Document:

EXHIBIT 4.10

FR:1792512.3

[Non-binding
Translation from German]

The
Contracting Parties

 

GRACE
GmbH & Co. KG

In der Hollerhecke 1

67547 Worms

as seller of receivables
(hereinafter referred to as the Premium Client)

client number: 2006/207

and

Coface
Finanz GmbH

Isaac-Fulda-Allee 5

55124 Mainz

as purchaser of
receivables (hereinafter referred to as CF)

 

 

Special
Provisions:

The subject-matter of this Contract is the revolving
purchase of trade receivables owed to Grace GmbH & Co. KG in Worms by the
debtors (Customers) specified in Schedule 1 a).

The list of Customers may be expanded or restricted if
so requested by the Premium
Client at any time.  At
the beginning of the contractual relationship, the Premium Client and CF therefore determined
the Premium Client’s
customers from among which the Premium Client may select the Customers.  These customers are listed in Schedule 1
b).  The Premium
Client will apply for changes regarding the Customers by
providing the new list of Customers to CF; such changes will be subject to a limit
stipulated by CF.  The Premium Client  will offer to CF all outstanding
receivables due from the designated Customers.

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  Page 2 of the Contract (Term
  Sheet)

  
	
  I.

  	
   

  	
  Basic information

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a)   Maximum aggregate amount The maximum
  aggregate amount of the receivables to be purchased, less that part of the
  purchase price which is to be retained, is

  	
   

  	
  50 million EUROS  (EUR 50,000,000.00)
  

  The average exposure should be at least EUR 25,000,000.00.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b)   Selected debtors

  	
   

  	
  As set out in Schedule 1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c)   Delcredere insurance (Clause 10)

  	
   

  	
  not applicable

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  d)   Debtors’ registered offices (countries)

  	
   

  	
  not applicable

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  e)   Approved credit insurer

  	
   

  	
  not applicable

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  f)   Contract number(s) of the approved credit
  insurer

  	
   

  	
  not applicable

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  g)   Maximum credit period
  (Clause 3.2 b)

  	
   

  	
  90-180 days

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  h)   Purchase of existing receivables
  (Clause 3.7)

  	
   

  	
  Yes

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  i)   Maximum credit period for purchase of
  existing receivables (Clause 3.7)

  	
   

  	
  30 days

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  j)   Reminder procedure (Clause 14.1)

  	
   

  	
  In accordance with the established reminder practice
  of the  Premium Client

  
	
   

  	
   

  	
  k)   Balance settlement procedure (description
  of procedure for PLAF clients)

  	
   

  	
  Yes

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  l)   Aggregated first loss

  	
   

  	
  not applicable

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  m)   Commencement and end of the Contract
  (Clause 27.1)

  	
   

  	
  The Contract will commence on 1 Jan. 2007 and
  will end no earlier than on 31 Dec. 2009.

  
	
   

  	
   

  	
  n)   Purchase price retention (Clause 6)

  	
   

  	
  10%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
   

  	
  Up-front fees (one-off payment)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o)   Structuring / Due diligence

  	
   

  	
  EUR 50,000.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
   

  	
  Ongoing fees

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  p)   For financing

  	
   

  	
  All-in
  margin: 3-month EURIBOR +0.97%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  q)   Special audits (Clauses 8.2, 24.3)

  	
   

  	
  EUR 5,000.00
  per special audit

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  r)   Minimum fee

  	
   

  	
  EUR 175,000.00 per contractual year (calculated by
  reference to the margin in accordance with No. III p)

  

 

 

 

 

 

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Page 3 of the Contract (Covenant
Agreement)

I. Preamble

In
view of the magnitude of the commitment, it has been agreed to define clear
quality guidelines within which the commitment is to remain.  In addition, the economic development of the Premium Client is of
material significance for the assessment of its creditworthiness by CF.

This
Covenant Agreement relates to the individual accounts of the Premium Client prepared
in accordance with the German Commercial Code (Handelsgesetzbuch;
HGB).  For the avoidance of doubt, it is understood
that this Covenant Agreement represents only part of the risk assessment
relating to the Premium
Client and is therefore not conclusive.  The risk assessment in particular also
depends on the performance of contractual obligations to suppliers, the debtors’
structure, the structure of the receivables portfolio and the extent of
delcredere cases.

II.
Covenants

The Premium Client undertakes for the term of this Contract
to comply with the following financial covenants, each as at the balance sheet
date of the individual accounts of the Premium Client:

The liable equity of the Premium Client is at least 40% of the
balance sheet total.

The above key figure will be calculated by the Premium Client using
the following calculation scheme:

	
  

  	
   

  	
  Equity

  	
   

  	
  Balance
  sheet total

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Capital shares

  	
   

  	
  Balance sheet
  total according to individual accounts

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  —

  	
   

  	
  Outstanding
  contributions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  —

  	
   

  	
  Goodwill

  	
   

  	
  Goodwill

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  +/—

  	
   

  	
  Liabilities/receivables
  due to/from Grace Holding GmbH

  	
   

  	
  Receivables due
  from Grace Holding GmbH or partner(s)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  +

  	
   

  	
  Liabilities due
  to affiliated companies 

  (remaining term > 5 years)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  +

  	
   

  	
  Capital reserves

  	
   

  	
   

  

 

 

 

 

 

 

 

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  +/-

  	
   

  	
  Liabilities/receivables
  due to/from partner(s)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  +/—

  	
   

  	
  Net profit/loss
  for the year

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  +/—

  	
   

  	
  Cumulative
  profit/loss

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  =

  	
   

  	
  Liable
  equity

  	
   

  	
  =

  	
   

  	
  Balance
  sheet total

  

 

Calculation of the equity
ratio:

Equity * 100

Balance sheet total

The calculation is to be based on the Premium Client’s
audited individual annual accounts for the relevant financial year, using the
same accounting and valuation methods as in the previous years.

The Premium Client will evidence compliance with the above
financial covenants on an annual basis by presenting the audited annual
accounts and will confirm such compliance in writing.  The relevant documents shall be submitted to CF without a request
having to be made and without delay (unverzüglich)
after being prepared, but no later than by 30 June of the respective
following year, and shall always be prepared using the same accounting and
valuation method.

The Premium Client
further undertakes for the term of this Contract

-                    to inform CF promptly and
continuously about the progress of the Chapter 11 proceedings relating to its
US parent company by providing the quarterly reports (so-called “10q filings”)
and annual reports (so-called “10k filings”) to CF. 
Should the Chapter 11 proceedings be expanded to include further
Group companies, the Premium
Client shall notify CF thereof without delay.

-                    as regards the
agreement of other terms and conditions (in particular financial covenants
relating to compliance with certain key figures and/or the maintenance of a
certain economic and financial situation), not to place CF in a worse
position than any other financing partner.

-                    to notify CF without delay of
any present and future agreements on financial covenants with other credit
institutions and not to place these credit institutions in a better position
with respect to the agreement of, and compliance with, financial covenants than
CF.  Should the Premium Client wish to agree financial
covenants with other credit institutions which would place these credit
institutions in a better position than CF, it will offer to CF to conclude a
supplementary agreement under which CF is placed in the same position with regard
to the financial covenants as the other credit institutions.

-                    to notify CF in future without
delay of any purchase of companies by the German Grace partial group that leads
to a material change in the balance sheet structure.

 

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In the event that the Premium Client fails
to comply with the obligations set out above and/or the financial covenants
agreed above, or in the event that the Premium Client fails to confirm compliance
with the financial covenants in good time by presenting the corresponding
documents, CF
will fix a period of 30 days during which the Premium Client may cure such breach of
contract.  If the fixed period has
expired without a result, CF
shall first be entitled to demand that the Premium Client create or enhance bankable
security in order to secure the claims of CF under this Contract.  This shall not affect any further rights to
which CF
is entitled under this Contract or any other agreement.

III.
Obligations to provide information

The Premium
Client shall regularly evidence compliance with the financial
covenants to CF.  CF shall be informed without delay of any
breach or any facts or circumstances endangering compliance.  To evidence compliance, the following
documents shall be presented to CF:

·                  Quarterly financial reports,
notification of the attainment of targets in accordance with Schedule 2.

·                  Audited annual accounts
including auditors’ reports on the Group accounts.

During
the term of the PLAF Contract, the Premium Client will retain the accounting and
valuation methods used immediately prior to the conclusion of the PLAF
Contract.  The documents to be submitted
must be prepared in accordance with the same principles as the Group accounts;
in the event of deviation from these principles, a document shall be submitted
which explains in detail each different bookkeeping and accounting approach and
its effects.  All financial information
will be prepared in the German or English language at the Premium Client’s
option and must be confirmed by the Premium Client to be correct and complete.

If
different accounting and valuation methods are used in the preparation of
future annual accounts, the Premium Client shall notify CF of these
differences when presenting the annual accounts and explain them in detail.  CF may request the key financial figures to
be adjusted by mutual agreement such that compliance with the adjusted key
financial figures reflects the same economic situation with the use of the
amended accounting and valuation methods as would compliance with the key
financial figures applicable up to that time if the previous accounting and
valuation methods had been used.

IV. Legal consequences

The Premium
Client and CF
agree that an increased risk assessment in respect of the Premium Client is
justified if the requirements relating to the Premium Client’s economic situation
agreed above are breached.

In this case, CF is entitled to
reduce the maximum aggregate amount for the duration of the non-compliance with
the financial requirements according to the scale set out below:

1. Adjustment of the maximum aggregate amount

a. In the event of breach
of any of the agreed key financial figures stipulated in Clause II of this
agreement by an amount of up to (and including) 10% of the relevant target figure, CF is entitled to
reduce the maximum aggregate amount by up to 20%
of this maximum aggregate amount without having to notify the Premium Client.

 

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b. In the event of breach
of one of the agreed key financial figures stipulated in Clause II of this
agreement by an amount of more than 10%
of the relevant target figure, CF is entitled to reduce the maximum aggregate amount by
up to 50% of this maximum
aggregate amount without having to notify the Premium Client.

c. In the event of breach
of one of the agreed key financial figures stipulated in Clause II of this
agreement by an amount of more than 20%
of the relevant target figure, CF is entitled to reduce the maximum aggregate amount to
zero.

The Premium Client will
have the possibility to cure breaches of key financial figures stipulated in
Clause II of this agreement within 30 days.  CF waives any adjustments under
Clause IV (1) within this period.

2.     Right of extraordinary termination

In addition, in
the event of any breach of one of the agreed key financial figures, CF has a right of
extraordinary termination for good cause (aus
wichtigem Grund) vis-à-vis the Premium Client.  The Premium Client’s legitimate interests will be
safeguarded in this context by a notice period of 1 month before the end of a
month during which the Premium
Client will have the possibility to cure the breach of the
financial covenants.

After the end of the
notice period, the Premium
Client will also have a right of extraordinary termination which
will release it from all obligations under this Contract.  Should the charges paid in accordance with
Page 2 No. III. p) in the relevant contractual year be lower than the
minimum fee set out on Page 2, No. III. r. at the relevant time, the Premium Client shall
pay to CF
the difference between the agreed minimum fee set out on Page 2,
No. III. r., and the charges already paid.

3.     Amendment
of terms and conditions

In the event of a breach
of covenants agreed herein, CF may, at its option and in agreement with the Premium Client, amend
the agreed terms and conditions.  Should agreement
on the amendment of terms and conditions not be reached within a period of one
month, the parties are entitled to extraordinary termination of this Contract.

IV. Improvement in economic key figures

Should
the Premium Client’s
receivables portfolio increase due to its positive economic development, CF will examine the
possibility to increase the maximum aggregate amount.  The maximum aggregate amount will only be
increased with the prior consent of the competent bodies of CF.

 

 

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PLAF
Contract

	
  Contents

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Basic principle.............................................................................................................................................................

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Purchase offer, invoice
  copies.....................................................................................................................................

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Acceptance..................................................................................................................................................................

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Assignment..................................................................................................................................................................

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Purchase price.............................................................................................................................................................

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Purchase price
  retention..............................................................................................................................................

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Covenants....................................................................................................................................................................

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Reimbursement of
  expenses, minimum fee................................................................................................................

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Warranty......................................................................................................................................................................

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Risk of a Customer’s
  insolvency (“delcredere case”).................................................................................................

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Limit............................................................................................................................................................................

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  CF’s duty of
  notification, monthly accounts, approval by silence..............................................................................

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Accounts receivable
  bookkeeping...............................................................................................................................

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Reminder procedure,
  cash collection..........................................................................................................................

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Fiduciary relationship,
  Customer payments................................................................................................................

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Security........................................................................................................................................................................

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Accessory obligations.................................................................................................................................................

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  Realisation of security.................................................................................................................................................

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  Enhancement of security.............................................................................................................................................

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  Rights of lien...............................................................................................................................................................

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  Fiduciary relationship
  in the case of non-assignable receivables...............................................................................

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
   

  	
  Undisclosed assignment,
  information to Customers...................................................................................................

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
   

  	
  Obligation on form of
  contract....................................................................................................................................

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
   

  	
  Obligations to provide
  information, right of examination..........................................................................................

  	
   

  	
  21

  

 

 

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  25.

  	
   

  	
  Assignability of claims
  against CF..............................................................................................................................

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
   

  	
  Unity of account, joint
  and several liability................................................................................................................

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
   

  	
  Commencement and end of
  the Contract....................................................................................................................

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28.

  	
   

  	
  Termination for good
  cause.........................................................................................................................................

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29.

  	
   

  	
  Other integral parts of
  this Contract............................................................................................................................

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30.

  	
   

  	
  Place of performance
  and place of jurisdiction...........................................................................................................

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31.

  	
   

  	
  Applicable law.............................................................................................................................................................

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  32.

  	
   

  	
  Severability..................................................................................................................................................................

  	
   

  	
  24

  

 

 

 

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1.              Basic
principle

CF will purchase the receivables owed to the Premium Client by its
Customers in accordance with this PLAF Contract.  The Premium Client’s  claims vis-à-vis CF and the resulting
payments will not serve as security for credits granted to the Premium Client by
third parties, but will be at the free disposal of the Premium Client,
enabling it to fulfil its liabilities towards suppliers as a matter of priority
using the advantages of immediate payment. 
The decision of CF
to purchase the receivables depends essentially on the information provided by
the Premium Client
with regard to the receivables and Customers. 
The correctness and reliability of this information are therefore of
decisive importance.  This Contract
establishes a good faith relationship which is intended for the long term.

2.              Purchase
offer, invoice copies

2.1                       The
Premium Client will offer to CF all present and future trade
receivables from Customers.  The offer
will be made by submission of an open item list, a list of availability and a
break-down by age at least twice per month.

2.2                       The
Premium Client will administer
invoice and credit note copies as a trustee for CF
and is obliged to pass corresponding copies to CF
at its request.  These copies must
clearly state the Customer, the reason for the receivable, the amount of the
receivable and the due date.  The Premium Client may only offer
receivables the original invoice copies of which have been received by the
Customer and for which the consideration  has been
performed in full and without any defects.

3.              Acceptance

3.1                       The
agreement on the purchase of the individual receivable will come into existence
upon the acceptance declaration by CF.  Acceptance will be declared by booking the
receivable into the Premium Client’s receivables
purchase account, without the Premium Client
having to be notified of the booking.

3.2                       CF undertakes to purchase each
receivable in the invoice order as soon as the receivable complies with the
following requirements:

a.               The
receivable is within the limit defined for the individual Customer and the
maximum aggregate amount agreed for the Premium
Client in total.  To the
extent these requirements are only met in part, CF undertakes to purchase that part of the
receivable which falls within the limit and the maximum aggregate amount.

b.              The
Customer is not granted a longer payment period than the maximum payment period
stipulated on Page 2 of this PLAF Contract.

c.               The
receivable exists, is free from any objections and defences (frei von Einwendungen und Einreden), is
assignable and is not encumbered by any third-party rights.

 

 

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d.              The
receivable is not owed by an affiliated company (verbundenes Unternehmen). 
Affiliated companies of the Premium
Client are companies which hold a direct or indirect interest in
the Premium Client or
in which the Premium Client
holds a direct or indirect interest or whose shareholders/partners are directly
or indirectly identical to the partners of the Premium Client or whose authorised representatives are
identical to at least some of the authorised representatives of the Premium Client.

e.               The
information on the invoices is provided to CF
twice in the month after the invoice dates.

3.3                       When
calculating the extent to which the maximum aggregate amount has been utilised
(Page 2, No. I a), all amounts paid for outstanding receivables
from all of the Premium Client’s Customers
must be taken into account.

3.4                       CF is also entitled to purchase
receivables which do not meet the requirements stipulated in
Clause 3.2.  CF
will become obliged to purchase a receivable if a receivable which is initially
not purchased meets the requirements stipulated in Clause 3.2 at a later
time (carry-back procedure).  If there is
more than one such receivable, the purchase will be made in the order of
invoice dates.

3.5                       The
purchase obligation of CF
stipulated in Clause 3.2 and Clause 3.3 will lapse if CF has good reason to believe that
the Premium Client has failed to fulfil
its obligations towards suppliers with retention of title.

3.6                       CF will book receivables it does not
purchase after receipt of information on the receivable into a special account
of the Premium Client.  These receivables will remain on offer for
purchase by CF at any time.  The Premium Client
may, however, set a time limit of 10 days in writing for CF
to accept the offer to purchase such receivables; in this case, acceptance must
be declared by notification that such receivables have been booked into the
receivables account.  If the fixed period
expires without acceptance, the offer for sale will lapse.

3.7                       At
the commencement of the Contract, CF declares
that it is prepared to purchase existing receivables insofar as these are not
older than 90 days and do not fall due for payment later than within the time
period stipulated on Page 2 of this PLAF Contract.

4.              Assignment

4.1                       The
Premium Client hereby assigns all
existing and future trade receivables from its Customers to CF subject to the condition
precedent that the relevant receivable is purchased by CF.  CF hereby
accepts this assignment.  Upon acceptance
of the offer for sale, CF
therefore will concurrently become the owner of the purchased receivable.  If only part of a receivable is purchased,
only this part will be assigned.

 

 

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4.2                       If
CF initially does not purchase the
receivable offered to it for purchase by the Premium
Client (identification by booking into the special account), the
Premium Client hereby assigns this
receivable to CF as security for all of CF’s claims against the Premium Client arising from the
business relationship with the Premium Client.  CF hereby
accepts this assignment.  The Premium Client also assigns such
claims to CF which arise between the
offer dates stipulated in Clause 2.1.

4.3                       All
receivables which the Premium Client
has assigned or will assign to suppliers in the context of an extended
retention of title are excluded from the assignment under Clause 4.2
(partial waiver in rem (dingliche Teilverzichtsklausel)).  To the extent it has the authority to do so,
the Premium Client authorises CF to collect these receivables in
its own name and for a third-party account.

4.4                       Should
the extended retention of title of a receivable referred to in Clause 4.3
subsequently lapse, such receivable will be assigned under Clause 4.2.

Should CF subsequently purchase a
receivable pursuant to Clause 3.4 or Clause 3.7, the assignment under
Clause 4.2 or the collection authorisation under Clause 4.2 will
lapse, and the receivable will be assigned under Clause 4.1.

5.              Purchase
price

5.1                       The
purchase price to be paid by CF shall
correspond to the amount of the purchased receivable, less bonuses and prompt
payment discounts and less the ongoing fees set out on Page 2,
No. III p).  The ongoing fees set
out on Page 2, No. III p) will be calculated with respect to the part
of the purchase price paid to the Premium Client
for the period from the payment until the settlement of the receivable by the
Customer or the occurrence of the delcredere event (Clause 10).

5.2                       The
purchase price, less the purchase price retention (cf. Clause 6), will be
due immediately upon the purchase of the receivable.  The purchase price retention will be due for
payment once the customer has paid the purchased receivable to CF in full and such payment has
reached CF or the delcredere case has
occurred (Clause 10).

6.              Purchase
price retention

6.1                       The
purchase price retention set out on Page 2 will serve as security for CF in respect of any claims which CF may have against the Premium Client.  CF is also
entitled to increase the purchase price retention above the agreed amount if
and insofar as facts, according to CF’s
reasonable judgment, justify the concern that

f.                 the
Premium Client
will not meet its obligations to CF,
in particular because a sustained deterioration of the Premium Client’s creditworthiness or of
security provided by the Premium
Client is to be presumed;

 

 

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g.              the
purchase price retention applicable up to that time is insufficient to cover
the average legitimate reductions in the receivables, particularly those
resulting from objections by the Customers or credit notes of the Premium Client.

7.              Covenants

7.1                       The
contracting parties have entered into this Contract on the basis of the
documents provided by the Premium Client
and the key financial figures contained therein.  It is agreed that in the event that the key
figures should deteriorate, CF will be
entitled to amend the contractual terms and conditions in compliance with the
Covenant Agreement (Page 3 of the Contract).  Should the key figures develop positively, CF will examine the possibility to adjust
the terms and conditions in favour of the Premium Client.  The details are governed by the Covenant
Agreement (Page 3 of this Contract).

8.              Reimbursement
of expenses, minimum fee

8.1                       Insofar
as a debit balance in the Premium Client’s
settlement account occurs, e.g. as a result of credit notes or the receivable
being disputed by the Customer after the purchase price has been paid,
overdraft interest will be charged to the Premium Client
as from the following banking day by way of a surcharge of 3.5% on the interest
rate separately agreed on Page 2 of this PLAF Contract after the Premium Client has been notified by CF.

8.2                       The
costs of special audits shall be borne by the Premium
Client.

8.3                       The
Premium Client
shall bear all expenses incurred in connection with the proper creation, administration,
release or realisation of security (in particular notary’s fees, depositing
charges and the costs of safeguarding collateral).

8.4                       In
order to calculate the payment obligations in respect of the minimum fee set
out on Page 2, No. III r), all ongoing fees that have been paid in
that contractual year in accordance with Page 2, No. III p) will be
added at the end of the contractual year set out in Clause 27.1.  In the event that the total amount of ongoing
fees set out on Page 2, No. III p) that have already been paid falls
short of the amount of the minimum fee, the Premium
Client shall pay to CF the
difference between the amount of the minimum fee and the ongoing fees actually
paid.

9.              Warranty

9.1                       The
Premium Client warrants the legal
existence of the purchased receivable, in particular that the receivable, as
shown in the invoice, exists, is due for payment, is free from objections and
defences, is assignable and is not encumbered with any third-party rights, and
that this will continue to apply until collection by CF.

 

 

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9.2                       If
claims under the warranty are enforced, the Premium
Client shall place CF in the
same position in which it would be if the Customer had paid the assigned
receivable in full.

Any further
rights under Sections 437 and 440 of the German Civil Code (Bürgerliches Gesetzbuch; BGB)
shall remain unaffected.

9.3                       Should
the Customer assert that it has no payment obligation towards CF in the event of disclosure under
Clause 22.2, the latter  will
inform the Premium Client thereof by
providing a special notification about objections or defences, by providing a
notification of a special purchase price retention or by transferring the
receivable to the special account. 
Should a Customer pay short a particular receivable, CF may, in the relationship with the
Premium Client, interpret this to
the effect that the Customer disputes its payment obligation to the extent of
the amount which remains unpaid.  Action
in respect of disputed receivables or disputed parts of receivables may only be
taken by Grace.

As long as the
Customer disputes its payment obligation, CF may retain, as special purchase
price retentions exceeding the general purchase price retention, any amounts
which will fall due in future up to the amount of the purchase price already
paid by CF in respect of the
receivable.

The Premium Client may
redeem such special purchase price retentions by providing suitable security,
in particular bank guarantees.  The
special purchase price retention shall be paid out as soon as it has been
established that the asserted objections or defences are unfounded.

The Premium Client is
obliged to settle the dispute about the goods within 60 days by providing
relevant documents or, alternatively, to purchase back the receivables.

9.4                       If
the Customer pays in a foreign currency and exchange rate differences occur as
a result of the lapse of time between invoicing and payment, the Premium Client is obliged to
compensate CF for these differences.

9.5                       CF is entitled, but not obliged, to
claim interest after the due date or default interest from the Customer.  CF shall
assign such claims against the Customer to the Premium
Client if the latter so requests.  If CF collects
such claims prior to reassignment to the Premium Client,
CF will set off such claims against
claims held by CF against the Premium Client.  Such claims will be asserted directly towards
the Customer only in the event of disclosure of the purchase of receivables
under Clause 22.2.

10.       Risk
of a Customer’s insolvency (“delcredere case”)

10.1                 The
Premium Client assumes the risk that
the Customer will not be able to pay the purchased receivable.

10.2                 The
Customer’s insolvency will be presumed if the Customer fails to pay the invoice
within 60 days of the due date.

 

 

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10.3                 If
insolvency (as defined in Clause 10.2) has occurred with respect to a
receivable, CF will reassign the
receivable to the Premium Client.  The Premium Client
is obliged to pay the purchase price back to the factor.  The Premium Client
is entitled to claim back receivables from CF even
before that point in time in individual cases. 
It will reimburse CF
immediately (unmittelbar) for the
purchase price.  The parties agree that
the reassignment of the receivable will be effective upon the reimbursement of
the purchase price.

10.4                 If
the Customer uses a cheque to pay a bill of exchange issued by the Premium Client which the Customer
has accepted, the delcredere risk will lapse when the cheque is cashed.  CF
will thus not assume the risk of the Customer’s insolvency for the Premium Client’s right of recourse
against the Customer arising from the bill of exchange.  It will not take the bill of exchange into
its possession.

11.       Limit

11.1                 Decisions
on limits will be made by CF and will
apply upon the notification of the decision to the Premium
Client.

11.2                 CF is at any time entitled to amend
or cancel limits at its discretion after a due assessment of the circumstances
(nach pflichtgemäßem Ermessen).

An amendment to limits will apply only to
future receivables, but not to receivables for which the Premium Client has rendered, prior
to receipt of notification of the amendment, the consideration by making
deliveries to the Customer which it cannot recall.

Limit decisions and their amendments will be
communicated by CF to the Premium Client without delay and/or
retrieved by the Premium Client.  The Premium Client
will include these in the list of availability which it will send to CF.

11.3                 When
calculating the extent to which a limit has been used, all receivables from a
Customer which have been purchased and are still unpaid will be added.  Receivables for which payment is by bills of
exchange which have been sent for discounting will be included in the
calculation until and to the extent the bills of exchange have been paid.

12.       CF’s
duty of notification, monthly accounts, approval by silence

12.1                 CF will send the Premium Client an overview of all
account positions relating to the collaboration within 10 days of the end of
each month (monthly accounts).

12.2                 Any
objections for reasons of inaccuracy or incompleteness of a monthly account
must be notified by the Premium Client
no later than within one month of its receipt; if the Premium
Client raises its objections in writing, dispatch within the
one-month period will be sufficient. 
Failure to notify objections within the time allowed will be deemed as
approval and therefore equal to the conclusion of an agreement that the
statements of account provided accurately reflect the mutual claims and legal
relationships and are to be used as the basis for the continuation of the
collaboration.  CF
will make particular reference to this consequence when issuing the monthly
accounts.

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12.3                 The
Premium Client may also require a
correction of the monthly accounts after the end of the time limit; in such a
case, it must, however, prove that and to what extent the monthly accounts were
incorrect.

12.4                 Silence
in respect of the monthly accounts as defined above will at the same time be
deemed to be the final recognition of the interest, fees and other charges
calculated for this month; particular reference will also be made to this fact
when the monthly accounts are issued.

12.5                 CF may reverse incorrect entries by
making the corresponding adjusting entries by the time of the next monthly
accounts.  Should CF
discover an incorrect entry only after the monthly accounts have been issued
and after the end of the period set out in Clause 12.2, it will notify the
Premium Client separately about the
adjusting entry to be made.

Should the Premium Client raise justified
objections to the adjusting entry, CF will
reverse the adjusting entry and will separately lodge the claim resulting
therefrom.

12.6                 Should
CF fail to settle a justified claim
of the Premium Client based on an
inaccurate entry without delay after becoming aware of such incorrect entry and
after reviewing the entry without delay, CF is
obliged to pay interest at a rate of 3.5% from the banking day following the
date on which it becomes aware of the inaccurate entry and reviews such entry
without delay.

13.       Accounts
receivable bookkeeping

13.1                 CF will not be in charge of accounts
receivable bookkeeping itself; the bookkeeping of the accounts receivable,
including the purchased receivables, will be undertaken by the Premium Client as a trustee for CF and with the care of a prudent
businessman (Sorgfalt eines ordentlichen Kaufmannes).  Information which the Premium
Client must supply to CF as part of automated data interchange
is listed in the “Process Description for PLAF Clients” (Schedule 3).  The Premium Client
will also be responsible for the reminder procedures relating to the
receivables from Customers.  The Premium Client is aware that, in
doing so, it accepts an increased fiduciary and protective duty towards CF, which means that the Premium Client  must execute the bookkeeping and reminder
procedures in such a way that CF is under
no circumstances in a worse position than it would be in if the named duties
were performed by CF itself.  This is a material contractual duty.

13.2                 If
agreed with the Premium  Client,
the collaboration will be based on electronic data interchange.  In this case, the Premium
Client undertakes to provide the corresponding data and to
operate the defined interfaces.

 

 

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14.       Reminder
procedure, cash collection

14.1                 The
Premium Client will execute the
reminder procedures for the receivables from Customers on behalf of CF. 
The Premium Client undertakes to
maintain the timing of reminders as described on Page 2 of this PLAF
Contract.

14.2                 If
no payment is received by the Premium Client
after performance of the reminder procedure, it must return to CF the purchase price of the
receivable after the expiry of the time period set out in Clause 10.2.

15.       Fiduciary
relationship, Customer payments

15.1                 If
payments for assigned receivables are received by the Premium
Client or in the Premium Client’s
accounts kept with other banks, the Premium Client will
accept these payments as a trustee for CF and
shall immediately forward them to CF along
with all original documents (credit transfer counterfoils, post bank credit
notes, settlement notices, etc.).

The Premium Client hereby assigns its
claims against its relevant bank arising from such credit balances to the
extent paid by the Customer and irrevocably authorises CF
to instruct the bank to transfer such claims to CF.

15.2                 If
the Premium Client receives such
payments in another form (in particular in the form of bills of exchange,
cheques or postal cheques), CF and the Premium Client hereby agree that
title to such documents is transferred to CF as soon
as they are acquired by the Premium Client.  The Premium Client
further assigns to CF in advance all of the
rights arising from the documents.  The
transfer of cheques and bills of exchange which become the direct property of
the Premium Client is substituted by the
fact that CF and the Premium Client hereby conclude a
safe-keeping agreement and the Premium Client,
in the event that it does not acquire direct possession, assigns to CF its right to recover possession
from third parties.

The Premium Client will endorse the
documents — to the necessary extent — and will transfer them to CF without delay.  Until the documents are transferred to CF, the Premium
Client must take all measures necessary to preserve the rights
arising from them.  The Premium Client authorises CF to sign bills of exchange in its
name as the drawer and to endorse bills of exchange and cheques in its name.

15.3                 As
long as the collaboration is performed in the settlement of balances procedure
(see description, Schedule 3), CF waives
the transfer of the payments and documents mentioned in Clauses 15.1 and
15.2.

15.4                 If
CF credits the value of cheques,
debit notes and bills of exchange before they are settled, this will be subject
to encashment.  If such amounts have to
be debited back, CF may request the Premium Client to place CF in the position in which it would
be if the receivable which is the subject of the debit had not been paid at
all.  CF
is authorised to make an adjusting booking irrespective of whether monthly
accounts have in the meantime been issued.

 

 

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16.       Security

16.1                 As
the delcredere risk (Debitorenrisiko)
associated with the receivables will remain with the Premium
Client, the Premium Client
is willing to provide security to CF for the
receivables only in respect of the requirements set out in Clauses 18 and
22 in accordance with the provisions set out below.  With the assignment of the receivable, the Premium Client assigns to CF all claims it acquires under its
agreement with the Customer, in particular rights to the restitution of goods
and services in the event of reversal of the agreement.

16.2                 The
Premium Client and CF hereby agree that the property
title to which is reserved and the equitable lien with which the Premium Client has secured an
assigned receivable will become the property or joint property of CF upon the assignment of the
receivable to which the security relates — at the latest at the time at
which the Premium Client acquires the
ownership or joint ownership.

16.3                 The
Premium Client and CF also agree that all existing and
future expectant rights which the Premium Client
acquires to objects contained in the invoices underlying the assigned
receivables will immediately pass to CF.

16.4                 The
Premium Client assigns forthwith to CF its future rights to recover
possession from the Customer or another third party which is in direct
possession of the property title to which is reserved or of the equitable
lien.  To the extent such objects are in the
direct possession of the Premium Client,
the Premium Client will keep them as a
trustee for CF free of charge and
separately from other goods.

16.5                 If
the assigned receivable originates from a sale to a destination according to
the buyer’s instruction, the Premium Client
hereby assigns to CF its claims towards the
carrier and its right of stoppage in transit.

16.6                 The
Premium Client hereby assigns to CF all its potential insurance
claims in respect of the assigned receivables and goods to which title has
passed.  To the extent the assignment is
contingent upon specific preconditions, the Premium
Client undertakes to execute the assignment in the manner
required.

16.7                 To
the extent ancillary rights are not transferred by operation of law, the Premium Client will transfer along
with the receivable all rights which serve to secure and enforce the sold
receivable.

17.       Accessory
obligations

17.1                 If
facts become known which give rise to doubts as to whether the Customer will
properly perform an agreement underlying a receivable that has been assigned to
CF, the Premium
Client must repossess the goods if so directed by CF; the costs of repossession of
goods for which receivables have been purchased will be borne by CF; costs relating to other goods
will be borne by the Premium Client.

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17.2                 Goods
which are once again in the possession of the Premium
Client shall be kept by the Premium Client
as a trustee for CF free of charge and
separately from other goods, regardless of the reason for the
repossession.  The Premium
Client shall inform CF of the
repossession and obtain instructions from CF without
delay.  To the extent these goods are not
already owned by CF, the Premium
Client and CF agree
that CF will become the owner as soon as
the Premium Client  reacquires the goods.  The goods shall be marked as the property of CF. 
Clause 17.2 does not apply to returned goods the receivables for
which have not been assigned to CF.

17.3                 The
Premium Client is obliged to support
CF using its best efforts and free
of charge in the enforcement and realisation of all security provided to
it.  CF may
instruct the Premium Client to realise
security itself in the best possible manner. 
In this case, the Premium Client
will act as a trustee for CF and
shall account comprehensively for the realisation and pass everything it
receives thereby to CF without delay.

18.       Realisation
of security

18.1                 CF will realise security provided to
it only if the Premium Client is late in
making payments to CF of material amounts and a
grace period of at least 2 weeks granted to the Premium
Client by CF for the
payment of the receivable, linked with a warning of realisation of security in
the event of non-performance, has elapsed without a result.  In addition, security for the receivables
from the Customers will be released only after disclosure of the procedure
within the meaning of Clause 22 of the PLAF Contract and after an
unsuccessful attempt to collect the relevant receivables.

18.2                 In
the event of realisation, CF may
choose between various items of security. 
In the realisation of security and when selecting the security to be
realised, CF will take account of the
legitimate interests of the Premium Client
and a third-party security grantor which has created security for the Premium Client’s liabilities.

To realise the
receivables assigned as security, CF
will collect such receivables and set them off against the Premium
Client’s liabilities towards CF.

18.3                 Should
the Customer fail to pay an assigned receivable on its due date, CF may, on the conditions set out in
Clause 18.1, take possession of the security for the receivable, or store
it at the premises of a third party, also if the security is in the possession
of the Premium Client.

18.4                 CF may also realise security by way
of a sale in the open market at its discretion after a due assessment of the
circumstances.  CF
will use the net proceeds from the realisation, after deduction of all costs
accruing from the realisation and of a reasonable reimbursement for its own
expenses, to cover the secured receivables. 
CF will surrender any unused
surplus.

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19.       Enhancement
of security

19.1                 CF may request security to be
provided for all claims (including contingent claims) arising from overdrafts
of the settlement account or in any other way.

19.2                 CF may assert its claim for the
provision or enhancement of security for as long as the realisable value of all
security corresponds to the aggregate value of all claims arising from the
business relationship (cover limit).

If the
realisable value of all security not only temporarily exceeds the cover limit, CF shall, if so
requested by the Premium
Client, release security at its option up to the amount that is
in excess of the cover limit; when selecting the security to be released, it
will take into account the legitimate interests of the Premium Client and of a third-party security
grantor that has provided security for the Premium
Client’s liabilities.

19.3                 If
CF initially refrained in whole or
in part from demanding the provision or enhancement of security when claims
against the Premium Client arose under
Clause 19.1, it may subsequently require that security be provided.  However, the precondition for such action is
the occurrence of knowledge of circumstances which justify an increased risk
assessment relating to the claims against the Premium
Client.  This may in
particular be the case if:

a.               the
economic situation of the Premium
Client has deteriorated; or

b.              the
existing security has decreased in value.

19.4                 CF will grant a reasonable period
for the provision or enhancement of security. 
If CF intends to make use of its
right of termination with immediate effect if the Premium
Client does not meet its obligation to provide or enhance
security in due time, it shall notify the Premium Client
in advance.

20.       Rights
of lien

20.1                 The
Premium Client and CF agree that CF
will acquire a right of lien over the securities and objects the possession of
which has been acquired, or will be acquired, by CF
in the course of ordinary business transactions between the parties, such as
cheques.

CF will also acquire a right of lien over
the claims to which the Premium Client
is or will be entitled against CF as a
result of the business relationship (such as credit balances).

20.2                 The
purpose of the right of lien is to secure all existing, future and contingent
claims to which CF and all of its domestic
and foreign branches are entitled towards the Premium
Client as a result of the business relationship.

20.3                 If
money or goods come into the power of disposition of CF
with the proviso that they may only be used for a specific purpose, CF’s right of lien will not extend
to such money or goods.

 

 

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21.       Fiduciary
relationship in the case of non-assignable receivables

21.1                 The
Premium Client will hold any
receivables whose assignment is not valid as a trustee for CF.  If the reason for the inability to assign the
receivable lapses, the assignment will become effective, and CF will become the legal owner.

21.2                 In
the case of assignments which are valid under Section 354a HGB, the Premium Client is obliged not to
conclude legal transactions in respect of the legitimate receivable without CF’s consent, and particularly to
refrain from agreements on a set-off, retention, release and deferment, also to
the extent that these are effective in the relationship with the creditor.  The Premium Client
will accept any incoming payments as a trustee for CF;
Clause 21.1 above will apply.

21.3                 In
addition, CF reserves the right to
request the Premium Client to perform the
reminder procedure directly vis-à-vis the Customer and with a frequency which
is to be agreed with CF.  CF is
entitled to do so only in the event of disclosure under Clause 22.2.

22.       Undisclosed
assignment, information to Customers

22.1                 The
sale and purchase of the receivables will be undisclosed.  The contractual relationship and the
assignment of the receivables will only be disclosed to the debtors of the Premium Client in compliance with
the provisions of this Clause 22.

22.2                 If
the Premium Client (i) no longer
meets the obligations to provide information on payments and lists of unpaid
invoices and to undertake bookkeeping or if the amounts of the unpaid invoices
materially deteriorate or the sustained deterioration of the economic situation
is imminent and (ii) if the Premium Client is in default in payment in
respect of receivables that are not only immaterial,

a.               CF will be
entitled and the Premium
Client will be obliged, after a warning has been issued and a
5-day grace period has been set, to inform the Customer about the contractual
relationship and the assignment of the receivables and security interests.

b.              the
Premium Client
must include an unequivocal reference in its General Terms and Conditions used
with its Customers (which must be agreed with CF) to the collaboration with CF in respect of
the PLAF process and the related assignment of receivables, ancillary rights
and transfer of the rights to the goods delivered.  This reference to the assignment of the
invoiced receivables to CF
shall also be included in the invoices in a clearly visible manner.

c.               CF will be
entitled to require the Premium
Client to surrender the original invoices for the purpose of
forwarding them to the Customer.

23.       Obligation
on form of contract

23.1                 The
Premium Client has provided its
General Terms and Conditions to CF for
examination and has taken account of CF’s
suggestions for additions and amendments. 
The Premium Client may amend its
General Terms and 

 

 

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                                      Conditions
only after informing CF thereof
and, if the amendment is material for CF, after CF has consented to the amendment.  By signing this Contract, CF agrees with the Premium Client’s General Terms and
Conditions as applicable at that time.

23.2                 The
Premium Client will inform CF as soon as it makes any
individual agreement with the Customer which is in breach of the above
obligations.

23.3                 The
Premium Client will, without CF’s consent, refrain from making
any agreements with its suppliers under which the assignment of receivables
based on a purchase under the PLAF procedure is prohibited.

24.       Obligations
to provide information, right of examination

24.1                 The
Premium Client is obliged to inform CF without delay of all material
circumstances of which it becomes aware and which relate to the receivables
from the Customers and could affect CF’s
interests.  The obligation to provide
information extends in particular to the following:

a)              objections
and defences, rights of set-off, avoidance and retention.  The Premium
Client shall notify CF
thereof through the fastest possible channel and shall issue a corresponding
credit note without delay.

b)             any
contesting of the receivable by the Customer, even if the Premium Client does not consider such dispute
to be justified.  If the Customer
comments in writing, the Premium
Client shall provide CF
with a copy through the fastest possible channel.

c)              all
material information available to the Premium
Client regarding the Customers’ creditworthiness, in particular
information on any deterioration in the Customers’ creditworthiness.

d)             any
measures to attach liens and other enforcement proceedings as well as all other
enforcement of third-party rights in respect of receivables from Customers.

e)              to
submit to CF, if so
requested, all documents in support of the receivables offered for purchase,
such as delivery notes, agreements, order confirmations, etc.

24.2                 The
Premium Client is furthermore
obliged to inform CF without delay of all
material circumstances relating to its company and to pass on the following
documents to CF:

a)              Existing
authorisations to third parties to collect cash may not be granted without the
consent of CF;
authorisations already granted shall be revoked immediately;

b)             all
booking arrears of over two weeks; booking arrears shall not be longer than
this;

c)              any
material deterioration in the Premium
Client’s general financial and business positions; any material
change under corporate law or in the legal representation of the Premium Client;
all facts which cause another company to become an affiliated company within
the meaning of Clause 3.2.d).

 

 

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Financing:
Contract                                                                                                      Page
21 of 25

24.3                 If
there is a legitimate interest, CF or any
third party appointed by CF are at
any time entitled to inspect the books, accounts and other documents and
records of the Premium Client at the latter’s
premises.  Any documents requested in
that context shall be presented to CF in
full.  In order to conduct this audit, CF shall have unrestricted access to
the Premium  Client’s
business premises at any time during normal business hours after consultations
with the Premium Client.  If there is any dubiety on the existence of a
receivable with respect to its grounds or amount, CF
is entitled to conduct a special audit on the Premium
Client’s premises.  The Premium Client will bear the ensuing
costs up to the maximum amount set out on Page 2, No. III q), to the
extent it is responsible for the dubiety.

24.4                 The
Premium Client releases CF and the companies affiliated with
CF within the meaning of
Clause 3.2.d) and, as far as information requests by CF
are concerned, all commercial banks cooperating with it from banking secrecy
and authorises CF to request from the
commercial banks all information relating to the Premium
Client.  In addition, CF may, with the Premium Client’s prior consent,
request documents or information from the tax advisor, auditor or any other
person in charge of bookkeeping or preparing the balance sheet for the Premium Client; these persons are
then released from their duty of confidentiality in respect of information
provided to CF.

24.5                 CF is entitled to forward any
accounting data and information it has received or will receive from the Premium Client to affiliated
companies of CF within the meaning of
Clause 3.2.d).  These companies are
Coface Holding AG, Coface Kreditversicherung AG, Coface Rating GmbH, Coface
Debitorenmanagement GmbH, Coface S. A., Coface Nederland Services BV, Coface
Danmark Services AS and Coface Sverige Services AB.  The data obtained in the context of the PLAF
Contract will be used for internal examinations of the [Premium]
Client’s and the Customers’
creditworthiness, the results of which may also be disclosed to clients of the
Coface Group.

24.6                 The
Premium Client will use its best
efforts to support CF in any disputes, whether
in court or out of court, relating to a receivable or security interest.  The Premium Client
is in particular obliged to inform CF
comprehensively about the matter in dispute and to provide all documents and
other evidence relevant to the matter.

24.7                 In
view of the agreed obligations to provide information and to give due
consideration, the result of any legal action between the Premium
Client and the Customer shall be deemed binding in the
relationship between CF and the Premium Client even without
third-party notice (Streitverkündung).

25.       Assignability
of claims against CF

The Premium Client’s
claims against CF
may be assigned to third parties only with CF’s consent. 
CF
may withhold its consent for good cause; good cause shall be deemed to exist in
particular if the intended assignment gives reason to presume that it is
disadvantageous for the Premium
Client’s suppliers.

 

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Financing:
Contract                                                                                                      Page
22 of 25

 

26.       Unity
of account, joint and several liability

26.1                 All
of the Premium Client’s accounts
kept with CF constitute a single
account and may be offset against each other by CF
to the legally permissible extent.  The Premium Client may perform set-offs
against claims of CF only if the Premium Client’s claims are
undisputed or have been recognised by declaratory judgment (rechtskräftig festgestellt).

CF may, in its relationship with the Premium Client, first set off any
payments received from a Customer after the limit fixed for the Customer has
been cancelled against purchased receivables from the same Customer, regardless
of the purpose stated by the Customer for these payments.  However, this is subject to the condition
that no extended retention of title has been agreed in favour of a supplier of
goods in respect of the purchased receivable against which the payment is to be
set off.

26.2                 The
same shall apply to any claims of CF against
the Premium Client under warranties set
out in Clause 9 as well as to any credit notes issued by the Premium Client and any realisation
proceeds.

26.3                 All
of CF’s claims against the Premium Client shall be due
immediately.

27.       Commencement
and end of the Contract

27.1                 The
commencement and end of this Contract are set out on Page 2 of this
Contract.

27.2                 The
Contract will be automatically extended unless any of the two contracting
parties terminates the Contract by giving 2 months’ written notice with effect
as of the end of a quarter.  If the
Contract is terminated by the Premium Client within the term of the Contract defined
on Page 2 No. I. m., the Premium Client  shall
be required to pay the minimum fee agreed under Page 2 No. III. r.
for the residual term of the Contract. 
If the fees under Page 2 No. III. p. already paid at such time
are lower than the minimum fee under Page 2 No. III. r., the Premium Client shall
be required to pay the difference between the fees already paid and the minimum
fee agreed under Page 2 No. III. r to CF.

27.3                 Upon
the end of the Contract, all unaccepted purchase offers will lapse.  Any pending transactions will be settled in
accordance with this PLAF Contract.

In the event of termination of the Contract, CF is entitled to
require the Premium
Client to reduce the exposure (utilisation of the maximum
aggregate amount).

In this case, CF will demand from the [Premium] Client in writing to
reduce the exposure within a specified period. 
Should the Premium
Client fail to reduce the exposure within such period, CF is entitled to
require the provision or enhancement of security under Clause 19.  The underlying receivables will remain
purchased and assigned to CF.

 

 

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Financing: Contract                                                                                                     Page
23 of 25

28.       Termination
for good cause

28.1                 The
PLAF Contract may be terminated in writing and with immediate effect for good
cause.  Good cause shall be deemed to
exist in particular if the other contracting party breaches a material
contractual obligation on a continued basis or if its assets materially
deteriorate such that the performance of its contractual duties is jeopardised.  Good cause shall also be deemed to exist if
the Premium Client does not meet its
payment obligations to suppliers, in particular if it does not honour cheques
and bills of exchange that are due for payment.

28.2                 Should
the Premium Client’s bookkeeping no
longer comply with the contractual requirements, CF  will notify the Premium
Client thereof and require it to rectify the situation within a
specified period.  If the Premium Client fails to comply with
this requirement within such period, CF shall
have a right of extraordinary termination of this Contract.

28.3                 In
the event of termination under Clause 28.1, Clause 27.3 shall apply mutatis mutandis.

29.       Other
integral parts of this Contract

Schedules 1-3 to this Contract are integral
parts of this Contract.

30.       Place
of performance and place of jurisdiction

To
the legally permissible extent, the place of performance and place of
jurisdiction for all disputes arising from this Contract shall be Mainz.

31.       Applicable
law

The
application of German law to this Contract and to all disputes arising from the
performance of this PLAF Contract is agreed.

32.       Severability

Should
any of the provisions of this Contract or its Schedules be or become invalid in
whole or in part, this shall not affect the validity of the remaining provisions.  This shall apply in particular where the
invalidity affects only individual receivables or parts thereof.  The invalid provision shall be replaced by a
provision which is legally valid and comes as close as possible to the intended
economic purpose of the invalid provision. 
Should any transactions in rem
(dingliche Geschäfte) (assignment
of claims and expectancies, transfers of ownership) be ineffective, the
contracting parties, to the legally permissible extent, shall be obliged to
treat such transactions in the internal relationship as if they were
effective.  In addition, they are obliged
to conclude the transaction 

 

 

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Financing:
Contract                                                                                                      Page
24 of 25

in rem without delay, taking into the account any
requirements left out of account before.

 

	
  Coface Finanz GmbH

  Isaac-Fulda-Allee 5 

  55124 Mainz

  	
   

  	
  GRACE GmbH & Co. KG

  In der Hollerhecke 1

  67547 Worms

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Mainz, [date]

  	
   

  	
  Worms, [date]

  

 

 

 

 

Premium Large Accounts
Financing:
Contract                                                                                                       Page
25 of 25EXHIBIT
10.17

 

 

 

 

 

 

 

 

W.
R. GRACE & CO.

SEVERANCE PAY PLAN FOR

SALARIED EMPLOYEES

 

 

 

 

 

 

 

 

Effective, as
amended, April 1, 2005

 

W. R. GRACE & CO.
SEVERANCE PAY PLAN

FOR SALARIED EMPLOYEES

SECTION 1

OVERVIEW

PREAMBLE

This
Plan was originally adopted on January 1, 1994. 
Effective July 1, 1996, the Plan was amended and restated to reflect
that the severance payable hereunder equals 1-1/2 weeks pay for each year of
service, and to cease the requirement that “Downsizing Events” must be declared
in order to apply the Plan.  Effective
February 1, 1999, the Plan was further amended and restated to reflect that no
Covered Employee is entitled to severance pay under this Plan, if he or she
ceases employment from the Company as a result of the 1999 Grace Productivity
Effectiveness Program, whether or not such cessation is a result of the
Employee’s election to not relocate with his or her position with the
Company.  Effective April 1, 2005, the
Plan was further amended and restated to reflect that no Covered Employee is
entitled to severance pay under this Plan, unless he or she signs and does not
revoke an agreement acceptable to the Company under which he or she releases
the Company, as well as its directors, officers, and employees (and other
related parties), from any liability related to his or her employment with or
termination from the Company.

1.1           Purpose

The
purpose of this Plan is to provide guidelines with respect to severance pay to
certain salaried employees of the Core Businesses (as hereinafter defined) of  W. R. Grace & Co., including its
affiliates and subsidiaries, (hereinafter the “Company”) whom the Company
permanently terminates from its employment because of job elimination or
reorganization.  This Plan shall not
apply to any employee of the Health Care Businesses (as hereinafter defined) or
any non-core business of the Company.

 2
 

1.2           Revocation Of Prior Severance
Policies And Plans:

Effective
as of July 1, 1996, the Company rescinds, revokes, and discontinues any other
policies, plans or practices regarding severance pay with respect to employees
of the Core Businesses, and no severance or similar payments shall be made by
the Company to an employee of any Core Business except as provided under the
terms of this Plan or another applicable written severance pay plan of the
Company with an effective date subsequent to the effective date of this
Plan.  The immediately preceding sentence
notwithstanding, the Company may also make severance or similar payments to
employees of Core Businesses pursuant to an arrangement not governed by this
Plan, if the requirements of subsection (a), (b) or (c) of this Section 1.2 are
satisfied.

(a)                                  The
Company may make severance or similar payments pursuant to, and in
consideration of, a properly executed written agreement that releases the
Company from all claims and potential claims of an employee; provided that the
terms of the severance pay arrangement are described in that agreement; and
provided further that the agreement is not part of an “employment termination
program” (within the meaning of the Age Discrimination In Employment Act)
offered to a group of employees (any such program shall not be implemented
without the approval of the Benefits Committee).

 3
 

(b)                                 The
Company may make severance or similar payments pursuant to a written employment
agreement that specifies the terms of a severance pay arrangement with respect
to an employee.

(c)                                  The
Company may make severance payments under the Grace Cost Management Program to
individuals who were identified for termination under that Program prior to its
expiration on June 30, 1996 (even if such termination occurs after that date).

The Plan shall not be
interpreted as requiring severance or similar payments in the circumstances
describe in this Section 1.2.

A Covered Employee shall
not receive severance pay under this Plan if the Plan Administrator determines
that the Covered Employee is entitled to severance or similar payments pursuant
to subsection (a), (b) or (c) of this Section 1.2.

SECTION 2

DEFINITIONS

The following words and
phrases as used herein shall be defined as follows unless a different
definition is plainly required by context.

2.1                                 Base
Salary:

The
regular earnings paid by the Company. 
Base Salary does not include (a) overtime, commission, incentive,
special, premium or bonus compensation or (b) any amount attributable to
Company sponsored employee benefit plans, whether or not such compensation or
amount is taxable as income.

 4
 

2.2                                 Benefits
Committee:

The
Investment and Benefits Committee of W. R. Grace & Co.

2.3                                 Continuous
Employment:

The period of employment with the Company commencing
on the Covered Employee’s (a) first day of employment with the Company or (b)
adjusted commencement of service date (as defined and administered by the
Covered Employee’s business unit), whichever is later.

2.4                                 Covered
Employee:

A
regular, full-time salaried employee of the Company employed in the United
States and who is directly employed in one of the Core Businesses; and
excluding any temporary or part-time employee, any employee of the “Health Care
Businesses” of the Company, and any employee covered by a collective bargaining
agreement.  “Health Care Businesses” mean
National Medical Care, Inc. and its direct and indirect subsidiaries.

2.5                                 Core
Businesses:

The following product lines of the Company:  Construction Products, Davison Products,
Packaging (including Container) and Emissions Control.  In addition, Grace Headquarters, Corporate
Technical Group, the Research Division (including Washington Research Center
and Lexington Research Laboratory), and Lexington Service Center Operations
shall be considered Core Businesses solely for purposes of this Plan.

 5
 

2.6                                 Effective
Date:

This
Plan was originally effective as of January 1, 1994.

2.8                           ERISA:

The
Employee Retirement Income Security Act of 1974, as now in effect or as
hereafter amended.

2.9                           Last Scheduled Employment
Date:

A Covered Employee’s final scheduled date of work with
the Company which is established by the Company.

2.10                       Layoff:

The discontinuance of active employment with the
Company which is initiated by the Company and which is expected by the Company
to be less than one year.

2.11                         Medical
Or Life Plan:

Each
Company-sponsored employee welfare benefit plan (as defined by ERISA section
3(1)) that provides medical or life insurance coverage to active employees.

2.12                       Plan:

The W. R. Grace & Co. Severance Pay
Plan for Salaried Employees, as set forth herein.

2.13                       Plan Administrator:

The W. R. Grace & Co. Corporate Human Resources
Division Vice President or his or her designee.

2.14                       Plan Sponsor:

W. R. Grace & Co.

 6
 

2.15                       Product Line/Business Unit
Executive:

A Company officer who has been designated by the Chief
Executive Officer of the Company as the head of a major product line or
business unit of the Company.

2.16                       Week’s Pay:

A Covered Employee’s annual Base Salary in effect on
his Last Scheduled Employment date, divided by 52.

2.17                       Year of Service:

During a Covered Employee’s period of
Continuous Employment, each twelve consecutive month period that commences on
(a) the first date of the Covered Employee’s employment with the Company or
adjusted commencement of service date (as defined and administered by the
Covered Employee’s business unit), whichever is later, and (b) the anniversary
of that date.

SECTION 3

ELIGIBILITY

3.1                                 A
Covered Employee shall qualify to receive severance pay up to an amount set
forth in Section 3.3 if (a) the Plan Administrator determines that the Covered
Employee was terminated by the Company and at the time of termination of employment
the employee was employed directly in one of the Core Businesses, (b) the
Covered Employee signs and does not revoke an agreement acceptable to the
Company under which he or

 7
 

she releases the Company
and its directors, officers, and employees (and other related parties) from any
liability related to his or her employment with or termination from the Company
and (c) no provision of Section 3.2 is applicable with respect to the employee.

3.2                                 The
provisions of Section 3.1 notwithstanding, a Covered Employee shall not qualify
to receive severance pay if the Plan Administrator determines that any of the
following circumstances are applicable with respect to the employee:

(a)                                  The
Covered Employee is on Layoff or leave of absence (paid or unpaid);

(b)                                 The
Covered Employee terminated his or her employment with the Company for any
reason, including resignation or retirement, prior to the employee’s Last
Scheduled Employment Date:

(c)                                  The
Covered Employee is terminated by the Company as a result of the Company’s sale
or transfer of all or a portion of the stock or assets of a business of the
Company to another person or entity, whether or not the Covered Employee
becomes an employee of, or is offered employment with, such other person or
entity;

(d)                                 The
Covered Employee is terminated by the Company before, or on, the employee’s
Last Scheduled Employment Date for (i) misconduct with respect of the employee’s
obligations to the Company, (ii) “cause” (as defined herein), (iii) violation
of any agreement between the employee and the Company, (iv) failure to

 8
 

                                                follow
policies, rules or procedures of the Company or of the employee’s business unit
or (v) similar reasons.  “Cause” means
the willful refusal by the employee to substantially carry out his or her
assigned duties and responsibilities, or the employee engaging in actions that
are injurious to the Company (monetarily or otherwise).  (No provision of this Plan shall be deemed
to, or interpreted to, in any way limit the Company’s authority or discretion
to terminate an employee for any reason.)

(e)                                  The
Covered Employee refuses to accept an offer to transfer to another position at
the Company for a Base Salary that is not less than the employee’s Base Salary
effective as of the employee’s Last Scheduled Employment Date, where the
principal work location of the position is within a reasonable commuting
distance of the Covered Employee’s residence.

(f)                                    The
Covered Employee (i) fails to follow policies, rules or procedures of the
Company or of the employee’s business unit or (ii) fails to adhere to any
agreement between the employee and the Company, through the Covered Employee’s
Last Scheduled Employment Date.

(g)                                 The
Covered Employee (i) is entitled to receive long term disability (“LTD”)
payments under any plan or program sponsored by the Company that provides LTD
payments to eligible employees, as of the employee’s Last Scheduled Employment
date or (ii) becomes

 9
 

                                                eligible
to receive such LTD payments as a result of a disability that commences prior
to or on the employee’s Last Scheduled Employment Date.  Any such Covered Employee shall be entitled
to LTD payments, in accordance with the terms of such plan or program.

(h)                                 The
Covered Employee is covered by any other severance plan of the Company.

(i)                                     The
Covered Employee does not sign or revokes an agreement acceptable to the
Company under which he or she releases the Company and its directors, officers,
and employees (and other related parties) from any liability related to his or
her employment with or termination from the Company.

3.3                                                     Amount
of Severance Pay:

If a Covered Employee qualifies for severance pay
under this Plan, the amount of severance to which he shall be entitled shall
not exceed 1-1/2 Weeks Pay for each Year of Service (subject to a minimum of 4
Weeks Pay and a maximum of 52 Weeks Pay).

3.4                                                     Time
and Form of Payment:

Severance pay shall be paid in regular payroll
installments where each such installment is equal to the Covered Employee’s
periodic Base Salary payment, until the total severance for which the Covered
Employee qualifies is paid (with the uneven balance, if any, added to the final
installment), commencing as soon as

 10
 

practicable following the employee’s Last Scheduled
Employment Date; provided that, at the option of the Company (upon the request of
the Covered Employee or otherwise) (a) severance pay may be paid in a lump sum
payment as soon as practicable following the employee’s Last Scheduled
Employment Date, and (b) the unpaid balance of severance pay that is being paid
in regular payroll installments may be paid in a lump sum payment at any time
during the installment payment period. 
Notwithstanding the foregoing, as soon as practicable after the Covered
Employee commences full-time employment as an employee of an employer, the
total remaining severance pay to which the Covered Employee is entitled shall
be paid in a lump sum payment.

3.5                                                     Deductions
From Severance Pay:

The Company shall deduct from severance payments (a)
any federal, state or local withholding or other taxes or charges which it is
required to deduct under applicable laws, (b) any amounts that the Covered
Employee owes the Company and (c) any required employee contributions with
respect to the continuation of benefits regarding the employee pursuant to
Section 9.

3.6                                                     Denial
Or Discontinuance of Severance/Similar Payments:

Any other provision of the Plan to the contrary
notwithstanding, the Plan Administrator may deny or discontinue severance or
similar pay to a Covered Employee if the Plan Administrator determines

 11
 

that the Covered Employee has engaged in “inappropriate
conduct” (as defined herein) before or after the Covered Employee’s Last
Scheduled Employment Date.  “Inappropriate
conduct” means any action that (a) violates any policy, rule or procedure of
the Company or the employee’s business unit, (b) violates any agreement between
the employee and Company, or (c) is otherwise detrimental to the Company.

3.7                                                     Reemployment
by the Company:

In the event that an individual who received severance
pay under any severance pay plan or policy of the Company becomes reemployed by
the Company thereafter, he shall not receive credit under any severance pay
plan or policy of the Company (including this Plan) for the years of service
for which Severance Pay had previously been paid to the employee.

3.8                                                     Death
of Covered Employee:

If a Covered Employee dies prior to the employee’s
Last Scheduled Employment Date, severance shall not be paid pursuant to this
Plan, with respect to the deceased employee. 
If a Covered Employee dies on or after the employee’s Last Scheduled
Employment Date, the unpaid amount of severance to which the employee was
entitled shall be paid in a lump sum payment to his or her spouse or, if the
employee is not married on the date of death, to the employee’s estate.

 12

SECTION 4

INTEGRATION WITH NOTICE REQUIREMENTS

To
the extent that the Company is required to make a payment to a Covered Employee
pursuant to a federal, state or local plant closing law (including, but not
limited to, the Federal Workers Adjustment and Retraining Notification Act) (a “Plant
Closing Payment”), any severance pay that might be payable to the employee
under this Plan shall be reduced by an amount equal to the Plant Closing
Payment; provided that any payments made pursuant to an applicable state or
local unemployment compensation law shall not be regarded as paid pursuant to a
plant closing law.

SECTION 5

ADMINISTRATION AND INTERPRETATION OF PLAN

The
Plan Administrator shall have general responsibility for the administration and
interpretation of the Plan.  The Plan
Administrator shall have full discretionary authority to determine if an
individual qualifies for severance pay and the amount, if any, of severance pay
payable under the Plan, and to otherwise interpret and construe the Plan.  The interpretations and determinations of the
Plan Administrator shall be binding and conclusive unless they are determined
by a court of law to be arbitrary and capricious.

 13
 

SECTION 6

SOURCE OF BENEFITS

This
Plan is unfunded and shall not be secured by any specific asset, account, or
fund of the Company.  To the extent that
any person acquires a right to receive payments from the Company hereunder,
such right shall be no greater than the right of an unsecured general creditor
of the Company.

SECTION 7

CLAIMS AND APPEALS

7.1                                 A
Covered Employee or former employee who believes that an event has occurred
which qualifies the employee for a benefit under this Plan, but who has not
been advised of such benefit or believes that the calculation of the benefit is
in error, shall file a claim with the Plan Administrator.  The claim must be filed within 30 days of the
date on which the employee had been advised of his or her Last Scheduled
Employment Date with the Company or, if later, within 30 days of the date that
the employee has learned the amount of his or her benefit under this Plan or
that the employee will not receive such a benefit.  The claim must be in a writing, signed and
dated by the employee, which includes an explanation of the claim specifying
the Section or Sections of this Plan upon which the claim is based.  A decision on the claim shall be made by the
Plan Administrator within 30 days of receipt of the claim, unless special
circumstances require an extension, in which case a decision shall be reached
as soon

 14
 

                                                as
possible but in no event more than 60 days after receipt of the claim.  Notice of the decision shall be given to the
employee in writing and sent by first class mail to the employee’s last known
address, and shall set forth the reasons for the decision.

7.2                                 If
any claim is denied in whole or in part, the claimant may appeal to the Plan
Administrator in writing within 60 days of the date notice of denial is
received by the claimant.  Such appeal
may include any additional information and statements which the claimant feels
support the claimant’s position.  A
decision on the appeal shall be made by the Plan Administrator within 30 days
of receipt of the appeal, unless special circumstances require an extension, in
which case a decision shall be reached as soon as possible but in no event more
than 60 days after receipt of the appeal. 
Notice of the decision on the appeal shall be given to the claimant in
writing and sent by first class mail to the claimant’s last known address, and
shall set forth the reasons for the decision.

SECTION 8

AMENDMENT AND TERMINATION

By
action of the Board of Directors of the Company or the Benefits Committee or
its designee, the Company may (a) amend or revise the Plan in any respect and
at any time or (b) terminate the Plan at any time.

 15
 

The
benefits provided under this Plan are not vested benefits and, therefore,
eligibility for such benefits may be changed at any time by amendment or
termination of the Plan.

SECTION 9

BENEFITS

9.1                                 If
a Covered Employee receives severance pay under this Plan in regular payroll
installments, the Covered Employee shall continue to participate in each
Medical Or Life Plan, under which the employee is covered on the employee’s
Last Scheduled Employment Date, until the end of the calendar month in which
the period that severance is paid to the employee expires; such participation
shall be under the same terms and conditions as would be applicable had the
employee continued to be an active employee of the employee’s business unit for
that period.

This Plan Section 9.1
shall not limit the Company’s ability to amend or terminate any Medical Or Life
Plan with respect to active employees, and such amendment or termination shall
also apply to each Covered Employee receiving severance who is covered by such
plan.

9.2                                 Under
no circumstances shall (a) severance pay be considered compensation for
purposes of any Company-sponsored defined benefit or defined contribution
employee pension benefit plan (as defined by ERISA section 3(2)(A)) or (b) the
period during which the Covered Employee receives severance be considered, or
counted as, service or credited service under any such plan; except as required
by applicable law or applicable regulation or by the terms of such plan.

 16
 

9.3                                 For
purposes of eligibility to elect coverage under a retiree medical or life
insurance plan (a “Retiree Medical Plan”), sponsored by the Company, which is
otherwise applicable to a Covered Employee who is eligible to receive severance
under this Plan:  (i) the employee shall
be credited with a period of service which is equal to the period for which he
or she could have received installment severance payments under the Plan
(whether or not he or she actually receives installment payments) and (ii) the
employee’s age at separation of service with the Company shall be deemed to be
his or her age on the date that the last installment severance payment would
have been made to the employee.  With
regard to a Covered Employee who would not be eligible to elect coverage under
a Retiree Medical Plan but for the immediately preceding sentence, the employee
shall be eligible to elect to commence participation under such Plan as of, or
after, the date he or she receives his or her last severance payment under the
Plan (even if that payment is a lump sum payment).  Notwithstanding the foregoing, if the
provisions of a Retiree Medical Plan conflict with the provisions of this
Section 9.3, the provisions of the Retiree Medical Plan shall control.

9.4                                 Except
as provided by Section 3.2(g), each Covered Employee’s participation in any
plan or program of the company that provides LTD payments to eligible employees
shall cease as of the employee’s Last Scheduled Employment Date, and no such
plan shall provide LTD payments to the Covered Employee with respect to
disabilities occurring after that date.

 17
 

SECTION 10

MISCELLANEOUS

10.1                           The
Company reserves the right to determine whether any employee or group of
employees qualifies for severance pay. 
The Company also reserves the right, whether in an individual case or
more generally, not to pay severance or to pay a lesser amount than is set
forth in this Plan.

10.2                           Any
other provision of this Plan to the contrary notwithstanding, a Covered
Employee’s business unit Product Line/Business Unit Executive may recommend, or
the Plan Administrator may approve, that the Covered Employee receive severance
pay that is less than the amount of severance calculated in accordance with
Section 3 of this Plan; and, in such a case, the Covered Employee shall be
entitled only to that lesser amount of severance pay.

10.3                           The
fact that a former employee has failed to qualify for a benefit under this Plan
shall not rescind or otherwise affect in any manner the employee’s termination
of employment from the Company, and such failure to qualify for a benefit shall
not establish any right (a) to a continuation or a reinstatement of employment
with the Company or (b) to receive any payment from the Company in lieu of such
benefit.

 18
 

10.4                           If an
employee or former employee is eligible for benefits under this Plan, together
with other cash termination benefits (other than benefits provided by a
qualified retirement plan) (“Total Benefits”), equal to or exceeding the
equivalent of twice the employee’s “annual compensation” (as herein defined)
during the year immediately preceding the employee’s Last Scheduled Employment
Date, the Plan Administrator shall reduce the benefits payable under this Plan
so that Total Benefits do not exceed that amount.  “Annual compensation” means the amount set
forth in section 2510.3-2(b)(2)(i) of the Department of Labor regulations
issued under ERISA.

10.5                           All
payments made to each Covered Employee under this Plan shall be completed no
later than 24 months after the termination of the employee’s service with the
Company.

10.6                           Any
other provision of this Plan or any provision of any other severance or similar
plan or policy of the Company notwithstanding: 
(a) a Covered Employee that qualifies for benefits under this Plan shall
not qualify, or be eligible, for severance pay or similar benefits under any
other plan or policy of the Company, including any severance plan covering
employees of the Health Care Businesses; and (b) a Covered Employee shall not
receive benefits under more than one severance or similar plan or program of
the Company.

10.7                           Notwithstanding
any other provision of this Plan, no Covered Employee shall be eligible for
benefits under this Plan as a result of ceasing employment under the Company’s
1999 Productivity Effectiveness Program, whether or not such cessation is a
result of his or her election to not physically relocate with his or her
position under the Program, or as a result of any other circumstance related to
the Program.

 19

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