real property or other assets
as necessary to comply with all Environmental Laws and to preserve the value of
such real property or other assets. Without limiting the generality of the
foregoing, the Company shall, and shall cause each Subsidiary to, comply with
any valid Federal or state judicial or administrative order requiring the
performance at any real property of the Company or any Subsidiary of activities
in response to the Release or threatened Release of a Hazardous Substance.

                                       33
<PAGE>   42

     (b) To the extent that the transportation of "hazardous waste" as defined
by RCRA is permitted by this Agreement, the Company shall, and shall cause its
Subsidiaries to, dispose of such hazardous waste only at licensed disposal
facilities operating in compliance with Environmental Laws.

     9.18 Inconsistent Agreements. Not, and not permit any Subsidiary to, enter
into any agreement containing any provision which would (a) be violated or
breached by any borrowing by the Company hereunder or by the performance by the
Company or any Subsidiary of any of its obligations hereunder or under any other
Loan Document or (b) create or permit to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary to (i) pay dividends
or make other distributions to the Company or any other Subsidiary, or pay any
Debt owed to the Company or any other Subsidiary, (ii) make loans or advances to
the Company or (iii) transfer any of its assets or properties to the Company.

     9.19 Investments. Not, and not permit any Subsidiary to, make or permit to
exist any Investment in any other Person, except (without duplication) the
following:

          (a) contributions by the Company to the capital of any of its
     Guarantor Subsidiaries, or by any such Guarantor Subsidiary to the capital
     of any of its Guarantor Subsidiaries;

          (b) in the ordinary course of business, Investments by the Company in
     any Guarantor Subsidiary or by any Subsidiary in the Company, by way of
     intercompany loans, advances or guaranties, all to the extent permitted by
     Section 9.7;

          (c) Suretyship Liabilities permitted by Section 9.7;

          (d) Cash Equivalent Investments;

          (e) bank deposits in the ordinary course of business;

          (f) Investments in securities of account debtors received pursuant to
     any plan of reorganization or similar arrangement upon the bankruptcy or
     insolvency of such account debtors;

          (g) Investments to consummate Acquisitions permitted by Section 9.11;

          (h) Investments listed on Schedule 9.19; and

          (i) other Investments, in addition to the Investments listed above, in
     an aggregate amount not in excess of 5% of the consolidated tangible assets
     of the Company and its Subsidiaries as determined in accordance with GAAP;

provided that (x) any Investment which when made complies with the requirements
of the definition of the term "Cash Equivalent Investment" may continue to be
held notwithstanding that such Investment if made thereafter would not comply
with such requirements; (y) no Investment otherwise permitted by clause (b),
(c), or (g) shall be permitted to be made if,

                                       34
<PAGE>   43

immediately before or after giving effect thereto, any Event of Default or
Unmatured Event of Default exists.

     9.20 Fiscal Year. Not change its Fiscal Year.

                                   SECTION 10
                   EFFECTIVENESS; CONDITIONS OF LENDING, ETC.

     The obligation of the Bank to amend and restate the Existing STEP Credit
Agreement as set forth herein is subject to the following conditions precedent:

     10.1 Deliveries. The obligation of the Bank to amend and restate the
Existing STEP Credit Agreement as set forth herein is, in addition to the
conditions precedent specified in Section 10.2, subject to the conditions
precedent that the Bank shall have received all of the following, each duly
executed and dated the Closing Date (or such earlier date as shall be
satisfactory to the Bank), in form and substance satisfactory to the Bank:

          10.1.1 Loan Documents. Each Loan Document.

          10.1.2 Guaranty. A counterpart of the Guaranty executed by each
Subsidiary of the Company required to execute the Guaranty under Section 9.14.

          10.1.3 Credit Agreement. The Company and the Bank shall have entered
into the Credit Agreement and all conditions to the effectiveness of the Credit
Agreement shall have been satisfied.

          10.1.4 Insurance. Evidence satisfactory to the Bank of the existence
of insurance required to be maintained pursuant to Section 9.3(b).

          10.1.5 Payment of Attorney Costs. Evidence of payment by the Company
of all Attorney Costs of the Bank to the extent invoiced prior to the Closing
Date, plus such additional amounts of Attorney Costs as shall constitute the
Bank's reasonable estimate of Attorney Costs incurred or to be incurred by the
Bank through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between the Company and the
Bank).

          10.1.6 Other. Such other documents as the Bank may reasonably request.

     10.2 Compliance with Warranties, No Default, etc. The following statements
shall be true and correct:

          (a) the representations and warranties of the Company and each
     Subsidiary set forth in this Agreement and the other Loan Documents shall
     be true and correct in all material respects with the same effect as if
     then made (except to the extent stated to relate to a specific earlier
     date, in which case such representations and warranties shall be true and
     correct as of such earlier date, and except to the extent changed by
     circumstances permitted by the terms of this Agreement); and

                                       35
<PAGE>   44

          (b) no Event of Default or Unmatured Event of Default shall have then
     occurred and be continuing.

                                   SECTION 11
                       EVENTS OF DEFAULT AND THEIR EFFECT

     11.1 Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:

          11.1.1 Non-Payment of the Term Loan, etc. Default in the payment when
due of the principal of the Term Loan; or default, and continuance thereof for
five days, in the payment when due of interest on the Term Loan or of any fee or
other amount payable by the Company hereunder or under any other Loan Document.

          11.1.2 Non-Payment of Other Debt. Any default shall occur under the
terms applicable to any Debt of the Company or any Subsidiary in an aggregate
amount (for all such Debt so affected) exceeding $10,000,000 and such default
shall (a) consist of the failure to pay such Debt when due, whether by
acceleration or otherwise, or (b) accelerate the maturity of such Debt or permit
the holder or holders thereof, or any trustee or agent for such holder or
holders, to cause such Debt to become due and payable (or require the Company or
any Subsidiary to purchase or redeem such Debt) prior to its expressed maturity.

          11.1.3 Other Material Obligations. Default (after giving effect to any
applicable requirement of notice and/or grace) in the payment when due, or in
the performance or observance of, any material obligation of, or condition
agreed to by, the Company or any Subsidiary with respect to any material
purchase or lease of goods or services where such default, singly or in the
aggregate with all other such defaults, might reasonably be expected to have a
Material Adverse Effect; provided, however, that the foregoing shall not
constitute an Event of Default hereunder so long as the Company or such
Subsidiary is contesting such default in good faith by appropriate proceedings
diligently conducted and has set aside on its books reserves with respect
thereto to the extent required by GAAP.

          11.1.4 Bankruptcy, Insolvency, etc. The Company or any Subsidiary
becomes insolvent or generally fails to pay, or admits in writing its inability
or refusal to pay, debts as they become due; or the Company or any Subsidiary
applies for, consents to, or acquiesces in the appointment of a trustee,
receiver or other custodian for the Company or such Subsidiary or any property
thereof, or makes a general assignment for the benefit of creditors; or, in the
absence of such application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for the Company or any Subsidiary or for a
substantial part of the property of any thereof and is not discharged within 45
days; or any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is commenced in respect of the Company or any
Subsidiary, and if such case or proceeding is not commenced by the Company or
such Subsidiary, it is consented to or acquiesced in by the Company or such
Subsidiary, or remains for 45 days undismissed; or the Company or any Subsidiary
takes any action to authorize, or in furtherance of, any of the foregoing.

                                       36
<PAGE>   45

          11.1.5 Non-Compliance with Loan Documents. (a) Failure by the Company
to comply with or to perform any covenant set forth in Sections 9.1.5(a), 9.6,
9.7, 9.8, 9.10, 9.11, 9.13, 9.19 or 9.20; or (b) failure by the Company to
comply with or to perform any other provision of this Agreement or any other
Loan Document (and not constituting an Event of Default under any other
provision of this Section 11) and continuance of such failure described in this
clause (b) for thirty (30) days.

          11.1.6 Representation and Warranties. Any representation and warranty
made by the Company or any Subsidiary herein or any other Loan Document is
breached or is false or misleading in any material respect, or any schedule,
certificate, financial statement, report, notice or other writing furnished by
the Company or any Subsidiary to the Bank in connection herewith is false or
misleading in any material respect on the date as of which the facts therein set
forth are stated or certified or deemed to have been stated or certified.

          11.1.7 Pension Plans. (a) Institution of any steps by the Company or
any other Person to terminate a Pension Plan if as a result of such termination
the Company could be required to make a contribution to such Pension Plan, or
could incur a liability or obligation to such Pension Plan, in excess of
$5,000,000; (b) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA; or (c) there
shall occur any withdrawal or partial withdrawal from a Multiemployer Pension
Plan and the withdrawal liability (without unaccrued interest) to Multiemployer
Pension Plans as a result of such withdrawal (including any outstanding
withdrawal liability that the Company and the Controlled Group have incurred on
the date of such withdrawal) exceeds $5,000,000.

          11.1.8 Judgments. Final judgments which exceed an aggregate of
$5,000,000 shall be rendered against the Company or any Subsidiary, excluding
judgments (a) for which there is full insurance (subject to reasonable and
customary deductibles) and with respect to which the insurer has assumed
responsibility in writing, (b) for which there is full indemnification (upon
terms and by creditworthy indemnitors which are satisfactory to the Bank), (c)
which have been paid, discharged or vacated or (d) which have been in force for
a period of time not to exceed the applicable period for filing an appeal, which
have been effectively stayed by the time required by the rules applicable to the
court rendering such judgments or in respect of which the Company or such
Subsidiary shall at the time in good faith be prosecuting an appeal or
proceeding for review, so long as neither execution nor attachment has been
levied thereunder or (e) covered under Section 11.1.9.

          11.1.9 Rodel Litigation. Final judgments which exceed an aggregate of
$10,000,000 shall be rendered against Cabot Corporation, the Company or any
Subsidiary in the Rodel Litigation, or any settlement of the Rodel Litigation
agreed to by the Company shall be entered into with respect to which Cabot
Corporation, the Company or any Subsidiary shall be obligated to pay an amount
in excess of $10,000,000, excluding judgments or settlements (a) for which the
Company or such Subsidiary has full insurance (subject to reasonable and
customary deductibles) and with respect to which the insurer has assumed
responsibility in writing, (b) for which the Company or such Subsidiary is fully
indemnified (upon terms and by creditworthy indemnitors which are satisfactory
to the Bank), (c) which have been paid, discharged or vacated

                                       37
<PAGE>   46

or (d) in the case of judgments, which have been in force for a period of time
not to exceed the applicable period for filing an appeal, which have been
effectively stayed by the time required by the rules applicable to the court
rendering such judgments or in respect of which Cabot Corporation, the Company
or such Subsidiary shall at the time in good faith be prosecuting an appeal or
proceeding for review, so long as neither execution nor attachment has been
levied thereunder.

          11.1.10 Invalidity of Guaranty, etc. The Guaranty shall cease to be in
full force and effect with respect to any Guarantor Subsidiary; or any Guarantor
Subsidiary (or any Person by, through or on behalf of such Subsidiary) shall
contest in any manner the validity, binding nature or enforceability of the
Guaranty with respect to such Guarantor Subsidiary.

          11.1.11 Change of Control. (a) Any Person or group of Persons (within
the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as
amended), shall acquire beneficial ownership (within the meaning of Rule 13d-3
promulgated under such Act) of more than 30% of the outstanding securities (on a
fully diluted basis and taking into account any securities or contract rights
exercisable, exchangeable or convertible into equity securities) of the Company
having voting rights in the election of directors under normal circumstances; or
(b) during any 12 month period, individuals who are members of the Board of
Directors of the Company at the beginning of such period shall cease for any
reason to constitute a majority of the Board of Directors of the Company, other
than due to expiration of term of service, death, disability, previously
established mandatory retirement or resignation due to reasons other than those
as a result of or in anticipation of circumstances described in the preceding
clause (a).

          11.1.12 Injunctions. The Company or any of its Subsidiaries shall be
enjoined, restrained or in any way prevented by a order of any court or
administrative or regulatory agency from using any material patent, trademark,
copyright or other intellectual property in a manner consistent with past
practice if the effect of such order might reasonably be expected to have a
Material Adverse Effect, unless the Company or such Subsidiary shall at the time
in good faith be prosecuting an appeal or proceeding for review and in respect
of which a stay of such order shall have been obtained pending such appeal or
review.

          11.1.13 Work Stoppages. There shall occur any strike, lockout, labor
dispute, embargo, condemnation, act of God or public enemy, or other casualty,
which in any such case causes, for more than fifteen (15) consecutive days, the
cessation or substantial curtailment of revenue producing activities at any
facility of the Company or any of its Subsidiaries if such event or circumstance
is not covered by business interruption insurance and might reasonably be
expected to have a Material Adverse Effect.

          11.1.14 Loss of Licenses or Permits. There shall occur the loss,
suspension or revocation of, or failure to renew, any license or permit now held
or hereafter acquired by the Company or any of its Subsidiaries if such loss,
suspension, revocation or failure to renew might reasonably be expected to have
a Material Adverse Effect.

                                       38
<PAGE>   47

          11.1.15 Forfeitures. The Company or any of its Subsidiaries shall have
been convicted for a state or federal crime, a punishment for which includes the
forfeiture of any assets of the Company or such Subsidiary having a fair market
value in excess of $5,000,000.

          11.1.16 Cancellation, Invalidity of Loan Documents. The cancellation,
termination, revocation or rescission of the Loan Documents otherwise than in
accordance with the terms thereof or with the express prior written agreement,
consent or approval of the Bank, or the commencement of any action at law, suit
or in equity or other legal proceeding by or on behalf of the Company or any
Loan Party or any of their respective stockholders, to cancel, revoke or rescind
any of the Loan Documents , or the determination by any court or any other
governmental or regulatory authority or agency of competent jurisdiction that
any one or more of the Loan Documents is illegal, invalid or unenforceable in
accordance with the terms thereof

     11.2 Effect of Event of Default. If any Event of Default described in
Section 11.1.4 shall occur, the Term Loan and all other obligations hereunder
shall become immediately due and payable, all without presentment, demand,
protest or notice of any kind; and, if any other Event of Default shall occur
and be continuing, the Bank shall declare the Term Loan and all other
obligations hereunder to be due and payable, whereupon the Term Loan and all
other obligations hereunder shall become immediately due and payable, all
without presentment, demand, protest or notice of any kind. The Bank shall
promptly advise the Company of any such declaration, but failure to do so shall
not impair the effect of such declaration.

                                   SECTION 12
                                     GENERAL

     12.1 Waiver; Amendments. No delay on the part of the Bank in the exercise
of any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise by any of them of any right, power or remedy preclude
other or further exercise thereof, or the exercise of any other right, power or
remedy. No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement or the Note shall in any event be effective unless
the same shall be in writing and signed and delivered by the Bank, and then any
such amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.

     12.2 Confirmations. The Company and the Bank agree from time to time, upon
written request received by it from the other, to confirm to the other in
writing the aggregate unpaid principal amount of the Term Loan then outstanding
under the Note.

     12.3 Notices. Except as otherwise provided in Sections 2.2.2 and 2.2.3, all
notices hereunder shall be in writing (including facsimile transmission) and
shall be sent to the applicable party at its address shown on Schedule 12.3 or
at such other address as such party may, by written notice received by the other
parties, have designated as its address for such purpose. Notices sent by
facsimile transmission shall be deemed to have been given when sent; notices
sent by mail shall be deemed to have been given three Business Days after the
date when sent by registered or certified mail, postage prepaid; and notices
sent by hand delivery or overnight courier service shall be deemed to have been
given when received. For purposes

                                       39
<PAGE>   48

Sections 2.2.2 and 2.2.3, the Bank shall be entitled to rely on telephonic
instructions from any person that the Bank in good faith believes is an
authorized officer or employee of the Company, and the Company shall hold the
Bank harmless from any loss, cost or expense resulting from any such reliance.

     12.4 Computations. Where the character or amount of any asset or liability
or item of income or expense is required to be determined, or any consolidation
or other accounting computation is required to be made, for the purpose of this
Agreement and the other Loan Documents, such determination or calculation shall,
to the extent applicable and except as otherwise specified in this Agreement, be
made in accordance with GAAP, consistently applied; provided that if the Company
notifies the Bank that the Company wishes to amend any covenant in Section 9 to
eliminate or to not take into account the effect of any change in GAAP on the
operation of such covenant, then the Company's compliance with such covenant
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such covenant is amended in a manner satisfactory to the Company and the
Bank.

     12.5 Regulation U. The Bank represents that it in good faith is not
relying, either directly or indirectly, upon any Margin Stock as collateral
security for the extension or maintenance by it of any credit provided for in
this Agreement.

     12.6 Costs, Expenses and Taxes. The Company agrees to pay on demand all
reasonable out-of-pocket costs and expenses of the Bank (including Attorney
Costs) in connection with the preparation, execution, delivery and
administration of this Agreement, the other Loan Documents and all other
documents provided for herein or delivered or to be delivered hereunder or in
connection herewith (including any amendment, supplement or waiver to any Loan
Document), and all reasonable out-of-pocket costs and expenses (including
Attorney Costs) incurred by the Bank after an Event of Default in connection
with the enforcement of this Agreement, the other Loan Documents or any such
other documents. In addition, the Company agrees to pay, and to save the Bank
harmless from all liability for, (a) any stamp or other taxes (excluding income
taxes and franchise taxes based on the Bank's net income) which may be payable
in connection with the execution and delivery of this Agreement, the borrowings
hereunder, the issuance of the Note or the execution and delivery of any other
Loan Document or any other document provided for herein or delivered or to be
delivered hereunder or in connection herewith and (b) any fees of the Company's
auditors in connection with any reasonable exercise by the Bank of their rights
pursuant to Section 9.2. All obligations provided for in this Section 12.6 shall
survive repayment of the Term Loan, cancellation of the Note and termination of
this Agreement.

     12.7 Subsidiary References. The provisions of this Agreement relating to
Subsidiaries shall apply only during such times as the Company has one or more
Subsidiaries.

     12.8 Captions. Section captions used in this Agreement are for convenience
only and shall not affect the construction of this Agreement.

                                       40
<PAGE>   49

     12.9 Succesors, Participants and Assigns. This Agreement shall be binding
upon the Company, the Bank and their respective successors and assigns, and
shall inure to the benefit of the Company and the Bank and the successors and
assigns of the Bank. The Bank may assign, participate or transfer any portion of
its rights under this Agreement to any Person, provided that so long as no Event
of Default exists, the Bank first obtains the prior written consent of the
Company, which consent shall not be unreasonably delayed or withheld and, in any
event, shall not be required for an assignment by the Bank to one of its
Affiliates. If the Bank transfers, or assigns any portion of its rights under
this Agreement to any Person then the Bank must transfer such corresponding
portion of STEP deposits made by the State of Illinois Treasury Department to
such assignee or transferee. From and after the date on which an assignment by
the Bank is made, the assignee shall be deemed automatically to have become a
party hereto and, such assignee shall have the rights and obligations of the
Bank hereunder and the Bank shall be released from its obligations hereunder.

     12.10 Governing Law. This Agreement and the Note shall be a contract made
under and governed by the internal laws of the State of Illinois applicable to
contracts made and to be performed entirely within such State. Whenever possible
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Company and rights of the Bank expressed
herein or in any other Loan Document shall be in addition to and not in
limitation of those provided by applicable law.

     12.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.

     12.12 Indemnification by the Company. In consideration of the execution and
delivery of this Agreement by the Bank and the agreement to make the Term Loan
provided hereunder, the Company hereby agrees to indemnify, exonerate and hold
the Bank and each of the officers, directors, employees, Affiliates and agents
of the Bank (each a "Bank Party") free and harmless from and against any and all
actions, causes of action, suits, losses, liabilities, damages and expenses,
including Attorney Costs (collectively, the "Indemnified Liabilities"), incurred
by the Bank Parties or any of them as a result of, or arising out of, or
relating to (i) any tender offer, merger, purchase of stock, purchase of assets
or other similar transaction financed or proposed to be financed in whole or in
part, directly or indirectly, with the proceeds of the Term Loan, (ii) the use,
handling, release, emission, discharge, transportation, storage, treatment or
disposal of any hazardous substance at any property owned or leased by the
Company or any Subsidiary, (iii) any violation of any Environmental Laws with
respect to conditions at any property owned or leased by the Company or any
Subsidiary or the operations conducted thereon, (iv) the investigation, cleanup
or remediation of offsite locations at which the Company or any Subsidiary or
their respective predecessors are alleged to have directly or indirectly
disposed of hazardous substances, (v) claims of any Persons in connection with
any of the Securities Laws

                                       41
<PAGE>   50

and relating to the making of the Term Loan or the transactions contemplated by
this Agreement and the other Loan Documents, or (vi) the execution, delivery,
performance or enforcement of this Agreement or any other Loan Document by any
of the Bank Parties, except for any such Indemnified Liabilities arising on
account of the applicable Bank Party's gross negligence or willful misconduct.
If and to the extent that the foregoing undertaking may be unenforceable for any
reason, the Company hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. All obligations provided for in this Section
12.12 shall survive repayment of the Term Loan, cancellation of the Note, any
foreclosure under, or any modification, release or discharge of any Guaranty and
termination of this Agreement.

     12.13 Nonliability of the Bank. The relationship between the Company on the
one hand and the Bank on the other hand shall be solely that of borrower and
lender. The Bank shall not have any fiduciary responsibility to the Company. The
Bank undertakes no responsibility to the Company to review or inform the Company
of any matter in connection with any phase of the Company's business or
operations. The Company agrees that the Bank shall not have liability to the
Company (whether sounding in tort, contract or otherwise) for losses suffered by
the Company in connection with, arising out of, or in any way related to the
transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined in a final non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the Bank. The Bank shall not have any liability with
respect to, and the Company hereby waives, releases and agrees not to sue for,
any special, indirect or consequential damages suffered by the Company in
connection with, arising out of, or in any way related to the Loan Documents or
the transactions contemplated thereby.

     12.14 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
PROPERTY MAY BE BROUGHT, AT THE BANK'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE SUCH PROPERTY MAY BE FOUND. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE COMPANY FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE
COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT

                                       42
<PAGE>   51

REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.

     12.15 Waiver of Jury Trial. EACH OF THE COMPANY AND THE BANK HEREBY WAIVES
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS AGREEMENT, THE NOTE, ANY OTHER LOAN DOCUMENT AND ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.

     12.16 Confidentiality. The Bank, without the prior written consent of the
Company, (i) shall not disclose to any third party any information relative to
the Company or any of its Subsidiaries which has been conspicuously designated
by the Company as confidential or proprietary ("Confidential Information"), (ii)
shall not use Confidential Information of the Company for its own purpose,
except as specifically provided in this Agreement to effect the purposes of this
Agreement, or to benefit a third party, (iii) shall not disseminate Confidential
Information to any Person other than its employees, directors, officers, agents
and attorneys who must be directly involved with such Confidential Information
and (iv) shall not fail to use the same degree of care as for its own
information of like importance (but in any event at least commercially
reasonable care) in safeguarding against disclosure of Confidential Information.
The foregoing restrictions on disclosure and use of Confidential Information
shall not apply to any disclosure or use of any Confidential Information (i) in
connection with any proposed assignment, participation or transfer permitted
under Section 12.9, provided the Bank making such assignment, participation or
transfer has first obtained the Company's prior written consent to such
disclosure or use, which consent shall not be unreasonably withheld so long as
the prospective assignee, participant or transferee has agreed in writing to be
bound by the provisions of this Section 12.16, (ii) which otherwise in its
entirety is in the public domain, (iii) to the extent required by applicable law
or any rule, regulation, decree, order or injunction of any foreign, federal,
state, municipal or other government, or any department, commission, board,
bureau, agency, public authority or instrumentality thereof or any court or
arbitrator, but only after each Agent and each Bank shall have given, to the
extent permitted by applicable law, the Company written notice of such
requirement and allowed the Company to contest such requirement, (iv) which is
obtained by the Bank from a third party not known to the Bank to be under an
obligation of confidentiality to the Company or (v) in connection with the
enforcement by the Bank of their respective rights under this Agreement and the
other Loan Documents, subject to the prior entry by the court in which such
proceedings are pending of an appropriate order designed to afford the Company
reasonable assurance such Confidential Information will be protected from
unnecessary disclosure.

                  [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK.]

                                       43
<PAGE>   52

Delivered at Chicago, Illinois, as of the day and year first above written.

                                             CABOT MICROELECTRONICS CORPORATION

                                             By:
                                                    ----------------------------
                                             Name:
                                                    ----------------------------
                                             Title:
                                                    ----------------------------

                                             LASALLE BANK NATIONAL ASSOCIATION

                                             By:
                                                    ----------------------------
                                             Name:
                                                    ----------------------------
                                             Title:
                                                    ----------------------------

<PAGE>   53

                                PRICING SCHEDULE

     The Eurodollar Margin and the Base Rate Margin shall be determined as set
forth below.

     Initially, the Eurodollar Margin shall be 1.00% per annum and the Base Rate
Margin shall be 0.00% per annum.

     The Eurodollar Margin and the Base Rate Margin shall be adjusted, in
accordance with the last paragraph of this Pricing Schedule, to equal the
applicable rate per annum set forth in the table below opposite the applicable
Leverage Ratio:

-------------------------------------------------------------------------------
LEVERAGE RATIO                               EURODOLLAR            BASE RATE
                                               MARGIN                MARGIN
-------------------------------------------------------------------------------
Greater than or equal to 1.50:1                1.50%                 0.00%
-------------------------------------------------------------------------------
Greater than or equal to 1.00:1 but less
than 1.50:1                                    1.25%                 0.00%
-------------------------------------------------------------------------------
Less than 1.00:1                               1.00%                 0.00%
-------------------------------------------------------------------------------

     The Eurodollar Margin and the Base Rate Margin shall be adjusted, to the
extent applicable, on the third Business Day after the 45th (or, in the case of
the last Fiscal Quarter of each Fiscal Year, 90th) day after the end of each
Fiscal Quarter commencing with the Fiscal Quarter ending June 30, 2001 based on
the Leverage Ratio as of the last day of such Fiscal Quarter; it being
understood that if the Company fails to deliver the financial statements
required by Section 9.1.1 or 9.1.2, as applicable, and the related Compliance
Certificate, required by Section 9.1.3 by the 45th day (or, if applicable, the
90th day) after any Fiscal Quarter, the Eurodollar Margin shall be 1.50% and the
Base Rate Margin shall be 0.00% until three Business Days following the delivery
of such financial statements and Compliance Certificate. Notwithstanding the
foregoing, no reduction to the foregoing interest rate margins or fee rates
shall become effective at any time when an Event of Default or Unmatured Event
of Default has occurred and is continuing.

<PAGE>   54

                                  SCHEDULE 8.6

                      LITIGATION AND CONTINGENT LIABILITIES

<PAGE>   55

                                  SCHEDULE 8.14

                                  SUBSIDIARIES

<PAGE>   56

                                  SCHEDULE 8.16

                              INTELLECTUAL PROPERTY

<PAGE>   57

                                  SCHEDULE 8.17

                                    INSURANCE

<PAGE>   58

                                  SCHEDULE 8.21

                            PENSION AND WELFARE PLANS

<PAGE>   59

                                  SCHEDULE 8.22

                              ENVIRONMENTAL MATTERS

<PAGE>   60

                                  SCHEDULE 9.7

                                  EXISTING DEBT

<PAGE>   61

                                  SCHEDULE 9.8

                                 EXISTING LIENS

<PAGE>   62

                                  SCHEDULE 9.19

                                   INVESTMENTS

<PAGE>   63

                                  SCHEDULE 10.9

                            EXISTING OPERATING LEASES

<PAGE>   64

                                  SCHEDULE 12.3

                              ADDRESSES FOR NOTICES

CABOT MICROELECTRONICS CORPORATION

870 North Commons Drive
Aurora, Illinois  60504
Attention:        Martin M. Ellen, Chief Financial Officer
Telephone:        (630) 375-5591
Facsimile:        (630) 499-2638

with a copy to:

870 North Commons Drive
Aurora, Illinois  60504
Attention:        Carol Bernstein, General Counsel
Telephone:        (630) 375-5461
Facsimile:        (630) 499-2644

LASALLE BANK NATIONAL ASSOCIATION

Notices of Conversion or Continuation

135 South LaSalle Street
Chicago, Illinois 60603
Attention:        Maria Coronado
Telephone:        (312) 904-7517
Facsimile:        (312) 904-4448

All Other Notices

135 South LaSalle Street
Chicago, Illinois 60603
Attention:        Jeff Raider
Telephone:        (312) 904-2766
Facsimile:        (312) 904-6546

<PAGE>   65

                                    EXHIBIT A

                                  FORM OF NOTE

                              Please See Attached.

<PAGE>   66

                                    TERM NOTE

JULY ___, 2001
CHICAGO, ILLINOIS                                                     $3,500,000

         FOR VALUE RECEIVED, the undersigned, CABOT MICROELECTRONICS
CORPORATION, a Delaware corporation (the "Maker"), promises to pay to the order
of LaSalle Bank National Association (the "Bank") at its principal office in
Chicago, Illinois the aggregate unpaid amount of the Term Loan made to the
undersigned by the Bank pursuant to the Second Amended and Restated Credit
Agreement referred to below (as shown on the schedule attached hereto (and any
continuation thereof) or in the records of the Bank), such principal amount to
be payable on April 3, 2005.

         The Maker further promises to pay interest on the unpaid principal
amount of the Term Loan until the date the Term Loan is paid in full, payable at
the rate(s) and at the time(s) set forth in the Second Amended and Restated
Credit Agreement. Payments of both principal and interest are to be made in
lawful money of the United States of America.

         This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Second Amended and Restated Credit Agreement, dated
as of July 10, 2001(as amended or otherwise modified from time to time, the
"Second Amended and Restated Credit Agreement"), among the Maker and the Bank,
to which Agreement reference is hereby made for a statement of the terms and
provisions under which this Note may or must be paid prior to its due date or
its due date accelerated. Capitalized terms used but not elsewhere defined in
this Note shall have the respective meanings ascribed to such terms in the
Second Amended and Restated Credit Agreement.

         This Note is made under and governed by the laws of the State of
Illinois applicable to contracts made and to be performed entirely within such
State.

                                             CABOT MICROELECTRONICS CORPORATION

                                             By:
                                                    ----------------------------
                                             Name:
                                                    ----------------------------
                                             Title:
                                                    ----------------------------

<PAGE>   67

                                                     Schedule attached to Term
                                                     Note dated July ___, 2001
                                                     of CABOT MICROELECTRONICS
                                                     CORPORATION payable to the
                                                     order of _________________

Date
and Amount of Loan  Date and Amount of
or of Conversion    Repayment or of          Interest
from another        Conversion into another  Period/Unpaid   Principal  Notation
type of Loan        type of Loan             Maturity Date   Balance    Made by
------------        ------------             -------------   -------    -------

1.       STEP RATE LOAN

2.       BASE RATE LOANS

3.       EURODOLLAR LOANS<PAGE>   1
                                                                   EXHIBIT 10.29

                                CREDIT AGREEMENT

                            DATED AS OF JULY 10, 2001

                                      AMONG

                       CABOT MICROELECTRONICS CORPORATION,

                         VARIOUS FINANCIAL INSTITUTIONS

                                       AND

                       LASALLE BANK NATIONAL ASSOCIATION,
                             AS ADMINISTRATIVE AGENT

                                       AND

                    NATIONAL CITY BANK OF MICHIGAN/ILLINOIS,
                              AS SYNDICATION AGENT

<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page

<S>                                                                                                            <C>
SECTION 1         DEFINITIONS.....................................................................................1

   1.1        Definitions.........................................................................................1

   1.2        Other Interpretive Provisions......................................................................13

SECTION 2         COMMITMENTS OF THE BANKS; BORROWING, CONVERSION AND LETTER OF CREDIT PROCEDURES................13

   2.1        Commitments........................................................................................13
              2.1.1      Revolving Loan Commitment...............................................................14
              2.1.2      Term Loan Commitment....................................................................14
              2.1.3      L/C Commitment..........................................................................14

   2.2        Loan Procedures....................................................................................14
              2.2.1      Various Types of Loans..................................................................14
              2.2.2      Borrowing Procedures....................................................................14
              2.2.3      Conversion and Continuation Procedures..................................................15

   2.3        Letter of Credit Procedures........................................................................16
              2.3.1      L/C Applications........................................................................16
              2.3.2      Participations in Letters of Credit.....................................................17
              2.3.3      Reimbursement Obligations...............................................................17
              2.3.4      Limitation on Obligations of Issuing Bank...............................................17
              2.3.5      Funding by Banks to Issuing Bank........................................................18

   2.4        Commitments Several................................................................................18

   2.5        Certain Conditions.................................................................................18

SECTION 3         NOTES EVIDENCING LOANS.........................................................................19

   3.1        Notes..............................................................................................19

   3.2        Recordkeeping......................................................................................19

SECTION 4         INTEREST.......................................................................................19

   4.1        Interest Rates.....................................................................................19

   4.2        Interest Payment Dates.............................................................................20

   4.3        Setting and Notice of Eurodollar Rates.............................................................20

   4.4        Computation of Interest............................................................................20
</TABLE>

                                       i
<PAGE>   3

<TABLE>
<S>                                                                                                            <C>
SECTION 5         FEES...........................................................................................20

   5.1        Non-Use Fee........................................................................................20

   5.2        Letter of Credit Fees..............................................................................20

   5.3        Upfront Fees.......................................................................................21

   5.4        Administrative Agent's Fees........................................................................21

   5.5        Other Due Fees and Other Amounts...................................................................21

SECTION 6         REDUCTION OR TERMINATION OF THE  COMMITMENT AMOUNTS; PREPAYMENTS...............................21

   6.1        Reduction or Termination of the Commitment Amounts.................................................21
              6.1.1      Voluntary Reduction or Termination of the Revolving
                         Commitment Amount.......................................................................21
              6.1.2      Mandatory Reductions of Revolving Commitment Amount.....................................21
              6.1.3      Mandatory Reductions of Term Loan Commitment Amount.....................................22
              6.1.4      All Reductions of the Commitment Amounts................................................22

   6.2        Prepayments........................................................................................22
              6.2.1      Voluntary Prepayments...................................................................22
              6.2.2      Mandatory Prepayments...................................................................22

   6.3        All Prepayments....................................................................................23

SECTION 7         MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES................................................23

   7.1        Making of Payments.................................................................................23

   7.2        Application of Certain Payments....................................................................23

   7.3        Due Date Extension.................................................................................23

   7.4        Setoff.............................................................................................24

   7.5        Proration of Payments..............................................................................24

   7.6        Taxes..............................................................................................24

SECTION 8         INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR
                  LOANS..........................................................................................25

   8.1        Increased Costs....................................................................................25

   8.2        Basis for Determining Interest Rate Inadequate or Unfair...........................................26

   8.3        Changes in Law Rendering Eurodollar Loans Unlawful.................................................27

   8.4        Funding Losses.....................................................................................27

   8.5        Right of Banks to Fund through Other Offices.......................................................28
</TABLE>

                                       ii
<PAGE>   4

<TABLE>
<S>                                                                                                            <C>
   8.6        Discretion of Banks as to Manner of Funding........................................................28

   8.7        Mitigation of Circumstances; Replacement of Banks..................................................28

   8.8        Conclusiveness of Statements; Survival of Provisions...............................................29

SECTION 9         REPRESENTATIONS AND WARRANTIES.................................................................29

   9.1        Organization.......................................................................................29

   9.2        Authorization; No Conflict.........................................................................29

   9.3        Validity and Binding Nature........................................................................30

   9.4        Financial Condition................................................................................30

   9.5        No Material Adverse Change.........................................................................30

   9.6        Litigation and Contingent Liabilities..............................................................30

   9.7        No Materially Adverse Contracts, etc...............................................................30

   9.8        Compliance.........................................................................................30

   9.9        Taxes..............................................................................................31

   9.10       Information........................................................................................31

   9.11       Solvency...........................................................................................31

   9.12       No Default.........................................................................................31

   9.13       Use of Proceeds....................................................................................31

   9.14       Subsidiaries.......................................................................................31

   9.15       Ownership of Properties; Liens.....................................................................32

   9.16       Intellectual Property..............................................................................32

   9.17       Insurance..........................................................................................32

   9.18       Investment Company Act; Public Utility Holding Company Act.........................................32

   9.19       Regulations T, U and X.............................................................................32

   9.20       Securities Matters.................................................................................32

   9.21       Pension and Welfare Plans..........................................................................32

   9.22       Environmental Matters..............................................................................33

   9.23       Labor Matters......................................................................................34

   9.24       Disclosure.........................................................................................34

   9.25       Survival of Warranties.............................................................................34
</TABLE>

                                      iii
<PAGE>   5

<TABLE>
<S>                                                                                                            <C>
SECTION 10        COVENANTS......................................................................................35

   10.1       Reports, Certificates and Other Information........................................................35
              10.1.1     Annual Report...........................................................................35
              10.1.2     Interim Reports.........................................................................35
              10.1.3     Compliance Certificates.................................................................35
              10.1.4     Reports to the SEC and to Shareholders..................................................35
              10.1.5     Notice of Default, Litigation and ERISA Matters.........................................36
              10.1.6     Management Reports......................................................................36
              10.1.7     Projections.............................................................................37
              10.1.8     Debt Notices............................................................................37
              10.1.9     Other Information.......................................................................37

   10.2       Books, Records and Inspections.....................................................................37

   10.3       Compliance with Laws; Payment of Taxes and Liabilities.............................................37

   10.4       Maintenance of Property; Insurance.................................................................37

   10.5       Maintenance of Existence, etc......................................................................38

   10.6       Financial Covenants................................................................................38
              10.6.1     Leverage Ratio..........................................................................38
              10.6.2     Debt Service Coverage Ratio.............................................................38
              10.6.3     Minimum Net Worth.......................................................................38

   10.7       Limitations on Debt................................................................................38

   10.8       Liens..............................................................................................40

   10.9       Operating Leases...................................................................................41

   10.10      Restricted Payments................................................................................41

   10.11      Mergers, Consolidations, Acquisitions, Sales.......................................................41

   10.12      Modification of Documents..........................................................................42

   10.13      Use of Proceeds....................................................................................42

   10.14      Further Assurances.................................................................................42

   10.15      Transactions with Affiliates.......................................................................43

   10.16      Employee Benefit Plans.............................................................................43

   10.17      Environmental Matters..............................................................................43

   10.18      Inconsistent Agreements............................................................................43

   10.19      Investments........................................................................................44

   10.20      Fiscal Year........................................................................................44
</TABLE>

                                       iv
<PAGE>   6

<TABLE>
<S>                                                                                                            <C>
SECTION 11        EFFECTIVENESS; CONDITIONS OF LENDING, ETC......................................................45

   11.1       Initial Credit Extension...........................................................................45
              11.1.1     Loan Documents..........................................................................45
              11.1.2     Constitutive Documents..................................................................45
              11.1.3     Consents, etc...........................................................................45
              11.1.4     Guaranty................................................................................45
              11.1.5     Opinions of Counsel.....................................................................45
              11.1.6     STEP Loan...............................................................................45
              11.1.7     Termination of Fleet Credit Agreement...................................................46
              11.1.8     Payment of Fees.........................................................................46
              11.1.9     Solvency Certificate....................................................................46
              11.1.10    Closing Certificate.....................................................................46
              11.1.11    Other...................................................................................46

   11.2       Conditions.........................................................................................46
              11.2.1     Compliance with Warranties, No Default, etc.............................................46
              11.2.2     Confirmatory Certificate................................................................47
              11.2.3     No Legal Impediment.....................................................................47

SECTION 12        EVENTS OF DEFAULT AND THEIR EFFECT.............................................................47

   12.1       Events of Default..................................................................................47
              12.1.1     Non-Payment of the Loans, etc...........................................................47
              12.1.2     Non-Payment of Other Debt...............................................................47
              12.1.3     Other Material Obligations..............................................................47
              12.1.4     Bankruptcy, Insolvency, etc.............................................................48
              12.1.5     Non-Compliance with Loan Documents......................................................48
              12.1.6     Representation and Warranties...........................................................48
              12.1.7     Pension Plans...........................................................................48
              12.1.8     Judgments...............................................................................48
              12.1.9     Rodel Litigation........................................................................49
              12.1.10    Invalidity of Guaranty, etc.............................................................49
              12.1.11    Change of Control.......................................................................49
              12.1.12    Injunctions.............................................................................49
              12.1.13    Work Stoppages..........................................................................50
              12.1.14    Loss of Licenses or Permits.............................................................50
              12.1.15    Forfeitures.............................................................................50
              12.1.16    Cancellation, Invalidity of Loan Documents..............................................50

   12.2       Effect of Event of Default.........................................................................50

SECTION 13        THE AGENTS.....................................................................................51

   13.1       Appointment and Authorization......................................................................51

   13.2       Delegation of Duties...............................................................................51
</TABLE>

                                       v
<PAGE>   7

<TABLE>
<S>                                                                                                            <C>
   13.3       Liability of Agents................................................................................51

   13.4       Reliance by Agents.................................................................................52

   13.5       Notice of Default..................................................................................52

   13.6       Credit Decision....................................................................................52

   13.7       Indemnification....................................................................................53

   13.8       Agents in Individual Capacity......................................................................53

   13.9       Successor Agents...................................................................................54

   13.10      Syndication Agent..................................................................................54

SECTION 14        GENERAL........................................................................................54

   14.1       Waiver; Amendments.................................................................................54

   14.2       Confirmations......................................................................................55

   14.3       Notices............................................................................................55

   14.4       Computations.......................................................................................55

   14.5       Regulation U.......................................................................................55

   14.6       Costs, Expenses and Taxes..........................................................................56

   14.7       Subsidiary References..............................................................................56

   14.8       Captions...........................................................................................56

   14.9       Assignments; Participations........................................................................56
              14.9.1     Assignments.............................................................................56
              14.9.2     Participations..........................................................................58

   14.10      Governing Law......................................................................................58

   14.11      Counterparts.......................................................................................58

   14.12      Successors and Assigns.............................................................................58

   14.13      Indemnification by the Company.....................................................................59

   14.14      Nonliability of Lenders............................................................................59

   14.15      Forum Selection and Consent to Jurisdiction........................................................60

   14.16      Waiver of Jury Trial...............................................................................60

   14.17      Confidentiality....................................................................................60
</TABLE>

                                       vi
<PAGE>   8

SCHEDULES

Pricing Schedule

SCHEDULE 2.1             Banks and Pro Rata Shares
SCHEDULE 9.6             Litigation and Contingent Liabilities
SCHEDULE 9.14            Subsidiaries
SCHEDULE 9.16            Intellectual Property
SCHEDULE 9.17            Insurance
SCHEDULE 9.21            Pension and Welfare Plans
SCHEDULE 9.22            Environmental Matters
SCHEDULE 10.7            Existing Debt
SCHEDULE 10.8            Existing Liens
SCHEDULE 10.9            Existing Operating Leases
SCHEDULE 10.19           Investments
SCHEDULE 14.3            Addresses for Notices

                                      vii
<PAGE>   9
                                    EXHIBITS

EXHIBIT A-1     Form of Revolving Note (Section 3.1)

EXHIBIT A-2     Form of Term Note (Section 3.1)

EXHIBIT B       Form of Compliance Certificate (Section 10.1.3)

EXHIBIT C       Form of Guaranty (Section 1.1)

EXHIBIT D       Form of Opinion of Neal Gerber & Eisenberg (Section 11.1.5)

EXHIBIT E       Form of Assignment Agreement (Section 14.9.1)

EXHIBIT F       Form of Solvency Certificate (Section 11.1.9)

                                      viii
<PAGE>   10
                                CREDIT AGREEMENT

     THIS CREDIT AGREEMENT dated as of July 10, 2001 (this "Agreement") is
entered into among CABOT MICROELECTRONICS CORPORATION (the "Company"), the
financial institutions that are or may from time to time become parties hereto
(together with their respective successors and assigns, the "Banks"), LASALLE
BANK NATIONAL ASSOCIATION (in its individual capacity, "LaSalle"), as
administrative agent for the Banks, and NATIONAL CITY BANK OF MICHIGAN/ILLINOIS,
a national banking association (in its individual capacity, "National City"), as
syndication agent for the Banks.

     WHEREAS, the Banks have agreed to make available to the Company term loans
and a revolving credit facility (which includes letters of credit) upon the
terms and conditions set forth herein;

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

                                   SECTION 1
                                   DEFINITIONS

     1.1 Definitions. When used herein the following terms shall have the
following meanings:

     Acquisition means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of all or substantially all
of any division of a Person, (b) the acquisition of in excess of 50% of the
capital stock, partnership interests, membership interests or equity of any
Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger
or consolidation or any other combination with another Person.

     Administrative Agent means LaSalle in its capacity as administrative agent
for the Banks hereunder and any successor thereto in such capacity.

     Affected Loan - see Section 8.3.

     Affiliate of any Person means (i) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person and (ii) any officer or director of such Person. A Person shall be deemed
to be "controlled by" any other Person if such Person possesses, directly or
indirectly, power to vote 5% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managers or
power to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.

     Agent means the Administrative Agent or the Syndication Agent.

     Agreement - see the Preamble.

<PAGE>   11

     Asset Sale means the sale, lease, assignment or other transfer for value
(each a "Disposition") by the Company or any Subsidiary to any Person (other
than the Company or any Subsidiary) of any asset or right of the Company or such
Subsidiary other than (a) the Disposition of any asset which is to be replaced,
and is in fact replaced, within 30 days with another asset performing the same
or a similar function, (b) the Disposition of inventory in the ordinary course
of business and (c) the Disposition of obsolete or unusable items of inventory
or equipment.

     Assignment Agreement - see Section 14.9.1.

     Attorney Costs means, with respect to any Person, all reasonable fees and
charges of any counsel to such Person, the reasonable allocable cost of internal
legal services of such Person, all reasonable disbursements of such internal
counsel and all court costs and similar legal expenses.

     Bank - see the Preamble. References to the "Banks" shall include the
Issuing Bank; for purposes of clarification only, to the extent that LaSalle (or
any successor Issuing Bank) may have any rights or obligations in addition to
those of the other Banks due to its status as Issuing Bank, its status as such
will be specifically referenced.

     Base Rate means at any time the greater of (a) the Federal Funds Rate plus
0.5% and (b) the Prime Rate.

     Base Rate Loan means any Loan which bears interest at or by reference to
the Base Rate.

     Base Rate Margin - see the Pricing Schedule.

     Business Day means any day on which LaSalle is open for commercial banking
business in Chicago, Illinois and, in the case of a Business Day which relates
to a Eurodollar Loan, on which dealings are carried on in the London interbank
eurodollar market.

     Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person, other than the Tuscola Unit C Agreement.

     Cash Collateralize means to deliver cash collateral to the Administrative
Agent, to be held as cash collateral for outstanding Letters of Credit, in such
amounts (but not in excess of 100% of the aggregate Stated Amounts of such
Letters of Credit) and pursuant to documentation satisfactory to the
Administrative Agent. Derivatives of such term have corresponding meanings.

     Cash Equivalent Investment means, at any time, (a) any evidence of Debt,
maturing not more than one year after such time, issued or guaranteed by the
United States government or any agency thereof (or, in the case of foreign
operations, any country that is a member of the Organisation for Economic
Co-operation and Development), (b) commercial paper, maturing not more than one
year from the date of issue, or corporate demand notes, in each case rated at
least

                                       2
<PAGE>   12

A-l by Standard & Poor's Ratings Group or P-l by Moody's Investors Service,
Inc., (c) any certificate of deposit (or time deposits represented by such
certificates of deposit) or banker's acceptance, maturing not more than one year
after such time, or overnight Federal Funds transactions that are issued or sold
by any Bank or its holding company or by a commercial banking institution that
is a member of the Federal Reserve System (or, in the case of foreign
operations, a commercial banking institution organized under the laws of a
country that is a member of the Organisation for Economic Co-operation and
Development) and has a combined capital and surplus and undivided profits of not
less than $500,000,000 and (d) any repurchase agreement entered into with any
Bank (or other commercial banking institution of the stature referred to in
clause (c)) which (i) is secured by a fully perfected security interest in any
obligation of the type described in any of clauses (a) through (c) and (ii) has
a market value at the time such repurchase agreement is entered into of not less
than 100% of the repurchase obligation of such Bank (or other commercial banking
institution) thereunder.

     CERCLA - see Section 9.22.

     Closing Date - means July 10, 2001.

     Code means the Internal Revenue Code of 1986.

     Commitment means, as to any Bank, such Bank's commitment to make Loans, and
to issue or participate in Letters of Credit, under this Agreement. The initial
amount of each Bank's Pro Rata Share of the Commitments is set forth on Schedule
2.1.

     Company - see the Preamble.

     Computation Period means each period of four consecutive Fiscal Quarters
ending on the last day of a Fiscal Quarter.

     Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the consolidated net income (or loss) of the
Company and its Subsidiaries for such period, plus non-cash losses from sales,
exchanges and other dispositions of assets and other non-cash losses and minus
any gains from sales, exchanges and other dispositions of assets, any other
gains and any gains from discontinued operations.

     Controlled Group means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Company, are treated
as a single employer under Section 414 of the Code or Section 4001 of ERISA.

     Debt of any Person means, without duplication, (a) all indebtedness of such
Person for borrowed money, whether or not evidenced by bonds, debentures, notes
or similar instruments, (b) all obligations of such Person as lessee under
Capital Leases which have been or should be recorded as liabilities on a balance
sheet of such Person in accordance with GAAP, (c) all obligations of such Person
to pay the deferred purchase price of property or services (excluding trade
accounts payable in the ordinary course of business), (d) all indebtedness
secured by a Lien

                                       3
<PAGE>   13

on the property of such Person, whether or not such indebtedness shall have been
assumed by such Person, (e) all obligations, contingent or otherwise, with
respect to the face amount of all letters of credit (whether or not drawn) and
banker's acceptances issued for the account of such Person (including the
Letters of Credit), (f) all Hedging Obligations of such Person, (g) all
Suretyship Liabilities of such Person and (h) all Debt of any partnership of
which such Person is a general partner.

     Debt Service Coverage Ratio means, as of the last day of any Fiscal
Quarter, the ratio of (i) EBIT for the Computation Period ending on such day to
(ii) the sum of (A) Interest Expense for such Computation Period plus (B)
required payments of principal of Funded Debt (including the Term Loans but
excluding the Revolving Loans) for the succeeding Computation Period.

     Designated Proceeds - see Section 6.2.2(a).

     Disposal - see the definition of "Release".

     Dollar and the sign "$" mean lawful money of the United States of America.

     Domestic Subsidiary means each Subsidiary of the Company incorporated or
organized in the United States of America or any State or territory thereof.

     EBIT means, for any period, Consolidated Net Income for such period plus,
to the extent deducted in determining such Consolidated Net Income, Interest
Expense and income tax expense. EBIT for any period in which one or more
Acquisitions permitted under Section 10.11 have been consummated shall be
calculated on a pro forma basis so as to include the effect such Acquisitions
would have had on EBIT if such Acquisitions had been consummated on the first
day of such period. Such pro forma calculation shall be made only on the basis
of historical audited or reviewed financial statements, without any adjustment,
of the Person acquired or from whom the assets which were the subject of such
Acquisition were acquired, prepared by an accounting firm of national
recognition or otherwise reasonably acceptable to the Required Banks and broken
down by fiscal quarter in a manner consistent with GAAP.

     EBITDA means, for any period, Consolidated Net Income for such period plus,
to the extent deducted in determining such Consolidated Net Income, Interest
Expense, income tax expense, depreciation and amortization for such period.
EBITDA for any period in which one or more Acquisitions permitted under Section
10.11 have been consummated shall be calculated on a pro forma basis so as to
include the effect such Acquisitions would have had on EBITDA if such
Acquisitions had been consummated on the first day of such period. Such pro
forma calculation shall be made only on the basis of historical audited or
reviewed financial statements, without any adjustment, of the Person acquired or
from whom the assets which were the subject of such Acquisition were acquired,
prepared by an accounting firm of national recognition or otherwise reasonably
acceptable to the Required Banks and broken down by fiscal quarter in a manner
consistent with GAAP.

                                       4
<PAGE>   14

     Environmental Claims means all claims, however asserted, by any
governmental, regulatory or judicial authority alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.

     Environmental Laws means all present or future federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any governmental authority,
in each case relating to Environmental Matters.

     Environmental Matters means any matter arising out of or relating to health
and safety, or pollution or protection of the environment or workplace,
including any of the foregoing relating to the presence, use, production,
generation, handling, transport, treatment, storage, disposal, distribution,
discharge, release, control or cleanup of any Hazardous Substance.

     ERISA means the Employee Retirement Income Security Act of 1974.

     Eurocurrency Reserve Percentage means, with respect to any Eurodollar Loan
for any Interest Period, a percentage (expressed as a decimal) equal to the
daily average during such Interest Period of the percentage in effect on each
day of such Interest Period, as prescribed by the FRB, for determining the
aggregate maximum reserve requirements applicable to "Eurocurrency Liabilities"
pursuant to Regulation D or any other then applicable regulation of the FRB
which prescribes reserve requirements applicable to "Eurocurrency Liabilities"
as presently defined in Regulation D.

     Eurodollar Loan means any Loan which bears interest at a rate determined by
reference to the Eurodollar Rate (Reserve Adjusted).

     Eurodollar Margin - see the Pricing Schedule.

     Eurodollar Office means with respect to any Bank the office or offices of
such Bank which shall be making or maintaining the Eurodollar Loans of such Bank
hereunder. A Eurodollar Office of any Bank may be, at the option of such Bank,
either a domestic or foreign office.

     Eurodollar Rate means, with respect to any Eurodollar Loan for any Interest
Period, a rate per annum equal to the offered rate for deposits in Dollars for a
period equal or comparable to such Interest Period which appears on Telerate
page 3750 as of 11:00 A.M. (London time) two Business Days prior to the first
day of such Interest Period. "Telerate Page 3750" means the display designated
as "Page 3750" on the Telerate Service (or such other page as may replace page
3750 on that service or such other service as may be nominated by the British
Bankers' Association as the information vendor for the purpose of displaying
British Bankers' Association Interest Settlement Rates for Dollar deposits).

     Eurodollar Rate (Reserve Adjusted) means, with respect to any Eurodollar
Loan for any Interest Period, a rate per annum (rounded upwards, if necessary,
to the nearest 1/16th of 1%) determined pursuant to the following formula:

                                       5
<PAGE>   15

           Eurodollar Rate     =     Eurodollar Rate
                                     ---------------
           (Reserve Adjusted)        1-Eurocurrency
                                     Reserve Percentage

     Event of Default means any of the events described in Section 12.1.

     Federal Funds Rate means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor
publication, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Administrative Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00 A.M. (New
York City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Administrative Agent.

     Fee Letter Agreement means the Fee Letter dated May 4, 2001 between the
Company and the Administrative Agent.

     Fiscal Quarter means a fiscal quarter of a Fiscal Year.

     Fiscal Year means the fiscal year of the Company and its Subsidiaries,
which period shall be the 12-month period ending on September 30th of each year.
References to a Fiscal Year with a number corresponding to any calendar year
(e.g., "Fiscal Year 2000") refer to the Fiscal Year ending on September 30th of
such calendar year.

     FRB means the Board of Governors of the Federal Reserve System or any
successor thereto.

     Funded Debt means, as to any Person, all Debt of such Person that matures
more than one year from the date of its creation (or is renewable or extendible,
at the option of such Person, to a date more than one year from such date).

     GAAP means generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.

     Group - see Section 2.2.1.

     Guarantor Subsidiary means each Subsidiary of the Company which executes a
Guaranty.

     Guaranty means a guaranty substantially in the form of Exhibit C.

     Hazardous Substances - see Section 9.22.

                                       6
<PAGE>   16

     Hedging Agreement means any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices.

     Hedging Obligation means, with respect to any Person at any time, the
liability of such Person under any Hedging Agreement at such time as determined
on a mark-to-market basis.

     Indemnified Liabilities - see Section 14.13.

     Interest Expense means for any period the consolidated interest expense of
the Company and its Subsidiaries for such period (including all imputed interest
on Capital Leases).

     Interest Period means, as to any Eurodollar Loan, the period commencing on
the date such Loan is borrowed or continued as, or converted into, a Eurodollar
Loan and ending on the date one, two, three or six months thereafter as selected
by the Company pursuant to Section 2.2.2 or 2.2.3, as the case may be; provided
that:

               (i) if any Interest Period would otherwise end on a day that is
          not a Business Day, such Interest Period shall be extended to the
          following Business Day unless the result of such extension would be to
          carry such Interest Period into another calendar month, in which event
          such Interest Period shall end on the preceding Business Day;

               (ii) any Interest Period that begins on a day for which there is
          no numerically corresponding day in the calendar month at the end of
          such Interest Period shall end on the last Business Day of the
          calendar month at the end of such Interest Period;

               (iii) the Company may not select any Interest Period for a
          Revolving Loan which would extend beyond the scheduled Termination
          Date; and

               (iv) the Company may not select any Interest Period for a Term
          Loan if, after giving effect to such selection, the aggregate
          principal amount of all Term Loans having Interest Periods ending
          after any date on which an installment of the Term Loans is scheduled
          to be repaid would exceed the aggregate principal amount of the Term
          Loans scheduled to be outstanding after giving effect to such
          repayment.

     Investment means, relative to any Person, any investment in another Person,
whether by acquisition of any debt or equity security, by making any loan or
advance or by becoming obligated with respect to a Suretyship Liability in
respect of obligations of such other Person (other than travel and similar
advances to employees in the ordinary course of business).

     Issuing Bank means LaSalle in its capacity as the issuer of Letters of
Credit hereunder and its successors and assigns in such capacity.

                                       7
<PAGE>   17

     LaSalle - see the Preamble.

     L/C Application means, with respect to any request for the issuance of a
Letter of Credit, a letter of credit application in the form being used by the
Issuing Bank at the time of such request for the type of letter of credit
requested.

     LC Fee Rate - see the Pricing Schedule.

     Letter of Credit - see Section 2.1.3.

     Leverage Ratio means, as of the last day of any Fiscal Quarter, the ratio
of (i) the remainder of (A) Total Debt as of such day minus (B) the aggregate
amount of all cash on hand and Cash Equivalent Investments of the Company and
its Subsidiaries as of such day to (ii) EBITDA for the Computation Period ending
on such day.

     Lien means, with respect to any Person, any interest granted by such Person
in any real or personal property, asset or other right owned or being purchased
or acquired by such Person which secures payment or performance of any
obligation and shall include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.

     Loan Documents means this Agreement, the Notes, the Guaranty and the L/C
Applications.

     Loan Party means the Company and each Subsidiary.

     Loans means Revolving Loans and Term Loans.

     Mandatory Prepayment Event - see Section 6.2.2(a).

     Margin Stock means any "margin stock" or "margin security" as such terms
are defined in Regulations U and X of the FRB.

     Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets,
business, properties or prospects of the Company and its Subsidiaries taken as a
whole, (b) a material impairment of the ability of the Company or any Subsidiary
to perform any of its obligations under any Loan Document or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability
against the Company or any Subsidiary of any Loan Document.

     Mortgage Debt means Debt secured by Mortgage Liens.

     Mortgage Liens means Liens granted by the Company or any Subsidiary which
attach solely to real estate and the improvements thereon.

                                       8
<PAGE>   18

     Multiemployer Pension Plan means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Company or any member of the
Controlled Group may have any liability.

     National City - see the Preamble.

     Net Cash Proceeds means:

          (a) with respect to any Asset Sale the aggregate cash proceeds
     (including cash proceeds received by way of deferred payment of principal
     pursuant to a note, installment receivable or otherwise, but only as and
     when received) received by the Company or any Subsidiary pursuant to such
     Asset Sale net of (i) the direct costs relating to such sale, transfer or
     other disposition (including sales commissions and legal, accounting and
     investment banking fees), (ii) taxes paid or reasonably estimated by the
     Company to be payable as a result thereof (after taking into account any
     available tax credits or deductions and any tax sharing arrangements) and
     (iii) amounts required to be applied to the repayment of any Debt secured
     by a Lien on the asset subject to such Asset Sale (other than the Loans);
     and

          (b) with respect to any issuance of Debt, the aggregate cash proceeds
     received by the Company or any Subsidiary pursuant to such issuance, net of
     the direct costs of such issuance (including up-front fees, placement fees,
     sales commissions and legal, accounting and investment banking fees).

     Net Worth means at any date the consolidated net worth of the Company and
its Subsidiaries as of such date as determined in accordance with GAAP.

     Non-Use Fee Rate - see the Pricing Schedule.

     Note - means a Revolving Note or a Term Note.

     Operating Lease means any lease of (or other agreement conveying the right
to use) any real or personal property by the Company or any Subsidiary, as
lessee, other than any Capital Lease.

     PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

     Pension Plan means a "pension plan", as such term is defined in Section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
Pension Plan), and to which the Company or any member of the Controlled Group
may have any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.

                                       9
<PAGE>   19

     Person means any natural person, corporation, partnership, trust, limited
liability company, association, governmental authority or unit, or any other
entity, whether acting in an individual, fiduciary or other capacity.

     Pro Rata Share means, with respect to any Bank, the percentage specified
opposite such Bank's name on Schedule 2.1 hereto, as adjusted from time to time
in accordance with the terms hereof.

     Pricing Schedule - the Pricing Schedule attached hereto.

     Prime Rate means, for any day, the rate of interest in effect for such day
as publicly announced from time to time by LaSalle as its prime rate (whether or
not such rate is actually charged by LaSalle). Any change in the Prime Rate
announced by LaSalle shall take effect at the opening of business on the day
specified in the public announcement of such change.

     RCRA - see Section 9.22.

     Regulation D means Regulation D of the FRB.

     Regulation T means Regulation T of the FRB.

     Regulation U means Regulation U of the FRB.

     Regulation X means Regulation X of the FRB. Release has the meaning
specified in CERCLA and the term "Disposal" (or "Disposed") has the meaning
specified in RCRA; provided that in the event either CERCLA or RCRA is amended
so as to broaden the meaning of any term defined thereby, such broader meaning
shall apply as of the effective date of such amendment; and provided, further,
that to the extent that the laws of a state wherein any affected property lies
establish a meaning for "Release" or "Disposal" which is broader than is
specified in either CERCLA or RCRA, such broader meaning shall apply.

     Requested Term Out Amount means the amount (not to exceed the Term Loan
Commitment then in effect) of the principal balance of the Revolving Loans
outstanding as of the date of the Term Out Notice requested by the Company to be
converted to Term Loans.

     Required Banks means a majority in number of the Banks having Pro Rata
Shares aggregating 51% or more.

     Revolving Commitment Amount means $75,000,000, as reduced from time to time
pursuant to Section 6.1.

     Revolving Loan - see Section 2.1.1.

     Revolving Note - see Section 3.1.

                                       10
<PAGE>   20

     Revolving Outstandings means, at any time, the sum of (a) the aggregate
principal amount of all outstanding Revolving Loans, plus (b) the Stated Amount
of all Letters of Credit.

     Rodel Litigation means the actions pending in the United States District
Court for the District of Delaware entitled Rodel, Inc. v. Cabot Corporation
(Civil Action No. 98-352) and Rodel, Inc. v. Cabot Corporation (Civil Action No.
99-256) and any other litigation or cause of action against Cabot Corporation or
the Company based upon the same patents at issue in such actions.

     SEC means the Securities and Exchange Commission or any other governmental
authority succeeding to any of the principal functions thereof.

     Securities Laws - see Section 9.20.

     Stated Amount means, with respect to any Letter of Credit at any date of
determination, (a) the maximum aggregate amount available for drawing thereunder
under any and all circumstances plus (b) the aggregate amount of all
unreimbursed payments and disbursements under such Letter of Credit.

     STEP Credit Agreement means the Second Amended and Restated Credit
Agreement between the Company and LaSalle dated as of July 10, 2001, as the same
may be amended, modified, supplemented or restated from time to time.

     Subsidiary means, with respect to any Person, a corporation, partnership,
limited liability company or other entity of which such Person and/or its other
Subsidiaries own, directly or indirectly, such number of outstanding shares or
other ownership interests as have more than 50% of the ordinary voting power for
the election of directors or other managers of such corporation, partnership,
limited liability company or other entity. Unless the context otherwise
requires, each reference to Subsidiaries herein shall be a reference to
Subsidiaries of the Company.

     Suretyship Liability means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person's obligation in respect of any Suretyship Liability at any time shall
(subject to any limitation set forth therein) be deemed to be the maximum amount
of the debt, obligation or other liability supported thereby, or, in the case of
contingent or unliquidated indemnification obligations, the amount which has
been, or, in accordance with GAAP should be, recorded as a liability on or
reserved for in such Person's balance sheet at such time. Notwithstanding
anything in this definition to the contrary, the term "Suretyship Liability"
shall not include any amount paid or payable by the Company or any Subsidiary
(a) to or for the benefit of any officer, director or employee of the Company or
any

                                       11
<PAGE>   21

Subsidiary or (b) to any customer, supplier, vendor or other Person arising in
the ordinary course of the Company's or such Subsidiary's business and
consistent with its prior practices.

     Syndication Agent means National City in its role as syndication agent for
the Banks hereunder and any successor thereto in such capacity.

     Term Loan - see Section 2.1.2.

     Term Loan Commitment Amount means, at any time, the lesser of (a) the
Revolving Loan Commitment then in effect and (b) $25,000,000, as reduced from
time to time pursuant to Section 6.1.

     Term Loan Funding Date means the date on which the Banks disburse the Term
Loans.

     Termination Date means the earlier to occur of (a) July 10, 2004 and (b)
such other date on which the Commitments terminate pursuant to Section 6 or 12.

     Term Note- see Section 3.1.

     Term Out Notice means a notice from the Company to the Administrative Agent
of the Company's election to exercise the Term Out Option, specifying therein
the Requested Term Out Amount and the requested Term Loan Funding Date.

     Term Out Option - see Section 2.1.2.

     Total Debt means all Debt of the Company and its Subsidiaries, determined
on a consolidated basis, excluding (a) contingent or unliquidated obligations in
respect of Suretyship Liabilities (except to the extent (i) the amount thereof
has been, or in accordance with GAAP should be, recorded as a liability on or
reserved for in the Company's consolidated balance sheet at such time and the
validity thereof is not being contested by the Company, such Subsidiary or the
party in interest in good faith by appropriate proceedings diligently conducted
or (ii) constituting Suretyship Liabilities in respect of Debt of a Person other
than the Company or any Subsidiary), (b) Hedging Obligations, and (c) Debt of
the Company to Subsidiaries and Debt of Subsidiaries to the Company or to other
Subsidiaries.

     Tuscola Unit C Agreement means the agreement contemplated between the
Company and Cabot Corporation whereby Cabot Corporation has constructed, and
owns, and will operate and maintain a commercial production unit at its
production facilities in Tuscola, Illinois for the primary purpose of producing
fumed alumina to be sold by Cabot Corporation to the Company and purchased by
the Company from Cabot Corporation subject to the terms of such agreement.

     Type of Loan or Borrowing - see Section 2.2.1. The types of Loans or
borrowings under this Agreement are as follows: Base Rate Loans or borrowings
and Eurodollar Loans or borrowings.

     Unmatured Event of Default means any event that, if it continues uncured,
will, with lapse of time or notice or both, constitute an Event of Default.

                                       12
<PAGE>   22

     Wholly-Owned Subsidiary means, as to any Person, another Person all of the
shares of capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by such Person
and/or another Wholly-Owned Subsidiary of such Person.

     1.2 Other Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.

          (b) Section, Schedule and Exhibit references are to this Agreement
     unless otherwise specified.

          (c) The term "including" is not limiting and means "including without
     limitation."

          (d) In the computation of periods of time from a specified date to a
     later specified date, the word "from" means "from and including"; the words
     "to" and "until" each mean "to but excluding", and the word "through" means
     "to and including."

          (e) Unless otherwise expressly provided herein, (i) references to
     agreements (including this Agreement) and other contractual instruments
     shall be deemed to include all subsequent amendments and other
     modifications thereto, but only to the extent such amendments and other
     modifications are not prohibited by the terms of any Loan Document, and
     (ii) references to any statute or regulation shall be construed as
     including all statutory and regulatory provisions amending, replacing,
     supplementing or interpreting such statute or regulation.

          (f) This Agreement and the other Loan Documents may use several
     different limitations, tests or measurements to regulate the same or
     similar matters. All such limitations, tests and measurements are
     cumulative and each shall be performed in accordance with its terms.

          (g) This Agreement and the other Loan Documents are the result of
     negotiations among and have been reviewed by counsel to the Agents, the
     Company, the Banks and the other parties thereto and are the work product
     of all parties. Accordingly, they shall not be construed against the Agents
     or the Banks merely because of the Agents' or Banks' involvement in their
     preparation.

                                   SECTION 2
                      COMMITMENTS OF THE BANKS; BORROWING,
                   CONVERSION AND LETTER OF CREDIT PROCEDURES

     2.1 Commitments. On and subject to the terms and conditions of this
Agreement, each of the Banks, severally and for itself alone, agrees to make
loans to, and to issue or participate in letters of credit for the account of,
the Company as follows:

                                       13
<PAGE>   23

          2.1.1 Revolving Loan Commitment. Each Bank will make loans on a
revolving basis ("Revolving Loans") from time to time until the Termination Date
in such Bank's Pro Rata Share of such aggregate amounts as the Company may
request from all Banks; provided that the Revolving Outstandings will not at any
time exceed the Revolving Commitment Amount.

          2.1.2 Term Loan Commitment. The Company may elect on or prior to the
Termination Date to convert a portion of the outstanding principal balance of
the Revolving Loans in an amount up to the Term Loan Commitment Amount to a term
loan (the "Term Out Option"). Provided no Event of Default or Unmatured Event of
Default then exists and is continuing and the Company has properly exercised the
Term Out Option, each Bank agrees to make a loan to the Company (each, a "Term
Loan") on the Term Loan Funding Date in such Bank's Pro Rata Share of the
Requested Term Out Amount. The Company may exercise the Term Out Option solely
by delivering to the Administrative Agent not more than 90 nor less than 30 days
prior to the requested Term Loan Funding Date (i) a Term Out Notice and (ii) a
Term Note, dated the requested Term Loan Funding Date, payable to each Bank in
the amount of such Bank's Pro Rata Share of the Requested Term Out Amount. The
commitments of the Banks to make Term Loans shall expire concurrently with the
making of the Term Loans on the Term Loan Funding Date.

          2.1.3 L/C Commitment. (a) The Issuing Bank will issue letters of
credit, in each case containing such terms and conditions as are permitted by
this Agreement and are reasonably satisfactory to the Issuing Bank (each a
"Letter of Credit"), at the request of and for the account of the Company from
time to time before the date which is 30 days prior to the Termination Date and
(b) as more fully set forth in Section 2.3.2, each Bank agrees to purchase a
participation in each such Letter of Credit; provided that, after giving effect
to such request, (i) the aggregate Stated Amount of all Letters of Credits shall
not at any time exceed $10,000,000 and (ii) the Revolving Outstandings will not
at any time exceed the Revolving Commitment Amount.

          2.2 Loan Procedures.

          2.2.1 Various Types of Loans. Each Revolving Loan shall be, and each
Term Loan may be, divided into tranches which are, either a Base Rate Loan or a
Eurodollar Loan (each a "type" of Loan), as the Company shall specify in the
related notice of borrowing or conversion pursuant to Section 2.2.2 or 2.2.3.
Eurodollar Loans having the same Interest Period are sometimes called a "Group"
or collectively "Groups". Base Rate Loans and Eurodollar Loans may be
outstanding at the same time, provided that not more than ten (10) different
Groups of Eurodollar Loans shall be outstanding at any one time. All borrowings,
conversions and repayments of Revolving Loans and Term Loans shall be effected
so that each Bank will have a pro rata share (according to its Pro Rata Share)
of all types and Groups of Loans.

          2.2.2 Borrowing Procedures.

          (a) The Company shall give written notice or telephonic notice
     (followed immediately by written confirmation thereof) to the
     Administrative Agent of each

                                       14
<PAGE>   24

     proposed borrowing not later than (a) in the case of a Base Rate borrowing,
     11:00 A.M., Chicago time, on the proposed date of such borrowing, and (b)
     in the case of a Eurodollar borrowing, 11:00 A.M., Chicago time, at least
     three Business Days prior to the proposed date of such borrowing. Each such
     notice shall be effective upon receipt by the Administrative Agent, shall
     be irrevocable, and shall specify the date, amount and type of borrowing
     and, in the case of a Eurodollar borrowing, the initial Interest Period
     therefor. Promptly upon receipt of such notice, the Administrative Agent
     shall advise each Bank thereof. Not later than 1:00 P.M., Chicago time, on
     the date of a proposed borrowing, each Bank shall provide the
     Administrative Agent at the office specified by the Administrative Agent
     with immediately available funds covering such Bank's Pro Rata Share of
     such borrowing and, so long as the Administrative Agent has not received
     written notice that the conditions precedent set forth in Section 11 with
     respect to such borrowing have not been satisfied, the Administrative Agent
     shall pay over the funds received by the Administrative Agent to the
     Company on the requested borrowing date. Each borrowing shall be on a
     Business Day. Each Base Rate borrowing shall be in an aggregate amount of
     at least $100,000 and an integral multiple of $10,000, and each Eurodollar
     borrowing shall be in an aggregate amount of at least $1,000,000 and an
     integral multiple of at least $500,000.

          (b) Unless the Administrative Agent receives notice from a Bank by
     noon, Chicago time, on the day of a proposed borrowing that such Bank will
     not make available to the Administrative Agent an amount equal to its Pro
     Rata Share of such borrowing, the Administrative Agent may assume that such
     Bank has made such amount available to the Administrative Agent and, in
     reliance upon such assumption, may make a corresponding amount available to
     the Company. If and to the extent such Bank has not made such amount
     available to the Administrative Agent, such Bank and the Company jointly
     and severally agree to repay such amount to the Administrative Agent
     forthwith upon demand, together with interest thereon at the interest rate
     applicable to Loans comprising such borrowing (but without any amount which
     may become due under Section 8.4 as a result of such repayment) or, in the
     case of any Bank which repays such amount within three Business Days, the
     Federal Funds Rate. Nothing set forth in this clause (b) shall relieve any
     Bank of any obligation it may have to make any Loan hereunder.

          2.2.3 Conversion and Continuation Procedures. (a) Subject to Section
2.2.1, the Company may, upon irrevocable written notice to the Administrative
Agent in accordance with clause (b) below:

          (i) elect, as of any Business Day, to convert any Loans (or any part
     thereof in an aggregate amount not less than $1,000,000 or a higher
     integral multiple of $500,000) into Loans of the other type; or

          (ii) elect, as of the last day of the applicable Interest Period, to
     continue any Eurodollar Loans having Interest Periods expiring on such day
     (or

                                       15
<PAGE>   25

     any part thereof in an aggregate amount not less than $1,000,000 or a
     higher integral multiple of $500,000) for a new Interest Period;

     provided that after giving effect to any prepayment, conversion or
     continuation, the aggregate principal amount of each Group of Eurodollar
     Loans shall be at least $1,000,000 and an integral multiple of $500,000.

          (b) The Company shall give written or telephonic (followed immediately
     by written confirmation thereof) notice to the Administrative Agent of each
     proposed conversion or continuation not later than (i) in the case of
     conversion into Base Rate Loans, 11:00 A.M., Chicago time, on the proposed
     date of such conversion and (ii) in the case of conversion into or
     continuation of Eurodollar Loans, 11:00 A.M., Chicago time, at least three
     Business Days prior to the proposed date of such conversion or
     continuation, specifying in each case:

               (A) the proposed date of conversion or continuation;

               (B) the aggregate amount of Loans to be converted or continued;

               (C) the type of Loans resulting from the proposed conversion or
               continuation; and

               (D) in the case of conversion into, or continuation of,
               Eurodollar Loans, the duration of the requested Interest Period
               therefor.

          (c) If upon the expiration of any Interest Period applicable to
     Eurodollar Loans, the Company has failed to select timely a new Interest
     Period to be applicable to such Eurodollar Loans, the Company shall be
     deemed to have elected to convert such Eurodollar Loans into Base Rate
     Loans effective on the last day of such Interest Period.

          (d) The Administrative Agent will promptly notify each Bank of its
     receipt of a notice of conversion or continuation pursuant to this Section
     2.2.3 or, if no timely notice is provided by the Company, of the details of
     any automatic conversion.

          (e) Any conversion of a Eurodollar Loan on a day other than the last
     day of an Interest Period therefor shall be subject to Section 8.4.

     2.3 Letter of Credit Procedures.

          2.3.1 L/C Applications. The Company shall give notice to the
Administrative Agent and the Issuing Bank of the proposed issuance of each
Letter of Credit on a Business Day which is at least three Business Days (or
such lesser number of days as the Administrative Agent and the Issuing Bank
shall agree in any particular instance in their sole discretion) prior to the
proposed date of issuance of such Letter of Credit. Each such notice shall be
accompanied by an L/C Application, duly executed by the Company and in all
respects satisfactory to the Administrative Agent and the Issuing Bank, together
with such other

                                       16
<PAGE>   26

documentation as the Administrative Agent or the Issuing Bank may request in
support thereof, it being understood that each L/C Application shall specify,
among other things, the date on which the proposed Letter of Credit is to be
issued, the expiration date of such Letter of Credit (which shall not be later
than the earlier to occur of (x) one year after the date of issuance thereof and
(y) if such Letter of Credit is not Cash Collateralized, twenty-five days prior
to the scheduled Termination Date, provided that any Letter of Credit having an
expiration date of one year after the date of issuance may provide for renewal
thereof for additional one-year periods, but in no event shall any renewal
extend beyond the date which is twenty-five days prior to the scheduled
Termination Date unless such Letter of Credit is Cash Collateralized). So long
as the Issuing Bank has not received written notice that the conditions
precedent set forth in Section 11 with respect to the issuance of such Letter of
Credit have not been satisfied, the Issuing Bank shall issue such Letter of
Credit on the requested issuance date. The Issuing Bank shall promptly advise
the Administrative Agent of the issuance of each Letter of Credit and of any
amendment thereto, extension thereof or event or circumstance changing the
amount available for drawing thereunder. In the event of any inconsistency
between the terms of any L/C Application and the terms of this Agreement, the
terms of this Agreement shall control.

          2.3.2 Participations in Letters of Credit. Concurrently with the
issuance of each Letter of Credit, the Issuing Bank shall be deemed to have sold
and transferred to each other Bank, and each other Bank shall be deemed
irrevocably and unconditionally to have purchased and received from the Issuing
Bank, without recourse or warranty, an undivided interest and participation, to
the extent of such other Bank's Pro Rata Share, in such Letter of Credit and the
Company's reimbursement obligations with respect thereto. For the purposes of
this Agreement, the unparticipated portion of each Letter of Credit shall be
deemed to be the Issuing Bank's "participation" therein. The Issuing Bank hereby
agrees, upon request of the Administrative Agent or any Bank, to deliver to the
Administrative Agent or such Bank a list of all outstanding Letters of Credit
issued by the Issuing Bank, together with such information related thereto as
the Administrative Agent or such Bank may reasonably request.

          2.3.3 Reimbursement Obligations. The Company hereby unconditionally
and irrevocably agrees to reimburse the Issuing Bank for each payment or
disbursement made by the Issuing Bank under any Letter of Credit honoring any
demand for payment made by the beneficiary thereunder, in each case on the date
that such payment or disbursement is made. Any amount not reimbursed on the date
of such payment or disbursement shall bear interest from the date of such
payment or disbursement to the date that the Issuing Bank is reimbursed by the
Company therefor, payable on demand, at a rate per annum equal to the Base Rate
from time to time in effect plus the Base Rate Margin from time to time in
effect plus, beginning on the third Business Day after receipt of notice from
the Issuing Bank of such payment or disbursement, 2%. The Issuing Bank shall
notify the Company and the Administrative Agent whenever any demand for payment
is made under any Letter of Credit by the beneficiary thereunder; provided that
the failure of the Issuing Bank to so notify the Company shall not affect the
rights of the Issuing Bank or the Banks in any manner whatsoever.

          2.3.4 Limitation on Obligations of Issuing Bank. In determining
whether to pay under any Letter of Credit, the Issuing Bank shall not have any
obligation to the Company or

                                       17
<PAGE>   27

any Bank other than to confirm that any documents required to be delivered under
such Letter of Credit appear to have been delivered and appear to comply on
their face with the requirements of such Letter of Credit. Any action taken or
omitted to be taken by the Issuing Bank under or in connection with any Letter
of Credit, if taken or omitted in the absence of gross negligence and willful
misconduct, shall not impose upon the Issuing Bank any liability to the Company
or any Bank and shall not reduce or impair the Company's reimbursement
obligations set forth in Section 2.3.3 or the obligations of the Banks pursuant
to Section 2.3.5.

          2.3.5 Funding by Banks to Issuing Bank. If the Issuing Bank makes any
payment or disbursement under any Letter of Credit and the Company has not
reimbursed the Issuing Bank in full for such payment or disbursement by 11:00
A.M., Chicago time, on the date of such payment or disbursement, or if any
reimbursement received by the Issuing Bank from the Company is or must be
returned or rescinded upon or during any bankruptcy or reorganization of the
Company or otherwise, each other Bank shall be obligated to pay to the
Administrative Agent for the account of the Issuing Bank, in full or partial
payment of the purchase price of its participation in such Letter of Credit, its
Pro Rata Share of such payment or disbursement (but no such payment shall
diminish the obligations of the Company under Section 2.3.3), and, upon notice
from the Issuing Bank, the Administrative Agent shall promptly notify each other
Bank thereof. Each other Bank irrevocably and unconditionally agrees to so pay
to the Administrative Agent in immediately available funds for the Issuing
Bank's account the amount of such other Bank's Pro Rata Share of such payment or
disbursement. If and to the extent any Bank shall not have made such amount
available to the Administrative Agent by 2:00 P.M., Chicago time, on the
Business Day on which such Bank receives notice from the Administrative Agent of
such payment or disbursement (it being understood that any such notice received
after noon, Chicago time, on any Business Day shall be deemed to have been
received on the next following Business Day), such Bank agrees to pay interest
on such amount to the Administrative Agent for the Issuing Bank's account
forthwith on demand, for each day from the date such amount was to have been
delivered to the Administrative Agent to the date such amount is paid, at a rate
per annum equal to (a) for the first three days after demand, the Federal Funds
Rate from time to time in effect and (b) thereafter, the Base Rate from time to
time in effect. Any Bank's failure to make available to the Administrative Agent
its Pro Rata Share of any such payment or disbursement shall not relieve any
other Bank of its obligation hereunder to make available to the Administrative
Agent such other Bank's Pro Rata Share of such payment, but no Bank shall be
responsible for the failure of any other Bank to make available to the
Administrative Agent such other Bank's Pro Rata Share of any such payment or
disbursement.

     2.4 Commitments Several. The failure of any Bank to make a requested Loan
on any date shall not relieve any other Bank of its obligation (if any) to make
a Loan on such date, but no Bank shall be responsible for the failure of any
other Bank to make any Loan to be made by such other Bank.

     2.5 Certain Conditions. Notwithstanding any other provision of this
Agreement, no Bank shall have an obligation to make any Loan, or to permit the
continuation of or any conversion into any Eurodollar Loan, and the Issuing Bank
shall not have any obligation to issue any Letter of Credit, if an Event of
Default or Unmatured Event of Default exists.

                                       18
<PAGE>   28

                                   SECTION 3
                             NOTES EVIDENCING LOANS

     3.1 Notes. The Revolving Loans of each Bank shall be evidenced by a
promissory note (each, a "Revolving Note") substantially in the form set forth
in Exhibit A-1, with appropriate insertions, payable to the order of such Bank
in a face principal amount equal to such Bank's Pro Rata Share of the Revolving
Commitment Amount. Each Revolving Loan of such Bank shall be paid in full on the
Termination Date. The Term Loan of each Bank, if any, shall be evidenced by a
promissory note (each, a "Term Note") substantially in the form set forth in
Exhibit A-2, with appropriate insertions, payable to the order of such Bank in a
face principal amount equal to such Bank's Pro Rata Share of the Requested Term
Out Amount. The Term Loan of such Bank shall be paid in equal quarterly
installments, sufficient to fully amortize such Term Loan by the fifth
anniversary of the Closing Date, beginning on the last day of the Fiscal Quarter
immediately following the Fiscal Quarter in which the Term Loan Funding Date
occurs and continuing on the last day of each Fiscal Quarter thereafter. The
Term Loan of such Bank shall be paid in full on the fifth anniversary of the
Closing Date.

     3.2 Recordkeeping. Each Bank shall record in its records, or at its option
on the schedule attached to its Notes, the date and amount of each Loan made by
such Bank, each repayment or conversion thereof and, in the case of each
Eurodollar Loan, the dates on which each Interest Period for such Loan shall
begin and end. The aggregate unpaid principal amount so recorded shall be
rebuttable presumptive evidence of the principal amount owing and unpaid on such
Note. The failure to so record any such amount or any error in so recording any
such amount shall not, however, limit or otherwise affect the obligations of the
Company hereunder or under any Note to repay the principal amount of the Loans
evidenced by such Notes together with all interest accruing thereon.

                                   SECTION 4
                                    INTEREST

     4.1 Interest Rates. The Company promises to pay interest on the unpaid
principal amount of each Loan for the period commencing on the date of such Loan
until such Loan is paid in full as follows:

          (a) at all times while such Loan is a Base Rate Loan, at a rate per
     annum equal to the sum of the Base Rate from time to time in effect plus
     the Base Rate Margin from time to time in effect; and

          (b) at all times while such Loan is a Eurodollar Loan, at a rate per
     annum equal to the sum of the Eurodollar Rate (Reserve Adjusted) applicable
     to each Interest Period for such Loan plus the Eurodollar Margin from time
     to time in effect;

provided that at any time an Event of Default exists, if requested by the
Required Banks, the interest rate applicable to each Loan shall be increased by
2% per annum.

                                       19
<PAGE>   29

     4.2 Interest Payment Dates. Accrued interest on each Base Rate Loan shall
be payable in arrears on the last day of each calendar quarter and at maturity.
Accrued interest on each Eurodollar Loan shall be payable on the last day of
each Interest Period relating to such Loan (and, in the case of a Eurodollar
Loan with a six-month Interest Period, on the three-month anniversary of the
first day of such Interest Period) and at maturity. After maturity, accrued
interest on all Loans shall be payable on demand. All accrued interest not paid
when due shall, to the extent permitted by law, bear interest from the date due
until paid at the Base Rate from time to time in effect plus the Base Rate
Margin from time to time in effect plus 2% per annum.

     4.3 Setting and Notice of Eurodollar Rates. The applicable Eurodollar Rate
for each Interest Period shall be determined by the Administrative Agent, and
notice thereof shall be given by the Administrative Agent promptly to the
Company and each Bank. Each determination of the applicable Eurodollar Rate by
the Administrative Agent shall be conclusive and binding upon the parties
hereto, in the absence of demonstrable error. The Administrative Agent shall,
upon written request of the Company or any Bank, deliver to the Company or such
Bank a statement showing the computations used by the Administrative Agent in
determining any applicable Eurodollar Rate hereunder.

     4.4 Computation of Interest. Interest shall be computed for the actual
number of days elapsed on the basis of a year of 360 days. The applicable
interest rate for each Base Rate Loan shall change simultaneously with each
change in the Base Rate.

                                   SECTION 5
                                      FEES

     5.1 Non-Use Fee. The Company agrees to pay to the Administrative Agent for
the account of each Bank a non-use fee, for the period from the Closing Date to
the Termination Date, at the Non-Use Fee Rate in effect from time to time of
such Bank's Pro Rata Share (as adjusted from time to time) of the unused amount
of the Revolving Commitment Amount. For purposes of calculating usage under this
Section, the Revolving Commitment Amount shall be deemed used to the extent of
the aggregate principal amount of all outstanding Revolving Loans plus the
Stated Amount of all Letters of Credit. Such non-use fee shall be payable in
arrears on the last day of each calendar quarter and on the Termination Date for
any period then ending for which such non-use fee shall not have previously been
paid. The non-use fee shall be computed for the actual number of days elapsed on
the basis of a year of 360 days.

     5.2 Letter of Credit Fees. (a) The Company agrees to pay to the
Administrative Agent for the account of each Bank a letter of credit fee for
each Letter of Credit equal to the LC Fee Rate in effect from time to time of
such Bank's Pro Rata Share (as adjusted from time to time) of the undrawn amount
of such Letter of Credit (computed for the actual number of days elapsed on the
basis of a year of 360 days); provided that, if requested by the Required Banks,
the rate applicable to each Letter of Credit shall be increased by 2% per annum
at any time that an Event of Default exists. Such letter of credit fee shall be
payable in arrears on the last day of each calendar quarter and on the
Termination Date for the period from the date of the issuance of each Letter of
Credit (or the last day on which the letter of credit fee was paid with respect

                                       20
<PAGE>   30

thereto) to the date such payment is due or, if earlier, the date on which such
Letter of Credit expired or was terminated.

     (b) In addition, with respect to each Letter of Credit, the Company agrees
to pay to the Issuing Bank, for its own account, (i) such fees and expenses as
the Issuing Bank customarily requires in connection with the issuance,
negotiation, processing and/or administration of letters of credit in similar
situations and (ii) a letter of credit fronting fee in the amount and at the
times agreed to by the Company and the Issuing Bank.

     5.3 Upfront Fees. The Company agrees to pay to the Administrative Agent for
the account of each Bank on the Closing Date an upfront fee as set forth in the
Fee Letter Agreement (and the Administrative Agent agrees to promptly forward to
each Bank a portion of such upfront fee in the amount previously agreed to
between the Administrative Agent and such Bank).

     5.4 Administrative Agent's Fees. The Company agrees to pay to the
Administrative Agent, as and when due, the fees set forth in the Fee Letter
Agreement or as are otherwise mutually agreed to from time to time by the
Company and the Administrative Agent.

     5.5 Other Due Fees and Other Amounts. All fees and other amounts due under
this Agreement and the other Loan Documents which are not paid when due shall,
to the extent permitted by law, bear interest from the date due until paid at
the Base Rate from time to time in effect plus the Base Rate Margin from time to
time in effect plus 2% per annum.

                                   SECTION 6
                         REDUCTION OR TERMINATION OF THE
                         COMMITMENT AMOUNTS; PREPAYMENTS

     6.1 Reduction or Termination of the Commitment Amounts.

          6.1.1 Voluntary Reduction or Termination of the Revolving Commitment
Amount. The Company may from time to time on at least five Business Days' prior
written notice received by the Administrative Agent (which shall promptly advise
each Bank thereof) permanently reduce the Revolving Commitment Amount to an
amount not less than the Revolving Outstandings. Any such reduction shall be in
an amount not less than $10,000,000 or a higher integral multiple of $1,000,000.
Concurrently with any reduction of the Revolving Commitment Amount to zero, the
Company shall pay all interest on the Revolving Loans, all non-use fees and all
letter of credit fees and shall Cash Collateralize in full all obligations
arising with respect to the Letters of Credit.

          6.1.2 Mandatory Reductions of Revolving Commitment Amount. The
Revolving Commitment Amount shall be permanently reduced on the Term Loan
Funding Date by an amount equal to the Requested Term Out Amount. If a Mandatory
Prepayment Event occurs prior to the Termination Date, then, on the date of such
Mandatory Prepayment Event, the Revolving Commitment Amount shall be permanently
reduced by an amount (if any) equal to the Designated Proceeds of such Mandatory
Prepayment Event.

                                       21
<PAGE>   31

          6.1.3 Mandatory Reductions of Term Loan Commitment Amount. The Term
Loan Commitment Amount shall be permanently reduced by an amount equal to 100%
of the amount of the Net Cash Proceeds received by the Company or any Subsidiary
from any issuance of Mortgage Debt, concurrently with the receipt by the Company
or such Subsidiary of such Net Cash Proceeds.

          6.1.4 All Reductions of the Commitment Amounts. All reductions of the
Revolving Commitment Amount and the Term Loan Commitment Amount shall reduce the
Commitments pro rata among the Banks according to their respective Pro Rata
Shares.

     6.2 Prepayments.

          6.2.1 Voluntary Prepayments. The Company may from time to time prepay
the Loans in whole or in part; provided that the Company shall give the
Administrative Agent (which shall promptly advise each Bank) notice thereof not
later than 11:00 A.M., Chicago time, on the day of such prepayment (which shall
be a Business Day), specifying the Loans to be prepaid and the date and amount
of prepayment. Any such partial prepayment shall be in an amount equal to
$100,000 or a higher integral multiple of $10,000.

          6.2.2 Mandatory Prepayments. (a) The Company shall make a prepayment
of the Loans upon the occurrence of any of the following (each a "Mandatory
Prepayment Event") at the following times and in the following amounts (such
applicable amounts being referred to as "Designated Proceeds"):

               (i) Concurrently with the receipt by the Company or any
          Subsidiary of Net Cash Proceeds from Asset Sales in an aggregate
          amount in excess of $2,000,000 in any Fiscal Year, in an amount equal
          to 100% of such excess; and

               (ii) Concurrently with the receipt by the Company or any
          Subsidiary of any Net Cash Proceeds from any issuance of any Mortgage
          Debt, in an amount equal to 100% of such Net Cash Proceeds.

     If the applicable Mandatory Prepayment Event occurs prior to the Term Loan
     Funding Date, the Designated Proceeds shall be applied to reduce the unpaid
     principal balance of the Revolving Loans (if any). If the Mandatory
     Prepayment Event occurs on or after the Term Loan Funding Date, (i) the
     Designated Proceeds shall be applied (i) first, to reduce the unpaid
     principal balance of the Term Loan, and (ii) second, to reduce the unpaid
     principal balance of the Revolving Loans (if any), in each case pro rata
     among the Banks according to their respective Pro Rata Shares.

          (b) If on any day on which the Revolving Commitment Amount is reduced
     pursuant to Section 6.1.2 the Revolving Outstandings exceed the Revolving
     Commitment Amount, the Company shall immediately prepay Revolving Loans or
     Cash Collateralize the outstanding Letters of Credit, or do a combination
     of the foregoing, in an amount sufficient to eliminate such excess.

                                       22
<PAGE>   32

     6.3 All Prepayments. Each voluntary partial prepayment shall be in a
principal amount of $100,000 or a higher integral multiple of $10,000. Any
partial prepayment of a Group of Eurodollar Loans shall be subject to the
proviso to Section 2.2.3(a). Any prepayment of a Eurodollar Loan on a day other
than the last day of an Interest Period therefor shall include interest on the
principal amount being repaid and shall be subject to Section 8.4. All
prepayments of Term Loans shall be applied pro rata to the remaining
installments thereof.

                                   SECTION 7
                 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES

     7.1 Making of Payments. All payments of principal of or interest on the
Notes, and of all fees, shall be made by the Company to the Administrative Agent
in immediately available funds at the office specified by the Administrative
Agent not later than noon, Chicago time, on the date due; and funds received
after that hour shall be deemed to have been received by the Administrative
Agent on the following Business Day. The Administrative Agent shall promptly
remit to each Bank its share of all such payments received in collected funds by
the Administrative Agent for the account of such Bank, net of any amounts owed
by such Bank to Administrative Agent under Section 2.2.2(b). All payments under
Section 8.1 shall be made by the Company directly to the Bank entitled thereto.
Unless the Administrative Agent receives notice from the Company prior to the
due date for any payment hereunder that the Company does not intend to make such
payment, the Administrative Agent may assume that the Company has made such
payment and, in reliance upon such assumption, make available to each Bank its
share of such payment, net of any amounts owed by such Bank to Administrative
Agent under Section 2.2.2(b). If and to the extent that the Company has not made
any such payment to the Administrative Agent, each Bank which received a share
of such payment shall repay such share (or the relevant portion thereof) to the
Administrative Agent forthwith upon demand, together with interest thereon at
the Base Rate (or, in the case of any Bank which repays such amount within three
Business Days, the Federal Funds Rate). Nothing set forth in this Section 7.1
shall relieve the Company of any obligation it may have to make any payment
hereunder.

     7.2 Application of Certain Payments. Each payment of principal shall be
applied to the Loans as the Company shall direct by notice to be received by the
Administrative Agent on or before the date of such payment or, in the absence of
such notice, as the Administrative Agent shall determine in its discretion.
Concurrently with each remittance to any Bank of its share of any such payment,
the Administrative Agent shall advise such Bank as to the application of such
payment. Notwithstanding the foregoing, after an Event of Default has occurred
and is continuing, the Administrative Agent may apply any payments as the
Administrative Agent shall determine in its sole discretion.

     7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Loans, or of any fees, falls due on a day which is not a
Business Day, then such due date shall be extended to the immediately following
Business Day (unless, in the case of a Eurodollar Loan, such immediately
following Business Day is the first Business Day of a calendar month, in which
case such due date shall be the immediately preceding Business Day) and, in the
case of principal, additional interest shall accrue and be payable for the
period of any such extension.

                                       23
<PAGE>   33

     7.4 Setoff. The Company agrees that the Administrative Agent and each Bank
have all rights of set-off and bankers' lien provided by applicable law, and in
addition thereto, the Company agrees that at any time any Event of Default
exists, the Administrative Agent and each Bank may apply to the payment of any
obligations of the Company hereunder, whether or not then due, any and all
balances, credits, deposits, accounts or moneys of the Company then or
thereafter with the Administrative Agent or such Bank.

     7.5 Proration of Payments. If any Bank shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of offset or otherwise,
but excluding any payment pursuant to Section 8.7 or 14.9 and payments of
interest on any Affected Loan) on account of principal of or interest on any
Loan (or on account of its participation in any Letter of Credit) in excess of
its pro rata share of payments and other recoveries obtained by all Banks on
account of principal of and interest on the Loans (or such participation) then
held by them, such Bank shall purchase from the other Banks such participations
in the Loans (or sub-participations in Letters of Credit) held by them as shall
be necessary to cause such purchasing Bank to share the excess payment or other
recovery ratably with each of them; provided that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Bank, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery.

     7.6 Taxes. All payments of principal of, and interest on, the Loans and all
other amounts payable hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes and
other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, excluding franchise taxes and taxes
imposed on or measured by any Bank's net income or receipts (all non-excluded
items being called "Taxes"). If any withholding or deduction from any payment to
be made by the Company hereunder is required in respect of any Taxes pursuant to
any applicable law, rule or regulation, then the Company will:

          (a) pay directly to the relevant authority the full amount required to
     be so withheld or deducted;

          (b) promptly forward to the Administrative Agent an official receipt
     or other documentation satisfactory to the Administrative Agent evidencing
     such payment to such authority; and

          (c) pay to the Administrative Agent for the account of the Banks such
     additional amount or amounts as is necessary to ensure that the net amount
     actually received by each Bank will equal the full amount such Bank would
     have received had no such withholding or deduction been required.

Moreover, if any Taxes are directly asserted against the Administrative Agent or
any Bank with respect to any payment received by the Administrative Agent or
such Bank hereunder, the Administrative Agent or such Bank may pay such Taxes
and the Company will promptly pay such additional amounts (including any
penalty, interest or expense arising due to any act or omission of the Company)
as is necessary in order that the net amount received by such Person

                                       24
<PAGE>   34

after the payment of such Taxes (including any Taxes on such additional amount)
shall equal the amount such Person would have received had such Taxes not been
asserted.

     If the Company fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent, for the account of the
respective Banks, the required receipts or other required documentary evidence,
the Company shall indemnify the Banks for any incremental Taxes, interest or
penalties that may become payable by any Bank as a result of any such failure.
For purposes of this Section 7.6, a distribution hereunder by the Administrative
Agent or any Bank to or for the account of any Bank shall be deemed a payment by
the Company.

     Each Bank that (a) is organized under the laws of a jurisdiction other than
the United States of America and (b)(i) is a party hereto on the Closing Date or
(ii) becomes an assignee of an interest under this Agreement under Section
14.9.1 after the Closing Date (unless such Bank was already a Bank hereunder
immediately prior to such assignment) shall execute and deliver to the Company
and the Administrative Agent one or more (as the Company or the Administrative
Agent may reasonably request) United States Internal Revenue Service Forms 4224
or Forms 1001 or such other forms or documents, appropriately completed, as may
be applicable to establish that such Bank is exempt from withholding or
deduction of Taxes. The Company shall not be required to pay additional amounts
to any Bank pursuant to this Section 7.6 to the extent that the obligation to
pay such additional amounts would not have arisen but for the failure of such
Bank to comply with this paragraph.

                                   SECTION 8
            INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS

     8.1 Increased Costs. (a) If, after the Closing Date, the adoption of, or
any change in, any applicable law, rule or regulation, or any change in the
interpretation or administration of any applicable law, rule or regulation by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or any
Eurodollar Office of such Bank) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency:

               (i) shall subject any Bank (or any Eurodollar Office of such
          Bank) to any tax, duty or other charge with respect to its Eurodollar
          Loans, its Notes or its obligation to make Eurodollar Loans, or shall
          change the basis of taxation of payments to any Bank of the principal
          of or interest on its Eurodollar Loans or any other amounts due under
          this Agreement in respect of its Eurodollar Loans or its obligation to
          make Eurodollar Loans (except for changes in the rate of tax on the
          overall net income of such Bank or its Eurodollar Office imposed by
          the jurisdiction in which such Bank's principal executive office or
          Eurodollar Office is located);

               (ii) shall impose, modify or deem applicable any reserve
          (including any reserve imposed by the FRB, but excluding any reserve
          included in the determination of interest rates pursuant to Section
          4), special deposit or similar

                                       25
<PAGE>   35

          requirement against assets of, deposits with or for the account of, or
          credit extended by any Bank (or any Eurodollar Office of such Bank);
          or

               (iii) shall impose on any Bank (or its Eurodollar Office) any
          other condition affecting its Eurodollar Loans, its Notes or its
          obligation to make Eurodollar Loans;

and the result of any of the foregoing is to increase the cost to (or to impose
a cost on) such Bank (or any Eurodollar Office of such Bank) of making or
maintaining any Eurodollar Loan, or to reduce the amount of any sum received or
receivable by such Bank (or its Eurodollar Office) under this Agreement or under
its Notes with respect thereto, then upon demand by such Bank (which demand
shall be accompanied by a statement setting forth the basis for such demand and
a calculation of the amount thereof in reasonable detail, a copy of which shall
be furnished to the Administrative Agent), the Company shall pay directly to
such Bank such additional amount as will compensate such Bank for such increased
cost or such reduction.

     (b) If any Bank shall determine that the adoption or phase- in of, any
applicable law, rule or regulation regarding capital adequacy or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank or any
Person controlling such Bank with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Bank's or such controlling Person's capital as a consequence of
such Bank's obligations hereunder or under any Letter of Credit to a level below
that which such Bank or such controlling Person could have achieved but for such
adoption, phase-in, change or compliance (taking into consideration such Bank's
or such controlling Person's policies with respect to capital adequacy) by an
amount deemed by such Bank or such controlling Person to be material, then from
time to time, upon demand by such Bank (which demand shall be accompanied by a
statement setting forth the basis for such demand and a calculation of the
amount thereof in reasonable detail, a copy of which shall be furnished to the
Administrative Agent), the Company shall pay to such Bank such additional amount
as will compensate such Bank or such controlling Person for such reduction.

     8.2 Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period:

          (a) deposits in U.S. dollars (in the applicable amounts) are not being
     offered to the Administrative Agent in the interbank eurodollar market for
     such Interest Period, or the Administrative Agent otherwise determines
     (which determination shall be binding and conclusive on the Company) that
     by reason of circumstances affecting the interbank eurodollar market
     adequate and reasonable means do not exist for ascertaining the applicable
     Eurodollar Rate; or

          (b) Banks having aggregate Pro Rata Shares of 25% or more shall
     reasonably determine and shall so advise the Administrative Agent that due
     to economic or other

                                       26
<PAGE>   36

     conditions affecting generally the eurodollar market which are not due to
     any act, omission, event or determination within the direct control of such
     Banks, the Eurodollar Rate (Reserve Adjusted) as determined by the
     Administrative Agent will not adequately and fairly reflect the cost to
     such Banks of maintaining or funding Eurodollar Loans for such Interest
     Period or that the making or funding of Eurodollar Loans has become
     impracticable as a result of an event occurring after the date of this
     Agreement;

then the Administrative Agent shall promptly notify the other parties thereof
and, so long as such circumstances shall continue, (i) no Bank shall be under
any obligation to make or convert into Eurodollar Loans and (ii) on the last day
of the current Interest Period for each Eurodollar Loan, such Loan shall, unless
then repaid in full, automatically convert to a Base Rate Loan.

     8.3 Changes in Law Rendering Eurodollar Loans Unlawful. If any change in
(including the adoption of any new) applicable law or regulation, or any change
in the interpretation of any applicable law or regulation by any governmental or
other regulatory body charged with the administration thereof, should make it
(or in the good faith judgment of any Bank cause a substantial question as to
whether it is) unlawful for any Bank to make, maintain or fund Eurodollar Loans,
then such Bank shall promptly notify each of the other parties hereto and, so
long as such circumstances shall continue, (a) such Bank shall have no
obligation to make or convert into Eurodollar Loans (but shall make Base Rate
Loans concurrently with the making of or conversion into Eurodollar Loans by the
Banks which are not so affected, in each case in an amount equal to the amount
of Eurodollar Loans which would be made or converted into by such Bank at such
time in the absence of such circumstances) and (b) on the last day of the
current Interest Period for each Eurodollar Loan of such Bank (or, in any event,
on such earlier date as may be required by the relevant law, regulation or
interpretation), such Eurodollar Loan shall, unless then repaid in full,
automatically convert to a Base Rate Loan. Each Base Rate Loan made by a Bank
which, but for the circumstances described in the foregoing sentence, would be a
Eurodollar Loan (an "Affected Loan") shall remain outstanding for the same
period as the Group of Eurodollar Loans of which such Affected Loan would be a
part absent such circumstances.

     8.4 Funding Losses. The Company hereby agrees that upon written demand by
any Bank (which demand shall be accompanied by a statement setting forth the
basis for the amount being claimed, a copy of which shall be furnished to the
Administrative Agent), the Company will indemnify such Bank against any net loss
or expense that such Bank may sustain or incur (including any net loss or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Bank to fund or maintain any Eurodollar Loan), as
reasonably determined by such Bank, as a result of (a) any payment, prepayment
or conversion of any Eurodollar Loan of such Bank on a date other than the last
day of an Interest Period for such Loan (including any conversion pursuant to
Section 8.3) or (b) any failure of the Company to borrow, convert or continue
any Loan on a date specified therefor in a notice of borrowing, conversion or
continuation pursuant to this Agreement. For this purpose, all notices to the
Administrative Agent pursuant to this Agreement shall be deemed to be
irrevocable.

                                       27
<PAGE>   37

     8.5 Right of Banks to Fund through Other Offices. Each Bank may, if it so
elects, fulfill its commitment as to any Eurodollar Loan by causing a foreign
branch or Affiliate of such Bank to make such Loan; provided that in such event
for the purposes of this Agreement such Loan shall be deemed to have been made
by such Bank and the obligation of the Company to repay such Loan shall
nevertheless be to such Bank and shall be deemed held by it, to the extent of
such Loan, for the account of such branch or Affiliate.

     8.6 Discretion of Banks as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Bank shall be entitled to fund
and maintain its funding of all or any part of its Loans in any manner it sees
fit, it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if such Bank had actually funded and
maintained each Eurodollar Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the Eurodollar Rate for
such Interest Period.

     8.7 Mitigation of Circumstances; Replacement of Banks. (a) Each Bank shall
promptly notify the Company and the Administrative Agent of any event of which
it has knowledge which will result in, and will use reasonable commercial
efforts available to it (and not, in such Bank's sole judgment, otherwise
disadvantageous to such Bank) to mitigate or avoid, (i) any obligation by the
Company to pay any amount pursuant to Section 7.6 or 8.1 or (ii) the occurrence
of any circumstances described in Section 8.2 or 8.3 (and, if any Bank has given
notice of any such event described in clause (i) or (ii) above and thereafter
such event ceases to exist, such Bank shall promptly so notify the Company and
the Administrative Agent). Without limiting the foregoing, each Bank will
designate a different funding office if such designation will avoid (or reduce
the cost to the Company of) any event described in clause (i) or (ii) of the
preceding sentence and such designation will not, in such Bank's sole judgment,
be otherwise disadvantageous to such Bank. No Bank shall request that the
Company pay any amount pursuant to Section 7.6 or 8.1, or advise Administrative
Agent as to its determination under Section 8.2(b), unless it is generally
making similar requests of, or determinations with respect to, other borrowers
similarly situated, and each Bank agrees to use a reasonable basis for
calculating such amounts and making such determinations.

     (b) If the Company becomes obligated to pay additional amounts to any Bank
pursuant to Section 7.6 or 8.1, or any Bank gives notice of the occurrence of
any circumstances described in Section 8.2 or 8.3, then, if no Event of Default
has occurred and is continuing, the Company may designate another bank which is
acceptable to the Administrative Agent and the Issuing Bank in their reasonable
discretion (such other bank being called a "Replacement Bank") to purchase the
Loans of such Bank and such Bank's rights hereunder, without recourse to or
warranty by, or expense to, such Bank, for a purchase price equal to the
outstanding principal amount of the Loans payable to such Bank plus any accrued
but unpaid interest on such Loans and all accrued but unpaid fees owed to such
Bank and any other amounts payable to such Bank under this Agreement (excluding,
however, in the event the aggregate Pro Rata Shares of the Banks being replaced
are less than 25%, all amounts, if any, which otherwise would be payable to such
Bank pursuant to Section 8.4 hereof), and to assume all the obligations of such
Bank hereunder, and, upon such purchase and assumption (pursuant to an
Assignment Agreement),

                                       28
<PAGE>   38

such Bank shall no longer be a party hereto or have any rights hereunder (other
than rights with respect to indemnities and similar rights applicable to such
Bank prior to the date of such purchase and assumption) and shall be relieved
from all obligations to the Company hereunder, and the Replacement Bank shall
succeed to the rights and obligations of such Bank hereunder.

     8.8 Conclusiveness of Statements; Survival of Provisions. Determinations
and statements of any Bank pursuant to Section 8.1, 8.2, 8.3 or 8.4 shall be
conclusive absent demonstrable error. Banks may use reasonable averaging and
attribution methods in determining compensation under Sections 8.1 and 8.4, and
the provisions of such Sections shall survive repayment of the Loans,
cancellation of the Notes, expiration or termination of the Letters of Credit
and termination of this Agreement.

                                   SECTION 9
                         REPRESENTATIONS AND WARRANTIES

     To induce the Agents and the Banks to enter into this Agreement and to
induce the Banks to make Loans and issue and participate in Letters of Credit
hereunder, the Company represents and warrants to the Agents and the Banks that:

     9.1 Organization. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware. Each Subsidiary is
validly existing and in good standing under the laws of the jurisdiction of its
organization. The Company and each other Loan Party has all requisite corporate
power to own its property and conduct its business as now conducted and as
presently contemplated. The Company is in good standing and is duly qualified to
do business in the States of Arizona, California, Colorado, Illinois, Indiana
and Texas, the Commonwealth of Massachusetts and each other jurisdiction where,
because of the nature of its activities or properties, such qualification is
required, except for such jurisdictions where the failure so to qualify would
not have a Material Adverse Effect.

     9.2 Authorization; No Conflict. Each of the Company and each other Loan
Party is duly authorized to execute and deliver each Loan Document to which it
is a party, the Company is duly authorized to borrow monies under this Agreement
and each of the Company and each other Loan Party is and will continue to be
duly authorized to perform its obligations under each Loan Document to which it
is a party. The execution, delivery and performance by the Company of this
Agreement and by each of the Company and each other Loan Party of each Loan
Document to which it is a party, and the borrowings by the Company under this
Agreement, do not and will not (i) require any consent or approval of any
governmental agency or authority that has not been obtained or (ii) conflict
with (a) any provision of law, (b) the articles of incorporation or by-laws of
the Company or any other Loan Party, (c) any agreement, indenture, instrument or
other document binding upon the Company or any other Loan Party or any of their
respective properties or assets or (d) any court or administrative order or
decree applicable to the Company, and do not and will not require, or result in,
the creation or imposition of any Lien on any asset of the Company or any other
Loan Party.

                                       29
<PAGE>   39

     9.3 Validity and Binding Nature. Each of this Agreement and each other Loan
Document to which the Company or any other Loan Party is a party is the legal,
valid and binding obligation of such Person, enforceable against such Person in
accordance with its terms.

     9.4 Financial Condition. The audited consolidated financial statements of
the Company and its Subsidiaries as of and for the fiscal years ended September
30, 1999 and September 30, 2000, and unaudited consolidated financial statements
of the Company for the portion of fiscal year 2001 up to and including March 31,
2001, copies of which have been furnished prior to the Closing Date to the
Administrative Agent, have been prepared in accordance with GAAP and fairly
present the consolidated financial condition of the Company and its Subsidiaries
as of such dates and the results of their operations for the periods then ended.
Except as reflected and accrued for or reserved against in the Company's
consolidated financial statements, or as disclosed in the notes thereto, neither
the Company nor any Subsidiary has any material liabilities, known or unknown,
matured or unmatured, absolute, contingent or otherwise which might reasonably
be expected to have a Material Adverse Effect.

     9.5 No Material Adverse Change. Since September 30, 2000, there has been no
event that has had or might reasonably be expected to have a Material Adverse
Effect. Since September 30, 2000, the Company has not (i) paid or declared any
dividend on or in respect of any shares of any class of capital stock of the
Company (other than dividends payable solely in shares of common stock of the
Company), (ii) purchased, redeemed or otherwise retired any shares of any class
of capital stock of the Company, directly or indirectly through a Subsidiary or
otherwise, (iii) returned capital to its shareholders as such, or (iv) made any
other distribution on or in respect of any shares of any class of capital stock
of the Company.

     9.6 Litigation and Contingent Liabilities. Except as set forth in Schedule
9.6, no litigation (including derivative actions), arbitration proceeding or
governmental investigation or proceeding is pending or, to the Company's
knowledge, threatened against the Company or any Subsidiary which might
reasonably be expected to have a Material Adverse Effect. There are no
injunctions or temporary restraining orders (either pending or, to the Company's
knowledge, threatened) that would prohibit the making of Loans. Other than any
liability incident to such litigation or proceedings, neither the Company nor
any Subsidiary has any contingent liabilities not listed on Schedule 9.6 or
permitted by Section 10.7 which has had or might reasonably be expected to have
a Material Adverse Effect.

     9.7 No Materially Adverse Contracts, etc. Neither the Company nor any of
its Subsidiaries is subject to any charter, corporate or, to the Company's
knowledge, other legal restriction, or any judgment, decree, order, rule or
regulation that has or is expected in the future to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is a party to any
contract or agreement that has or is expected to have any Material Adverse
Effect.

     9.8 Compliance. Neither the Company nor any of its Subsidiaries is in
violation of any provision of its articles of incorporation, bylaws, or any
agreement or instrument to which it may be subject or by which it or any of its
properties may be bound or any statute, license, rule or regulation applicable
to it, or, to the Company's knowledge, any decree, order or judgment, in any of
the foregoing cases in a manner that could result in the imposition of
substantial penalties

                                       30
<PAGE>   40

or result in a Material Adverse Effect. No contract or other agreement to which
the Company or any Subsidiary is a party has been terminated if such termination
could result in a Material Adverse Effect.

     9.9 Taxes. Each of the Company and each Subsidiary has filed all tax
returns and reports (federal, state, local, foreign and other applicable tax
returns) required to be filed by or on behalf of it and has paid or caused to be
paid all taxes and other governmental charges due for the periods covered
thereby, including interest and penalties, other than any such taxes or charges
(i) for which a timely and proper extension has been obtained and (ii) that are
being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained to the extent required by GAAP, unless
and until any Lien resulting therefrom attaches to its property and becomes
enforceable against its other creditors. The Company has set aside reserves on
its balance sheet for the payment of all liabilities for all taxes (whether or
not disputed) of the Company accrued through the date of such balance sheet to
the extent required by GAAP.

     9.10 Information. All information heretofore or contemporaneously with this
Agreement furnished in writing by the Company or any other Loan Party to the
Agents or any Bank for purposes of or in connection with this Agreement and the
transactions contemplated hereby is, and all written information hereafter
furnished by or on behalf of the Company or any other Loan Party to the Agents
or any Bank pursuant hereto or in connection herewith will be, true and accurate
in every material respect on the date as of which such information is dated or
certified, and none of such information is or will be incomplete by omitting to
state any material fact necessary to make such information not misleading in
light of the circumstances under which made (it being recognized by the Agents
and the Banks that any projections and forecasts provided by the Company are
based on good faith estimates and assumptions believed by the Company to be
reasonable as of the date of the applicable projections or assumptions and that
actual results during the period or periods covered by any such projections and
forecasts may differ from projected or forecasted results).

     9.11 Solvency. On the Closing Date, and immediately prior to and after
giving effect to the transactions contemplated by this Agreement and the making
of each Loan, (i) the Company's and each other Loan Party's assets will exceed
its liabilities and (ii) each of the Company and each other Loan Party will be
solvent, will be able to pay its debts as they mature, will own property with
fair saleable value greater than the amount required to pay its debts and will
have capital sufficient to carry on its business as then constituted.

     9.12 No Default. No Event of Default or Unmatured Event of Default exists
or would result from the incurring by the Company of any Debt under this
Agreement or under any other Loan Document.

     9.13 Use of Proceeds. The Company will apply the proceeds of any Loan or
Letter of Credit under this Agreement for working capital and general corporate
purposes.

     9.14 Subsidiaries. Except as set forth on Schedule 9.14 hereto, the Company
has no Subsidiaries.

                                       31
<PAGE>   41

     9.15 Ownership of Properties; Liens. Except as permitted pursuant to
Section 10.8 and subject to Section 9.16, each of the Company and each
Subsidiary owns good title to all of its properties and assets, tangible and
intangible, of any nature whatsoever (including patents, trademarks, trade
names, service marks and copyrights), free and clear of all Liens, charges and
claims (including infringement claims with respect to patents, trademarks,
service marks, copyrights and the like).

     9.16 Intellectual Property. To the best of the Company's knowledge after
due inquiry, and except as set forth in Schedule 9.16, the Company and each of
its Subsidiaries owns and possesses or has a license or other right to use all
such patents, patent rights, trademarks, trademark rights, trade names, trade
name rights, service marks, service mark rights and copyrights as are necessary
for the conduct of the business of the Company and its Subsidiaries as conducted
on the Closing Date, without any infringement upon rights of others which might
reasonably be expected to have a Material Adverse Effect.

     9.17 Insurance. Set forth on Schedule 9.17 is a complete and accurate
summary of the property and casualty insurance program of the Company and its
Subsidiaries as of the Closing Date (including the names of all insurers, policy
numbers, expiration dates, amounts and types of coverage, annual premiums,
exclusions, deductibles, self-insured retention and a description in reasonable
detail of any self-insurance program, retrospective rating plan, fronting
arrangement or other risk assumption arrangement involving the Company or any
Subsidiary).

     9.18 Investment Company Act; Public Utility Holding Company Act. Neither
the Company nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940. Neither the Company nor any Subsidiary is a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935.

     9.19 Regulations T, U and X. None of the transactions contemplated by this
Agreement or any of the other Loan Documents, including the use of the proceeds
of the Loans, will violate or result in a violation of any regulation issued
pursuant to Section 7 of the Securities Exchange Act of 1934, as amended,
including, without limitation, Regulations T, U and X and the Company is not
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.

     9.20 Securities Matters. The making of the Loans, the application of the
proceeds and repayment thereof by the Company and the consummation of the
transactions contemplated by this Agreement and the other Loan Documents will
not violate any provision of any federal or state securities statutes, rules or
regulations, or any order issued by the Securities and Exchange Commission
(collectively, the "Securities Laws).

     9.21 Pension and Welfare Plans. (a) Except as set forth in Schedule 9.21,
during the twelve-consecutive-month period prior to the date of the execution
and delivery of this Agreement, (i) no steps have been taken to terminate any
Pension Plan and (ii) no contribution failure has occurred with respect to any
Pension Plan sufficient to give rise to a Lien under

                                       32
<PAGE>   42

Section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which could result in the incurrence
by the Company of any material liability, fine or penalty. The Company has no
contingent liability with respect to any post-retirement benefit under a Welfare
Plan, other than liability for continuation coverage described in Part 6 of
Subtitle B of Title I of ERISA.

     (b) Except as set forth in Schedule 9.21, all contributions (if any) have
been made to any Multiemployer Pension Plan that are required to be made by the
Company or any other member of the Controlled Group under the terms of the plan
or of any collective bargaining agreement or by applicable law; neither the
Company nor any member of the Controlled Group has withdrawn or partially
withdrawn from any Multiemployer Pension Plan, incurred any withdrawal liability
with respect to any such plan, received notice of any claim or demand for
withdrawal liability or partial withdrawal liability from any such plan, and no
condition has occurred which, if continued, might result in a withdrawal or
partial withdrawal from any such plan; and neither the Company nor any member of
the Controlled Group has received any notice that any Multiemployer Pension Plan
is in reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of any excise tax, that any such
plan is or has been funded at a rate less than that required under Section 412
of the Code, that any such plan is or may be terminated, or that any such plan
is or may become insolvent.

     9.22 Environmental Matters.

          (a) To the best of the Company's knowledge based upon a good faith
     review, neither the Company nor any Subsidiary, nor any operator of the
     Company's or any Subsidiary's properties, is in violation, or alleged
     violation, of any judgment, decree, order, law, permit, license, rule or
     regulation pertaining to environmental matters, including those arising
     under the Resource Conservation and Recovery Act ("RCRA"), the
     Comprehensive Environmental Response, Compensation and Liability Act of
     1980 ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986
     or any other Environmental Law which individually or in the aggregate might
     reasonably be expected to have a Material Adverse Effect.

          (b) Neither the Company nor any Subsidiary has received notice from
     any third party, including any federal, state or local governmental
     authority (i) that any one of them has been identified by the United States
     Environmental Protection Agency as a potentially responsible party under
     CERCLA with respect to a site listed on the National Priorities List, 40
     C.F.R. Part 300 Appendix B, (ii) that any hazardous waste, as defined by 42
     U.S.C.ss.6903(5), any hazardous substance as defined by 42
     U.S.C.ss.9601(14), any pollutant or contaminant as defined by 42
     U.S.C.ss.9601 (33) or any toxic substance, oil or hazardous material or
     other chemical or substance regulated by any Environmental Law (all of the
     foregoing, "Hazardous Substances"), which any one of them has generated,
     transported or disposed of has been found at any site at which a federal,
     state or local agency or other third party has conducted a remedial
     investigation, removal or other response action pursuant to any
     Environmental Law, (iii) that the Company or any

                                       33
<PAGE>   43

     Subsidiary must conduct a remedial investigation, removal, response action
     or other activity pursuant to any Environmental Law or (iv) of any
     Environmental Claim.

          (c) To the best of the Company's knowledge, except as set forth on
     Schedule 9.22, (i) no portion of any real property or other assets of the
     Company or any Subsidiary has been used for the handling, processing,
     storage or disposal of Hazardous Substances except in accordance in all
     material respects with applicable Environmental Laws, and no underground
     tank or other underground storage receptacle for Hazardous Substances is
     located on such properties, (ii) in the course of any activities conducted
     by the Company, any Subsidiary or the operators of any real property of the
     Company or any Subsidiary, no Hazardous Substances have been generated or
     are being used on such properties except in accordance in all material
     respects with applicable Environmental Laws, (iii) there have been no
     Releases or threatened Releases of Hazardous Substances on, upon, into or
     from any real property or other assets of the Company or any Subsidiary,
     which might individually or in the aggregate reasonably be expected to have
     a Material Adverse Effect, (iv) there have been no Releases on, upon, from
     or into any real property in the vicinity of any real property or other
     assets of the Company or any Subsidiary which, through soil or groundwater
     contamination, may have come to be located on, upon or into any real
     property or other assets of the Company or any Subsidiary, and which might
     reasonably be expected to have a Material Adverse Effect and (v) any
     Hazardous Substances generated by the Company and its Subsidiaries have
     been transported offsite only by properly licensed carriers and delivered
     only to treatment or disposal facilities maintaining valid permits as
     required under applicable Environmental Laws, which transporters and
     facilities have been and are operating in compliance in all material
     respects with such permits and applicable Environmental Laws.

     9.23 Labor Matters. Neither the Company nor any Subsidiary is subject to
any labor or collective bargaining agreement. There are no existing or
threatened strikes, lockouts or other labor disputes involving the Company or
any Subsidiary that singly or in the aggregate might reasonably be expected to
have a Material Adverse Effect. Hours worked by and payment made to employees of
the Company and its Subsidiaries are not in violation of the Fair Labor
Standards Act or any other applicable law, rule or regulation dealing with such
matters.

     9.24 Disclosure. None of this Agreement or any of the other Loan Documents
contains any untrue statement of a material fact or omits to state a material
fact (known to the Company or any of its Subsidiaries in the case of any
document or information not furnished by it or any of its Subsidiaries)
necessary in order to make the statements herein or therein not misleading.
There is no fact known to the Company or any of its Subsidiaries which
materially adversely affects, or which is reasonably likely in the future to
materially adversely affect, the business, assets, financial condition or
prospects of the Company or any of its Subsidiaries, exclusive of effects
resulting from changes in general economic conditions, legal standards or
regulatory conditions.

     9.25 Survival of Warranties. All representations contained in this
Agreement and the other Loan Documents survive the execution and delivery of
this Agreement.

                                       34

<PAGE>   44
                                   SECTION 10
                                    COVENANTS

     Until the expiration or termination of the Commitments and thereafter until
all obligations of the Company hereunder and under the other Loan Documents are
paid in full and all Letters of Credit have been terminated, the Company agrees
that, unless at any time the Required Banks shall otherwise expressly consent in
writing, it will:

     10.1 Reports, Certificates and Other Information. Furnish to the
Administrative Agent and each Bank:

          10.1.1 Annual Report. Promptly when available and in any event within
90 days after the close of each Fiscal Year a copy of the annual audit report of
the Company and its Subsidiaries for such Fiscal Year, including therein
consolidated balance sheets and statements of earnings and cash flows of the
Company and its Subsidiaries as at the end of such Fiscal Year, certified
without qualification by PriceWaterhouseCoopers LLP or other independent
auditors of recognized standing selected by the Company and reasonably
acceptable to the Required Banks, together with a written statement from such
accountants to the effect that in making the examination necessary for the
signing of such annual audit report by such accountants, nothing came to their
attention that caused them to believe that the Company was not in compliance
with any provision of Section 10.6, 10.7, 10.9 or 10.10 of this Agreement
insofar as such provision relates to accounting matters or, if something has
come to their attention that caused them to believe that the Company was not in
compliance with any such provision, describing such non-compliance in reasonable
detail.

          10.1.2 Interim Reports. Promptly when available and in any event
within 45 days after the end of each Fiscal Quarter (except the last Fiscal
Quarter of each Fiscal Year), consolidated balance sheets of the Company and its
Subsidiaries as of the end of such Fiscal Quarter, together with consolidated
statements of earnings for each Fiscal Quarter in such Fiscal Year and cash
flows for the period beginning with the first day of such Fiscal Year and ending
on the last day of such Fiscal Quarter, together with a comparison with the
corresponding period of the previous Fiscal Year.

          10.1.3 Compliance Certificates. Contemporaneously with the furnishing
of a copy of each annual audit report pursuant to Section 10.1.1 and each set of
quarterly statements pursuant to Section 10.1.2, a duly completed compliance
certificate in the form of Exhibit B, with appropriate insertions, dated the
date of such annual report or such quarterly statements and signed by the Chief
Financial Officer or Treasurer of the Company, containing a computation of each
of the financial ratios and restrictions set forth in Section 10.6 and to the
effect that such officer has not become aware of any Event of Default or
Unmatured Event of Default that has occurred and is continuing or, if there is
any such event, describing it and the steps, if any, being taken to cure it.

          10.1.4 Reports to the SEC and to Shareholders. Promptly upon the
filing or sending thereof, copies of all regular, periodic or special reports of
the Company or any Subsidiary filed with the SEC; copies of all registration
statements of the Company or any

                                       35
<PAGE>   45

Subsidiary filed with the SEC (other than on Form S-8); and copies of all proxy
statements or other communications made to security holders generally.

          10.1.5 Notice of Default, Litigation and ERISA Matters. Promptly upon
becoming aware of any of the following, written notice describing the same and
the steps being taken by the Company or the Subsidiary affected thereby with
respect thereto:

          (a) the occurrence of an Event of Default or an Unmatured Event of
     Default;

          (b) any litigation, arbitration or governmental investigation or
     proceeding not previously disclosed by the Company to the Banks which has
     been instituted or, to the knowledge of the Company, is threatened against
     the Company or any Subsidiary or to which any of the properties of any
     thereof is subject which might reasonably be expected to have a Material
     Adverse Effect;

          (c) the institution of any steps by any member of the Controlled Group
     or any other Person to terminate any Pension Plan, or the failure of any
     member of the Controlled Group to make a required contribution to any
     Pension Plan (if such failure is sufficient to give rise to a Lien under
     Section 302(f) of ERISA) or to any Multiemployer Pension Plan, or the
     taking of any action with respect to a Pension Plan which could result in
     the requirement that the Company furnish a bond or other security to the
     PBGC or such Pension Plan, or the occurrence of any event with respect to
     any Pension Plan or Multiemployer Pension Plan which could result in the
     incurrence by any member of the Controlled Group of any material liability,
     fine or penalty (including any claim or demand for withdrawal liability or
     partial withdrawal from any Multiemployer Pension Plan), or any material
     increase in the contingent liability of the Company with respect to any
     post-retirement welfare plan benefit, or any notice that any Multiemployer
     Pension Plan is in reorganization, that increased contributions may be
     required to avoid a reduction in plan benefits or the imposition of an
     excise tax, that any such Pension Plan or Multiemployer Pension Plan is or
     has been funded at a rate less than that required under Section 412 of the
     Code, that any such Pension Plan or Multiemployer Pension Plan is or may be
     terminated, or that any such Pension Plan or Multiemployer Pension Plan is
     or may become insolvent;

          (d) any cancellation or material change in any insurance maintained by
     the Company or any Subsidiary; or

          (e) any other event (including (i) any violation of any Environmental
     Law or the assertion of any Environmental Claim or (ii) the enactment or
     effectiveness of any law, rule or regulation) which might reasonably be
     expected to have a Material Adverse Effect.

          10.1.6 Management Reports. Promptly following receipt by the Company,
copies of all detailed management reports submitted to the Company by
independent auditors in connection with each annual or interim audit made by
such auditors of the books of the Company.

                                       36
<PAGE>   46

          10.1.7 Projections. As soon as practicable, and in any event within
45 days after the commencement of each Fiscal Year, financial projections for
the Company and its Subsidiaries for such Fiscal Year and the next two
succeeding Fiscal Years prepared in a manner consistent with the projections
delivered by the Company to the Banks prior to the Closing Date or otherwise in
a manner reasonably satisfactory to the Administrative Agent, accompanied by a
certificate of the Chief Financial Officer or Treasurer of the Company on behalf
of the Company to the effect that (i) such projections were prepared by the
Company in good faith, (ii) the Company has a reasonable basis for the
assumptions contained in such projections and (iii) such projections have been
prepared in accordance with such assumptions.

          10.1.8 Debt Notices. Promptly following receipt by the Company or any
of its Subsidiaries, copies of any material notices (including notices of
default or acceleration) received from any holder or trustee of, under or with
respect to any Debt of the Company or such Subsidiary.

          10.1.9 Other Information. Promptly from time to time, such other
information concerning the Company and its Subsidiaries as any Bank or the
Administrative Agent may reasonably request.

     10.2 Books, Records and Inspections. Keep, and cause each Subsidiary to
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
GAAP; permit, and cause each Subsidiary to permit, any Bank or the
Administrative Agent or any representative thereof to inspect the properties and
operations of the Company or such Subsidiary; and permit, and cause each
Subsidiary to permit, at any reasonable time and with reasonable notice (or at
any time without notice if an Event of Default exists), any Bank or the
Administrative Agent or any representative thereof to visit any or all of its
offices, to discuss its financial matters with its officers and its independent
auditors (and the Company hereby authorizes such independent auditors to discuss
such financial matters with any Bank or the Administrative Agent or any
representative thereof), and to examine (and, at the expense of the Company or
the applicable Subsidiary, photocopy extracts from) any of its books or other
records. All such inspections or audits by the Administrative Agent if an Event
of Default exists shall be at the Company's expense.

     10.3 Compliance with Laws; Payment of Taxes and Liabilities. (a) Comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws, rules, regulations, decrees, orders, judgments, licenses and
permits, except where failure to comply could not reasonably be expected to have
a Material Adverse Effect; and (b) pay, and cause each Subsidiary to pay, prior
to delinquency, all taxes and other governmental charges against it or any of
its property, as well as claims of any kind which, if unpaid, might become a
Lien on any of its property; provided that the foregoing shall not require the
Company or any Subsidiary to pay any such tax or charge so long as it shall
contest the validity thereof in good faith by appropriate proceedings and shall
set aside on its books reserves with respect thereto to the extent required by
GAAP.

     10.4 Maintenance of Property; Insurance.

                                       37
<PAGE>   47

          (a) Keep, and cause each Subsidiary to keep, all property useful and
     necessary in the business of the Company or such Subsidiary in good working
     order and condition, ordinary wear and tear excepted.

          (b) Maintain, and cause each Subsidiary to maintain, with responsible
     insurance companies, such insurance as may be required by any law or
     governmental regulation or court decree or order applicable to it and such
     other insurance, to such extent and against such hazards and liabilities,
     as is customarily maintained by companies similarly situated, but which
     shall insure against all risks and liabilities of the type identified on
     Schedule 9.17 and shall have insured amounts no less than, and deductibles
     no higher than, those set forth on such schedule; and, upon request of the
     Administrative Agent or any Bank, furnish to the Administrative Agent or
     such Bank a certificate setting forth in reasonable detail the nature and
     extent of all insurance maintained by the Company and its Subsidiaries.

     10.5 Maintenance of Existence, etc. Maintain and preserve, and (subject to
Section 10.11) cause each Subsidiary to maintain and preserve, (a) its existence
and good standing in the jurisdiction of its organization and (b) its
qualification to do business and good standing in each jurisdiction where the
nature of its business makes such qualification necessary (except in those
instances in which the failure to be qualified or in good standing does not have
a Material Adverse Effect).

     10.6 Financial Covenants.

          10.6.1 Leverage Ratio. Not permit the Leverage Ratio on the last day
     of each Fiscal Quarter to be greater than 2.25 to 1.00.

          10.6.2 Debt Service Coverage Ratio. Not permit the Debt Service
     Coverage Ratio on the last day of each Fiscal Quarter to be less than 3.50
     to 1.00.

          10.6.3 Minimum Net Worth. Not permit Net Worth as of the last day of
     (i) the Fiscal Quarter ending June 30, 2001 to be less than the sum of (A)
     $104,459,000 plus (B) 50% of the consolidated net income, exclusive of
     losses, of the Company and its Subsidiaries for each of the two Fiscal
     Quarters ending June 30, 2001 and (ii) any Fiscal Quarter thereafter to be
     less than the sum of (A) the amount required hereunder for the last day of
     immediately preceding Fiscal Quarter plus (B) 50% of the consolidated net
     income, exclusive of losses, of the Company and its Subsidiaries for such
     Fiscal Quarter.

     10.7 Limitations on Debt. Not, and not permit any Subsidiary to, create,
incur, assume or suffer to exist any Debt, except:

          (a) obligations under the STEP Credit Agreement, this Agreement and
     the other Loan Documents;

                                       38
<PAGE>   48

          (b) Debt secured by Liens permitted by Section 10.8(d), and
     extensions, renewals and refinancings thereof; provided that the aggregate
     amount of all such Debt at any time outstanding shall not exceed
     $10,000,000;

          (c) Debt of Guarantor Subsidiaries to the Company;

          (d) unsecured Debt of the Company to Subsidiaries;

          (e) unsecured subordinated Debt of the Company (other than to
     Subsidiaries) in an aggregate amount not to exceed $100,000,000 at any time
     outstanding which has subordination terms, covenants, pricing and other
     terms and conditions which have been approved in writing by Administrative
     Agent in advance of the incurrence thereof, which approval shall not be
     unreasonably withheld so long as (1) such Debt matures after all
     obligations under this Agreement and the other Loan Documents have matured
     and become due and payable in full, (2) the subordination terms provide
     that no payment shall be made on such Debt, and no enforcement or
     collection action shall be taken by the holder of such Debt, if any Event
     of Default exists and is continuing under this Agreement and are otherwise
     consistent with then prevailing subordination terms and conditions, (3) the
     covenants and events of default with respect to such Debt are less
     restrictive than those contained in this Agreement and the other Loan
     Documents and (4) the pricing and other terms and conditions of such Debt
     are consistent with then prevailing market terms applicable to Debt of such
     character and type;

          (f) other senior unsecured Debt of the Company (other than to
     Subsidiaries) or of any Subsidiary (other than to the Company or any
     Subsidiary) in an aggregate amount not to exceed $10,000,000 at any time
     outstanding on terms and conditions which are approved in writing by the
     Required Banks in advance of the incurrence thereof, which approval shall
     not be unreasonably withheld so long as (1) such Debt matures after all
     obligations under this Agreement and the other Loan Documents have matured
     and become due and payable in full, (2) the covenants and events of default
     with respect to such Debt are not more restrictive than those contained in
     this Agreement and the other Loan Documents and (3) the pricing and other
     terms and conditions of such Debt are consistent with then prevailing
     market terms applicable to Debt of such character and type;

          (g) Mortgage Debt of the Company (other than to Subsidiaries) or of
     any Subsidiary (other than to the Company or any Subsidiary) in an
     aggregate amount not to exceed $25,000,000 at any time outstanding on terms
     and conditions which are approved in writing by Administrative Agent in
     advance of the incurrence thereof, which approval shall not be unreasonably
     withheld so long as the pricing and other terms and conditions of such Debt
     are consistent with then prevailing market terms applicable to Debt of such
     character and type;

          (h) Hedging Obligations incurred for bona fide hedging purposes and
     not for speculation; and

                                       39
<PAGE>   49

          (i) Debt described on Schedule 10.7 and any extension, renewal or
     refinancing thereof so long as the principal amount thereof is not
     increased.

     10.8 Liens. Not, and not permit any Subsidiary to, create or permit to
exist any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (whether now owned or hereafter acquired), except:

          (a) Liens for taxes or other governmental charges not at the time
     delinquent or thereafter payable without penalty or being contested in good
     faith by appropriate proceedings and, in each case, for which it maintains
     reserves to the extent required by GAAP;

          (b) Liens arising in the ordinary course of business (such as (i)
     Liens of carriers, warehousemen, mechanics and materialmen and other
     similar Liens imposed by law and (ii) Liens incurred in connection with
     worker's compensation, unemployment compensation and other types of social
     security (excluding Liens arising under ERISA) or in connection with surety
     bonds, bids, performance bonds and similar obligations) for sums not
     overdue or being contested in good faith by appropriate proceedings and not
     involving any deposits or advances or borrowed money or the deferred
     purchase price of property or services and, in each case, for which it
     maintains reserves to the extent required by GAAP;

          (c) Liens described on Schedule 10.8;

          (d) subject to the limitation set forth in Section 10.7(b), (i) Liens
     arising in connection with Capital Leases (and attaching only to the
     property being leased), (ii) Liens existing on property at the time of the
     acquisition thereof by the Company or any Subsidiary (and not created in
     contemplation of such acquisition) and (iii) Liens that constitute purchase
     money security interests on any property securing debt incurred for the
     purpose of financing all (but not greater than the cost thereof) or any
     part of the cost of acquiring such property, provided that any such Lien
     attaches to such property within 60 days of the acquisition thereof and
     attaches solely to the property so acquired;

          (e) attachments, levied judgments and other similar Liens arising in
     connection with court proceedings with respect to which no Event of Default
     would exist under Section 12.1.8 or 12.1.9;

          (f) easements, rights of way, restrictions, minor defects or
     irregularities in title and other similar Liens not interfering in any
     material respect with the ordinary conduct of the business of the Company
     or any Subsidiary;

          (g) subject to the limitations set forth in Section 10.7(g), Mortgage
     Liens; and

          (h) other Liens, in addition to the Liens listed above, provided that
     the aggregate amount of all Debt or other obligations secured thereby at
     any time outstanding shall not exceed $500,000.

                                       40
<PAGE>   50

     10.9 Operating Leases. Not permit the aggregate amount of all rental
payments under Operating Leases other than those described on Schedule 10.9 made
(or scheduled to be made) by the Company and its Subsidiaries (on a consolidated
basis) to exceed $5,000,000 in any Fiscal Year.

     10.10 Restricted Payments. Not, and not permit any Subsidiary to, (a) make
any dividends or distributions to any of its shareholders (other than dividends
and distributions in the form of its own capital stock) or purchase or redeem
any of its capital stock or other equity interests or any warrants, options or
other rights in respect thereof, except that (i) any Subsidiary may make
dividends or distributions to the Company or to a Wholly-Owned Subsidiary and
(ii) so long as no Event of Default or Unmatured Event of Default exists or
results therefrom, the Company may make dividends and distributions to its
shareholders and may purchase or redeem its capital stock, other equity
interests, warrants, options and other rights in respect thereof so long as the
aggregate amount paid in respect of such dividends, distributions, purchases and
redemptions from the Closing Date through the date such dividends,
distributions, purchases and redemptions are made does not exceed $10,000,000
plus fifty percent (50%) of the consolidated net income of the Company and its
Subsidiaries for the period commencing December 31, 2000 through the date such
dividends, distributions, purchases or redemptions are made, (b) pay any
management fees or similar fees to any of its shareholders or any Affiliate
thereof other than those which arise pursuant to bona fide arm's length
transactions in the ordinary course of business and reasonable and customary
directors' fees, (c) make any redemption, prepayment, defeasance or repurchase
of any Debt other than Debt permitted under Section 10.7(a), 10.7(b), 10.7(c),
10.7(d) or 10.7(h) or (d) set aside funds for any of the foregoing.

     10.11 Mergers, Consolidations, Acquisitions, Sales. Not, and not permit any
Subsidiary to, be a party to any merger or consolidation, purchase or acquire
all or substantially all of the assets of any other Person, all or substantially
all of any division of any other Person or, except as permitted under Section
10.19, any stock of any class of, or any partnership or joint venture interest
in, any other Person, or, except in the ordinary course of its business, sell,
transfer, convey or lease all or any substantial part of its assets, or sell or
assign with or without recourse any receivables, except for (a) any such merger,
consolidation, sale, transfer, conveyance, lease or assignment of or by any
Wholly-Owned Subsidiary into the Company or into, with or to any other
Wholly-Owned Subsidiary; (b) any such purchase or other acquisition by the
Company or any Wholly-Owned Subsidiary of the assets or stock of any
Wholly-Owned Subsidiary; (c) any Acquisition by the Company or any Wholly-Owned
Subsidiary where:

          (1) immediately before and after giving effect to such Acquisition, no
     Event of Default or Unmatured Event of Default shall exist;

          (2) the aggregate consideration to be paid by the Company and its
     Subsidiaries (including any Debt assumed or issued in connection therewith
     and the value of all capital stock issued in connection therewith, the
     amount thereof to be calculated in accordance with GAAP) in connection with
     such Acquisition (or any series of related Acquisitions) does not exceed
     $35,000,000 individually and $75,000,000 in the aggregate

                                       41
<PAGE>   51

     when taking into consideration the aggregate purchase price of all other
     purchases and acquisitions consummated after the Closing Date;

          (3) not less than five (5) Business Days prior to entering into any
     definitive agreement in connection with such Acquisition, the Company shall
     have delivered to the Administrative Agent a reasonably detailed
     description of such Acquisition, together with historical audited or
     reviewed financial statements of the Person to be acquired or from whom the
     assets which are the subject of such Acquisition are to be acquired and,
     without any adjustment to the historical financial performance of the
     Company, such Person or assets, projections of the effect of such
     Acquisition on the Company's financial performance, demonstrating to the
     satisfaction of Administrative Agent that both before and after giving
     effect to such Acquisition, the Company is and will be in pro forma
     compliance with all the financial ratios and restrictions set forth in
     Section 10.6;

          (4) in the case of the Acquisition of any Person, the Board of
     Directors, and, if required by applicable law, the shareholders of the
     Company and the Person so acquired have approved the acquisition; and

          (5) immediately before and after giving effect to such Acquisition,
     the Revolving Commitment Amount shall exceed the Revolving Outstandings by
     at least $15,000,000 less any cash on hand and Cash Equivalent Investments
     of the Company; and

(d) sales and dispositions of assets (including the stock of Subsidiaries) for
at least fair market value (as determined by the Board of Directors of the
Company for any such sale or disposition outside the ordinary course of
business) so long as the net book value of all assets sold or otherwise disposed
of prior to the fifth anniversary of the Closing Date does not exceed the
remainder of (1) 10% of the net book value of the consolidated tangible assets
of the Company and its Subsidiaries as of the most recently ended Fiscal Quarter
minus (2) the aggregate value of all such sales and dispositions since the
Closing Date.

     10.12 Modification of Documents. Not permit the Certificate or Articles of
Incorporation, By-Laws, other organizational documents or any documents,
instruments or agreements evidencing, securing or governing the terms of
repayment of any Debt of the Company or any Subsidiary or the Tuscola Unit C
Agreement to be amended or modified in any way which might reasonably be
expected to materially adversely affect the interests of the Banks.

     10.13 Use of Proceeds. Use the proceeds of the Loans, and the Letters of
Credit, solely for working capital and for other general corporate purposes; and
not use or permit any proceeds of any Loan to be used, either directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
"purchasing or carrying" any Margin Stock.

     10.14 Further Assurances. Take, and cause each Subsidiary to take, such
actions as are necessary or as the Administrative Agent or the Required Banks
may reasonably request from time to time to ensure that the obligations of the
Company hereunder and under the Loan

                                       42
<PAGE>   52

Documents are guaranteed, by causing the execution and delivery to the
Administrative Agent of (a) a counterpart of the Guaranty executed by all
Subsidiaries (including, promptly upon the acquisition or creation thereof, each
Subsidiary acquired or created after the date hereof) other than Subsidiaries
who collectively own less than 5% of the consolidated tangible assets of the
Company and its Subsidiaries as determined in accordance with GAAP and (b)
concurrently with such execution of a counterpart of the Guaranty by any
Subsidiary (1) copies of the articles of incorporation and by-laws of such
Subsidiary and resolutions of the board of directors (or similar governing body)
of such Subsidiary authorizing the execution and delivery of the Guaranty,
certified, in each case, by a duly authorized officer of such Subsidiary and (2)
an opinion of counsel (which may be the Company's general counsel) substantially
in the form of Exhibit D, with appropriate insertions, pertaining to such
Subsidiary and its execution of a counterpart of the Guaranty.

     10.15 Transactions with Affiliates. Not, and not permit any Subsidiary to,
enter into, or cause, suffer or permit to exist any transaction, arrangement or
contract with any of its other Affiliates (other than the Company and its
Subsidiaries) which is on terms which are less favorable than are obtainable
from any Person which is not one of its Affiliates.

     10.16 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in substantial compliance with all applicable
requirements of law and regulations.

     10.17 Environmental Matters. (a) If any Release or Disposal of Hazardous
Substances shall occur or shall have occurred on any real property or any other
assets of the Company or any Subsidiary, the Company shall, or shall cause the
applicable Subsidiary to, cause the prompt containment and removal of such
Hazardous Substances and the remediation of such real property or other assets
as necessary to comply with all Environmental Laws and to preserve the value of
such real property or other assets. Without limiting the generality of the
foregoing, the Company shall, and shall cause each Subsidiary to, comply with
any valid Federal or state judicial or administrative order requiring the
performance at any real property of the Company or any Subsidiary of activities
in response to the Release or threatened Release of a Hazardous Substance.

     (b) To the extent that the transportation of "hazardous waste" as defined
by RCRA is permitted by this Agreement, the Company shall, and shall cause its
Subsidiaries to, dispose of such hazardous waste only at licensed disposal
facilities operating in compliance with Environmental Laws.

     10.18 Inconsistent Agreements. Not, and not permit any Subsidiary to, enter
into any agreement containing any provision which would (a) be violated or
breached by any borrowing by the Company hereunder or by the performance by the
Company or any Subsidiary of any of its obligations hereunder or under any other
Loan Document or (b) create or permit to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary to (i) pay dividends
or make other distributions to the Company or any other applicable Subsidiary,
or pay any Debt owed to the Company or any other Subsidiary, (ii) make loans or
advances to the Company or (iii) transfer any of its assets or properties to the
Company.

                                       43
<PAGE>   53

     10.19 Investments. Not, and not permit any Subsidiary to, make or permit to
exist any Investment in any other Person, except (without duplication) the
following:

          (a) contributions by the Company to the capital of any of its
     Guarantor Subsidiaries, or by any such Guarantor Subsidiary to the capital
     of any of its Guarantor Subsidiaries;

          (b) in the ordinary course of business, Investments by the Company in
     any Guarantor Subsidiary or by any Subsidiary in the Company, by way of
     intercompany loans, advances or guaranties, all to the extent permitted by
     Section 10.7;

          (c) Suretyship Liabilities permitted by Section 10.7;

          (d) Cash Equivalent Investments;

          (e) bank deposits in the ordinary course of business, provided that
     the aggregate amount of all such deposits which are maintained with any
     bank located in the United States other than a Bank shall not at any time
     after December 31, 2001 exceed $500,000, excluding such amounts as are
     inadvertently remitted to a bank other than a Bank by any customer of the
     Company or any Subsidiary despite payment directions to the contrary given
     to such customer so long as such remittances promptly after receipt are
     deposited with a Bank;

          (f) Investments in securities of account debtors received pursuant to
     any plan of reorganization or similar arrangement upon the bankruptcy or
     insolvency of such account debtors;

          (g) Investments to consummate Acquisitions permitted by Section 10.11;

          (h) Investments listed on Schedule 10.19; and

          (i) other Investments, in addition to the Investments listed above, in
     an aggregate amount not in excess of 5% of the consolidated tangible assets
     of the Company and its Subsidiaries as determined in accordance with GAAP;

provided that (x) any Investment which when made complies with the requirements
of the definition of the term "Cash Equivalent Investment" may continue to be
held notwithstanding that such Investment if made thereafter would not comply
with such requirements; (y) no Investment otherwise permitted by clause (b),
(c), or (g) shall be permitted to be made if, immediately before or after giving
effect thereto, any Event of Default or Unmatured Event of Default exists.

10.20    Fiscal Year.  Not change its Fiscal Year.

                                       44
<PAGE>   54

                                   SECTION 11
                   EFFECTIVENESS; CONDITIONS OF LENDING, ETC.

     The obligation of each Bank to make its Loans and of the Issuing Bank to
issue Letters of Credit is subject to the following conditions precedent:

     11.1 Initial Credit Extension. The obligation of the Banks to make the
initial Loans and the obligation of the Issuing Bank to issue its initial Letter
of Credit (whichever first occurs) is, in addition to the conditions precedent
specified in Section 11.2, subject to the conditions precedent that the
Administrative Agent shall have received all of the following, each duly
executed and dated the Closing Date (or such earlier date as shall be
satisfactory to the Administrative Agent), in form and substance satisfactory to
the Administrative Agent:

          11.1.1 Loan Documents. Each Loan Document.

          11.1.2 Constitutive Documents. Copies, certified by the secretary or
     assistant secretary of each Loan Party, of:

          (a) the articles of incorporation and by-laws of such Loan Party as
     amended to date; and

          (b) resolutions of the Board of Directors of each Loan Party
     authorizing the execution, delivery and performance by such Loan Party of
     this Agreement, the Notes and the other Loan Documents to which such Loan
     Party is a party;

together with a certification by such secretary or assistant secretary of the
names of the officer or officers of such Loan Party authorized to sign the Loan
Documents to which such Loan Party is a party, together with a sample of the
true signature of each such officer (it being understood that the Administrative
Agent and each Bank may conclusively rely on each such certificate until
formally advised by a like certificate of any changes therein).

          11.1.3 Consents, etc. Certified copies of all documents evidencing any
necessary corporate or partnership action, consents and governmental approvals
(if any) required for the execution, delivery and performance by the Company and
each other Loan Party of this Agreement, the Notes and the other Loan Documents.

          11.1.4 Guaranty. A counterpart of the Guaranty executed by each
Subsidiary of the Company required to execute the Guaranty under Section 10.14.

          11.1.5 Opinions of Counsel. The opinion of Neal Gerber & Eisenberg
substantially in the form of Exhibit D.

          11.1.6 STEP Loan. The Company and LaSalle shall have amended and
restated that certain Amended and Restated Credit Agreement dated as of July 5,
2000 between the Company and LaSalle to conform such Amended and Restated Credit
Agreement to this Agreement, to eliminate the revolving line of credit contained
therein, retain the provisions

                                       45
<PAGE>   55
relating to the STEP loan described therein and to make such other amendments
and modifications thereto as LaSalle reasonably may require.

          11.1.7 Termination of Fleet Credit Agreement. Evidence satisfactory to
the Administrative Agent that the Revolving Credit Agreement dated as of March
29, 2000 among the Company, the financial institutions party thereto, and Fleet
National Bank, as agent for such financial institutions, has been terminated.

          11.1.8 Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with all Attorney Costs of the Administrative
Agent to the extent invoiced prior to the Closing Date, plus such additional
amounts of Attorney Costs as shall constitute the Administrative Agent's
reasonable estimate of Attorney Costs incurred or to be incurred by the
Administrative Agent through the closing proceedings (provided that such
estimate shall not thereafter preclude final settling of accounts between the
Company and the Administrative Agent).

          11.1.9 Solvency Certificate. A Solvency Certificate, substantially in
the form of Exhibit F, executed by the Chief Financial Officer or Treasurer of
the Company.

          11.1.10 Closing Certificate. A certificate signed by the Chief
Financial Officer or Treasurer of the Company dated as of the Closing Date
affirming the matters set forth in Section 11.2.1 as of the Closing Date.

          11.1.11 Other. Such other documents as the Administrative Agent or any
Bank may reasonably request.

     11.2 Conditions. The obligation (a) of each Bank to make each Loan and (b)
of the Issuing Bank to issue each Letter of Credit is subject to the following
further conditions precedent that:

          11.2.1 Compliance with Warranties, No Default, etc. Both before and
after giving effect to any borrowing and the issuance of any Letter of Credit,
the following statements shall be true and correct:

          (a) the representations and warranties of the Company and each
     Subsidiary set forth in this Agreement and the other Loan Documents shall
     be true and correct in all material respects with the same effect as if
     then made (except to the extent stated to relate to a specific earlier
     date, in which case such representations and warranties shall be true and
     correct as of such earlier date, and except to the extent changed by
     circumstances permitted by the terms of this Agreement); and

          (b) no Event of Default or Unmatured Event of Default shall have then
     occurred and be continuing.

                                       46
<PAGE>   56

          11.2.2 Confirmatory Certificate. If requested by the Administrative
Agent or any Bank, the Administrative Agent shall have received (in sufficient
counterparts to provide one to each Bank) a certificate dated the date of such
requested Loan or Letter of Credit and signed by a duly authorized
representative of the Company as to the matters set out in Section 11.2.1 (it
being understood that each request by the Company for the making of a Loan or
the issuance of a Letter of Credit shall be deemed to constitute a warranty by
the Company that the conditions precedent set forth in Section 11.2.1 will be
satisfied at the time of the making of such Loan or the issuance of such Letter
of Credit), together with such other documents as the Administrative Agent or
any Bank may reasonably request in support thereof.

          11.2.3 No Legal Impediment. No change shall have occurred in any law
or regulations thereunder or interpretations thereof that in the reasonable
opinion of any Bank would make it illegal for such Bank to make such Loan or to
participate in the issuance, extension or renewal of such Letter of Credit or in
the reasonable opinion of the Administrative Agent would make it illegal for the
Issuing Bank to issue, extend or renew such Letter of Credit.

                                   SECTION 12
                       EVENTS OF DEFAULT AND THEIR EFFECT

     12.1 Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:

          12.1.1 Non-Payment of the Loans, etc. Default in the payment when due
of the principal of any Loan; or default, and continuance thereof for five days,
in the payment when due of interest on any Loan or of any fee, reimbursement
obligation with respect to any Letter of Credit or other amount payable by the
Company hereunder or under any other Loan Document.

          12.1.2 Non-Payment of Other Debt. Any default shall occur under the
terms applicable to any Debt of the Company or any Subsidiary in an aggregate
amount (for all such Debt so affected) exceeding $10,000,000 and such default
shall (a) consist of the failure to pay such Debt when due, whether by
acceleration or otherwise, or (b) accelerate the maturity of such Debt or permit
the holder or holders thereof, or any trustee or agent for such holder or
holders, to cause such Debt to become due and payable (or require the Company or
any Subsidiary to purchase or redeem such Debt) prior to its expressed maturity.

          12.1.3 Other Material Obligations. Default (after giving effect to any
applicable requirement of notice and/or grace) in the payment when due, or in
the performance or observance of, any material obligation of, or condition
agreed to by, the Company or any Subsidiary with respect to any material
purchase or lease of goods or services where such default, singly or in the
aggregate with all other such defaults, might reasonably be expected to have a
Material Adverse Effect; provided, however, that the foregoing shall not
constitute an Event of Default hereunder so long as the Company or such
Subsidiary is contesting such default in good faith by appropriate proceedings
diligently conducted and has set aside on its books reserves with respect
thereto to the extent required by GAAP.

                                       47
<PAGE>   57
          12.1.4 Bankruptcy, Insolvency, etc. The Company or any Subsidiary
becomes insolvent or generally fails to pay, or admits in writing its inability
or refusal to pay, debts as they become due; or the Company or any Subsidiary
applies for, consents to, or acquiesces in the appointment of a trustee,
receiver or other custodian for the Company or such Subsidiary or any property
thereof, or makes a general assignment for the benefit of creditors; or, in the
absence of such application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for the Company or any Subsidiary or for a
substantial part of the property of any thereof and is not discharged within 45
days; or any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is commenced in respect of the Company or any
Subsidiary, and if such case or proceeding is not commenced by the Company or
such Subsidiary, it is consented to or acquiesced in by the Company or such
Subsidiary, or remains for 45 days undismissed; or the Company or any Subsidiary
takes any action to authorize, or in furtherance of, any of the foregoing.

          12.1.5 Non-Compliance with Loan Documents. (a) Failure by the Company
to comply with or to perform any covenant set forth in Sections 10.1.5(a), 10.6,
10.7, 10.8, 10.10, 10.11, 10.13, 10.19, or 10.20 except to the extent of any
failure to comply with Section 10.19 due to bank deposits in the ordinary course
of business in excess of $500,000 so long as any such excess does not exist for
more than thirty (30) days; or (b) failure by the Company to comply with or to
perform any other provision of this Agreement or any other Loan Document (and
not constituting an Event of Default under any other provision of this Section
12) and continuance of such failure described in this clause (b) for thirty (30)
days.

          12.1.6 Representation and Warranties. Any representation and warranty
made by the Company or any Subsidiary herein or any other Loan Document is
breached or is false or misleading in any material respect, or any schedule,
certificate, financial statement, report, notice or other writing furnished by
the Company or any Subsidiary to any Agent or any Bank in connection herewith is
false or misleading in any material respect on the date as of which the facts
therein set forth are stated or certified or deemed to have been stated or
certified.

          12.1.7 Pension Plans. (a) Institution of any steps by the Company or
any other Person to terminate a Pension Plan if as a result of such termination
the Company could be required to make a contribution to such Pension Plan, or
could incur a liability or obligation to such Pension Plan, in excess of
$5,000,000; (b) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA; or (c) there
shall occur any withdrawal or partial withdrawal from a Multiemployer Pension
Plan and the withdrawal liability (without unaccrued interest) to Multiemployer
Pension Plans as a result of such withdrawal (including any outstanding
withdrawal liability that the Company and the Controlled Group have incurred on
the date of such withdrawal) exceeds $5,000,000.

          12.1.8 Judgments. Final judgments which exceed an aggregate of
$5,000,000 shall be rendered against the Company or any Subsidiary, excluding
judgments (a) for which there is full insurance (subject to reasonable and
customary deductibles) and with respect to which the insurer has assumed
responsibility in writing, (b) for which there is full

                                       48
<PAGE>   58
indemnification (upon terms and by creditworthy indemnitors which are
satisfactory to Administrative Agent), (c) which have been paid, discharged or
vacated or (d) which have been in force for a period of time not to exceed the
applicable period for filing an appeal, which have been effectively stayed by
the time required by the rules applicable to the court rendering such judgments
or in respect of which the Company or such Subsidiary shall at the time in good
faith be prosecuting an appeal or proceeding for review, so long as neither
execution nor attachment has been levied thereunder or (e) covered under Section
12.1.9.

          12.1.9 Rodel Litigation. Final judgments which exceed an aggregate of
$10,000,000 shall be rendered against Cabot Corporation, the Company or any
Subsidiary in the Rodel Litigation, or any settlement of the Rodel Litigation
agreed to by the Company shall be entered into with respect to which Cabot
Corporation, the Company or any Subsidiary shall be obligated to pay an amount
in excess of $10,000,000, excluding judgments or settlements (a) for which the
Company or such Subsidiary has full insurance (subject to reasonable and
customary deductibles) and with respect to which the insurer has assumed
responsibility in writing, (b) for which the Company or such Subsidiary is fully
indemnified (upon terms and by creditworthy indemnitors which are satisfactory
to Administrative Agent), (c) which have been paid, discharged or vacated or (d)
in the case of judgments, which have been in force for a period of time not to
exceed the applicable period for filing an appeal, which have been effectively
stayed by the time required by the rules applicable to the court rendering such
judgments or in respect of which Cabot Corporation, the Company or such
Subsidiary shall at the time in good faith be prosecuting an appeal or
proceeding for review, so long as neither execution nor attachment has been
levied thereunder.

          12.1.10 Invalidity of Guaranty, etc. The Guaranty shall cease to be in
full force and effect with respect to any Guarantor Subsidiary; or any Guarantor
Subsidiary (or any Person by, through or on behalf of such Subsidiary) shall
contest in any manner the validity, binding nature or enforceability of the
Guaranty with respect to such Guarantor Subsidiary.

          12.1.11 Change of Control. (a) Any Person or group of Persons (within
the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as
amended), shall acquire beneficial ownership (within the meaning of Rule 13d-3
promulgated under such Act) of more than 30% of the outstanding securities (on a
fully diluted basis and taking into account any securities or contract rights
exercisable, exchangeable or convertible into equity securities) of the Company
having voting rights in the election of directors under normal circumstances; or
(b) during any 12 month period, individuals who are members of the Board of
Directors of the Company at the beginning of such period shall cease for any
reason to constitute a majority of the Board of Directors of the Company, other
than due to expiration of term of service, death, disability, previously
established mandatory retirement or resignation due to reasons other than those
as a result of or in anticipation of circumstances described in the preceding
clause (a).

          12.1.12 Injunctions. The Company or any of its Subsidiaries shall be
enjoined, restrained or in any way prevented by a order of any court or
administrative or regulatory agency from using any material patent, trademark,
copyright or other intellectual property in a manner consistent with past
practice if the effect of such order might reasonably be expected to have a

                                       49
<PAGE>   59
Material Adverse Effect, unless the Company or such Subsidiary shall at the time
in good faith be prosecuting an appeal or proceeding for review and in respect
of which a stay of such order shall have been obtained pending such appeal or
review.

          12.1.13 Work Stoppages. There shall occur any strike, lockout, labor
dispute, embargo, condemnation, act of God or public enemy, or other casualty,
which in any such case causes, for more than fifteen (15) consecutive days, the
cessation or substantial curtailment of revenue producing activities at any
facility of the Company or any of its Subsidiaries if such event or circumstance
is not covered by business interruption insurance and might reasonably be
expected to have a Material Adverse Effect.

          12.1.14 Loss of Licenses or Permits. There shall occur the loss,
suspension or revocation of, or failure to renew, any license or permit now held
or hereafter acquired by the Company or any of its Subsidiaries if such loss,
suspension, revocation or failure to renew might reasonably be expected to have
a Material Adverse Effect.

          12.1.15 Forfeitures. The Company or any of its Subsidiaries shall have
been convicted for a state or federal crime, a punishment for which includes the
forfeiture of any assets of the Company or such Subsidiary having a fair market
value in excess of $5,000,000.

          12.1.16 Cancellation, Invalidity of Loan Documents. The cancellation,
termination, revocation or rescission of the Loan Documents otherwise than in
accordance with the terms thereof or with the express prior written agreement,
consent or approval of the Banks, or the commencement of any action at law, suit
or in equity or other legal proceeding by or on behalf of the Company or any
Loan Party or any of their respective stockholders, to cancel, revoke or rescind
any of the Loan Documents , or the determination by any court or any other
governmental or regulatory authority or agency of competent jurisdiction that
any one or more of the Loan Documents is illegal, invalid or unenforceable in
accordance with the terms thereof

     12.2 Effect of Event of Default. If any Event of Default described in
Section 12.1.4 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Loans and all other obligations
hereunder shall become immediately due and payable and the Company shall
immediately Cash Collateralize all Letters of Credit, all without presentment,
demand, protest or notice of any kind; and, if any other Event of Default shall
occur and be continuing, the Administrative Agent (upon written request of the
Required Banks) shall declare the Commitments (if they have not theretofore
terminated) to be terminated and/or declare all Loans and all other obligations
hereunder to be due and payable and/or demand that the Company immediately Cash
Collateralize all Letters of Credit, whereupon the Commitments (if they have not
theretofore terminated) shall immediately terminate and/or all Loans and all
other obligations hereunder shall become immediately due and payable and/or the
Company shall immediately Cash Collateralize all Letters of Credit, all without
presentment, demand, protest or notice of any kind. The Administrative Agent
shall promptly advise the Company of any such declaration, but failure to do so
shall not impair the effect of such declaration. Notwithstanding the foregoing,
the effect as an Event of Default of any event described in Section 12.1.1 or
Section 12.1.4 may be waived by the written concurrence of all of the Banks, and
the effect as an Event of Default of any other event described in this Section
12 may be

                                       50
<PAGE>   60

waived by the written concurrence of the Required Banks. Any cash collateral
delivered hereunder shall be held by the Administrative Agent (without liability
for interest thereon) and applied to obligations arising in connection with any
drawing under a Letter of Credit. After the expiration or termination of all
Letters of Credit, such cash collateral shall be applied by the Administrative
Agent to any remaining obligations hereunder and any excess, together with all
earnings thereon, if any, shall be delivered to the Company or as a court of
competent jurisdiction may direct. No termination of the Commitments pursuant to
this paragraph shall relieve the Company or any of its Subsidiaries of any of
the obligations arising or incurred under this Agreement, any Letter of Credit
or any other Loan Document.

                                   SECTION 13
                                   THE AGENTS

     13.1 Appointment and Authorization. (a) Each Bank hereby irrevocably
(subject to Section 13.9) appoints, designates and authorizes the Agents to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, no Agent shall have any duty or
responsibility except those expressly set forth herein, nor shall any Agent have
or be deemed to have any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against any Agent.

     (b) The Issuing Bank shall act on behalf of the Banks with respect to any
Letters of Credit issued by it and the documents associated therewith. The
Issuing Bank shall have all of the benefits and immunities (i) provided to the
Agents in this Section 13 with respect to any acts taken or omissions suffered
by the Issuing Bank in connection with Letters of Credit issued by it or
proposed to be issued by it and the applications and agreements for letters of
credit pertaining to such Letters of Credit as fully as if the term "Agent", as
used in this Section 13, included the Issuing Bank with respect to such acts or
omissions and (ii) as additionally provided in this Agreement with respect to
the Issuing Bank.

     13.2 Delegation of Duties. Each Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.

     13.3 Liability of Agents. Neither any Agent nor any of its directors,
officers, employees or other Person assisting them in their duties nor any
employee or agent thereof shall (i) be liable for any action taken or omitted to
be taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (ii) be responsible in any manner to any
of the Banks for any recital, statement, representation or warranty made by the
Company or any Subsidiary or Affiliate of the Company, or any officer thereof,
contained in this

                                       51
<PAGE>   61

Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by any
Agent under or in connection with, this Agreement or any other Loan Document, or
the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of the Company or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent shall be under any obligation to any Bank to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Company or any of the Company's
Subsidiaries or Affiliates.

     13.4 Reliance by Agents. Each Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Company), independent accountants and other experts selected by such Agent. Each
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Banks as it deems appropriate and, if it
so requests, confirmation from the Banks of their obligation to indemnify such
Agent against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. Each Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Banks and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.

     13.5 Notice of Default. Each Bank hereby agrees that, upon learning of the
existence of an Event of Default, it shall promptly notify the Administrative
Agent. The Administrative Agent shall not be deemed to have knowledge or notice
of the occurrence of any Event of Default or Unmatured Event of Default except
with respect to defaults in the payment of principal, interest and fees required
to be paid to the Administrative Agent for the account of the Banks, unless the
Administrative Agent shall have received written notice from a Bank or the
Company referring to this Agreement, describing such Event of Default or
Unmatured Event of Default and stating that such notice is a "notice of
default". The Administrative Agent will notify the Banks of its receipt of any
such notice. The Administrative Agent shall take such action with respect to
such Event of Default or Unmatured Event of Default as may be requested by the
Required Banks in accordance with Section 12; provided that unless and until the
Administrative Agent has received any such request, the Administrative Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Event of Default or Unmatured Event of Default as
it shall deem advisable or in the best interest of the Banks.

     13.6 Credit Decision. Each Bank acknowledges that the Agents have not made
any representation or warranty to it, and that no act by the Agents hereafter
taken, including any review of the affairs of the Company and its Subsidiaries,
shall be deemed to constitute any representation or warranty by any Agent to any
Bank. Each Bank represents to the Agents that it

                                       52

<PAGE>   62

has, independently and without reliance upon the Agents and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, prospects, operations, property,
financial and other condition and creditworthiness of the Company and its
Subsidiaries, and made its own decision to enter into this Agreement and to
extend credit to the Company hereunder. Each Bank also represents that it will,
independently and without reliance upon the Agents and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other documents
expressly herein required to be furnished to the Banks by the Administrative
Agent, no Agent shall have any duty or responsibility to provide any Bank with
any credit or other information concerning the business, prospects, operations,
property, financial or other condition or creditworthiness of the Company which
may come into the possession of such Agent.

     13.7 Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Banks shall indemnify upon demand the Agent and its
directors, officers, employees and any other Person assisting them in their
duties or any employee or agent thereof (to the extent not reimbursed by or on
behalf of the Company and without limiting the obligation of the Company to do
so), pro rata, from and against any and all Indemnified Liabilities; provided
that no Bank shall be liable for any payment to any such Person of any portion
of the Indemnified Liabilities resulting from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank shall
reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive repayment of the Loans, cancellation of the Notes,
expiration or termination of the Letters of Credit, termination of this
Agreement and the resignation or replacement of the Agent.

     13.8 Agents in Individual Capacity. LaSalle, National City and their
respective Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, acquire equity interests in and generally engage in
any kind of banking, trust, financial advisory, underwriting or other business
with the Company and its Subsidiaries and Affiliates as though LaSalle was not
the Administrative Agent or the Issuing Bank hereunder, National City was not
the Syndication Agent hereunder and without notice to or consent of the Banks.
The Banks acknowledge that, pursuant to such activities, LaSalle, National City
and their respective Affiliates may receive information regarding the Company or
its Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company or such Affiliate) and acknowledge that no
Agent shall be under any obligation to provide such information to them. With
respect to their Loans (if any), LaSalle, National City and their

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<PAGE>   63

respective Affiliates shall have the same rights and powers under this Agreement
as any other Bank and may exercise the same as though LaSalle was not the
Administrative Agent and the Issuing Bank, National City was not the Syndication
Agent, and the terms "Bank" and "Banks" include LaSalle, National City and their
respective Affiliates, to the extent applicable, in their individual capacities.

     13.9 Successor Agents. Any Agent may resign as an Agent upon 30 days'
notice to the Banks. If an Agent resigns under this Agreement, the Required
Banks shall, with (so long as no Event of Default exists) the consent of the
Company (which shall not be unreasonably withheld or delayed), appoint from
among the Banks a successor agent for the Banks. If no successor agent is
appointed prior to the effective date of the resignation of an Agent, such Agent
may appoint, after consulting with the Banks and the Company, a successor agent
from among the Banks. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the terms "Administrative Agent," "Syndication
Agent" and "Agent," as applicable, shall mean such successor agent, and the
retiring Agent's appointment, powers and duties as an Agent shall be terminated.
After any retiring Agent's resignation hereunder as an Agent, the provisions of
this Section 13 and Sections 14.6 and 14.13 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was an Agent under this
Agreement. If no successor agent has accepted appointment as an Agent by the
date which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Banks shall perform all of the duties of the retiring Agent hereunder until
such time, if any, as the Required Banks appoint a successor agent as provided
for above.

     13.10 Syndication Agent. There shall be no rights, obligations or
liabilities afforded to or imposed upon the Syndication Agent by virtue of its
status as such.

                                   SECTION 14
                                     GENERAL

     14.1 Waiver; Amendments. No delay on the part of any Agent or any Bank in
the exercise of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise by any of them of any right, power or
remedy preclude other or further exercise thereof, or the exercise of any other
right, power or remedy. No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement or the Notes shall in any event be
effective unless the same shall be in writing and signed and delivered by the
Required Banks, and then any such amendment, modification, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No amendment, modification, waiver or consent shall change the
Pro Rata Share of any Bank without the consent of such Bank. No amendment,
modification, waiver or consent shall (i) increase the Revolving Commitment
Amount or the Term Loan Commitment Amount, (ii) extend the date for payment of
any principal of or any interest on the Loans or any fees payable hereunder,
(iii) reduce the principal amount of any Loan, the rate of interest thereon or
any fees payable hereunder, (iv) release the Guaranty, (v) alter the definition
of "Required Banks" or (vi) amend this Section 14.1 without, in each case, the
consent of all Banks. Notwithstanding the foregoing, the Required

                                       54
<PAGE>   64

Banks may waive or reduce the amount of any mandatory commitment reduction under
the second sentence of Section 6.1.2 or under Section 6.1.3 or waive, compromise
or extend the date for payment of any mandatory prepayment under Section 6.2.2.
No provision of Section 13 or other provision of this Agreement affecting any
Agent in its capacity as such shall be amended, modified or waived without the
consent of such Agent. No provision of this Agreement relating to the rights or
duties of the Issuing Bank in its capacity as such shall be amended, modified or
waived without the consent of the Issuing Bank.

     14.2 Confirmations. The Company and each holder of a Note agree from time
to time, upon written request received by it from the other, to confirm to the
other in writing (with a copy of each such confirmation to the Administrative
Agent) the aggregate unpaid principal amount of the Loans then outstanding under
such Note.

     14.3 Notices. Except as otherwise provided in Sections 2.2.2 and 2.2.3, all
notices hereunder shall be in writing (including facsimile transmission) and
shall be sent to the applicable party at its address shown on Schedule 14.3 or
at such other address as such party may, by written notice received by the other
parties, have designated as its address for such purpose. Notices sent by
facsimile transmission shall be deemed to have been given when sent; notices
sent by mail shall be deemed to have been given three Business Days after the
date when sent by registered or certified mail, postage prepaid; and notices
sent by hand delivery or overnight courier service shall be deemed to have been
given when received. For purposes of Sections 2.2.2 and 2.2.3, the
Administrative Agent shall be entitled to rely on telephonic instructions from
any person that the Administrative Agent in good faith believes is an authorized
officer or employee of the Company, and the Company shall hold the
Administrative Agent and each other Bank harmless from any loss, cost or expense
resulting from any such reliance.

     14.4 Computations. Where the character or amount of any asset or liability
or item of income or expense is required to be determined, or any consolidation
or other accounting computation is required to be made, for the purpose of this
Agreement and the other Loan Documents, such determination or calculation shall,
to the extent applicable and except as otherwise specified in this Agreement, be
made in accordance with GAAP, consistently applied; provided that if the Company
notifies the Administrative Agent that the Company wishes to amend any covenant
in Section 10 to eliminate or to not take into account the effect of any change
in GAAP on the operation of such covenant (or if the Administrative Agent
notifies the Company that the Required Banks wish to amend Section 10 for such
purpose), then the Company's compliance with such covenant shall be determined
on the basis of GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such covenant is
amended in a manner satisfactory to the Company and the Required Banks.

     14.5 Regulation U. Each Bank represents that it in good faith is not
relying, either directly or indirectly, upon any Margin Stock as collateral
security for the extension or maintenance by it of any credit provided for in
this Agreement.

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<PAGE>   65

     14.6 Costs, Expenses and Taxes. The Company agrees to pay on demand all
reasonable out-of-pocket costs and expenses of the Administrative Agent
(including Attorney Costs) in connection with the preparation, execution,
syndication, delivery and administration of this Agreement, the other Loan
Documents and all other documents provided for herein or delivered or to be
delivered hereunder or in connection herewith (including any amendment,
supplement or waiver to any Loan Document), and all reasonable out-of-pocket
costs and expenses (including Attorney Costs) incurred by the Administrative
Agent and each Bank after an Event of Default in connection with the enforcement
of this Agreement, the other Loan Documents or any such other documents. In
addition, the Company agrees to pay, and to save the Agents and the Banks
harmless from all liability for, (a) any stamp or other taxes (excluding income
taxes and franchise taxes based on the Agents' or Banks' net income) which may
be payable in connection with the execution and delivery of this Agreement, the
borrowings hereunder, the issuance of the Notes, the issuance of any Letters of
Credit or the execution and delivery of any other Loan Document or any other
document provided for herein or delivered or to be delivered hereunder or in
connection herewith and (b) any fees of the Company's auditors in connection
with any reasonable exercise by the Administrative Agent and the Banks of their
rights pursuant to Section 10.2. All obligations provided for in this Section
14.6 shall survive repayment of the Loans, cancellation of the Notes, expiration
or termination of the Letters of Credit and termination of this Agreement.

     14.7 Subsidiary References. The provisions of this Agreement relating to
Subsidiaries shall apply only during such times as the Company has one or more
Subsidiaries.

     14.8 Captions. Section captions used in this Agreement are for convenience
only and shall not affect the construction of this Agreement.

     14.9 Assignments; Participations.

          14.9.1 Assignments. Any Bank may, with the prior written consents of
the Issuing Bank and the Administrative Agent and (so long as no Event of
Default exists) the Company (which consents shall not be unreasonably delayed or
withheld and, in any event, shall not be required for an assignment by a Bank to
one of its Affiliates), at any time assign and delegate to one or more
commercial banks or other Persons (any Person to whom such an assignment and
delegation is to be made being herein called an "Assignee") all or any fraction
of such Bank's Loans and Commitment (which assignment and delegation shall be of
a constant, and not a varying, percentage of all the assigning Bank's Loans and
Commitment) in a minimum aggregate amount equal to $5,000,000; provided that (a)
no assignment and delegation may be made to any Person if, at the time of such
assignment and delegation, the Company would be obligated to pay any greater
amount under Section 7.6 or Section 8 to the Assignee than the Company is then
obligated to pay to the assigning Bank under such Sections (and if any
assignment is made in violation of the foregoing, the Company will not be
required to pay the incremental amounts) and (b) the Company and the
Administrative Agent shall be entitled to continue to deal solely and directly
with such Bank in connection with the interests so assigned and delegated to an
Assignee until the date when all of the following conditions shall have been
met:

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<PAGE>   66

          (x) five Business Days (or such lesser period of time as the
     Administrative Agent and the assigning Bank shall agree) shall have passed
     after written notice of such assignment and delegation, together with
     payment instructions, addresses and related information with respect to
     such Assignee, shall have been given to the Company and the Administrative
     Agent by such assigning Bank and the Assignee,

          (y) the assigning Bank and the Assignee shall have executed and
     delivered to the Company and the Administrative Agent an assignment
     agreement substantially in the form of Exhibit E (an "Assignment
     Agreement"), together with any documents required to be delivered
     thereunder, which Assignment Agreement shall have been accepted by the
     Administrative Agent, and

          (z) except in the case of an assignment by a Bank to one of its
     Affiliates, the assigning Bank or the Assignee shall have paid the
     Administrative Agent a processing fee of $3,500.

From and after the date on which the conditions described above have been met,
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a "Bank" hereunder and (y) the assigning Bank, to the
extent that rights and obligations hereunder have been assigned and delegated by
it pursuant to such Assignment Agreement, shall be released from its obligations
hereunder. Within five Business Days after effectiveness of any assignment and
delegation, the Company shall execute and deliver to the Administrative Agent
(for delivery to the Assignee and the Assignor, as applicable) a new Revolving
Note in the principal amount of the Assignee's Pro Rata Share of the Revolving
Commitment Amount and a new Term Note in the principal amount of the Assignee's
Term Loan, if any, and, if the assigning Bank has retained a Commitment
hereunder, a replacement Revolving Note in the principal amount of the Pro Rata
Share of the Revolving Commitment Amount retained by the assigning Bank and a
replacement Term Note in the principal amount of the Term Loan, if any, retained
by the assigning Bank (such Notes to be in exchange for, but not in payment of,
the predecessor Notes held by such assigning Bank). Each such Note shall be
dated the effective date of such assignment. The assigning Bank shall mark each
predecessor Note "exchanged" and deliver it to the Company. Accrued interest on
that part of the predecessor Notes being assigned shall be paid as provided in
the Assignment Agreement. Accrued interest and fees on that part of the
predecessor Notes not being assigned shall be paid to the assigning Bank.
Accrued interest and accrued fees shall be paid at the same time or times
provided in the predecessor Notes and in this Agreement. Any attempted
assignment and delegation not made in accordance with this Section 14.9.1 shall
be null and void.

     Notwithstanding the foregoing provisions of this Section 14.9.1 or any
other provision of this Agreement, any Bank may at any time assign all or any
portion of its Loans and its Notes to a Federal Reserve Bank (but no such
assignment shall release any Bank from any of its obligations hereunder).

                                       57
<PAGE>   67

          14.9.2 Participations. Any Bank may, with the prior written consent
of the Company (which consent (i) shall not be required if any Event of Default
exists or for a sale of a participating interest by a Bank to one of its
Affiliates and (ii) shall not be unreasonably delayed or withheld), at any time
sell to one or more commercial banks or other Persons participating interests in
any Loan owing to such Bank, the Notes held by such Bank, the Commitment of such
Bank, the direct or participation interest of such Bank in any Letter of Credit
or any other interest of such Bank hereunder (any Person purchasing any such
participating interest being herein called a "Participant"). In the event of a
sale by a Bank of a participating interest to a Participant, (x) such Bank shall
remain the holder of its Notes for all purposes of this Agreement, (y) the
Company and the Administrative Agent shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations hereunder
and (z) all amounts payable by the Company shall be determined as if such Bank
had not sold such participation and shall be paid directly to such Bank. No
Participant shall have any direct or indirect voting rights hereunder except
with respect to any of the events described in the fourth sentence of Section
14.1. Each Bank agrees to incorporate the requirements of the preceding sentence
into each participation agreement which such Bank enters into with any
Participant. The Company agrees that if amounts outstanding under this Agreement
and the Notes are due and payable (as a result of acceleration or otherwise),
each Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement, any Note and with
respect to any Letter of Credit to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this Agreement
or such Notes; provided that such right of setoff shall be subject to the
obligation of each Participant to share with the Banks, and the Banks agree to
share with each Participant, as provided in Section 7.5. The Company also agrees
that each Participant shall be entitled to the benefits of Section 7.6 and
Section 8 as if it were a Bank (provided that no Participant shall receive any
greater compensation pursuant to Section 7.6 or Section 8 than would have been
paid to the participating Bank if no participation had been sold).

     14.10 Governing Law. This Agreement and each Note shall be a contract made
under and governed by the internal laws of the State of Illinois applicable to
contracts made and to be performed entirely within such State. Whenever possible
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Company and rights of the Agents and the Banks
expressed herein or in any other Loan Document shall be in addition to and not
in limitation of those provided by applicable law.

     14.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.

     14.12 Successors and Assigns. This Agreement shall be binding upon the
Company, the Banks and the Agents and their respective successors and assigns,
and shall inure to the benefit

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<PAGE>   68

of the Company, the Banks and the Agents and the successors and assigns of the
Banks and the Agents.

     14.13 Indemnification by the Company. In consideration of the execution and
delivery of this Agreement by the Agents and the Banks and the agreement to
extend the Commitments provided hereunder, the Company hereby agrees to
indemnify, exonerate and hold each Agent, each Bank and each of the officers,
directors, employees, Affiliates and agents of each Agent and each Bank (each a
"Bank Party") free and harmless from and against any and all actions, causes of
action, suits, losses, liabilities, damages and expenses, including Attorney
Costs (collectively, the "Indemnified Liabilities"), incurred by the Bank
Parties or any of them as a result of, or arising out of, or relating to (i) any
tender offer, merger, purchase of stock, purchase of assets or other similar
transaction financed or proposed to be financed in whole or in part, directly or
indirectly, with the proceeds of any of the Loans, (ii) the use, handling,
release, emission, discharge, transportation, storage, treatment or disposal of
any hazardous substance at any property owned or leased by the Company or any
Subsidiary, (iii) any violation of any Environmental Laws with respect to
conditions at any property owned or leased by the Company or any Subsidiary or
the operations conducted thereon, (iv) the investigation, cleanup or remediation
of offsite locations at which the Company or any Subsidiary or their respective
predecessors are alleged to have directly or indirectly disposed of hazardous
substances, (v) claims of any Persons in connection with any of the Securities
Laws and relating to the making of the Loans or the transactions contemplated by
this Agreement and the other Loan Documents. or (vi) the execution, delivery,
performance or enforcement of this Agreement or any other Loan Document by any
of the Bank Parties, except for any such Indemnified Liabilities arising on
account of the applicable Bank Party's gross negligence or willful misconduct.
If and to the extent that the foregoing undertaking may be unenforceable for any
reason, the Company hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. All obligations provided for in this Section
14.13 shall survive repayment of the Loans, cancellation of the Notes,
expiration or termination of the Letters of Credit, any foreclosure under, or
any modification, release or discharge of any Guaranty and termination of this
Agreement.

     14.14 Nonliability of Lenders. The relationship between the Company on the
one hand and the Banks and the Agents on the other hand shall be solely that of
borrower and lender. Neither any Agent nor any Bank shall have any fiduciary
responsibility to the Company. Neither any Agent nor any Bank undertakes any
responsibility to the Company to review or inform the Company of any matter in
connection with any phase of the Company's business or operations. The Company
agrees that neither any Agent nor any Bank shall have liability to the Company
(whether sounding in tort, contract or otherwise) for losses suffered by the
Company in connection with, arising out of, or in any way related to the
transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined in a final non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither any Agent
nor any Bank shall have any liability with respect to, and the Company hereby
waives, releases and agrees not to sue for, any

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<PAGE>   69

special, indirect or consequential damages suffered by the Company in connection
with, arising out of, or in any way related to the Loan Documents or the
transactions contemplated thereby.

     14.15 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF
ANY JURISDICTION WHERE SUCH PROPERTY MAY BE FOUND. THE COMPANY HEREBY EXPRESSLY
AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF
ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE COMPANY
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.
THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND
ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

     14.16 Waiver of Jury Trial. EACH OF THE COMPANY, EACH AGENT AND EACH BANK
HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.

     14.17 Confidentiality. Each Agent and each Bank, without the prior written
consent of the Company, (i) shall not disclose to any third party any
information relative to the Company or any of its Subsidiaries which has been
conspicuously designated by the Company as confidential or proprietary
("Confidential Information"), (ii) shall not use Confidential Information of the
Company for its own purpose, except as specifically provided in this Agreement
to effect the purposes of this Agreement, or to benefit a third party, (iii)
shall not disseminate Confidential Information to any Person other than its
employees, directors, officers, agents and attorneys who must be directly
involved with such Confidential Information and (iv) shall not fail to use the
same degree of care as for its own information of like importance (but in any
event at least commercially reasonable care) in safeguarding against disclosure
of Confidential Information. The foregoing restrictions on disclosure and use of
Confidential Information shall not apply to

                                       60
<PAGE>   70

any disclosure or use of any Confidential Information (i) in connection with any
proposed assignment or participation permitted under Section 14.9, provided the
Bank making such assignment or selling such participation has first obtained the
Company's prior written consent to such disclosure or use, which consent shall
not be unreasonably withheld so long as the prospective assignee or participant
has agreed in writing to be bound by the provisions of this Section 14.17, (ii)
which otherwise in its entirety is in the public domain, (iii) to the extent
required by applicable law or any rule, regulation, decree, order or injunction
of any foreign, federal, state, municipal or other government, or any
department, commission, board, bureau, agency, public authority or
instrumentality thereof or any court or arbitrator, but only after each Agent
and each Bank shall have given, to the extent permitted by applicable law, the
Company written notice of such requirement and allowed the Company to contest
such requirement, (iv) which is obtained by any Agent or any Bank from a third
party not known to such Agent or such Bank to be under an obligation of
confidentiality to the Company or (v) in connection with the enforcement by
Administrative Agent and the Banks of their respective rights under this
Agreement and the other Loan Documents, subject to the prior entry by the court
in which such proceedings are pending of an appropriate order designed to afford
the Company reasonable assurance such Confidential Information will be protected
from unnecessary disclosure.

                  [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK.]

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Delivered at Chicago, Illinois, as of the day and year first above written.

                              CABOT MICROELECTRONICS
                              CORPORATION

                              By:      ____________________________________
                              Name:    ____________________________________
                              Title:   ____________________________________

                              LASALLE BANK NATIONAL ASSOCIATION,
                              as Administrative Agent

                              By:      ____________________________________
                              Name:    ____________________________________
                              Title:   ____________________________________

                              LASALLE BANK NATIONAL ASSOCIATION,
                              as Issuing Bank and as a Bank

                              By:      ____________________________________
                              Name:    ____________________________________
                              Title:   ____________________________________

                              NATIONAL CITY BANK OF
                              MICHIGAN/ILLINOIS, as Syndication Agent

                              By:      ____________________________________
                              Name:    ____________________________________
                              Title:   ____________________________________

                              NATIONAL CITY BANK OF
                              MICHIGAN/ILLINOIS, as a Bank

                              By:      ____________________________________
                              Name:    ____________________________________
                              Title:   ____________________________________

                              FIRSTAR BANK, N.A., as a Bank

                              By:      ____________________________________
                              Name:    ____________________________________
                              Title:   ____________________________________

<PAGE>   72
                                PRICING SCHEDULE

     The Eurodollar Margin, the Base Rate Margin, the Non-Use Fee Rate and the
LC Fee Rate shall be determined as set forth below.

     Initially, the Eurodollar Margin shall be 1.00% per annum, the Base Rate
Margin shall be 0.00% per annum, the Non-Use Fee Rate shall be 0.25% per annum
and the LC Fee Rate shall be 1.00% per annum.

     The Eurodollar Margin, the Base Rate Margin, the Non-Use Fee Rate and the
LC Fee Rate shall be adjusted, in accordance with the last paragraph of this
Pricing Schedule, to equal the applicable rate per annum set forth in the table
below opposite the applicable Leverage Ratio:

-------------------------------------------------------------------------------
LEVERAGE RATIO                       EURODOLLAR  BASE RATE    NON-USE   LC FEE
                                       MARGIN      MARGIN    FEE RATE    RATE
-------------------------------------------------------------------------------
Greater than or equal to 1.50:1        1.50%       0.00%       0.35%    1.50%
-------------------------------------------------------------------------------
Greater than or equal to 1.00:1
but less than 1.50:1                   1.25%       0.00%       0.25%    1.25%
-------------------------------------------------------------------------------
Less than 1.00:1                       1.00%       0.00%       0.25%    1.00%
-------------------------------------------------------------------------------

     The Eurodollar Margin, the Base Rate Margin, the Non-Use Fee Rate and the
LC Fee Rate shall be adjusted, to the extent applicable, on the third Business
Day after the 45th (or, in the case of the last Fiscal Quarter of each Fiscal
Year, 90th) day after the end of each Fiscal Quarter commencing with the Fiscal
Quarter ending June 30, 2001 based on the Leverage Ratio as of the last day of
such Fiscal Quarter; it being understood that if the Company fails to deliver
the financial statements required by Section 10.1.1 or 10.1.2, as applicable,
and the related Compliance Certificate, required by Section 10.1.3 by the 45th
day (or, if applicable, the 90th day) after any Fiscal Quarter, the Eurodollar
Margin shall be 1.50%, the Base Rate Margin shall be 0.00%, the Non-Use Fee Rate
shall be 0.35% and the LC Fee Rate shall be 1.50% until three Business Days
following the delivery of such financial statements and Compliance Certificate.
Notwithstanding the foregoing, no reduction to the foregoing interest rate
margins or fee rates shall become effective at any time when an Event of Default
or Unmatured Event of Default has occurred and is continuing.

<PAGE>   73
                                  SCHEDULE 2.1

                            BANKS AND PRO RATA SHARES

---------------------------------------------------------------------------
                              Pro Rata Share
                               of Revolving
Bank                         Commitment Amount          Pro Rata Share
---------------------------------------------------------------------------
LaSalle Bank National           $30,000,000                  40%
Association
---------------------------------------------------------------------------
National City Bank of           $22,500,000                  30%
Michigan/Illinois
---------------------------------------------------------------------------
Firstar Bank, N.A.              $22,500,000                  30%
---------------------------------------------------------------------------
TOTALS                          $75,000,000                 100%
---------------------------------------------------------------------------

<PAGE>   74
                                  SCHEDULE 9.6

                      LITIGATION AND CONTINGENT LIABILITIES

<PAGE>   75
                                  SCHEDULE 9.14

                                  SUBSIDIARIES

<PAGE>   76
                                  SCHEDULE 9.16

                              INTELLECTUAL PROPERTY

<PAGE>   77
                                  SCHEDULE 9.17

                                    INSURANCE

<PAGE>   78
                                  SCHEDULE 9.21

                            PENSION AND WELFARE PLANS

<PAGE>   79
                                  SCHEDULE 9.22

                              ENVIRONMENTAL MATTERS

<PAGE>   80
                                  SCHEDULE 10.7

                                  EXISTING DEBT

<PAGE>   81
                                  SCHEDULE 10.8

                                 EXISTING LIENS

<PAGE>   82
                                  SCHEDULE 10.9

                          EXISTING OPERATING AGREEMENTS

<PAGE>   83
                                 SCHEDULE 10.19

                                   INVESTMENTS

<PAGE>   84
                                  SCHEDULE 14.3

                              ADDRESSES FOR NOTICES

CABOT MICROELECTRONICS CORPORATION

870 North Commons Drive
Aurora, Illinois  60504
Attention:   Martin M. Ellen, Chief Financial Officer
Telephone:   (630) 375-5591
Facsimile:   (630) 499-2638

with a copy to:

870 North Commons Drive
Aurora, Illinois  60504
Attention:   Carol Bernstein, General Counsel
Telephone:   (630) 375-5461
Facsimile:   (630) 499-2644

LASALLE BANK NATIONAL ASSOCIATION, as Administrative Agent, Issuing Bank and a
Bank

Notices of Borrowing , Conversion, Continuation and Letter of Credit Issuance

135 South LaSalle Street
Chicago, Illinois 60603
Attention:   Maria Coronado
Telephone:   (312) 904-7517
Facsimile:   (312) 904-4448

All Other Notices

135 South LaSalle Street
Chicago, Illinois 60603
Attention:   Jeff Raider
Telephone:   (312) 904-2766
Facsimile:   (312) 904-6546

<PAGE>   85
NATIONAL CITY BANK OF MICHIGAN/ILLINOIS

2021 Sprint Road
Suite 600
Oak Brook, Illinois  60523
Attention:   James M. Wilber, Vice President
Telephone:   (630) 954-3100
Facsimile:   (630) 954-6441

FIRSTAR BANK, N.A.

30 N. Michigan Avenue
Chicago, Illinois  60602
Attention:   Timothy A. Fossa, Vice President
Telephone:   (312) 696- 1347
Facsimile:   (312) 696-1397

<PAGE>   86
                                   EXHIBIT A-1

                             FORM OF REVOLVING NOTE

                              Please See Attached.

<PAGE>   87
                                 REVOLVING NOTE

JULY     , 2001
CHICAGO, ILLINOIS                                                  $___________

     FOR VALUE RECEIVED, the undersigned, CABOT MICROELECTRONICS CORPORATION, a
Delaware corporation (the "Maker"), promises to pay to the order of
____________________________________ (the "Bank") at the principal office of
LaSalle Bank National Association (the "Administrative Agent") in Chicago,
Illinois the aggregate unpaid amount of all Revolving Loans made to the
undersigned by the Bank pursuant to the Credit Agreement referred to below (as
shown on the schedule attached hereto (and any continuation thereof) or in the
records of the Bank), such principal amount to be payable on the dates set forth
in the Credit Agreement.

     The Maker further promises to pay interest on the unpaid principal amount
of each Revolving Loan from the date such Revolving Loan is made until the date
such Revolving Loan is paid in full, payable at the rate(s) and at the time(s)
set forth in the Credit Agreement. Payments of both principal and interest are
to be made in lawful money of the United States of America.

     This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, dated as of July 10, 2001(as
amended or otherwise modified from time to time, the "Credit Agreement"), among
the Maker, certain financial institutions (including the Bank), the
Administrative Agent and National City Bank of Michigan/Illinois, a national
banking association, as Syndication Agent, to which Credit Agreement reference
is hereby made for a statement of the terms and provisions under which this Note
may or must be paid prior to its due date or its due date accelerated.
Capitalized terms used but not elsewhere defined in this Note shall have the
respective meanings ascribed to such terms in the Credit Agreement.

     This Note is made under and governed by the laws of the State of Illinois
applicable to contracts made and to be performed entirely within such State.

                                   CABOT MICROELECTRONICS CORPORATION

                                   By:      __________________________________
                                   Name:    __________________________________
                                   Title:   __________________________________

<PAGE>   88
                                         Schedule attached to Revolving Note
                                         dated July ___, 2001 of CABOT
                                         MICROELECTRONICS CORPORATION payable to
                                         the order of _____________

Date and
Amount of Loan     Date and Amount of
or of Conversion   Repayment or of        Interest
from another       Conversion into        Period/Unpaid   Principal   Notation
type of Loan       another type of Loan   Maturity Date   Balance     Made by
----------------   --------------------   -------------   ---------   --------

1. BASE RATE LOANS

2. EURODOLLAR LOANS

<PAGE>   89
                                   EXHIBIT A-2

                                FORM OF TERM NOTE

                              Please See Attached.

<PAGE>   90
                                    TERM NOTE

                 , 200
----------- -----     --
CHICAGO, ILLINOIS                                                 $___________

     FOR VALUE RECEIVED, the undersigned, CABOT MICROELECTRONICS CORPORATION, a
Delaware corporation (the "Maker"), promises to pay to the order of
____________________________________ (the "Bank") at the principal office of
LaSalle Bank National Association (the "Administrative Agent") in Chicago,
Illinois the aggregate unpaid amount of the Term Loan made to the undersigned by
the Bank pursuant to the Credit Agreement referred to below (as shown on the
schedule attached hereto (and any continuation thereof) or in the records of the
Bank), such principal amount to be payable in quarterly installments on the last
day of each Fiscal Quarter set forth below in the amount set forth below
opposite the date on which such installment is payable:

                   Fiscal Quarter Ending     Amount of Installment

                   [____________________]    [____________________]

                   [____________________]    [____________________]

                   [____________________]    [____________________]

Reference is made to the Credit Agreement for the terms of which this Note shall
or may be prepaid and under which payment of this Note may be accelerated.

     The Maker further promises to pay interest on the unpaid principal amount
of the Term Loan from the date the Term Loan is made until the date such Term
Loan is paid in full, payable at the rate(s) and at the time(s) set forth in the
Credit Agreement. Payments of both principal and interest are to be made in
lawful money of the United States of America.

     This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, dated as of July 10, 2001(as
amended or otherwise modified from time to time, the "Credit Agreement"), among
the Maker, certain financial institutions (including the Bank), the
Administrative Agent and National City Bank of Michigan/Illinois, a national
banking association, as Syndication Agent, to which Credit Agreement reference
is hereby made for a statement of the terms and provisions under which this Note
may or must be paid prior to its due date or its due date accelerated.
Capitalized terms used but not elsewhere defined in this Note shall have the
respective meanings ascribed to such terms in the Credit Agreement.

<PAGE>   91
     This Note is made under and governed by the laws of the State of Illinois
applicable to contracts made and to be performed entirely within such State.

                                        CABOT MICROELECTRONICS CORPORATION

                                        By:      ____________________________
                                        Name:    ____________________________
                                        Title:   ____________________________

<PAGE>   92
                                                  Schedule attached to Term Note
                                                  dated ________ ___, 200__ of
                                                  CABOT MICROELECTRONICS
                                                  CORPORATION payable to the
                                                  order of _______________

Date and
Amount of Loan     Date and Amount of
or of Conversion   Repayment or of        Interest
from another       Conversion into        Period/Unpaid   Principal   Notation
type of Loan       another type of Loan   Maturity Date   Balance     Made by
----------------   --------------------   -------------   ---------   --------

1. BASE RATE LOANS

2. EURODOLLAR LOANS

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