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EXHIBIT 10
SECOND AMENDMENT TO FERRO CORPORATION
PARTICIPATION AGREEMENT
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This Second Amendment (this "AMENDMENT") to the Participation
Agreement (as defined below) dated as of July 24, 1997 is entered into among the
parties to that certain Participation Agreement dated as of October 31, 1995
among Ferro Corporation (the "COMPANY"), State Street Bank and Trust Company,
not in its individual capacity except as expressly provided therein, but solely
as Trustee, the financial institutions named as Purchasers on Schedule I thereto
and their respective successors and assigns and Citibank, N.A. as Agent, as
amended by Amendment and Waiver to Ferro Corporation Asset Defeasance Product
Financing dated as of March 31, 1997 (as the same may be further amended from
time to time, the "PARTICIPATION AGREEMENT"). Capitalized terms used but not
defined herein shall have the respective meanings set forth in the Participation
Agreement.
PRELIMINARY STATEMENTS
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(1) The Company, the banks and National City Bank, as agent,
parties to that certain Credit Agreement dated as of August 22, 1990, and the
amendments thereto dated as of May 31, 1991, July 30, 1991, December 31, 1991,
July 21, 1992, August 20, 1993, June 22, 1995 and October 25, 1995, respectively
(such Credit Agreement as so amended, the "CREDIT AGREEMENT"), have agreed to
enter into an eighth amendment of the Credit Agreement dated as of the date
hereof (the "CREDIT AGREEMENT AMENDMENT").
(2) In connection with the Credit Agreement Amendment, the
Company, the Trustee, the Purchasers and the Agent have agreed to amend the
Participation Agreement as set forth below.
NOW, THEREFORE, the parties agree as follows:
SECTION 1. AMENDMENT TO PARTICIPATION AGREEMENT. (a) Section
5.01(i) of the Participation Agreement is hereby amended by deleting such
section in its entirety and inserting in lieu thereof the following:
"(I) FINANCIAL COVENANTS.
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(i) WORKING CAPITAL. Maintain an excess of consolidated current assets over
consolidated current liabilities of the Company and its Subsidiaries of
not less than $125,000,000. Consolidated current liabilities shall not
include the current portion of the indebtedness evidenced by the Notes
issued under the Revolving Credit Agreement.
(ii) TANGIBLE NET WORTH. Maintain an excess of (A) the sum of
consolidated total tangible assets plus an amount equal to the
After-Tax Realignment Expense over (B) consolidated total liabilities
(including Guaranties) of the Company and its Subsidiaries of not
less than the Required Net Worth. The "Required Net Worth" shall
initially be $235,000,000 and shall increase as of December 31 of each
year, commencing December 31, 1997, by an amount equal to 25% of the
consolidated net income (if any) of the Company and its Subsidiaries
for the fiscal year ending on such December 31.
(iii) TANGIBLE NET WORTH RATIO. Maintain a ratio of consolidated total
liabilities (including Guaranties but excluding the Transition
Obligation) to the aggregate of (i) consolidated tangible net worth of
the Company and its Subsidiaries, plus (ii) an amount (in no case
greater than fifty-five million dollars ($55,000,000)) equal to the
goodwill acquired by the Company from Synpro, as part of the Company's
acquisition of all or substantially all of the assets of Synpro, plus
(iii) an amount equal to the After-Tax Realignment Expense, of not more
than 1.85 to 1.00.
(iv) INTEREST COVERAGE RATIO. Maintain, for each period of four consecutive
fiscal quarters, beginning with the four fiscal quarters ending June
30, 1997, a ratio of consolidated net income (before interest income,
interest expense, income taxes and the Realignment Expense) of the
Company and its Subsidiaries for such period to consolidated interest
expense (net of interest income) for such period of not less than 2.5
to 1.0."
(b) Appendix A to the Participation Agreement is hereby
amended by inserting the following definitions in alphabetical order:
"AFTER-TAX REALIGNMENT EXPENSE" means a
non-recurring charge, in an amount not greater than
$100,020,000, against the consolidated income of the Company
and its Subsidiaries for the quarter-annual fiscal period
ending June 30, 1997.
"REALIGNMENT EXPENSE" means a non-recurring charge,
in an amount not greater than $152,790,000, against the
consolidated income of the Company and its Subsidiaries for
the quarter-annual fiscal period ending June 30, 1997."
SECTION 2. EFFECTIVENESS. This Amendment shall be effective as
of April 30, 1997, provided that the Credit Agreement Amendment is executed and
becomes effective in accordance with the terms thereof.
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SECTION 3. RATIFICATION AND CONFIRMATION. Except as expressly
herein amended, the Participation Agreement and each of the other Operative
Documents are ratified and confirmed in all respects and shall remain in full
force and effect in accordance with their terms. Each reference in the Operative
Documents or in any other documents delivered in connection therewith to the
Participation Agreement shall (unless otherwise specifically provided) mean the
Participation Agreement, as amended by this Amendment, and as hereafter amended
or restated.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio.
(b) The execution, delivery and performance by the Company of
this Amendment are within its corporate powers, have been duly authorized by all
necessary corporate action, and do not contravene the Company's charter or
by-laws.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Company of this
Amendment.
(d) The representations and warranties contained in Section
4.01 of the Participation Agreement are correct in all material respects on and
as of the date hereof, as though made on and as of the date hereof.
(e) No event has occurred and no condition exists which
constitutes a Default or an Event of Default.
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW (OR ANY SIMILAR SUCCESSOR
PROVISION THERETO) BUT EXCLUDING ALL OTHER CONFLICT-OF-LAW RULES.
SECTION 6. EXECUTION IN COUNTERPARTS. This Amendment may be
executed in any number of counterparts and by any combination of the parties
herein in separate counterparts, each of which shall be an original and all of
which when taken together shall constitute one and the same agreement. Delivery
of an executed counterpart of a signature page to this Amendment by telecopier
shall be effective as delivery of a manually executed counterpart of this
Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective Officers thereunto duly
authorized as of the date hereof.
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SIGNATURE PAGE FOR SECOND AMENDMENT TO
FERRO CORPORATION PARTICIPATION AGREEMENT
FERRO CORPORATION
By: /s/ D. ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: D. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Treasurer
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except as expressly stated
in the Participation Agreement, but solely as Trustee
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
CITIBANK, N.A., as Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President/ S.C.O.
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SIGNATURE PAGE FOR SECOND AMENDMENT TO
FERRO CORPORATION PARTICIPATION AGREEMENT
CITICORP USA, INC.,
as Note Purchaser and
as Certificate Purchaser
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Attorney-in-fact
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SIGNATURE PAGE FOR SECOND AMENDMENT TO
FERRO CORPORATION PARTICIPATION AGREEMENT
BANK HAPOALIM B.M.,
as Note Purchaser and
as Certificate Purchaser
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
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SIGNATURE PAGE FOR SECOND AMENDMENT TO
FERRO CORPORATION PARTICIPATION AGREEMENT
FIRST NATIONAL BANK OF CHICAGO,
as Note Purchaser
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title:Vice President
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SIGNATURE PAGE FOR SECOND AMENDMENT TO
FERRO CORPORATION PARTICIPATION AGREEMENT
NATIONAL CITY BANK,
as Note Purchaser
By: ▇▇▇▇▇▇▇ ▇. Lathe
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Name: ▇▇▇▇▇▇▇ ▇. Lathe
Title: Senior Vice President
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SIGNATURE PAGE FOR SECOND AMENDMENT TO
FERRO CORPORATION PARTICIPATION AGREEMENT
KEYBANK NATIONAL ASSOCIATION, successor by
merger to SOCIETY NATIONAL BANK,
as Note Purchaser
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President