EXHIBIT 4.2
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                           SECOND AMENDED AND RESTATED
                                CREDIT AGREEMENT


                                      among

                            PHELPS DODGE CORPORATION,


                               THE SEVERAL LENDERS
                        FROM TIME TO TIME PARTIES HERETO,



                                       and


                            THE CHASE MANHATTAN BANK,
                             as Administrative Agent



                            Dated as of June 25, 1997
<PAGE>
                                TABLE OF CONTENTS



SECTION 1.   DEFINITIONS
      1.1  Defined Terms
      1.2  Other Definitional Provisions 

SECTION 2.   AMOUNT AND TERMS OF COMMITMENTS
      2.1  Revolving Credit Commitments
      2.2  Revolving Credit Notes
      2.3  Procedure for Revolving Credit Borrowing
      2.4  CAF Advances 
      2.5  Fees 
      2.6  Termination or Reduction of Commitments
      2.7  Option Prepayments 
      2.8  Conversion and Continuation Options
      2.9  Minimum Amounts and Maximum Number of Tranches
      2.10 Interest Rates and Payment Dates 
      2.11 Computation of Interest and Fees 
      2.12 Inability to Determine Interest Rate 
      2.13 Pro Rata Treatment and Payments
      2.14 Illegality 
      2.15 Requirements of Law 
      2.16 Taxes
      2.17 Indemnity 
      2.18 Actions of Lenders
      2.19 Actions of the Lenders 
      2.20 Extension of Termination Date

SECTION 3. REPRESENTATIONS AND WARRANTIES
      3.1  Financial Condition
      3.2  No Change  
      3.3  Corporate Existence
      3.4  Corporate Power; Authorization; Enforceable
             obligations
      3.5  No Legal Bar 
      3.6  No Material Litigation 
      3.7  No Default 
      3.8  Ownership of Property; Liens 
      3.9  Compliance with Law
      3.10 Taxes
      3.11 Federal Regulations
      3.12 ERISA
      3.13 Investment Company Act; Other Regulations
      3.14 Subsidiaries 
      3.15 Purpose of Loans 
      3.16 Environmental Matters
<PAGE>
     SECTION 4.     CONDITIONS PRECEDENT
     4.1  Conditions to Effectiveness; Closing Date 
     4.2  Conditions to Each Loan 

     SECTION 5. AFFIRMATIVE COVENANTS 
     5.1  Financial Statements
     5.2  Certificates; Other Information
     5.3  Payment of Obligations
     5.4  Conduct of Business and Maintenance of Existence
     5.5  Compliance With Laws, etc 
     5.6  Maintenance of Property; Insurance
     5.7  Inspection of Property; Books and Records;
             Discussions
     5.8  Notices 

     SECTION 6.     NEGATIVE COVENANTS
     6.1  Financial Condition Covenants
     6.2  Limitation on Mortgages, Sale and Leaseback, etc.

     SECTION 7.     EVENTS OF DEFAULT 

     SECTION 8.     THE ADMINISTRATIVE AGENT
     8.1  Appointment 
     8.2  Delegation of Duties
     8.3  Reliance by Administrative Agent
     8.5  Notice of Default 
     8.6  Non-Reliance on Administrative Agent and Other
            Lenders 
     8.7  Indemnification 
     8.8  Administrative Agent in Its Individual Capacity
     8.9  Successor Administrative Agent

SECTION 9.   MISCELLANEOUS
     9.1  Amendments and Waivers
     9.2  Notices 
     9.3  No Waiver; Cumulative Remedies
     9.4  Survival of Representations and Warranties
     9.5  Payment of Expenses and Taxes 
     9.6  Successors and Assigns; Participations; Purchasing
            Lenders 
     9.7  Adjustments; Set-off
     9.8  Counterparts
     9.9  Severability
     9.10 Integration 
     9.11 GOVERNING LAW 
     9.12 Submission To Jurisdiction; Waivers
     9.13 Acknowledgements
     9.14 WAIVERS OF JURY TRIAL 

SCHEDULES

Schedule II    Phelps Dodge Corporation Principal Domestic
                       Subsidiaries and other Subsidiaries
Schedule III   Environmental Representation
Schedule IV    Existing CAF Advances
<PAGE>
         SECOND  AMENDED AND  RESTATED  CREDIT  AGREEMENT,  dated as of June 25,
1997, among PHELPS DODGE  CORPORATION,  a New York corporation (the "Borrower"),
the several banks and other financial  institutions from time to time parties to
this Agreement (the  "Lenders") and THE CHASE MANHATTAN BANK, a New York banking
corporation,  as  administrative  agent  for  the  Lenders  hereunder  (in  such
capacity, the "Administrative Agent").


                              W I T N E S S E T H :

         WHEREAS,  the  Borrower is a party to the Amended and  Restated  Credit
Agreement,  dated as of June 4, 1996,  with the banks  parties  thereto  and The
Chase  Manhattan Bank (formerly known as Chemical Bank), as Agent (the "Existing
Credit Agreement");

         WHEREAS,  the Borrower  wishes to amend and restate the Existing Credit
Agreement and, for that purpose,  has requested the Lenders to make available to
it a  revolving  credit  facility  and  a  competitive  advance  facility  in an
aggregate  principal  amount  of  up  to  $1,000,000,000  as  more  particularly
described herein; and

         WHEREAS,  the  Lenders  are  willing to agree to amend and  restate the
Existing  Credit  Agreement and to make  available  such  facilities and to make
loans thereunder on the terms and conditions contained herein;

         NOW,  THEREFORE,  in consideration of the premises and mutual covenants
contained herein,  the parties hereto hereby agree that on the Closing Date, the
Existing  Credit  Agreement  will be amended  and  restated  in its  entirety as
follows:


                  SECTION 1. DEFINITIONS

         1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
<PAGE>
         "ABR": for any day, a rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the  greatest  of (a) the Prime  Rate in effect on
such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes  hereof:

     "Base CD Rate" shall mean the sum of (a) the product of (i) the Three-Month
Secondary  CD Rate and (ii) a fraction,  the  numerator  of which is one and the
denominator  of which is one minus the C/D  Reserve  Percentage  and (b) the C/D
Assessment  Rate;  "Three-Month  Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month  certificates of deposit reported as being
in effect on such day (or,  if such day shall not be a  Business  Day,  the next
preceding  Business Day) by the Board of Governors of the Federal Reserve System
(the  "Board")  through  the public  information  telephone  line of the Federal
Reserve  Bank of New York (which rate will,  under the current  practices of the
Board, be published in Federal Reserve  Statistical Release H.15(519) during the
week  following such day), or, if such rate shall not be so reported on such day
or such next  preceding  Business  Day,  the  average  of the  secondary  market
quotations for  three-month  certificates of deposit of major money center banks
in New York City received at  approximately  10:00 A.M.,  New York City time, on
such day (or,  if such day shall not be a Business  Day,  on the next  preceding
Business Day) by the  Administrative  Agent from three New York City  negotiable
certificate  of  deposit  dealers of  recognized  standing  selected  by it; and
"Federal Funds Effective Rate" shall mean, for any day, the weighted  average of
the rates on overnight  federal funds  transactions  with members of the Federal
Reserve  System  arranged by federal  funds  brokers,  as  published on the next
succeeding  Business Day by the Federal  Reserve  Bank of New York,  or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from three federal funds brokers of recognized  standing  selected by it. If the
Administrative  Agent  shall  have  determined  (which  determination  shall  be
conclusive  absent  manifest  error) that it is unable to ascertain  the Base CD
Rate or the Federal Funds Effective Rate, or both, for any reason, including the
inability or failure of the Administrative Agent to obtain sufficient quotations
in accordance with the terms thereof, the ABR shall be determined without regard
to clause (b) or (c),  or both,  of the first  sentence of this  definition,  as
appropriate,  until the  circumstances  giving rise to such  inability no longer
exist.  Any change in the ABR due to a change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds  Effective  Rate shall be effective as of
the opening of business on the  effective  day of such change in the Prime Rate,
the  Three-Month  Secondary  CD  Rate  or  the  Federal  Funds  Effective  Rate,
respectively.

         "ABR Loans":  Revolving Credit Loans the rate of interest applicable to
which is based upon the ABR.

         "Accounts":  "accounts" as such term is defined in Section 9-106 of the
Uniform Commercial Code of the State of New York.
<PAGE>
         "Affiliate":  as  to  any  Person,  any  other  Person  (other  than  a
Subsidiary) which,  directly or indirectly,  is in control of, is controlled by,
or is under common control with, such Person.  For purposes of this  definition,
"control" of a Person  means the power,  directly or  indirectly,  either to (a)
vote 20% or more of the securities having ordinary voting power for the election
of  directors  of such  Person  or (b)  direct  or cause  the  direction  of the
management and policies of such Person, whether by contract or otherwise.

         "Agreement":  this Second  Amended and Restated  Credit  Agreement,  as
amended, supplemented or otherwise modified from time to time.

         "Applicable Margin": for each Eurodollar Loan during each day, the rate
per annum set forth below opposite the Rating in effect on such day:

                                          Applicable Margin-
                   Ratings                Eurodollar Loans
                   -------                -----------------

                   Rating I                   .0950%

                   Rating II                  .1275%

                   Rating III                 .1350%

                   Rating IV                  .1600%

                   Rating V                   .2500%

         "Assignee": as defined in subsection 9.6(e).

         "Assignment and Acceptance": as defined in subsection 9.6.

         "Attributable  Debt":  at any time, the present value,  discounted at a
rate per annum equal to the weighted average of the interest rates for any Loans
outstanding  under the Credit  Agreement,  and if no Loans are outstanding under
the Credit Agreement,  the Prime Rate at such time, compounded quarterly, of the
obligation of a lessee for rental payments (not including amounts payable by the
lessee for maintenance,  property taxes and insurance) during the remaining term
of any lease  (including  any period for which such lease has been  extended  or
may, at the option of the lessor, be extended).
<PAGE>
         "Available Commitments": at any time, an amount equal to the excess, if
any,  of (a) the  aggregate  amount of the  Commitments  over (b) the  aggregate
principal amount of all Loans then outstanding.

         "Board of  Directors":  the Board of Directors of the Borrower,  or the
Executive Committee of the Board of Directors of the Borrower.

         "Borrowing  Date":  any Business Day specified in a notice  pursuant to
subsection  2.3 or 2.4 as a date on which the  Borrower  requests the Lenders to
make Loans hereunder.

         "Business  Day":  a day other than a  Saturday,  Sunday or other day on
which  commercial  banks in New York City are  authorized  or required by law to
close;  provided,  that when such term is used in respect of any Borrowing Date,
payment  date,  interest  rate  determination  date or  first  or last day of an
Interest  Period,  in each case in respect of a Eurodollar  Loan or a LIBOR Rate
CAF  Advance,  a Business  Day shall also be a day on which  dealings in foreign
currency and exchange between banks may be carried on in London, England.

         "CAF  Advance":  each CAF Advance made pursuant to subsection  2.4; the
aggregate  amount  advanced  by a  Lender  pursuant  to  subsection  2.4 on each
Borrowing Date shall  constitute one or more CAF Advances,  as specified by such
Lender pursuant to subsection 2.4(b).

         "CAF Advance Assignees": as defined in subsection 9.6(c).

         "CAF Advance  Assignment":  any assignment by a Lender to a CAF Advance
Assignee of a CAF Advance and related  Individual CAF Advance Note; any such CAF
Advance  Assignment to be registered in the Register must set forth,  in respect
of the CAF  Advance  Assignee  thereunder,  the full  name of such  CAF  Advance
Assignee, its address for notices, its lending office address (in each case with
telephone and facsimile  transmission  numbers) and payment instructions for all
payments to such CAF Advance Assignee, and must contain an agreement by such CAF
Advance  Assignee to comply with the provisions of subsection 9.6 and subsection
2.16 to the same extent as any Lender.
<PAGE>
         "CAF Advance  Confirmation":  each  confirmation by the Borrower of its
acceptance  of CAF  Advance  Offers,  which CAF  Advance  Confirmation  shall be
substantially  in the  form  of  Exhibit  D-3  and  shall  be  delivered  to the
Administrative Agent in writing or by facsimile transmission.

         "CAF Advance Notes":  the collective  reference to the Grid CAF Advance
Notes and the Individual CAF Advance Notes; individually, a "CAF Advance Note".

         "CAF  Advance  Offer":  each  offer  by a Lender  to make CAF  Advances
pursuant to a CAF Advance  Request,  which CAF Advance  Offer shall  contain the
information   specified   in  Exhibit  D-2  and  shall  be   delivered   to  the
Administrative   Agent  by   telephone,   immediately   confirmed  by  facsimile
transmission.

         "CAF  Advance  Request":  each  request by the  Borrower for Lenders to
submit bids to make CAF Advances, which shall contain the information in respect
of such  requested CAF Advances  specified in Exhibit D-1 and shall be delivered
to the  Administrative  Agent in writing  or by  facsimile  transmission,  or by
telephone, immediately confirmed by facsimile transmission.

         "Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation,  any and all
equivalent  ownership  interests in a Person (other than a corporation)  and any
and all warrants or options to purchase any of the foregoing.

         "Capitalized Lease": any Lease of property, real, personal or mixed, in
respect of which the present  value (or some other  computation)  of the minimum
rental  commitment  thereunder  would,  in accordance with GAAP in effect on the
date such Lease is executed, be capitalized on a balance sheet of the lessee.

         "Capitalized  Lease  Obligation":  at any time,  the aggregate  amounts
which, in accordance with GAAP, are shown as liabilities on the balance sheet of
the lessee with respect to the minimum  rental  commitment  under a  Capitalized
Lease of the lessee.
<PAGE>
         "C/D  Assessment  Rate":  for any day,  the annual  assessment  rate in
effect  on such day which is  payable  by a member  of the Bank  Insurance  Fund
classified  as  well-capitalized  and  within  supervisory  subgroup  "B"  (or a
comparable successor  assessment risk  classification)  within the meaning of 12
C.F.R.  ss.  327.3(d)  (or  any  successor  provision)  to the  Federal  Deposit
Insurance  Corporation  (or any  successor)  for  such  Corporation's  (or  such
successor's) insuring time deposits at offices of such institution in the United
States.

         "C/D Reserve Percentage":  for any day as applied to any calculation of
the Base C/D Rate, that  percentage  (expressed as a decimal) which is in effect
on such day, as  prescribed  by the Board of  Governors  of the Federal  Reserve
System (or any successor)  (the "Board"),  for  determining  the maximum reserve
requirement  for a  Depositary  Institution  (as defined in  Regulation D of the
Board) in respect of new non-personal time deposits in Dollars having a maturity
of 30 days or more.

         "Chase": The Chase Manhattan Bank.

         "Closing Date": the date on which the conditions precedent set forth in
subsection 4.1 shall be satisfied.

         "Code":  the  Internal  Revenue  Code of 1986,  as amended from time to
time.

         "Commitment":  as to any Lender,  the obligation of such Lender to make
Revolving  Credit  Loans to the Borrower  hereunder  in an  aggregate  principal
amount at any one time  outstanding  not to exceed the amount set forth opposite
such  Lender's  name on Schedule  I, as such amount may be reduced  from time to
time in accordance with the provisions of this Agreement.

         "Commitment  Percentage":  as to any Lender at any time, the percentage
which such Lender's  Commitment  then  constitutes of the aggregate  Commitments
(or, at any time after the  Commitments  shall have expired or  terminated,  the
percentage  which the  aggregate  principal  amount of such  Lender's  Revolving
Credit Loans then outstanding  constitutes of the aggregate  principal amount of
the  Revolving  Credit  Loans  then  outstanding  or,  if the  Commitments  have
terminated or expired and no Revolving  Credit Loans are then  outstanding,  the
percentage  which the aggregate  principal  amount of such Lender's CAF Advances
then  outstanding  constitutes  of the  aggregate  principal  amount  of the CAF
Advances then outstanding).

         "Commitment  Period":  the period from and including the date hereof to
but not  including  the  Termination  Date or such  earlier  date on  which  the
Commitments shall terminate as provided herein.

         "Commonly  Controlled Entity": an entity,  whether or not incorporated,
which is under common  control  with the Borrower  within the meaning of Section
4001 of ERISA or is part of a group which  includes  the  Borrower  and which is
treated as a single employer under Section 414 of the Code.
<PAGE>
         "Consolidated Tangible Net Worth": at any date, the excess at such date
of total assets over total  liabilities  of the  Borrower  and its  consolidated
subsidiaries  determined  in  accordance  with GAAP,  on a  consolidated  basis,
excluding,  however,  from the  determination of total assets (i) all intangible
assets  such  as  goodwill,  trade  names,  trademarks,   patents,  organization
expenses, unamortized debt discount and expense and other like intangibles, (ii)
to the extent not already deducted from total assets, reserves for depreciation,
depletion, obsolescence and/or amortization of properties and all other reserves
or appropriations of retained earnings which, in accordance with GAAP, should be
established  in  connection   with  the  business   conducted  by  the  relevant
corporation, and (iii) any revaluation or other write-up in book value of assets
subsequent to December 31, 1996 except in accordance with GAAP.

         "Contractual  Obligation":  as to  any  Person,  any  provision  of any
security  issued  by  such  Person  or of any  agreement,  instrument  or  other
undertaking  to  which  such  Person  is a party  or by  which  it or any of its
property is bound.

         "Continuing Lenders": as defined in subsection 2.20(a)(ii).

         "Default": any of the events specified in Section 7, whether or not any
requirement  for the giving of notice,  the lapse of time, or both, or any other
condition, has been satisfied.

         "Dollars" and "$":  dollars in lawful  currency of the United States of
America.

         "Environmental Laws": any and all applicable foreign,  Federal,  state,
local or municipal  laws,  rules,  orders,  regulations,  statutes,  ordinances,
codes, decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating,  relating to or imposing  liability or
standards of conduct concerning protection of human health or the environment.

         "ERISA":  the  Employee  Retirement  Income  Security  Act of 1974,  as
amended from time to time.

         "Eurodollar  Loans":  Revolving  Credit  Loans  the  rate  of  interest
applicable to which is based upon the Eurodollar Rate.
<PAGE>
         "Eurodollar Rate": with respect to each day during each Interest Period
pertaining  to a Eurodollar  Loan,  the rate per annum equal to (a) the rate for
deposits in Dollars with maturities  equal to such Interest Period which appears
on the display designated "LIBO" of the Telerate screen page 3750 as used by the
British Bankers Association at 11:00 A.M., London time, on the date which is two
Business Days preceding the first day of such Interest Period, or (b) if no such
rate is being quoted at the time of  determination,  the rate per annum equal to
the  average  (rounded  upward to the nearest  1/100th of 1%) of the  respective
rates notified to the  Administrative  Agent by each of the Reference Lenders as
the rate at which such Reference  Lender is offered Dollar  deposits at or about
10:00 A.M., New York City time, two Business Days prior to the beginning of such
Interest  Period in the interbank  eurodollar  market where the  eurodollar  and
foreign currency and exchange  operations in respect of its Eurodollar Loans are
then being  conducted for delivery on the first day of such Interest  Period for
the number of days comprised  therein and in an amount  comparable to the amount
of its Eurodollar Loan to be outstanding during such Interest Period.

         "Event of Default":  any of the events specified in Section 7, provided
that any  requirement  for the giving of notice,  the lapse of time, or both, or
any other condition, has been satisfied.

         "Existing Credit Agreement": as defined in the recitals.

         "Existing Termination Date": as defined in subsection 2.20(a)(i).

         "Facility  Fee Rate":  for each day during each  quarterly  calculation
period,  a rate per annum set forth below  opposite the Rating in effect on such
day:

                                        Facility Fee
                      Ratings               Rate
                      -------           ------------

                      Rating I             .0550%

                      Rating II            .0600%

                      Rating III           .0650%

                      Rating IV            .0900%

                      Rating V             .1250%

         "Financing  Lease":  any  lease  of  property,  real or  personal,  the
obligations  of the lessee in respect of which are required in  accordance  with
GAAP to be capitalized on a balance sheet of the lessee.

         "Fixed Rate CAF Advance  Request":  any CAF Advance Request  requesting
the Lenders to offer to make CAF  Advances at a fixed rate (as opposed to a rate
composed of the LIBOR Rate plus (or minus) a margin).

         "GAAP":  generally accepted accounting  principles in the United States
of America in effect from time to time.
<PAGE>
         "Governmental Authority":  any nation or government, any state or other
political subdivision thereof and any entity exercising executive,  legislative,
judicial, regulatory or administrative functions of or pertaining to government.

         "Grid CAF Advance Note": as defined in subsection 2.4(f); collectively,
the "Grid CAF Advance Notes".

         "Guarantee":  of a  Person,  at a  particular  date,  the sum  (without
duplication) of the following:  (a) guarantees or  endorsements  (other than for
purposes of collection in the ordinary course of business) of, or obligations to
purchase  goods or services for the purpose of supplying  funds for the purchase
or payment of,  indebtedness,  liabilities or  obligations of others,  and other
contingent  liabilities  in respect of, or to purchase or  otherwise  acquire or
service,  indebtedness,  liabilities or obligations of others, provided that any
such  obligation to purchase goods or services shall be treated as  Indebtedness
only to the extent that payment thereunder will be required (after giving effect
to any provision  limiting  such  payments) if such property or services are not
delivered to such Person,  and (b) all  indebtedness in effect  guaranteed by an
agreement,   contingent  or  otherwise,  to  make  any  loan,  advance,  capital
contribution  or other  investment  in the debtor for the  purpose of assuring a
minimum equity, asset base, working capital or other balance sheet condition for
any date,  or to provide  funds for the  payment of any  liability,  dividend or
stock  liquidation  payment,  or  otherwise  to supply funds to or in any manner
invest in the  debtor,  but only to the extent of the  liability  of such Person
thereunder.

         "Hazardous  Materials":  any  hazardous  materials,  hazardous  wastes,
hazardous  constituents,  hazardous  or  toxic  substances,  petroleum  products
(including crude oil or any fraction  thereof),  defined or regulated as such in
or under any Environmental Law.

         "Indebtedness":  of a Person,  at a particular  date,  the sum (without
duplication) of the following: (a) all items of indebtedness which in accordance
with GAAP would be included in  determining  total  liabilities  as shown on the
liability  side  of a  balance  sheet  of  such  Person  as at  such  date,  (b)
indebtedness  for the  repayment  of  borrowed  money  secured  by any  Mortgage
existing on a Principal Property owned subject to such Mortgage,  whether or not
the indebtedness  secured thereby shall have been assumed,  (c) Guarantees,  (d)
Capitalized Lease Obligations and (e) Production  Payments,  provided,  however,
that the term "Indebtedness" shall not include liabilities in respect of advance
payments made under  contracts for the sale of goods and/or  services,  or lease
obligations other than Capitalized Lease Obligations,  or guarantees of any such
liabilities or lease obligations.
<PAGE>
         "Indebtedness  for Money Borrowed":  of a Person, at a particular date,
the sum (without duplication) of the following (a) all Indebtedness,  whether or
not  represented  by  bonds,  debentures,   notes,  commercial  paper  or  other
securities,  for the repayment of borrowed money,  (b) all deferred  obligations
for the  payment of the  purchase  price of  property  or assets  purchased  and
secured by a purchase  money  mortgage,  conditional  sale  agreement,  security
agreement or any title retention  agreement,  (c)  Indebtedness of the character
described  in  clauses  (b)  and  (c) of the  definition  of  "Indebtedness"  in
subsection 1.1 if such  Indebtedness  relates to Indebtedness for Money Borrowed
of others, (d) Capitalized Lease Obligations and (e) Production Payments.

         "Individual CAF Advance Note": as defined in subsection 2.4(g).

         "Insolvency":  with respect to any  Multiemployer  Plan,  the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.

         "Insolvent": pertaining to a condition of Insolvency.

         "Interest  Payment Date":  (a) as to any ABR Loan, the last day of each
March, June, September and December to occur while such Loan is outstanding, (b)
as to any Eurodollar Loan having an Interest Period of three months or less, the
last day of such Interest  Period,  and (c) as to any Eurodollar  Loan having an
Interest Period longer than three months,  each day which is three months,  or a
whole multiple thereof, after the first day of such Interest Period and the last
day of such Interest Period.

         "Interest Period": with respect to any Eurodollar Loan:

         (i)  initially,  the period  commencing  on the borrowing or conversion
date, as the case may be, with respect to such  Eurodollar  Loan and ending one,
two, three or six months  thereafter or, to the extent  available (as determined
by the Administrative  Agent), nine or twelve months thereafter,  as selected by
the Borrower in its notice of borrowing or notice of conversion, as the case may
be, given with respect thereto; and

         (ii)  thereafter,  each period  commencing  on the last day of the next
preceding  Interest  Period  applicable to such  Eurodollar Loan and ending one,
two, three or six months  thereafter or, to the extent  available (as determined
by the Administrative  Agent), nine or twelve months thereafter,  as selected by
the Borrower by  irrevocable  notice to the  Administrative  Agent not less than
three  Business Days prior to the last day of the then current  Interest  Period
with respect thereto;

provided that, all of the foregoing  provisions relating to Interest Periods are
subject to the following:

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

         (2)  any  Interest  Period  that  would  otherwise  extend  beyond  the
Termination Date shall end on the Termination Date;

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

         (4) the Borrower shall select  Interest  Periods so as not to require a
payment or prepayment of any Eurodollar  Loan during an Interest Period for such
Loan.
<PAGE>
         "LIBOR  Rate":  in respect of any CAF Advance  requested  pursuant to a
LIBOR CAF  Advance  Request,  the rate for  deposits  in Dollars  for the period
commencing  on the date of such CAF  Advance  and  ending on the  maturity  date
thereof which appears on the display  designated  "LIBO" of the Telerate  screen
page 3750 as used by the British Bankers Association at 11:00 A.M., London time,
on the date which is two Business Days preceding the first day of such period.

         "LIBOR Rate CAF Advance": any CAF Advance made pursuant to a LIBOR Rate
CAF Advance Request.

         "LIBOR Rate CAF Advance  Request":  any CAF Advance Request  requesting
the Lenders to offer to make CAF Advances at an interest rate equal to the LIBOR
Rate plus (or minus) a margin.

         "Lien":  any  mortgage,  pledge,  hypothecation,   assignment,  deposit
arrangement,  encumbrance,  lien (statutory or other),  charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional  sale or other title  retention  agreement and any  Financing  Lease
having substantially the same economic effect as any of the foregoing).

         "Lease" or "lease":  any lease or other similar arrangement for the use
of property and "lessee" thereunder shall include any lessee or user thereunder.

         "Loan":  any  Revolving  Credit Loan or CAF Advance  made by any Lender
pursuant to this Agreement.

         "Loan Documents": this Agreement and the Notes.

         "Material  Adverse Change":  a material adverse change in the financial
condition  of the Borrower and its  consolidated  subsidiaries  taken as a whole
from that reflected in the Borrower's  consolidated balance sheet as at December
31, 1996 referred to in subsection 3.1.

         "Materials  of  Environmental   Concern":  any  gasoline  or  petroleum
(including  crude oil or any  fraction  thereof)  or  petroleum  products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any applicable  Environmental Law,  including,  without  limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.

         "Mortgage": any mortgage, pledge, security interest,  encumbrance, lien
or charge of any kind (including any  conditional  sale or other title retention
agreement),   provided   that  the  sale  of  Accounts   pursuant  to  hold-back
arrangements  entitling  the  purchaser of such  Accounts to offset  against the
hold-back  losses arising from defaults by account debtors shall not be deemed a
Mortgage.

         "Moody's": Moody's Investor Service, Inc.

         "Multiemployer  Plan": a Plan which is a multiemployer  plan as defined
in Section 4001(a)(3) of ERISA.

         "Non-Excluded Taxes": as defined in subsection 2.16.

         "Notes": the collective reference to the Revolving Credit Notes and the
CAF Advance Notes.

         "Participant": as defined in subsection 9.6(b).

         "PBGC": the Pension Benefit Guaranty  Corporation  established pursuant
to Subtitle A of Title IV of ERISA.
<PAGE>
         "Person":  an individual,  partnership,  corporation,  business  trust,
joint  stock  company,  trust,   unincorporated   association,   joint  venture,
Governmental Authority or other entity of whatever nature.

         "Plan":  at a  particular  time,  any  employee  benefit  plan which is
covered by ERISA and in respect of which the  Borrower or a Commonly  Controlled
Entity is (or, if such plan were  terminated  at such time,  would under Section
4069 of ERISA be deemed to be) an  "employer"  as  defined  in  Section  3(5) of
ERISA.

         "Prime Rate":  the rate of interest per annum  publicly  announced from
time to time by Chase as its prime rate in effect at its principal office in New
York City (the Prime Rate not being  intended  to be the lowest rate of interest
charged by Chase in connection with extensions of credit to debtors).

         "Principal Domestic Subsidiary": each of the Subsidiaries designated as
a "Principal Domestic Subsidiary" on Schedule II attached hereto.

         "Principal  Property":  (a) any mineral  property,  located  within the
United States of America or its territories or  possessions,  of the Borrower or
any Principal Domestic  Subsidiary which is in production,  under development or
included  in  estimates  of  reserves   published  by  the  Borrower,   (b)  any
concentrator,  smelter,  refinery,  rod mill, metal fabricating plant or similar
processing  or  manufacturing  facility,  located  within the  United  States of
America or its  territories  or  possessions,  of the Borrower or any  Principal
Domestic Subsidiary,  or (c) any Capital Stock of, or any Indebtedness for Money
Borrowed owing to the Borrower or any other  Principal  Domestic  Subsidiary of,
any Principal Domestic Subsidiary which owns any Principal  Property;  provided,
that Principal Property shall in any event not include any property, facility or
Principal Domestic Subsidiary  determined by the Board of Directors not to be of
material importance to the operations of the Borrower and the Principal Domestic
Subsidiaries taken as a whole.

         "Production Payment":  any arrangement providing for the sale, transfer
or other disposition of (a) minerals (including coal and hydrocarbons) until the
transferee  thereof shall realize therefrom a specified amount of money (however
determined) or a specified amount of such minerals  (however  determined) or (b)
any interest in minerals  (including  coal and  hydrocarbons)  of the  character
commonly referred to as a "production payment."

         "Rating Agencies": collectively, S&P and Moody's.
<PAGE>
         "Rating I", "Rating II", "Rating III",  "Rating IV" and "Rating V": the
respective Ratings set forth below:


                         S&P                     Moody's                 
                                                                         
     Rating I        AA- or higher          Aa3 or higher                
                                                                         
     Rating II    Lower than AA-            Lower than Aa3 but           
                  but higher than or        higher than or               
                  equal to A+               equal to A1                  
                                                                         
                                                                         
     Rating III   Lower than A+             Lower than A1 but            
                  but higher than or        higher than or equal         
                  equal to A-               to A3                        
                                                                         
     Rating IV    Lower than A- but         Lower than A3 but higher
                  higher than or equal      than or equal to 
                  to BBB+                   Baa1                         

     Rating V     BBB or lower              Baa2 or lower                
                                           
;  provided,  that if on any day  the  Ratings  of the  Rating  Agencies  do not
coincide  for any rating  category,  the higher  Rating  will be the  applicable
Rating for purposes of determining  the  Applicable  Margin and the Facility Fee
Rate with respect to any Interest  Period or quarterly  period,  as the case may
be.

         "Ratings":  the  ratings  of  the  Rating  Agencies  applicable  to the
long-term  senior  unsecured  debt of the  Borrower,  as announced by the Rating
Agencies.

         "Reference Lenders": Chase, The Bank of Nova Scotia and Morgan Guaranty
Trust Company of New York.

         "Register": as defined in subsection 9.6(d).

         "Regulation  U":  Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.

         "Reorganization": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.

         "Reportable  Event":  any of the events set forth in Section 4043(c) of
ERISA,  other  than those  events as to which the  thirty  day notice  period is
waived under  subsections  .12,  .13,  .14, .16, .18, .19 or .20 of PBGC Reg. SS
2615.

         "Required Lenders": at any time, Lenders the Commitment  Percentages of
which aggregate at least 66-2/3%.

         "Requirement  of Law": as to any Person,  any applicable  law,  treaty,
rule or  regulation  or  determination  of an  arbitrator  or a court  or  other
Governmental  Authority,  in each case applicable to or binding upon such Person
or any of its  property  or to  which  such  Person  or any of its  property  is
subject.

         "Responsible  Officer":  the chief executive officer,  the president or
any  vice-president of the Borrower or, with respect to financial  matters,  the
chief financial officer,  any vice-president with  responsibility  primarily for
accounting  or  financial  matters,  the  treasurer  or  the  controller  of the
Borrower.
<PAGE>
         "Revolving Credit Loans": as defined in subsection 2.1.

         "Revolving Credit Note": as defined in subsection 2.2.

         "Sale and Lease-Back  Transactions":  any  arrangement  with any Person
providing for the leasing by the Borrower or a Principal Domestic  Subsidiary of
any Principal  Property (except for temporary leases for a term of not more than
three years),  title to which  property has been or is to be sold or transferred
by the Borrower or such Principal Domestic Subsidiary to such Person, except for
arrangements with any Governmental  Authority of the United States of America or
any of its territories or possessions  entered into for the purpose of financing
all or any part of the purchase price or the cost of  constructing  or improving
the property subject to such arrangement.

         "Single Employer Plan": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.

         "S&P": Standard & Poor's Ratings Service, a division of the McGraw-Hill
Companies, Inc.

         "Subsidiary":  as to any Person,  a  corporation,  partnership or other
entity of which shares of stock or other  ownership  interests  having  ordinary
voting power  (other than stock or such other  ownership  interests  having such
power only by reason of the happening of a  contingency)  to elect a majority of
the board of directors or other  managers of such  corporation,  partnership  or
other  entity are at the time owned,  or the  management  of which is  otherwise
controlled, directly or indirectly through one or more intermediaries,  or both,
by such Person. Unless otherwise qualified,  all references to a "Subsidiary" or
to  "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of the Borrower.

         "Terminating Lender": as defined in subsection 2.20(a)(i).

         "Termination  Date":  June 25,  2002 or such  later  date to which  the
Termination Date may be extended pursuant to subsection 2.20.

         "Total  Capitalization":  at any date, the sum of Consolidated Tangible
Net Worth at such date and  Indebtedness  for Money Borrowed of the Borrower and
its  consolidated   subsidiaries  determined  in  accordance  with  GAAP,  on  a
consolidated basis, at such date.

         "Tranche":  the reference to Eurodollar Loans the then current Interest
Period with  respect to which begins on the same date and ends on the same later
date  (whether  or not such Loans  shall  originally  have been made on the same
day).

         "Transferee": as defined in subsection 9.6(h).

         "Type": as to any Revolving Credit Loan, its nature as an ABR Loan or a
Eurodollar Loan.
<PAGE>
         1.2 Other  Definitional  Provisions.  (a)  Unless  otherwise  specified
therein,  all terms defined in this  Agreement  shall have the defined  meanings
when used in the Notes or any  certificate  or other  document made or delivered
pursuant hereto.

         (b) As used  herein  and in the  Notes,  and any  certificate  or other
document made or delivered  pursuant  hereto,  accounting  terms relating to the
Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms
partly  defined in  subsection  1.1, to the extent not  defined,  shall have the
respective meanings given to them under GAAP.

         (c) The words  "hereof",  "herein" and "hereunder" and words of similar
import when used in this Agreement  shall refer to this Agreement as a whole and
not to any  particular  provision of this  Agreement,  and Section,  subsection,
Schedule  and  Exhibit   references  are  to  this  Agreement  unless  otherwise
specified.

         (d) The  meanings  given  to terms  defined  herein  shall  be  equally
applicable to both the singular and plural forms of such terms.


                  SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

         2.1  Revolving  Credit  Commitments.  (a)  Subject  to  the  terms  and
conditions  hereof,  each Lender severally agrees to make revolving credit loans
("Revolving  Credit  Loans")  to the  Borrower  from  time  to time  during  the
Commitment  Period in an aggregate  principal amount at any one time outstanding
not to exceed the amount of such Lender's  Commitment provided that no Revolving
Credit  Loan  shall be made if,  after  giving  effect  thereto,  the  aggregate
outstanding  principal  amount of Revolving  Credit Loans and CAF Advances would
exceed the  Commitments.  During the Commitment  Period the Borrower may use the
Commitments  by borrowing,  prepaying the Revolving  Credit Loans in whole or in
part, and reborrowing, all in accordance with the terms and conditions hereof.

         (b) The Revolving  Credit Loans may from time to time be (i) Eurodollar
Loans,  (ii) ABR Loans or (iii) a  combination  thereof,  as  determined  by the
Borrower and notified to the Administrative Agent in accordance with subsections
2.3  and  2.8,  provided  that  no  Revolving  Credit  Loan  shall  be made as a
Eurodollar Loan after the day that is one month prior to the Termination Date.

         2.2  Revolving  Credit Notes.  The Revolving  Credit Loans made by each
Lender shall be evidenced by a promissory note of the Borrower, substantially in
the form of Exhibit  A-1,  with  appropriate  insertions  as to payee,  date and
principal  amount (a  "Revolving  Credit  Note"),  payable  to the order of such
Lender and in a  principal  amount  equal to the lesser of (a) the amount of the
initial  Commitment of such Lender and (b) the aggregate unpaid principal amount
of all  Revolving  Credit  Loans  made by such  Lender.  Each  Lender  is hereby
authorized  to record the date,  Type and amount of each  Revolving  Credit Loan
made by such Lender,  each  continuation  thereof,  each  conversion of all or a
portion  thereof  to  another  Type,  the date and  amount  of each  payment  or
prepayment of principal thereof and, in the case of Eurodollar Loans, the length
of each Interest  Period with respect  thereto,  on the schedule  annexed to and
constituting a part of its Revolving Credit Note, and any such recordation shall
constitute  prima facie evidence of the accuracy of the information so recorded;
provided,  however,  that the  failure  to make any such  recordation  shall not
affect the obligations of the Borrower  hereunder or under any Revolving  Credit
Note.  Each  Revolving  Credit Note shall (x) be dated the Closing Date,  (y) be
stated to mature on the  Termination  Date and (z)  provide  for the  payment of
interest in accordance with subsection 2.10.
<PAGE>
          2.3 Procedure for Revolving Credit Borrowing.  The Borrower may borrow
under the Commitments during the Commitment Period on any Business Day, provided
that the Borrower shall give the Administrative  Agent irrevocable notice (which
notice must be received by the Administrative Agent prior to 1:00 P.M., New York
City time, (a) three Business Days prior to the requested Borrowing Date, if all
or  any  part  of the  requested  Revolving  Credit  Loans  are to be  initially
Eurodollar Loans or (b) on the requested Borrowing Date, otherwise),  specifying
(i) the amount to be borrowed,  (ii) the requested Borrowing Date, (iii) whether
the borrowing is to be of Eurodollar  Loans, ABR Loans or a combination  thereof
and (iv) if the borrowing is to be entirely or partly of Eurodollar  Loans,  the
amount of each such  Eurodollar  Loan and the  length  of the  initial  Interest
Period therefor.  Each borrowing under the Commitments  shall be in an aggregate
amount equal to (x) in the case of ABR Loans,  $5,000,000 or a whole multiple of
$1,000,000 in excess  thereof (or, if the then  Available  Commitments  are less
than  $5,000,000,  such lesser amount) and (y) in the case of Eurodollar  Loans,
$5,000,000 or a whole multiple of $1,000,000 in excess thereof.  Upon receipt of
any such notice  from the  Borrower,  the  Administrative  Agent shall  promptly
notify  each  Lender  thereof.  Each Lender will make the amount of its pro rata
share of each borrowing available to the Administrative Agent for the account of
the Borrower at the office of the  Administrative  Agent specified in subsection
9.2 prior to 2:00 P.M.,  New York City time, on the Borrowing  Date requested by
the Borrower in funds immediately  available to the  Administrative  Agent. Such
borrowing  will then be made  available  to the  Borrower by the  Administrative
Agent crediting the account of the Borrower on the books of such office with the
aggregate  of the amounts  made  available  to the  Administrative  Agent by the
Lenders and in like funds as received by the Administrative Agent.

         2.4 CAF Advances. (a) The Borrower may borrow CAF Advances from time to
time on any  Business Day during the period from the Closing Date until the date
occurring 14 days prior to the Termination  Date in the manner set forth in this
subsection 2.4 and in amounts such that the aggregate amount of Revolving Credit
Loans and CAF Advances  outstanding  at any time shall not exceed the  aggregate
amount of the Commitments at such time.  Prior to the Closing Date, the Borrower
will have borrowed  existing CAF Advances as set forth on Schedule IV. As of the
Closing  Date,  such  existing CAF  Advances  shall be deemed to be CAF Advances
under this Agreement.

         (b) (i) The Borrower  shall  request CAF  Advances by  delivering a CAF
Advance Request to the Administrative Agent, not later than 12:00 Noon (New York
City time) four Business Days prior to the proposed  Borrowing Date (in the case
of a LIBOR Rate CAF Advance  Request),  and not later than 10:00 A.M.  (New York
City time) one Business Day prior to the proposed Borrowing Date (in the case of
a Fixed Rate CAF Advance Request). Each CAF Advance Request may solicit bids for
CAF Advances in an aggregate  principal  amount of  $5,000,000  or increments of
$1,000,000 in excess  thereof and for not more than three  alternative  maturity
dates for such CAF Advances. The maturity date for each CAF Advance shall be not
less than 7 days nor more than 360 days after the  Borrowing  Date therefor (and
in any event not after the Termination  Date).  The  Administrative  Agent shall
promptly  notify each Lender by facsimile  transmission  of the contents of each
CAF Advance Request received by it.
<PAGE>
             (ii) In the case of a LIBOR Rate CAF Advance Request,  upon receipt
of notice  from the  Administrative  Agent of the  contents  of such CAF Advance
Request,  any  Lender  that  elects,  in its sole  discretion,  to do so,  shall
irrevocably  offer to make one or more CAF  Advances  at the LIBOR  Rate plus or
minus a margin  determined by such Lender in its sole  discretion  for each such
CAF  Advance.  Any such  irrevocable  offer  shall be made by  delivering  a CAF
Advance  Offer to the  Administrative  Agent,  before 10:30 A.M.  (New York City
time) three Business Days before the proposed  Borrowing Date, setting forth the
maximum amount of CAF Advances for each maturity date, and the aggregate maximum
amount for all maturity dates, which such Lender would be willing to make (which
amounts may, subject to subsection 2.4(a),  exceed such Lender's Commitment) and
the margin above or below the LIBOR Rate at which such Lender is willing to make
each such CAF Advance; the Administrative Agent shall advise the Borrower before
11:15  A.M.  (New York City  time)  three  Business  Days  before  the  proposed
Borrowing  Date, of the contents of each such CAF Advance Offer  received by it.
If the  Administrative  Agent in its  capacity  as a Lender  shall,  in its sole
discretion,  elect to make any such offer,  it shall  advise the Borrower of the
contents of its CAF Advance  Offer before 10:15 A.M.  (New York City time) three
Business Days before the proposed Borrowing Date.

             (iii) In the case of a Fixed Rate CAF Advance Request, upon receipt
of notice  from the  Administrative  Agent of the  contents  of such CAF Advance
Request,  any  Lender  that  elects,  in its sole  discretion,  to do so,  shall
irrevocably  offer  to  make  one or more  CAF  Advances  at a rate of  interest
determined by such Lender in its sole discretion for each such CAF Advance.  Any
such  irrevocable  offer shall be made by  delivering a CAF Advance Offer to the
Administrative  Agent,  before  9:30 A.M.  (New York City time) on the  proposed
Borrowing  Date,  setting  forth the  maximum  amount of CAF  Advances  for each
maturity date, and the aggregate  maximum amount for all maturity  dates,  which
such Lender would be willing to make (which  amounts may,  subject to subsection
2.4(a),  exceed such Lender's Commitment) and the rate of interest at which such
Lender is willing to make each such CAF Advance;  the Administrative Agent shall
advise  the  Borrower  before  10:15 A.M.  (New York City time) on the  proposed
Borrowing Date of the contents of each such CAF Advance Offer received by it. If
the  Administrative  Agent  in its  capacity  as a  Lender  shall,  in its  sole
discretion,  elect to make any such offer,  it shall  advise the Borrower of the
contents of its CAF Advance  Offer before 9:15 A.M.  (New York City time) on the
proposed Borrowing Date.

             (iv) The  Borrower  shall  before  11:45 A.M.  (New York City time)
three  Business  Days  before the  proposed  Borrowing  Date (in the case of CAF
Advances  requested  by a LIBOR Rate CAF Advance  Request) and before 10:45 A.M.
(New York City time) on the proposed Borrowing Date (in the case of CAF Advances
requested  by a  Fixed  Rate  CAF  Advance  Request)  either,  in  its  absolute
discretion:

         (A) cancel such CAF Advance Request by giving the Administrative  Agent
telephone notice to that effect, or
<PAGE>
         (B)  accept  one or more of the  offers  made by any  Lender or Lenders
pursuant to clause  (ii) or clause  (iii)  above,  as the case may be, by giving
telephone notice to the Administrative Agent (immediately  confirmed by delivery
to the Administrative Agent of a CAF Advance  Confirmation) of the amount of CAF
Advances for each relevant maturity date to be made by each Lender (which amount
for each such  maturity  date shall be equal to or less than the maximum  amount
for such  maturity date  specified in the CAF Advance Offer of such Lender,  and
for all maturity  dates  included in such CAF Advance Offer shall be equal to or
less than the aggregate  maximum amount  specified in such CAF Advance Offer for
all such  maturity  dates)  and  reject  any  remaining  offers  made by Lenders
pursuant to clause (ii) or clause  (iii)  above,  as the case may be;  provided,
however,  that (x) the Borrower  may not accept  offers for CAF Advances for any
maturity  date  in an  aggregate  principal  amount  in  excess  of the  maximum
principal  amount  requested  in the  related CAF  Advance  Request,  (y) if the
Borrower  accepts any of such offers,  it must accept offers strictly based upon
pricing for such relevant maturity date and no other criteria whatsoever and (z)
if two or more Lenders submit offers for any maturity date at identical  pricing
and the  Borrower  accepts any of such offers but does not wish to (or by reason
of the  limitations  set forth in  subsection  2.4(a)  or in  clause  (x) of the
proviso,  cannot)  borrow the total  amount  offered by such  Lenders  with such
identical pricing,  the Borrower shall accept offers from all of such Lenders in
amounts  allocated  among them pro rata according to the amounts offered by such
Lenders  (unless  such pro rata  allocation  would  result in a violation of the
requirement  that CAF  Advances  made by a Lender on a  Borrowing  Date for each
relevant  maturity  date  shall be in a  principal  amount of  $5,000,000  or an
integral  multiple of $1,000,000 in excess thereof,  in which event the Borrower
shall be  permitted to make such  allocations  on a basis other than pro rata to
the extent necessary to comply with such requirement).

             (v) If the Borrower  notifies the  Administrative  Agent that a CAF
Advance   Request  is  cancelled   pursuant  to  clause  (iv)  (A)  above,   the
Administrative  Agent shall give prompt telephone notice thereof to the Lenders,
and the CAF Advances requested thereby shall not be made.

             (vi) If the Borrower  accepts pursuant to clause (iv) (B) above one
or more of the offers made by any Lender or Lenders,  the  Administrative  Agent
shall promptly notify each Lender which has made such an offer, of the aggregate
amount of such CAF Advances to be made on such  Borrowing Date for each maturity
date and of the  acceptance or rejection of any offers to make such CAF Advances
made by such Lender.  Each Lender which is to make a CAF Advance  shall,  before
12:00  Noon (New York City  time) on the  Borrowing  Date  specified  in the CAF
Advance Request applicable thereto,  make available to the Administrative  Agent
at its office set forth in subsection  9.2 the amount of CAF Advances to be made
by such Lender, in immediately  available funds. The  Administrative  Agent will
make such funds available to the Borrower as soon as practicable on such date at
the Administrative  Agent's aforesaid address. As soon as practicable after each
Borrowing  Date,  the  Administrative  Agent  shall  notify  each  Lender of the
aggregate  amount  of CAF  Advances  advanced  on such  Borrowing  Date  and the
respective maturity dates thereof.
<PAGE>
         (c)  Within  the  limits  and on  the  conditions  set  forth  in  this
subsection  2.4, the Borrower may from time to time borrow under this subsection
2.4, repay pursuant to paragraph (d) below,  and reborrow under this  subsection
2.4.

         (d) The  Borrower  shall  repay  to the  Administrative  Agent  for the
account of each Lender which has made a CAF Advance (or the CAF Advance Assignee
in respect thereof, as the case may be) on the maturity date of each CAF Advance
(such  maturity date being that  specified by the Borrower for repayment of such
CAF Advance in the related CAF Advance Request) the then unpaid principal amount
of such CAF  Advance.  The  Borrower  shall  not have the  right to  prepay  any
principal amount of any CAF Advance.

         (e) The Borrower shall pay interest on the unpaid  principal  amount of
each CAF Advance from the Borrowing Date to the stated maturity date thereof, at
the rate of interest  determined  pursuant to paragraph (b) above (calculated on
the basis of a 360 day year for actual days  elapsed),  payable on the  interest
payment  date or dates  specified  by the  Borrower  for such CAF Advance in the
related CAF Advance  Request as provided in the CAF Advance Note evidencing such
CAF  Advance.  If all or a portion of the  principal  amount of any CAF  Advance
shall not be paid when due (whether at the stated  maturity,  by acceleration or
otherwise),  such overdue principal amount shall, without limiting any rights of
any  Lender  under this  Agreement,  bear  interest  from the date on which such
payment  was due at a rate per  annum  which is 2% above  the rate  which  would
otherwise be  applicable  pursuant to the CAF Advance Note  evidencing  such CAF
Advance until the scheduled  maturity date with respect  thereto as set forth in
the CAF Advance Note evidencing such CAF Advance, and for each day thereafter at
a rate per annum  which is 2% above the ABR until paid in full (as well after as
before judgment).

         (f) The CAF Advances  made by each Lender shall be evidenced  initially
by a promissory note of the Borrower,  substantially  in the form of Exhibit A-2
with appropriate insertions (a "Grid CAF Advance Note"), payable to the order of
such Lender and  representing  the  obligation of the Borrower to pay the unpaid
principal  amount of all CAF Advances made by such Lender,  with interest on the
unpaid  principal  amount  from  time to time  outstanding  of each CAF  Advance
evidenced  thereby as  prescribed in  subsection  2.4(e).  Each Lender is hereby
authorized  to  record  the date and  amount  of each CAF  Advance  made by such
Lender,  the  maturity  date  thereof,  the date and  amount of each  payment of
principal  thereof and the interest  rate with  respect  thereto on the schedule
annexed to and  constituting  part of its Grid CAF  Advance  Note,  and any such
recordation  shall  constitute  prima  facie  evidence  of the  accuracy  of the
information so recorded;  provided,  however,  that the failure to make any such
recordation shall not affect the obligations of the Borrower  hereunder or under
any Grid CAF Advance Note. Each Grid CAF Advance Note shall be dated the Closing
Date, and each CAF Advance  evidenced thereby shall bear interest for the period
from and  including the Borrowing  Date thereof on the unpaid  principal  amount
thereof  from  time  to  time  outstanding  at the  applicable  rate  per  annum
determined as provided in, and such  interest  shall be payable as specified in,
subsection 2.4(e).
<PAGE>
          (g) Amounts  advanced by a Lender pursuant to this subsection 2.4 on a
Borrowing  Date which have the same  maturity  date and  interest  rate shall be
deemed to constitute one CAF Advance so long as such amounts remain evidenced by
the Grid CAF  Advance  Note of such  Lender;  any such  Lender  that wishes such
amounts  to  constitute  more  than one CAF  Advance  and to have  each such CAF
Advance  evidenced  by a  separate  promissory  note  payable  to  such  Lender,
substantially  in the form of  Exhibit  A-3 with  appropriate  insertions  as to
Borrowing Date,  principal  amount and interest rate (an "Individual CAF Advance
Note"),  shall  notify the  Administrative  Agent and the  Borrower by facsimile
transmission  of the  respective  principal  amounts of the CAF Advances  (which
principal  amounts  shall  not be less  than  $5,000,000  for  any of  such  CAF
Advances) to be evidenced by each such  Individual  CAF Advance Note.  Not later
than three  Business  Days after  receipt of such  notice,  the  Borrower  shall
deliver to such Lender an  Individual  CAF Advance  Note payable to the order of
such  Lender in the  principal  amount of each such CAF  Advance  and  otherwise
conforming  to  the  requirements  of  this  Agreement.  Upon  receipt  of  such
Individual CAF Advance Note, such Lender shall endorse on the Schedule  attached
to its Grid CAF Advance  Note the transfer of such CAF Advance from its Grid CAF
Advance Note to such Individual CAF Advance Note.

         2.5 Fees. (a) The Borrower will pay to the Administrative Agent for the
account  of each  Lender  a  facility  fee  computed  for each  day  during  the
Commitment  Period at a rate per annum equal to the  Facility Fee Rate in effect
for such day on the amount of the Commitment of such Lender,  payable  quarterly
in arrears on the last day of each March,  June,  September  and December and on
the  Termination  Date or such  earlier  date on  which  the  Commitments  shall
terminate  as provided  herein,  commencing  on the first of such dates to occur
after the date hereof.

         (b) The  Borrower  will  pay to the  Administrative  Agent  for its own
account in connection  with the  utilization  by the Borrower of the CAF Advance
procedures  pursuant to subsection 2.4, an auction fee in the amount  previously
agreed in writing between the Borrower and the Administrative Agent, such fee to
be paid concurrently with the delivery of each CAF Advance Request.

         (c) The  Borrower  will  pay to the  Administrative  Agent  for its own
account such other fees in the amounts and on the dates as have been  previously
agreed in writing between the Borrower and the Administrative Agent.

         2.6  Termination or Reduction of  Commitments.  The Borrower shall have
the  right,  upon not less  than  five  Business  Days'  written  notice  to the
Administrative  Agent,  to terminate the  Commitments  or, from time to time, to
reduce the amount of the  Commitments.  Any such reduction shall be in an amount
equal to $5,000,000 or a whole multiple thereof and shall reduce permanently the
Commitments then in effect. The Administrative  Agent shall promptly send a copy
of any notices of reduction or  termination  of the  Commitments  to each of the
Lenders.
<PAGE>
         2.7 Optional Prepayments. The Borrower may at any time and from time to
time prepay the ABR Loans and the Eurodollar Loans, in whole or in part, without
premium or penalty, by giving irrevocable notice to the Administrative  Agent at
or before 1:00 P.M. on the third Business Day prior to  prepayment,  such notice
specifying  the date and amount of prepayment  and whether the  prepayment is of
Eurodollar Loans, ABR Loans or a combination  thereof,  and, if of a combination
thereof,  the amount  allocable  to each.  Upon  receipt of any such  notice the
Administrative  Agent shall  promptly  notify each Lender  thereof.  If any such
notice is given, the amount specified in such notice shall be due and payable on
the date  specified  therein,  together  with any  amounts  payable  pursuant to
subsection 2.17;  provided that any Lender entitled to claim any amounts payable
pursuant to subsection 2.17 shall have provided the Borrower with a certificate,
through  the  Administrative  Agent,  setting  forth in  reasonable  detail such
amounts.

         2.8 Conversion  and  Continuation  Options.  (a) The Borrower may elect
from time to time to  convert  Eurodollar  Loans to ABR  Loans,  by  giving  the
Administrative  Agent at least two Business  Days' prior  irrevocable  notice of
such election, provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest  Period with respect  thereto.  The Borrower
may elect from time to time to convert ABR Loans to  Eurodollar  Loans by giving
the Administrative  Agent at least three Business Days' prior irrevocable notice
of such  election.  Any such  notice of  conversion  to  Eurodollar  Loans shall
specify the length of the initial Interest Period or Interest Periods  therefor.
Upon receipt of any such notice the  Administrative  Agent shall promptly notify
each Lender  thereof.  All or any part of outstanding  Eurodollar  Loans and ABR
Loans may be  converted  as provided  herein,  provided  that (i) no Loan may be
converted  into a Eurodollar  Loan when any Event of Default has occurred and is
continuing  and  the  Administrative  Agent  has or the  Required  Lenders  have
determined  that such a conversion  is not  appropriate  and (ii) no Loan may be
converted  into a Eurodollar  Loan after the date that is one month prior to the
Termination Date.

         (b) Any  Eurodollar  Loans may be continued as such upon the expiration
of the then current  Interest Period with respect thereto by the Borrower giving
the Administrative  Agent at least three Business Days' prior irrevocable notice
of the  length of the next  Interest  Period  to be  applicable  to such  Loans,
provided that no Eurodollar  Loan may be continued as such (i) when any Event of
Default has occurred and is continuing and the  Administrative  Agent has or the
Required  Lenders have determined that such a continuation is not appropriate or
(ii)  after  the  date  that is one  month  prior  to the  Termination  Date and
provided,  further,  that if the Borrower shall fail to give any required notice
as described  above in this paragraph or if such  continuation  is not permitted
pursuant to the preceding proviso such Loans shall be automatically converted to
ABR Loans on the last day of such then expiring Interest Period.
<PAGE>
         ( c) Any  notice  required  by this  subsection  2.8 to be given to the
Administrative  Agent on any Business Day must be received by the Administrative
Agent prior to 11:00 A.M., New York City time, on such Business Day.

         2.9 Minimum  Amounts and Maximum  Number of Tranches.  All  borrowings,
conversions and  continuations of Loans hereunder and all selections of Interest
Periods  hereunder  shall  be in  such  amounts  and be  made  pursuant  to such
elections so that, after giving effect thereto,  the aggregate  principal amount
of the Loans  comprising each Tranche shall be equal to $5,000,000 or a multiple
of $1,000,000 in excess  thereof.  The Borrower shall be entitled to maintain no
more than ten Tranches at any one time.

         2.10 Interest Rates and Payment Dates.  (a) Each  Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the  Eurodollar  Rate  determined  for such day plus the
Applicable Margin.

         (b) Each ABR Loan shall bear  interest at a rate per annum equal to the
ABR.


         ( c) If all or a portion of (i) the  principal  amount of any Revolving
Credit  Loan,  (ii) any  interest  payable  thereon or (iii) any facility fee or
other amount payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum which is (x) in the case of overdue principal, the rate that
would otherwise be applicable  thereto  pursuant to the foregoing  provisions of
this subsection plus 2% or (y) in the case of overdue interest,  facility fee or
other  amount,  the ABR plus 2%, in each case from the date of such  non-payment
until such amount is paid in full (as well after as before judgment).

         (d) Interest on each Revolving  Credit Loan shall be payable in arrears
on each Interest  Payment Date,  provided  that  interest  accruing  pursuant to
paragraph (c) of this subsection shall be payable from time to time on demand.

         (e)  Interest on CAF Loans will be payable as  provided  in  subsection
2.4.

         2.11  Computation  of  Interest  and Fees.  (a)  Whenever  interest  is
accruing at the ABR,  calculated on the basis of the Prime Rate,  such interest,
shall be  calculated  on the basis of a 365- (or  366-,  as the case may be) day
year for the actual days elapsed;  and, otherwise,  interest shall be calculated
on the basis of a 360-day year for the actual days elapsed.  Facility fees shall
be calculated  on the basis of a 360-day year for the actual days  elapsed.  The
Administrative  Agent shall as soon as  practicable  notify the Borrower and the
Lenders of each  determination  of a Eurodollar Rate. Any change in the interest
rate on a Loan resulting  from a change in the ABR shall become  effective as of
the opening of business on the day on which such change becomes  effective.  The
Administrative  Agent shall as soon as  practicable  notify the Borrower and the
Lenders of the  effective  date and the amount of each such  change in  interest
rate.
<PAGE>
         (b) Each determination of an interest rate by the Administrative  Agent
pursuant to any provision of this  Agreement  shall be conclusive and binding on
the   Borrower  and  the  Lenders  in  the  absence  of  manifest   error.   The
Administrative  Agent  shall,  at the  request of the  Borrower,  deliver to the
Borrower a statement showing the quotations used by the Administrative  Agent in
determining any interest rate pursuant to subsection 2.10(a).

         (c ) If any  Reference  Lender  shall for any  reason no longer  have a
Commitment,  such  Reference  Lender  shall  thereupon  cease to be a  Reference
Lender, and if, as a result, there shall only be one Reference Lender remaining,
the Administrative  Agent (after consultation with the Borrower and the Lenders)
shall, by notice to the Borrower and the Lenders,  designate another Lender as a
Reference  Lender so that  there  shall at all  times be at least two  Reference
Lenders.

         (d) Each  Reference  Lender  shall  use its  best  efforts  to  furnish
quotations of rates to the Administrative  Agent as contemplated  hereby. If any
of the Reference  Lenders shall be unable or shall otherwise fail to supply such
rates to the Administrative  Agent upon its request, the rate of interest shall,
subject to the provisions of subsection  2.12, be determined on the basis of the
quotations of the remaining Reference Lenders or Reference Lender.

         2.12 Inability to Determine Interest Rate. If prior to the first day of
any  Interest  Period the  Administrative  Agent  shall have  determined  (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for  ascertaining  the Eurodollar Rate for such Interest  Period,  the
Administrative  Agent  shall give  notice  thereof  by  telephone  or  facsimile
transmission to the Borrower and the Lenders as soon as practicable  thereafter.
If such notice is given (x) any  Eurodollar  Loans  requested  to be made on the
first day of such Interest Period shall be made as ABR Loans, (y) any Loans that
were to  have  been  converted  on the  first  day of such  Interest  Period  to
Eurodollar  Loans shall be  converted  to or  continued as ABR Loans and (z) any
outstanding  Eurodollar  Loans  shall be  converted,  on the  first  day of such
Interest  Period,  to ABR Loans.  Until such  notice has been  withdrawn  by the
Administrative  Agent, no further Eurodollar Loans shall be made or continued as
such,  nor shall the  Borrower  have the right to  convert  Loans to  Eurodollar
Loans.
<PAGE>
         2.13  Pro Rata  Treatment  and  Payments.  (a)  Each  borrowing  by the
Borrower of Revolving  Credit Loans,  each payment by the Borrower on account of
any facility fee hereunder and any reduction of the  Commitments  of the Lenders
shall be made pro rata according to the respective Commitment Percentages of the
Lenders.  Each payment  (other than  prepayments)  by the Borrower on account of
principal of and  interest on the Loans shall be made pro rata  according to the
respective  amounts  then due and  owing.  Each  prepayment  in  respect  of the
Revolving  Credit  Loans  shall  be made pro rata  according  to the  respective
outstanding  principal  amounts  of  Revolving  Credit  Loans  then  held by the
Lenders.  All  payments  (including  prepayments)  to be  made  by the  Borrower
hereunder and under the Notes, whether on account of principal,  interest,  fees
or otherwise,  shall be made without set off or  counterclaim  and shall be made
prior to 12:00  Noon,  New  York  City  time,  on the due  date  thereof  to the
Administrative  Agent, for the account of the Lenders entitled  thereto,  at the
Administrative  Agent's  office  specified in subsection  9.2, in Dollars and in
immediately  available  funds.  The  Administrative  Agent shall distribute such
payments to the Lenders promptly upon receipt in like funds as received.  If any
payment  hereunder  becomes due and payable on a day other than a Business  Day,
such payment  shall be extended to the next  succeeding  Business Day, and, with
respect to payments of principal,  interest thereon shall be payable at the then
applicable rate during such extension.

         (b) Unless the Administrative Agent shall have been notified in writing
by any Lender  prior to a  borrowing  that such  Lender will not make the amount
that  would   constitute   its  share  of  such   borrowing   available  to  the
Administrative  Agent, the  Administrative  Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such  assumption,  make  available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative  Agent, on demand,  such amount with interest thereon at a
rate equal to the daily  average  Federal  Funds  Effective  Rate for the period
until such Lender makes such amount immediately  available to the Administrative
Agent. A certificate of the  Administrative  Agent  submitted to any Lender with
respect to any amounts  owing under this  subsection  shall be conclusive in the
absence of manifest  error. If such Lender's share of such borrowing is not made
available to the Administrative  Agent by such Lender within three Business Days
of such  Borrowing  Date,  the  Administrative  Agent  shall also be entitled to
recover such amount with  interest  thereon at the rate per annum  applicable to
ABR Loans hereunder, on demand, from the Borrower.
<PAGE>
         2.14 Illegality.  Notwithstanding  any other provision  herein,  if the
adoption of or any change in any Requirement of Law or in the  interpretation or
application  thereof  shall make it unlawful  for any Lender to make or maintain
Eurodollar  Loans as contemplated by this Agreement,  (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert ABR Loans to Eurodollar  Loans shall forthwith be cancelled and (b) such
Lender's  Revolving Credit Loans then  outstanding as Eurodollar  Loans, if any,
shall be converted automatically to ABR Loans on the respective last days of the
then current  Interest  Periods with respect to such  Revolving  Credit Loans or
within such  earlier  period as required  by law.  If any such  conversion  of a
Eurodollar  Loan  occurs on a day which is not the last day of the then  current
Interest Period with respect thereto, the Borrower shall pay to such Lender such
amounts, if any, as may be required pursuant to subsection 2.17.

         2.15  Requirements  of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive  (whether or not having the force of
law) from any central bank or other  Governmental  Authority made  subsequent to
the date hereof:

             (i) shall subject any Lender to any tax of any kind whatsoever with
respect to any  Eurodollar  Loan made by it, or change the basis of  taxation of
payments to such Lender of principal, interest, fees of any other amount payable
in respect thereof (except for Non-Excluded Taxes covered by subsection 2.16 and
changes in taxes imposed on or measured by the overall net income of such Lender
or its lending office for such Loan);

             (ii) shall impose,  modify or hold applicable any reserve,  special
deposit, compulsory loan or similar requirement against assets held by, deposits
or  other  liabilities  in or for the  account  of,  advances,  loans  or  other
extensions  of credit  by, or any other  acquisition  of funds by, any office of
such  Lender  which  is  not  otherwise  included  in the  determination  of the
Eurodollar Rate hereunder; or

             (iii) shall impose on such Lender any other  condition  (except for
any condition covered by clauses (i) or (ii) above and not specifically excluded
from the coverage of such clauses by the terms thereof);

and the result of any of the  foregoing  is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining  Eurodollar  Loans or to reduce any amount  receivable
hereunder  in respect  thereof,  then,  in any such  case,  the  Borrower  shall
promptly pay such Lender,  upon its demand,  any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable.  If
any Lender  becomes  entitled to claim any additional  amounts  pursuant to this
subsection,  it shall  promptly  notify the  Borrower  in  writing,  through the
Administrative Agent, of the event by reason of which it has become so entitled;
provided,  that the  Borrower  shall not be required to  compensate a Lender for
costs in respect of any period beginning before the date which is 120 days prior
to the date on which the  Borrower  receives  notice  that such  costs have been
imposed, or if such costs have been imposed retroactively,  the period beginning
on such earlier date on which such costs shall have become effective (excluding,
however,  any portion of such  period  which is after the date of adoption of or
change in the  relevant  Requirement  of Law and more than 120 days prior to the
date on which  the  Borrower  had  received  notice  that  such  costs  had been
imposed).  A certificate as to any additional  amounts payable  pursuant to this
subsection  submitted by such Lender,  through the Administrative  Agent, to the
Borrower shall be conclusive in the absence of manifest error.
<PAGE>
         (b) If any Lender  shall have  determined  that the  adoption of or any
change  in  any  Requirement  of  Law  regarding  capital  adequacy  or  in  the
interpretation  or  application  thereof  or  compliance  by such  Lender or any
corporation  controlling  such Lender with any  request or  directive  regarding
capital adequacy  (whether or not having the force of law) from any Governmental
Authority  made  subsequent  to the date hereof does or shall have the effect of
reducing the rate of return on such Lender's or such corporation's  capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such  corporation  could  have  achieved  but for such  change or  compliance
(taking into  consideration  such Lender's or such  corporation's  policies with
respect to capital  adequacy) by an amount deemed by such Lender to be material,
then from time to time,  after submission by such Lender to the Borrower (with a
copy to the  Administrative  Agent) of a written request therefor,  the Borrower
shall pay to such Lender such  additional  amount or amounts as will  compensate
such Lender for such reduction.

         ( c) Covenants of the Borrower in this  subsection  2.15 shall  survive
the  termination  of this  Agreement  and the payment of the Notes and all other
amounts payable hereunder.

         2.16 Taxes.  (a) All payments made by the Borrower under this Agreement
and the  Notes  shall be made  free and  clear  of,  and  without  deduction  or
withholding  for or on account of, any present or future income,  stamp or other
taxes, levies, imposts,  duties, charges, fees, deductions or withholdings,  now
or  hereafter  imposed,   levied,   collected,   withheld  or  assessed  by  any
Governmental   Authority   ("Taxes"),   excluding   (i)  Taxes  imposed  on  the
Administrative Agent or any Lender as a result of a present or former connection
between  the  Administrative  Agent or such Lender and the  jurisdiction  of the
Governmental  Authority imposing such Tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Administrative Agent or such Lender having executed,  delivered or performed
its obligations or received a payment under, or enforced,  this Agreement or the
Notes) and (ii) Taxes imposed by the United States on any Lender other than as a
result of a Change in Law relating to such Lender (any such non-excluded  Taxes,
"Non-Excluded Taxes"). If any Taxes are required to be withheld from any amounts
payable to the Administrative  Agent or any Lender hereunder or under the Notes,
(A) the Borrower or the Administrative  Agent shall withhold and deduct any such
Taxes from such amounts,  (B) the Borrower or the Administrative Agent shall pay
to or deposit with the appropriate  taxing authority in a timely manner the full
amount of Taxes so withheld or deducted,  (C) the Borrower or the Administrative
Agent shall reasonably promptly send to the Administrative  Agent or such Lender
a certified copy of an original  official  receipt  received by the Borrower (or
other documentation  reasonably  acceptable to the Administrative  Agent or such
Lender) showing payment thereof,  and (D) if such Taxes are Non-Excluded  Taxes,
the  amounts so  payable to the  Administrative  Agent or such  Lender  shall be
increased to the extent necessary to yield to the  Administrative  Agent or such
Lender  (after  payment of all  Non-Excluded  Taxes)  interest or any such other
amounts  payable  hereunder  at the rates or in the  amounts  specified  in this
Agreement  and the Notes,  provided,  however,  that the  Borrower  shall not be
required  to  increase  any  such  amounts  payable  to any  Lender  that is not
organized  under the laws of the United  States of America or a state thereof if
such  Lender  fails to comply with the  requirements  of  paragraph  (b) of this
subsection.  If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the  Administrative  Agent the
required  documentary evidence set forth in clause (C) above, the Borrower shall
indemnify the  Administrative  Agent and the Lenders for any incremental  Taxes,
interest or penalties that may become payable by the Administrative Agent or any
Lender as a result of any such failure.  The agreements in this subsection shall
survive the  termination  of this Agreement and the payment of the Notes and all
other amounts payable hereunder.
<PAGE>
         (b) Each Lender that is not  incorporated  under the laws of the United
States of America or a state thereof shall:

             (i) on or prior to the date such Lender becomes a Lender  hereunder
deliver to the Borrower and the Administrative  Agent (A) two duly completed and
accurate copies of United States Internal  Revenue Service Form 1001 or 4224, or
successor  applicable  form,  as the case may be,  and (B) an  Internal  Revenue
Service Form W-8 or W-9, or successor applicable form, as the case may be;

             (ii)  deliver  to the  Borrower  and the  Administrative  Agent two
further duly completed and accurate copies of any such form or  certification on
or before  the date  that any such  form or  certification  expires  or  becomes
obsolete and after the  occurrence  of any event  requiring a change in the most
recent form previously delivered by it to the Borrower; and

             (iii) obtain such  extensions  of time for filing and complete such
forms or  certifications  as may  reasonably be requested by the Borrower or the
Administrative Agent;

unless in any such case an event (including,  without limitation,  any change in
treaty,  law or  regulation)  has  occurred  prior to the date on which any such
delivery would  otherwise be required which renders all such forms  inapplicable
or which would prevent such Lender from duly  completing and delivering any such
form  with  respect  to it and such  Lender  so  advises  the  Borrower  and the
Administrative  Agent.  Such Lender shall certify (i) in the case of a Form 1001
or 4224,  that it is entitled to receive  payments under this Agreement  without
deduction or  withholding  of any United States federal income taxes and (ii) in
the case of a Form W-8 or W-9,  that it is entitled to an exemption  from United
States backup  withholding  tax. As provided in subsection  9.6(i),  each Person
that  shall  become  a  Lender  pursuant  to  subsection  9.6  and  that  is not
incorporated under the laws of the United States of America or any state thereof
shall, upon the  effectiveness of the related  transfer,  be required to provide
all of the  forms  and  statements  required  pursuant  to this  subsection.  In
addition,  each Lender shall, upon the written request of the Borrower,  provide
the Borrower  with such other forms,  certificates  or  documentation  as may be
reasonably  necessary to claim any exemption from, or reduced rate of, Taxes for
which the  Borrower is liable under this  subsection  2.16;  provided  that such
action shall not cause the imposition on such Lender of any material  additional
costs or legal,  regulatory or administrative  burdens. If an event occurs after
the date on which any form,  certificate  or  documentation  is  submitted  by a
Lender that renders such item or the  information  set forth therein  incorrect,
such Lender shall promptly notify the Borrower and the  Administrative  Agent in
writing of such incorrectness.
<PAGE>
         (c) For purposes of this subsection  2.16,  "Change in Law" shall mean,
with  respect to any  Lender,  a change in the Code,  the  Treasury  Regulations
thereunder or any official  interpretation  thereof (or any officially  proposed
changes in the  interpretation  thereof) or an  amendment  or  revocation  of an
applicable  United States income tax treaty after the date such Lender  acquired
its Notes.

         2.17  Indemnity.  The Borrower  agrees to indemnify  each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a  consequence  of (a) default by the Borrower in making a borrowing
of,  conversion into or continuation of Eurodollar  Loans after the Borrower has
given a notice  requesting  the same in accordance  with the  provisions of this
Agreement,  (b) default by the Borrower in making any prepayment of a Eurodollar
Loan  after the  Borrower  has given a notice  thereof  in  accordance  with the
provisions  of this  Agreement or (c) the making of a prepayment  of  Eurodollar
Loans on a day  which is not the last day of an  Interest  Period  with  respect
thereto. Such indemnification may include an amount equal to the excess, if any,
of (i) the amount of interest which would have accrued on the amount so prepaid,
or not so borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow,  convert or continue to the last day of
such  Interest  Period  (or,  in the case of a failure  to  borrow,  convert  or
continue,  the  Interest  Period that would have  commenced  on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding,  however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have  accrued to such  Lender on such  amount by  placing  such  amount on
deposit for a comparable  period with leading banks in the interbank  eurodollar
market.  This covenant  shall survive the  termination of this Agreement and the
payment of the Notes and all other amounts payable hereunder.

         2.18  Eurocurrency  Liabilities.  The  Borrower  agrees  to pay to each
Lender which requests  compensation under this subsection 2.18 (by notice to the
Borrower),  on  the  last  day of  each  Interest  Period  with  respect  to any
Eurodollar Loan made by such Lender, so long as such Lender shall be required to
maintain reserves against  "Eurocurrency  liabilities" under Regulation D of the
Board of Governors of the Federal Reserve System (or, so long as such Lender may
be required by such Board of Governors or by any other Governmental Authority to
maintain  reserves  against any other  category of  liabilities  which  includes
deposits  by  reference  to  which  the  interest  rate on  Eurodollar  Loans is
determined  as provided in this  Agreement or against any category of extensions
of credit or other assets of such Lender which includes any  Eurodollar  Loans),
an additional  amount  (determined  by such Lender and notified to the Borrower)
representing  such  Lender's  calculation  or,  if an  accurate  calculation  is
impracticable, reasonable estimate (using such reasonable means of allocation as
such Lender  shall  determine)  of the actual  costs,  if any,  incurred by such
Lender  during  such  Interest  Period as a result of the  applicability  of the
foregoing reserves to such Eurodollar Loans, which amount in any event shall not
exceed the product of the following for each day of such Interest Period:
<PAGE>
                  (a) the principal  amount of the Eurodollar Loans made by such
Lender to which such Interest Period relates outstanding on such day; and

                  (b) the  difference  between (x) a fraction  the  numerator of
which  is the  Eurodollar  Rate  (expressed  as a  decimal)  applicable  to such
Eurodollar  Loan and the  denominator  of which is one  minus the  maximum  rate
(expressed as a decimal) at which such reserve  requirements are imposed by such
Board of Governors or other  Governmental  Authority on such date minus (y) such
numerator; and

                  ( c) a  fraction  the  numerator  of  which  is  one  and  the
denominator of which is 360.

         2.19 Actions of the Lenders.  (a) Each Lender shall take all reasonable
action  (including,  without  limitation,  providing  to the Borrower any forms,
documents,  or  certificates)  necessary to avoid or minimize any amounts  which
might otherwise be payable  pursuant to subsection 2.15 or 2.16 or the effect of
any  event  referred  to  in  subsection  2.14  including,  without  limitation,
designating  a different  lending  office;  provided  that such action shall not
cause the imposition on such Lender of any material  additional  costs or legal,
regulatory or administrative burdens.

                  (b) At any time when an event  referred to in subsection  2.14
has occurred, or the payment of increased amounts pursuant to subsection 2.15 or
2.16  to any  Lender  is  required,  if the  Borrower  shall  provide  a  Person
reasonably  acceptable  to the  Administrative  Agent  willing to  purchase  the
Revolving  Credit  Notes held by such Lender and assume the  Commitment  of such
Lender, such Lender shall transfer its Revolving Credit Notes and its Commitment
to such  Person,  pursuant  to  documentation  reasonably  satisfactory  to such
Lender, such Person, the Borrower and the Administrative  Agent, on any Business
Day  specified  by the  Borrower  not  earlier  than 7  Business  Days after the
Borrower shall have provided such Person, in exchange for a purchase price equal
to the  principal  amount of such  Revolving  Credit Notes thereon to such date,
together with accrued  interest and all other amounts that would be payable with
respect to such Revolving  Credit Notes if such purchase were a prepayment under
subsection  2.7.  Upon  such  transfer  such  Lender  shall be  relieved  of its
Commitment and other obligations to the Borrower hereunder.

         2.20 Extension of Termination Date. (a)(i) The Borrower may request, in
a notice given as herein  provided to the  Administrative  Agent and each of the
Lenders during the 30 day period  commencing on the date that is 13 months prior
to the Termination Date then in effect (the "Existing  Termination  Date"), that
the Termination Date be extended, which notice shall specify the new Termination
Date (which  shall be 12 months after the  Existing  Termination  Date) to be in
effect following such extension (the "Requested  Termination  Date");  provided,
however,  that  the  Borrower  may  request  only  two  such  extensions  of the
Termination Date. Each Lender,  acting in its sole discretion,  shall, not later
than a date 20 days after its  receipt  of any such  notice  from the  Borrower,
notify the Borrower and the  Administrative  Agent in writing of its election to
extend or not to extend the Termination Date with respect to its Commitment. Any
Lender which shall not timely notify the Borrower and the  Administrative  Agent
of its election to extend the  Termination  Date shall be deemed to have elected
not to extend the  Termination  Date with respect to its Commitment  (any Lender
who timely notifies the Borrower and the Administrative Agent of an election not
to extend its  commitment and any Lender so deemed to have elected not to extend
its commitment being referred to as a "Terminating Lender"). The election of any
Lender to agree to a requested  extension shall not obligate any other Lender to
agree.
<PAGE>
             (ii) If and only if Lenders holding  Commitments  that aggregate at
least 66-2/3% of the  aggregate  amount of the  Commitments,  on the date of the
notice  delivered by the Borrower  pursuant to subparagraph (i) above (including
Commitments  of all  Terminating  Lenders on such date) shall have agreed during
the 20 day period  referred to in such  subparagraph  (i) to extend the Existing
Termination Date, then (A) the Commitments of the Lenders other than Terminating
Lenders (the  "Continuing  Lenders")  shall,  subject to the other provisions of
this Agreement,  be extended to the Requested  Termination Date specified in the
notice from the Borrower, and as to such Lenders the term "Termination Date", as
used herein shall on and after the date as of which the  requested  extension is
effective mean such Requested  Termination  Date,  provided that if such date is
not a  Business  Day,  then such  Requested  Termination  Date shall be the next
preceding Business Day and (B) the Commitments of the Terminating  Lenders shall
continue until the Existing  Termination Date, and shall then terminate,  and as
to the Terminating  Lenders,  the term "Termination Date", as used herein, shall
continue to mean such Existing Termination Date.

                  (b) In the event  that the  Termination  Date  shall have been
extended for the Continuing  Lenders in accordance with paragraph (a) above and,
in connection with such extension,  there are Terminating  Lenders, the Borrower
may, at its own expense,  require any Terminating  Lender to transfer and assign
in whole or in part, without recourse (in accordance with subsection 9.6) all or
part of its  interests,  rights  and  obligations  under  this  Agreement  to an
assignee (which  assignee may be another Lender,  if another Lender accepts such
assignment)  that shall assume such  assigned  obligations  and that shall agree
that its Commitment will expire on the Termination Date in effect for Continuing
Lenders pursuant to such paragraph (a); provided, however, that (i) the Borrower
shall have received a written consent of the Administrative Agent in the case of
an  assignee  that is not a Lender  (which  consent  shall not  unreasonably  be
withheld) and (ii) the assigning Lender shall have received from the Borrower or
such assignee full payment in  immediately  available  funds of the principal of
and  interest  accrued  to the  date of such  payment  on the  Loans  made by it
hereunder to the extent that such Loans are subject to such  assignment  and all
other amounts owed to it hereunder  (including any amounts that would be payable
to the assigning  Lender pursuant to subsection  2.17 if such  assignment  were,
instead, a prepayment of the Loans of such Lender).  Any such assignee's initial
Termination  Date  shall be the  Termination  Date in effect at the time of such
assignment for the Continuing Lenders.  The Borrower shall not have any right to
require a Lender to assign any part of its  interests,  rights  and  obligations
under this Agreement  pursuant to this paragraph (b) unless it has notified such
Lender of its  intention  to require  the  assignment  thereof at least ten days
prior to the proposed assignment date.


                  SECTION 3. REPRESENTATIONS AND WARRANTIES

         To induce the  Administrative  Agent and the Lenders to enter into this
Agreement and to make the Loans, the Borrower hereby  represents and warrants to
the Administrative Agent and each Lender that:
<PAGE>
         3.1 Financial Condition. The consolidated balance sheet of the Borrower
and its  consolidated  subsidiaries  as at  December  31,  1996 and the  related
consolidated statements of income and of cash flows for the fiscal year ended on
such date, reported on by Price Waterhouse, copies of which have heretofore been
furnished  to each  Lender,  are  complete  and correct  and present  fairly the
consolidated   financial   condition  of  the  Borrower  and  its   consolidated
subsidiaries as at such dates, and the consolidated  results of their operations
and their consolidated cash flows for the fiscal years then ended. The unaudited
consolidated balance sheet of the Borrower and its consolidated  subsidiaries as
at March 31, 1997 and the related  unaudited  consolidated  statements of income
and of cash flows for the three-month period ended on such date,  certified by a
Responsible  Officer,  copies of which have  heretofore  been  furnished to each
Lender,  are complete and correct and present fairly the consolidated  financial
condition of the Borrower and its consolidated Subsidiaries as at such date, and
the consolidated  results of their operations and their  consolidated cash flows
for the  three-month  period  then  ended  (subject  to  normal  year-end  audit
adjustments). All such financial statements, including the related schedules and
notes thereto,  have been prepared in accordance with GAAP applied  consistently
throughout  the periods  involved  (except as approved  by such  accountants  or
Responsible Officer, as the case may be, and as disclosed therein).

         3.2 No Change.  No event or  circumstance  has  occurred or is existing
which has  resulted  in, or after  giving  effect  to the  reasonably  projected
outcome or effect thereof will result in, a Material Adverse Change.

         3.3 Corporate  Existence.  The Borrower (a) is duly organized,  validly
existing  and in  good  standing  under  the  laws  of the  jurisdiction  of its
organization, (b) has the corporate power and authority, and the legal right, to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently  engaged and (c) is duly qualified
as  a  foreign  corporation  and  in  good  standing  under  the  laws  of  each
jurisdiction where its ownership,  lease or operation of property or the conduct
of its  business  requires  such  qualification  except to the  extent  that the
failure to be so qualified would not result in a Material Adverse Change.
<PAGE>
         3.4  Corporate  Power;  Authorization;   Enforceable  Obligations.  The
Borrower has the corporate  power and authority,  and the legal right,  to make,
deliver and perform the Loan Documents and to borrow hereunder and has taken all
necessary  corporate  action  to  authorize  the  borrowings  on the  terms  and
conditions  of this  Agreement  and the Notes and to  authorize  the  execution,
delivery and performance of the Loan Documents.  No consent or authorization of,
filing  with,  notice  to or other act by or in  respect  of,  any  Governmental
Authority  or any other  Person is required in  connection  with the  borrowings
hereunder   or  with  the   execution,   delivery,   performance,   validity  or
enforceability  of the Loan Documents  except such as have been obtained or made
and are in full force and effect.  This  Agreement has been,  and each Note will
be, duly  executed  and  delivered  on behalf of the  Borrower.  This  Agreement
constitutes, and each Note when executed and delivered will constitute, a legal,
valid and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general  equitable  principles
(whether enforcement is sought by proceedings in equity or at law).

          3.5 No Legal Bar. The execution,  delivery and performance of the Loan
Documents, the borrowings hereunder and the use of the proceeds thereof will not
violate  the  Certificate  of  Incorporation  or By-Laws of the  Borrower or any
Requirement  of Law or  Contractual  Obligation of the Borrower or of any of its
Principal Domestic Subsidiaries and will not result in, or require, the creation
or  imposition  of any  Lien on any of its or  their  respective  properties  or
revenues  pursuant to any  provision of such  Certificate  of  Incorporation  or
By-Laws or any such Requirement of Law or Contractual Obligation.

         3.6 No Material Litigation. No litigation,  investigation or proceeding
of or before any  arbitrator  or  Governmental  Authority  is pending or, to the
knowledge of the Borrower,  overtly threatened by or against the Borrower or any
of its Principal Domestic Subsidiaries or against any of its or their respective
properties  or revenues (a) with respect to any of the Loan  Documents or any of
the  transactions  contemplated  hereby or thereby,  or (b) which  after  giving
effect to the reasonably  projected outcome or effect thereof,  will result in a
Material Adverse Change.

         3.7 No Default.  Neither the Borrower nor any of its Principal Domestic
Subsidiaries  is in  default  under or with  respect  to any of its  Contractual
Obligations  in any respect which has resulted in or, after giving effect to the
reasonably  projected  outcome  or effect  thereof,  will  result in, a Material
Adverse Change. No Default or Event of Default has occurred and is continuing.

         3.8  Ownership  of  Property;  Liens.  Each  of the  Borrower  and  its
Principal  Domestic  Subsidiaries  has good record and  marketable  title in fee
simple to, or a valid  leasehold  interest in, all its real  property,  and good
title to, or a valid leasehold interest in, all its other property,  and none of
such  property  is subject to any Lien except as  permitted  by  subsection  6.2
except to the extent that the absence of such title or  leasehold  interest  has
not resulted in, and after giving effect to the reasonably  projected outcome or
effect thereof, will not result in, a Material Adverse Change.

         3.9  Compliance  with  Law.  The  Borrower  and  each of its  Principal
Domestic  Subsidiaries  is in  compliance  with  all  Requirements  of  Law  and
Contractual  Obligations  except  to the  extent  that  the  failure  to  comply
therewith  has not  resulted  in, and,  after  giving  effect to the  reasonably
projected  outcome or effect  thereof,  will not  result in, a Material  Adverse
Change.
<PAGE>
         3.10  Taxes.   Each  of  the  Borrower  and  its   Principal   Domestic
Subsidiaries  has  filed or caused to be filed  all tax  returns  which,  to the
knowledge of the Borrower, are required to be filed and has paid all taxes shown
to be due and payable on said returns or on any  assessments  made against it or
any of its property and all other taxes,  fees or other charges imposed on it or
any of its property by any Governmental  Authority (other than any the amount or
validity of which are  currently  being  contested in good faith by  appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of the Borrower or its Principal Domestic Subsidiaries, as
the case may be) and, to the knowledge of the Borrower,  no tax Lien (other than
a Lien for Taxes that are not yet due and payable) has been filed,  with respect
to any such tax, fee or other  charge  which,  in any case,  has resulted in, or
after giving effect to the reasonably  projected  outcome or effect thereof will
result in, a Material Adverse Change.

         3.11 Federal Regulations.  No part of the proceeds of any Loans will be
used for  "purchasing"  or "carrying"  any "margin  stock" within the respective
meanings  of each  of the  quoted  terms  under  Regulation  U of the  Board  of
Governors of the Federal  Reserve  System as now and from time to time hereafter
in effect or for any purpose which violates the provisions of the Regulations of
such Board of Governors. If requested by any Lender or the Administrative Agent,
the  Borrower  will  furnish  to the  Administrative  Agent  and  each  Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
U-1 referred to in said Regulation U.

         3.12 ERISA.  Neither a  Reportable  Event nor an  "accumulated  funding
deficiency"  (within  the  meaning of Section  412 of the Code or Section 302 of
ERISA) nor any other event has occurred during the five-year period prior to the
date on which this  representation  is made or deemed  made with  respect to any
Plan which has resulted in or, after giving effect to the  reasonably  projected
outcome or effect thereof, will result in, a Material Adverse Change.

         3.13 Investment Company Act; Other Regulations.  The Borrower is not an
"investment  company",  or a company  "controlled"  by an "investment  company",
within the  meaning of the  Investment  Company  Act of 1940,  as  amended.  The
Borrower is not  subject to  regulation  under any  Federal or state  statute or
regulation  which  limits its  ability to incur  indebtedness  of the type being
incurred by it pursuant to this Agreement.

         3.14 Subsidiaries.  Set forth in Schedule II is a complete and accurate
list showing all Subsidiaries (other than inactive  Subsidiaries) existing as of
the  date of this  Agreement,  designating  certain  Subsidiaries  as  Principal
Domestic  Subsidiaries  and showing the  jurisdiction of  incorporation  of each
Principal  Domestic  Subsidiary and the percentage of the outstanding  shares of
Capital  Stock  of such  Subsidiaries  owned  (directly  or  indirectly)  by the
Borrower  or any  Subsidiary.  All of the  outstanding  Capital  Stock  of  each
Principal  Domestic  Subsidiary  has been  validly  issued,  is  fully  paid and
non-assessable  and is owned  by the  Borrower  or one or more of the  Principal
Domestic  Subsidiaries  free and clear of all  Liens.  Each  Principal  Domestic
Subsidiary is duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation.

         3.15  Purpose of Loans.  The proceeds of the Loans shall be used by the
Borrower  for its general  corporate  purposes,  including  working  capital and
acquisitions.
<PAGE>
         3.16  Environmental  Matters.  Except as  disclosed  in the  Borrower's
Annual  Report on Form 10-K for fiscal year 1996 or on Schedule III, to the best
knowledge of the Borrower,  the Borrower and each Principal Domestic  Subsidiary
has complied  with all  applicable  Environmental  Laws,  except for failures to
comply which have not resulted  in, and after  giving  effect to the  reasonably
projected  outcome or effect  thereof  will not  result  in, a Material  Adverse
Change.  Except as disclosed in the  Borrower's  Annual  Report on Form 10-K for
fiscal year 1996 or on  Schedule  III, to the best  knowledge  of the  Borrower,
there are no events,  conditions or circumstances involving the Borrower, any of
its  Principal  Domestic  Subsidiaries  or any  Subsidiaries  of such  Principal
Domestic   Subsidiaries   with  respect  to   management  of  any  Materials  of
Environmental  Concern,  environmental  pollution or  contamination  or employee
health  or  safety  which  have  resulted  in,  or after  giving  effect  to the
reasonably  projected  outcome  or effect  thereof  will  result  in, a Material
Adverse Change.


                  SECTION 4. CONDITIONS PRECEDENT


         4.1  Conditions  to   Effectiveness;   Closing  Date.  The  obligations
hereunder of each Lender and of the Administrative  Agent shall become effective
upon the satisfaction of the following conditions precedent:

             (a) Loan Documents.  The  Administrative  Agent shall have received
(i) this Agreement,  executed and delivered by a duly authorized  officer of the
Borrower and each Lender,  with a  counterpart  for each Lender and (ii) for the
account of each Lender,  each of the Notes conforming to the requirements hereof
and executed by a duly authorized officer of the Borrower.

             (b) Compliance  Certificate.  The  Administrative  Agent shall have
received,  with a counterpart  for each Lender,  a certificate  of the Borrower,
dated as of the date of this Agreement,  substantially in the form of Exhibit C,
with appropriate insertions and attachments, reasonably satisfactory in form and
substance to the  Administrative  Agent,  executed by the  President or any Vice
President and the Secretary or any Assistant Secretary of the Borrower.

             (c ) Corporate  Proceedings  of the  Borrower.  The  Administrative
Agent shall have  received,  with a counterpart  for each Lender,  a copy of the
resolutions,  in form and substance satisfactory to the Administrative Agent, of
the Board of Directors of the Borrower  authorizing (i) the execution,  delivery
and  performance of this Agreement and the other Loan Documents to which it is a
party and (ii) the borrowings contemplated hereunder, certified by the Secretary
or an  Assistant  Secretary  of the  Borrower as of the date of this  Agreement,
which certificate shall be in form and substance reasonably  satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified have
not been amended, modified, revoked or rescinded.
<PAGE>
             (d) Borrower Incumbency Certificate. The Administrative Agent shall
have  received,  with a  counterpart  for  each  Lender,  a  Certificate  of the
Borrower,  dated  as of the date of this  Agreement,  as to the  incumbency  and
signature of the officers of the Borrower executing any Loan Document reasonably
satisfactory in form and substance to the Administrative  Agent, executed by the
President or any Vice President and the Secretary or any Assistant  Secretary of
the Borrower.

             (e)  Corporate  Documents.  The  Administrative  Agent  shall  have
received,  with a counterpart  for each Lender,  true and complete copies of the
certificate of  incorporation  and by-laws of the Borrower,  certified as of the
date of this  Agreement as complete and correct  copies thereof by the Secretary
or an Assistant Secretary of the Borrower.

             (f) Fees.  The  Administrative  Agent shall have received such fees
payable on or before the  Closing  Date as have been agreed to in writing by the
Borrower and the Administrative Agent.

             (e) Legal Opinions.  The Administrative  Agent shall have received,
with a counterpart  for each Lender an executed legal opinion of (i) Debevoise &
Plimpton, special counsel to the Borrower,  substantially in the form of Exhibit
B-1  and  (ii)  Scott  A.  Crozier,  Esq.,  General  Counsel  to  the  Borrower,
substantially  in the form of Exhibit B-2. Such legal  opinions shall cover such
other matters incident to the transactions contemplated by this Agreement as the
Administrative Agent may reasonably require.

             (h)  Existing  Credit  Agreement.  Except for existing CAF Advances
listed  on  Schedule  IV,  the  Borrower  shall  have  paid in  full  all of its
indebtedness  and obligations  under the Existing Credit Agreement (or shall pay
such  indebtedness  and obligations with all or a portion of the proceeds of the
initial Loans  hereunder),  and all  commitments of the banks under the Existing
Credit Agreement shall have been cancelled.

             (i) Additional  Matters.  All other  documents and legal matters in
connection  with  the  transactions  contemplated  by this  Agreement  shall  be
reasonably  satisfactory in form and substance to the  Administrative  Agent and
its counsel. If the Administrative  Agent intends to request any documents other
than those described above in this subsection 4.1 in connection with the Closing
Date, it will make such request to the Borrower not later than three days before
the Closing Date.

          4.2  Conditions to Each Loan. The agreement of each Lender to make any
Loan requested to be made by it on any date (including,  without limitation, its
initial  Loan  whether  or not  made on the  Closing  Date)  is  subject  to the
satisfaction of the following conditions precedent:

             (a) Representations and Warranties. Each of the representations and
warranties made by the Borrower and the  Subsidiaries in or pursuant to the Loan
Documents  shall be true and correct in all material  respects on and as of such
date as if made on and as of such date (other than, in the case of any Loan made
after the Closing Date, the  representation and warranty contained in subsection
3.2).
<PAGE>
             (b) No Default.  No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the Loans  requested to
be made on such date.

             (c) Additional  Matters.  All corporate and other proceedings,  and
all  documents,  instruments  and other  legal  matters in  connection  with the
transactions  contemplated  by this Agreement and the other Loan Documents shall
be reasonably  satisfactory in form and substance to the  Administrative  Agent,
and the Administrative  Agent shall have received such other documents and legal
opinions  in  respect  of  any  aspect  or  consequence   of  the   transactions
contemplated hereby or thereby as it shall reasonably request.

Each borrowing by the Borrower  hereunder shall constitute a representation  and
warranty  by the  Borrower  as of the  date of such  Loan  that  the  conditions
contained in this subsection 4.2 have been satisfied.


                  SECTION 5. AFFIRMATIVE COVENANTS

         The Borrower hereby agrees that, so long as the  Commitments  remain in
effect, any Note remains  outstanding and unpaid or any other amount is owing to
any Lender or the Administrative Agent hereunder, the Borrower shall:

         5.1 Financial Statements. Furnish to each Lender:

             (a) as soon as  available,  but in any event  within 100 days after
the end of each fiscal year of the Borrower,  a copy of the consolidated balance
sheet of the Borrower and its  consolidated  subsidiaries  as at the end of such
year and the related consolidated statements of income and retained earnings and
of cash flows for such year,  setting forth in each case in comparative form the
figures for the  previous  year,  reported on without a "going  concern" or like
qualification  or exception,  or  qualification  arising out of the scope of the
audit, by Price Waterhouse or other independent  certified public accountants of
nationally recognized standing; and

             (b) as soon as  available,  but in any event not later than 55 days
after the end of each of the first three  quarterly  periods of each fiscal year
of the Borrower,  the unaudited  consolidated  balance sheet of the Borrower and
its  consolidated  subsidiaries  as at the end of such  quarter  and the related
unaudited  consolidated  statements of income and retained  earnings and of cash
flows of the Borrower and its consolidated subsidiaries for such quarter and the
portion of the fiscal year  through the end of such  quarter,  setting  forth in
each case in comparative form the figures for the previous year,  certified by a
Responsible  Officer as being fairly stated in all material respects (subject to
normal year-end audit adjustments);

all such  financial  statements  shall be complete  and correct in all  material
respects and shall be prepared in reasonable  detail and in accordance with GAAP
applied  consistently  throughout the periods  reflected  therein and with prior
periods (except as approved by such accountants or officer,  as the case may be,
and disclosed therein).
<PAGE>
         5.2 Certificates; Other Information. Furnish to each Lender:

             (a)  concurrently  with the  delivery of the  financial  statements
referred to in subsection  5.1(a),  a certificate of the  independent  certified
public accountants reporting on such financial statements stating that in making
the examination  necessary  therefor no knowledge was obtained of any Default or
Event of Default (including calculations  demonstrating  compliance with Section
6.1), except as specified in such certificate;

             (b)  concurrently  with the  delivery of the  financial  statements
referred to in  subsections  5.1(a) and 5.1(b),  a certificate  of a Responsible
Officer  stating that,  to the best of such  Officer's  knowledge,  the Borrower
during such period has  observed or  performed  all of its  covenants  and other
agreements,  and satisfied every  condition,  contained in this Agreement and in
the Notes to be observed,  performed or satisfied by it (including  calculations
demonstrating  compliance  with Section 6.1), and that such Officer has obtained
no  knowledge  of any Default or Event of Default  except as  specified  in such
certificate;

             ( c)  within  ten  days  after  the same are  sent,  copies  of all
financial  statements and reports which the Borrower sends to its  stockholders,
and within ten days after the same are filed, copies of all financial statements
and periodic financial reports which the Borrower may make to, or file with, the
Securities  and Exchange  Commission or any successor or analogous  Governmental
Authority; and

             (d) promptly,  such additional  financial and other  information as
any Lender may from time to time reasonably request.

         5.3 Payment of Obligations. Pay, discharge or otherwise satisfy, in all
material  respects,  and  cause  its  Principal  Domestic  Subsidiaries  to pay,
discharge or otherwise satisfy, in all material respects,  at or before maturity
or otherwise in accordance with reasonable business practices,  all its material
obligations  of whatever  nature;  provided,  that the Borrower or its Principal
Domestic  Subsidiaries,  as the case may be, may contest its obligations in good
faith by  appropriate  proceedings if it maintains  reserves in conformity  with
GAAP with respect thereto.

         5.4 Conduct of  Business  and  Maintenance  of  Existence.  Continue to
engage  in  businesses  of the same  general  types as now  conducted  by it and
preserve,  renew and keep in full force and effect its  corporate  existence and
take all  reasonable  action to maintain all rights,  privileges  and franchises
necessary or desirable in the normal conduct of its business except that nothing
in this  subsection  5.4 shall prevent (a) the Borrower from  discontinuing  any
business if, in the opinion of the Board of Directors, such discontinuance is in
the best  interests  of the  Borrower  and not  disadvantageous  in any material
respect  to any  Lender  or the  holder  of any  Note  or (b)  the  abandonment,
modification  or  termination  of  rights,  privileges  and  franchises  of  the
Borrower,  if, in the  opinion  of the  Board of  Directors,  such  abandonment,
modification  or  termination  is in the best  interests of the Borrower and not
disadvantageous in any material respect to any Lender or the holder of any Note.
<PAGE>
         5.5 Compliance With Laws, etc. Use commercially  reasonable  efforts to
comply,  and to cause each  Principal  Domestic  Subsidiary  to  comply,  in all
material  respects  with all  Requirements  of Law and  Contractual  Obligations
except to the extent  that  failure to so comply  would not,  in the  reasonable
judgment of the Borrower,  be expected to result in a Material  Adverse  Change,
provided,  however,  that  neither  the  Borrower  nor  any  Principal  Domestic
Subsidiary  shall  be  required  to  comply  with  any  Requirements  of  Law or
Contractual Obligations if the applicability or validity thereof shall currently
be contested in good faith by appropriate proceedings.

         5.6 Maintenance of Property;  Insurance.  Keep all Principal Properties
in good working order and condition  except that nothing in this  subsection 5.6
shall prevent the Borrower or any of its Principal  Domestic  Subsidiaries  from
discontinuing  the operation and maintenance of any of its Principal  Properties
if,  in  the  opinion  of  the  Board  of  Directors  of  the   Borrower,   such
discontinuance  is in the best interest of the Borrower and not  disadvantageous
in any material respect to any Lender or the holder of any Note;  maintain,  and
cause each Principal Domestic Subsidiary to maintain, with financially sound and
reputable  insurance  companies  insurance  on all its  property  of a character
usually insured by companies similarly situated and operating like properties in
at least such  amounts and  against at least such risks as are  usually  insured
against in the same general  area by companies  engaged in the same or a similar
business;  and furnish to each Lender, upon written request, full information as
to the insurance carried. The Borrower and any Principal Domestic Subsidiary may
self-insure  (which term shall  include  insurance  by an  affiliated  insurance
company)  against any of the risks  required to be insured  against  pursuant to
this subsection 5.6 so long as such self-insurance is not excessive in the light
of self-insurance by companies similarly situated and operating like properties,
provided,  in the case of any  insurance  required  by law,  that  such  risk is
permitted  to be  self-insured  under  applicable  law and  such  self-insurance
complies with applicable law.

         5.7 Inspection of Property; Books and Records;  Discussions.  Keep, and
cause each Principal  Domestic  Subsidiary to keep,  proper books of records and
account in which full,  true and correct entries in conformity with GAAP and all
Requirements  of Law shall be made of all dealings and  transactions in relation
to its business and  activities;  and permit,  and cause any Principal  Domestic
Subsidiary  to permit,  representatives  of any  Lender,  at such  Lender's  own
expense,  to visit  and  inspect  any of its  properties  and  examine  and make
abstracts from any of its books and records at any reasonable  time and as often
as may reasonably be desired and, after  reasonable  notice to the Borrower,  to
discuss the business,  operations,  properties and financial and other condition
of the  Borrower  and its  Principal  Domestic  Subsidiaries  with  officers and
employees of the Borrower and its Principal  Domestic  Subsidiaries and with its
independent certified public accountants.

         5.8 Notices.  Promptly give notice to the Administrative Agent and each
Lender of:

             (a) the occurrence of any Default or Event of Default;

             (b) any (i)  default  or event of  default  under  any  Contractual
Obligation  of the  Borrower  or any of its  Subsidiaries  or  (ii)  litigation,
investigation  or proceeding which may exist at any time between the Borrower or
any of its Subsidiaries and any Governmental  Authority,  unless in either case,
the Borrower has determined that such event has not resulted in, or after giving
effect to the reasonably projected outcome or effect thereof will not result in,
a Material Adverse Change; and
<PAGE>
             (c ) the  following  events,  as soon as possible  and in any event
within 30 days after the Borrower  knows or has reason to know thereof:  (i) the
occurrence  or  reasonably  expected  occurrence  of any  Reportable  Event with
respect to any Plan, a failure to make any required  contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any  withdrawal  from, or
the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii)
the  institution of proceedings or the taking of any other action by the PBGC or
the Borrower or any Commonly  Controlled Entity or any  Multiemployer  Plan with
respect to the withdrawal from, or the terminating, Reorganization or Insolvency
of,  any  Plan  which  with  respect  to the  events  in  clause  (i)  or  (ii),
individually  or in the  aggregate,  could  reasonably be expected to involve an
amount of $15,000,000 or more.

Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible  Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.


                  SECTION 6. NEGATIVE COVENANTS

          The Borrower hereby agrees that, so long as the Commitments  remain in
effect, any Note remains  outstanding and unpaid or any other amount is owing to
any Lender or the Administrative Agent hereunder, the Borrower shall not:

         6.1 Financial Condition Covenants.

             (a) Maintenance of Tangible Net Worth. Permit Consolidated Tangible
Net Worth at any time to be less than $1,100,000,000.

             (b) Indebtedness for Money Borrowed to Total Capitalization. Permit
the  ratio  of  Indebtedness   for  Money  Borrowed  of  the  Borrower  and  its
consolidated subsidiaries, determined on a consolidated basis in accordance with
GAAP, to Total Capitalization at any time to be greater than 0.5:1.

         6.2 Limitation on Mortgages, Sale and Leaseback, etc.

             (a) The  Borrower  will  not,  nor  will it  permit  any  Principal
Domestic  Subsidiary  to, (i) issue,  assume or guarantee any  Indebtedness  for
Money  Borrowed,  if such  Indebtedness  for  Money  Borrowed  is  secured  by a
mortgage,  pledge,  security  interest or lien (any mortgage,  pledge,  security
interest  or lien being  hereinafter  in this  subsection  6.2  referred to as a
"mortgage" or  "mortgages")  upon,  or (ii)  directly or  indirectly  secure any
outstanding  Indebtedness  for Money  Borrowed by a mortgage upon, any Principal
Property  now  owned  or  hereinafter  acquired;  provided,  however,  that  the
foregoing restriction shall not apply to:
<PAGE>
                  (i) mortgages on any Principal Property acquired,  constructed
or improved by the Borrower or any Principal Domestic  Subsidiary after the date
of this Agreement which are created or assumed contemporaneously with, or within
90 days  after,  such  acquisition,  construction  or  improvement  to secure or
provide for the payment of any part of the  purchase  price of such  property or
the cost of such  construction  or  improvement  incurred after the date of this
Agreement,  or, in  addition  to  mortgages  contemplated  by clause (ii) below,
mortgages on any Principal Property existing at the time of acquisition thereof,
provided, that in the case of any such acquisition,  construction or improvement
the mortgage shall not apply to any property  theretofore  owned by the Borrower
or any  Principal  Domestic  Subsidiary,  other  than in the  case  of any  such
construction or improvement,  any theretofore  unimproved real property on which
the property so constructed, or the improvement, is located;

                  (ii)  mortgages  on any  Principal  Property  acquired  from a
corporation  which is merged with or into the  Borrower or a Principal  Domestic
Subsidiary;

                  (iii) mortgages to secure Indebtedness for Money Borrowed of a
Principal  Domestic  Subsidiary to the Borrower or to another Principal Domestic
Subsidiary;

                  (iv) any  extension,  renewal or  replacement  (or  successive
extensions,  renewals or  replacements),  in whole or in part,  of any  mortgage
referred to in the foregoing clauses (i) to (iii), inclusive; provided, however,
that the principal  amount of  Indebtedness  for Money Borrowed  secured thereby
shall not exceed the  principal  amount of  Indebtedness  for Money  Borrowed so
secured at the time of such  extension,  renewal or  replacement,  and that such
extension,  renewal  or  replacement  shall  be  limited  to all or  part of the
property  which  secured the  mortgage so  extended,  renewed or replaced  (plus
improvements on such property); and

                  (v)  the   issuance,   assumption   or  guarantee  of  secured
Indebtedness  for  Money  Borrowed  which  would  otherwise  be  subject  to the
foregoing  restrictions of this subsection  6.2(a) in an aggregate amount which,
together with all other such Indebtedness for Money Borrowed of the Borrower and
its Principal Domestic Subsidiaries and the Attributable Debt in respect of Sale
and  Lease-Back  Transactions  (other  than  Sale  and  Lease-Back  Transactions
permitted because the Borrower would be entitled to incur Indebtedness for Money
Borrowed  secured by a mortgage  on the  property  to be leased  pursuant to the
provisions  of  this   subsection   6.2  and  other  than  Sale  and  Lease-Back
Transactions  the  proceeds of which have been  applied in  accordance  with the
limitations on Sale and Lease-Back  Transactions set forth in subsection  6.2(c)
below) does not at the time exceed 10% of Consolidated Tangible Net Worth.

             (b) For the purposes of this subsection 6.2, the following types of
transactions, among others, shall not be deemed to create Indebtedness for Money
Borrowed secured by a mortgage:

                  (i) Production Payments; and

                  (ii)  mortgages in favor of the United States of America,  any
of its  territories or  possessions,  or any State thereof,  or any  department,
agency,  instrumentality  or  political  subdivision  of  any  thereof,  or  any
department,  agency or  instrumentality  of any such political  subdivision,  to
secure partial  progress,  advance or other payments pursuant to any contract or
statute or to secure any indebtedness  incurred for the purpose of financing all
or any part of the purchase price or the cost of  constructing  or improving the
property subject to such mortgages.
<PAGE>
             (c ) The  Borrower  will  not,  nor will it  permit  any  Principal
Domestic Subsidiary to, enter into any Sale and Lease-Back  Transaction,  unless
the  proceeds of such sale or transfer  are at least equal to the fair value (as
determined  by the Board of  Directors)  of such  property  and  either  (i) the
Borrower  or such  Principal  Domestic  Subsidiary  would be  entitled  to incur
Indebtedness  for  Borrowed  Money  secured by a mortgage on the  property to be
leased pursuant to this  subsection 6.2 or (ii) the Borrower  shall,  and in any
such case the Borrower covenants that it will, apply an amount equal to the fair
value (as determined by the Board of Directors) of the property so leased to the
retirement  (other  than  any  mandatory  retirement),  within  90  days  of the
effective date of any such Sale and Lease-Back Transaction,  of Indebtedness for
Money Borrowed of the Borrower or such Principal  Domestic  Subsidiary  which by
its terms matures at, or is extendible or renewable at the option of the obligor
to, a date more  than  twelve  months  after  the date of the  creation  of such
Indebtedness for Money Borrowed and which ranks prior to or on a parity with the
Loans; provided,  however that the Borrower or any Principal Domestic Subsidiary
may enter into any Sale and  Lease-Back  Transaction  which would  otherwise  be
subject to the foregoing restrictions of this subsection 6.2(c) if the amount of
the  Attributable  Debt in respect of such Sale and Lease-Back  Transactions for
such transaction,  together with all secured  Indebtedness for Money Borrowed of
the Borrower and its Principal Domestic  Subsidiaries and all other Attributable
Debt in respect of Sale and Lease-Back Transactions existing at such time (other
than Sale and Lease-Back  Transactions  permitted  because the Borrower would be
entitled to incur  Indebtedness  for Money Borrowed secured by a mortgage on the
property  to be leased  and  other  than Sale and  Lease-Back  Transactions  the
proceeds of which have been applied in  accordance  with the clause (ii) of this
subsection), does not at the time exceed 10% of Consolidated Tangible Net Worth.


                  SECTION 7. EVENTS OF DEFAULT

         If any of the following events shall occur and be continuing:

             (a) The Borrower  shall fail to pay any  principal of any Note when
due in accordance  with the terms thereof or hereof;  or the Borrower shall fail
to pay any interest on any Note, or any other amount payable  hereunder,  within
five  Business  Days after any such  interest  or other  amount  becomes  due in
accordance with the terms thereof or hereof; or

             (b) Any  representation  or  warranty  made or  deemed  made by the
Borrower herein or which is contained in any certificate,  document or financial
or other statement  furnished by it at any time under or in connection with this
Agreement shall prove to have been incorrect in any material respect on or as of
the date made or deemed made; or

             (c ) The Borrower shall default in the observance or performance of
any agreement contained in Section 6; or

             (d) The Borrower  shall default in the observance or performance of
any other  agreement  contained  in this  Agreement  (other  than as provided in
paragraphs  (a) through (c) of this  Section),  and such default shall  continue
unremedied  for a period of 30 days after  notice  thereof has been given to the
Borrower in accordance with this Agreement; or
<PAGE>
             (e) The  Borrower  or any of its  Principal  Domestic  Subsidiaries
shall (i) default in any payment of principal of or interest of any Indebtedness
for Money  Borrowed  (other than the Notes),  beyond the period of grace (not to
exceed 30 days),  if any,  provided in the  instrument or agreement  under which
such  Indebtedness  for Money Borrowed was created (except for any such payments
on account of Indebtedness  for Money Borrowed in an aggregate amount at any one
time of up to $20,000,000);  or (ii) default in the observance or performance of
any other  agreement or condition  relating to any such  Indebtedness  for Money
Borrowed (except for any such  Indebtedness in an aggregate  principal amount at
any one time of up to  $20,000,000)  or contained in any instrument or agreement
evidencing,  securing  or  relating  thereto,  or any other event shall occur or
condition  exist,  the effect of which default or other event or condition is to
cause,  or to  permit  the  holder or  holders  of such  Indebtedness  for Money
Borrowed  (or a trustee or agent on behalf of such  holder or holders) to cause,
with the giving of notice if required,  such  Indebtedness for Money Borrowed to
become due prior to its stated maturity; or

             (f) (i) The Borrower or any of its Principal Domestic  Subsidiaries
shall  commence any case,  proceeding  or other action (A) under any existing or
future law of any  jurisdiction,  domestic or foreign,  relating to  bankruptcy,
insolvency,  reorganization  or relief of debtors,  seeking to have an order for
relief  entered  with respect to it, or seeking to  adjudicate  it a bankrupt or
insolvent,  or  seeking  reorganization,  arrangement,  adjustment,  winding-up,
liquidation,  dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator
or  other  similar  official  for it or for all or any  substantial  part of its
assets, or the Borrower or any of its Principal Domestic Subsidiaries shall make
a general  assignment for the benefit of its  creditors;  or (ii) there shall be
commenced against the Borrower or any of its Principal Domestic Subsidiaries any
case,  proceeding  or other  action of a nature  referred to in clause (i) above
which (A)  results in the entry of an order for relief or any such  adjudication
or appointment or (B) remains undismissed, undischarged or unbonded for a period
of 60 days; or (iii) there shall be commenced against the Borrower or any of its
Principal  Domestic  Subsidiaries  any case,  proceeding or other action seeking
issuance of a warrant of  attachment,  execution,  distraint or similar  process
against all or any substantial  part of its assets which results in the entry of
an order for any such relief which shall not have been vacated,  discharged,  or
stayed or bonded pending  appeal within 60 days from the entry thereof;  or (iv)
the Borrower or any of its Principal Domestic Subsidiaries shall take any action
in furtherance  of, or indicating its consent to,  approval of, or  acquiescence
in, any of the acts set forth in clause (i),  (ii),  or (iii) above;  or (v) the
Borrower or any of its Principal  Domestic  Subsidiaries shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
<PAGE>
             (g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated  funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of the  Borrower or any Commonly
Controlled  Entity,  (iii) a  Reportable  Event shall occur with  respect to, or
proceedings  shall commence to have a trustee  appointed,  or a trustee shall be
appointed,  to administer  or to  terminate,  any Single  Employer  Plan,  which
Reportable  Event or commencement of proceedings or appointment of a trustee is,
in the  reasonable  opinion  of the  Required  Lenders,  likely to result in the
termination  of such Plan for  purposes  of Title IV of ERISA,  (iv) any  Single
Employer  Plan  shall  terminate  for  purposes  of Title IV of  ERISA,  (v) the
Borrower or any Commonly  Controlled Entity shall, or in the reasonable  opinion
of the Required  Lenders is likely to, incur any liability in connection  with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other event or  condition  shall occur or exist with respect to a Plan;
and in each case in clauses (i) through  (vi)  above,  such event or  condition,
together with all other such events or  conditions,  if any, has resulted in, or
after giving effect to the reasonably  projected  outcome or effect thereof will
result in, a Material Adverse Change; or

             (h) One or more  judgments or decrees shall be entered  against the
Borrower  or  any  of  its  Principal  Domestic  Subsidiaries  involving  in the
aggregate a liability (not paid or fully covered by insurance) of $30,000,000 or
more, and all such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 60 days from the entry thereof; or
<PAGE>
             (i) This Agreement or any of the Notes shall, at any time while any
Note shall  remain  unpaid or any Lender  shall have any  Commitment  hereunder,
cease to be in full force and effect or shall be  declared  to be null and void,
or the validity or enforceability thereof shall be contested by the Borrower, or
the Borrower shall deny that it has any or further liability or obligation under
this Agreement or any of the Notes;

then, and in any such event, (A) if such event is an Event of Default  specified
in clause  (i) or (ii) of  paragraph  (f) above with  respect  to the  Borrower,
automatically  the  Commitments  shall  immediately   terminate  and  the  Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement  and the Notes shall  immediately  become due and payable,  and (B) if
such  event is any  other  Event of  Default,  either  or both of the  following
actions  may be  taken:  (i) with  the  consent  of the  Required  Lenders,  the
Administrative  Agent may,  or upon the  request of the  Required  Lenders,  the
Administrative Agent shall, by notice to the Borrower declare the Commitments to
be terminated forthwith,  whereupon the Commitments shall immediately terminate;
and (ii) with the consent of the Required Lenders, the Administrative Agent may,
or upon the request of the Required Lenders,  the Administrative Agent shall, by
notice to the  Borrower,  declare the Loans  hereunder  (with  accrued  interest
thereon) and all other  amounts  owing under this  Agreement and the Notes to be
due and payable  forthwith,  whereupon the same shall immediately become due and
payable.  Except  as  expressly  provided  above in this  Section,  presentment,
demand, protest and all other notices of any kind are hereby expressly waived.


                  SECTION 8. THE ADMINISTRATIVE AGENT

         8.1 Appointment. Each Lender hereby irrevocably designates and appoints
The Chase Manhattan Bank as the  Administrative  Agent of such Lender under this
Agreement and the other Loan Documents,  and each Lender irrevocably  authorizes
The Chase Manhattan Bank, as the  Administrative  Agent for such Lender, to take
such action on its behalf under the  provisions of this  Agreement and the other
Loan  Documents  and to  exercise  such  powers and  perform  such duties as are
expressly  delegated to the Administrative  Agent by the terms of this Agreement
and the other Loan Documents,  together with such other powers as are reasonably
incidental  thereto.  Notwithstanding any provision to the contrary elsewhere in
this  Agreement,   the  Administrative  Agent  shall  not  have  any  duties  or
responsibilities,  except those  expressly  set forth  herein,  or any fiduciary
relationship   with  any   Lender,   and  no   implied   covenants,   functions,
responsibilities,  duties,  obligations or  liabilities  shall be read into this
Agreement  or  any  other  Loan   Document  or  otherwise   exist   against  the
Administrative Agent.
<PAGE>
         8.2 Delegation of Duties. The  Administrative  Agent may execute any of
its duties  under this  Agreement  and the other  Loan  Documents  by or through
agents  or  attorneys-in-fact  and  shall  be  entitled  to  advice  of  counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be  responsible  for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.

         8.3 Exculpatory Provisions. Neither the Administrative Agent nor any of
its officers,  directors,  employees,  agents,  attorneys-in-fact  or Affiliates
shall be (i) liable for any action  lawfully  taken or omitted to be taken by it
or such Person  under or in  connection  with this  Agreement  or any other Loan
Document  (except  for its or such  Person's  own gross  negligence  or  willful
misconduct)  or (ii)  responsible  in any manner to any of the  Lenders  for any
recitals, statements,  representations or warranties made by the Borrower or any
officer thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or  received  by the  Administrative  Agent under or in  connection  with,  this
Agreement or any other Loan Document or for the value, validity,  effectiveness,
genuineness, enforceability or sufficiency of this Agreement or the Notes or any
other  Loan  Document  or  for  any  failure  of the  Borrower  to  perform  its
obligations hereunder or thereunder. The Administrative Agent shall not be under
any  obligation to any Lender to ascertain or to inquire as to the observance or
performance  of any of the  agreements  contained  in, or  conditions  of,  this
Agreement or any other Loan  Document,  or to inspect the  properties,  books or
records of the Borrower.

         8.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled  to rely,  and  shall be fully  protected  in  relying,  upon any Note,
writing, resolution, notice, consent, certificate,  affidavit, letter, telecopy,
statement,  order or other document or conversation believed by it to be genuine
and  correct  and to have  been  signed,  sent or made by the  proper  Person or
Persons and upon advice and  statements  of legal  counsel  (including,  without
limitation, counsel to the Borrower),  independent accountants and other experts
selected by the  Administrative  Agent.  The  Administrative  Agent may deem and
treat the  payee of any Note as the  owner  thereof  for all  purposes  unless a
written  notice of assignment,  negotiation or transfer  thereof shall have been
filed with the  Administrative  Agent. The  Administrative  Agent shall be fully
justified in failing or refusing to take any action under this  Agreement or any
other Loan Document  unless it shall first receive such advice or concurrence of
the Required Lenders as it deems appropriate or it shall first be indemnified to
its  satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Administrative  Agent shall in all cases be fully protected in acting, or in
refraining  from acting,  under this  Agreement and the Notes and the other Loan
Documents in accordance with a request of the Required Lenders, and such request
and any action  taken or failure to act pursuant  thereto  shall be binding upon
all the Lenders and all future holders of the Notes.
<PAGE>
         8.5 Notice of Default.  The Administrative Agent shall not be deemed to
have  knowledge or notice of the  occurrence  of any Default or Event of Default
hereunder unless the  Administrative  Agent has received notice from a Lender or
the Borrower  referring to this  Agreement,  describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative  Agent receives such a notice, the Administrative Agent shall
give notice  thereof to the Lenders.  The  Administrative  Agent shall take such
action with respect to such  Default or Event of Default as shall be  reasonably
directed  by  the  Required   Lenders;   provided  that  unless  and  until  the
Administrative  Agent shall have received such  directions,  the  Administrative
Agent may (but shall not be  obligated  to) take such  action,  or refrain  from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.

         8.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
expressly  acknowledges  that  neither the  Administrative  Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any  representations  or warranties to it and that no act by the  Administrative
Agent  hereinafter  taken,  including any review of the affairs of the Borrower,
shall  be  deemed  to  constitute   any   representation   or  warranty  by  the
Administrative Agent to any Lender. Each Lender represents to the Administrative
Agent that it has,  independently  and without reliance upon the  Administrative
Agent or any other Lender, and based on such documents and information as it has
deemed  appropriate,  made  its own  appraisal  of and  investigation  into  the
business,   operations,    property,   financial   and   other   condition   and
creditworthiness  of the  Borrower  and made its own  decision to make its Loans
hereunder and enter into this  Agreement.  Each Lender also  represents  that it
will,  independently and without reliance upon the  Administrative  Agent or any
other  Lender,  and based on such  documents  and  information  as it shall deem
appropriate at the time,  continue to make its own credit  analysis,  appraisals
and decisions in taking or not taking action under this  Agreement and the other
Loan Documents,  and to make such  investigation as it deems necessary to inform
itself as to the business,  operations,  property, financial and other condition
and  creditworthiness  of the  Borrower.  Except for notices,  reports and other
documents   expressly   required  to  be   furnished   to  the  Lenders  by  the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or  responsibility  to provide any Lender  with any credit or other  information
concerning  the  business,   operations,   property,   condition  (financial  or
otherwise),  prospects or  creditworthiness  of the Borrower which may come into
the possession of the  Administrative  Agent or any of its officers,  directors,
employees, agents, attorneys-in-fact or Affiliates.

         8.7 Indemnification.  The Lenders agree to indemnify the Administrative
Agent in its capacity as such (to the extent not  reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably  according to
their  respective  Commitment  Percentages  in  effect  on  the  date  on  which
indemnification  is sought  under this  subsection  (or, if  indemnification  is
sought after the date upon which the  Commitments  shall have terminated and the
Loans shall have been paid in full,  ratably in accordance with their Commitment
Percentages  immediately  prior  to such  date),  from and  against  any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or  disbursements  of any kind whatsoever which may at any time
(including,  without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the  Administrative  Agent in any
way  relating  to or  arising  out of  this  Agreement,  any of the  other  Loan
Documents or any documents  contemplated  by or referred to herein or therein or
the transactions  contemplated  hereby or thereby or any action taken or omitted
by the  Administrative  Agent under or in connection  with any of the foregoing;
provided  that no Lender  shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses  or  disbursements  resulting  solely  from the  Administrative
Agent's  gross  negligence  or  willful  misconduct.   The  agreements  in  this
subsection  shall survive the payment of the Notes and all other amounts payable
hereunder.
<PAGE>
         8.8 Administrative Agent in Its Individual Capacity. The Administrative
Agent and its Affiliates  may make loans to, accept  deposits from and generally
engage in any kind of business  with the  Borrower as though the  Administrative
Agent  were not the  Administrative  Agent  hereunder  and under the other  Loan
Documents.  With  respect to its Loans made or renewed by it and any Note issued
to it, the Administrative Agent shall have the same rights and powers under this
Agreement  and the other Loan  Documents as any Lender and may exercise the same
as though it were not the  Administrative  Agent,  and the  terms  "Lender"  and
"Lenders" shall include the Administrative Agent in its individual capacity.

         8.9 Successor Administrative Agent. The Administrative Agent may resign
as  Administrative   Agent  upon  10  days'  notice  to  the  Lenders.   If  the
Administrative  Agent shall resign as Administrative  Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor  agent for the Lenders,  which  successor agent shall be
approved by the Borrower,  whereupon such  successor  agent shall succeed to the
rights,   powers  and  duties  of  the   Administrative   Agent,  and  the  term
"Administrative  Agent"  shall mean such  successor  agent  effective  upon such
appointment and approval,  and the former Administrative  Agent's rights, powers
and duties as  Administrative  Agent shall be  terminated,  without any other or
further  act or deed on the part of such former  Administrative  Agent or any of
the parties to this  Agreement  or any holders of the Notes.  After any retiring
Administrative  Agent's  resignation as Administrative  Agent, the provisions of
this subsection shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was  Administrative  Agent under this  Agreement and the
other Loan Documents.


                  SECTION 9. MISCELLANEOUS
<PAGE>
         9.1 Amendments and Waivers.  Neither this Agreement,  any Note, nor any
terms  hereof or thereof may be  amended,  supplemented  or  modified  except in
accordance with the provisions of this subsection. The Required Lenders may, or,
with the written consent of the Required Lenders,  the Administrative Agent may,
from  time to time,  (a)  enter  into  with  the  Borrower  written  amendments,
supplements or  modifications  hereto and to the Notes for the purpose of adding
any  provisions  to this  Agreement,  the Notes or the other Loan  Documents  or
changing in any manner the rights of the Lenders or of the Borrower hereunder or
thereunder or (b) waive, on such terms and conditions as the Required Lenders or
the  Administrative  Agent, as the case may be, may specify in such  instrument,
any of the  requirements  of this Agreement or the Notes or any Default or Event
of Default and its consequences;  provided,  however, that no such waiver and no
such amendment, supplement or modification shall (i) reduce the amount or extend
the scheduled  date of maturity of any Note or of any  installment  thereof,  or
reduce the stated rate of any  interest or fee payable  hereunder  or extend the
scheduled  date of any  payment  thereof  or  increase  the amount or extend the
expiration date of any Lender's Commitment,  in each case without the consent of
each Lender affected  thereby,  or (ii) amend,  modify or waive any provision of
this subsection or reduce the percentage specified in the definition of Required
Lenders,  or consent to the assignment or transfer by the Borrower of any of its
rights and  obligations  under this Agreement and the other Loan  Documents,  in
each case without the written consent of all the Lenders, or (iii) amend, modify
or waive any  provision  of Section 8 without  the  written  consent of the then
Administrative  Agent.  Any such waiver and any such  amendment,  supplement  or
modification  shall  apply  equally to each of the  Lenders and shall be binding
upon the Borrower,  the Lenders, the Administrative Agent and all future holders
of the Notes.  In the case of any  waiver,  the  Borrower,  the  Lenders and the
Administrative  Agent  shall be  restored to their  former  position  and rights
hereunder and under the outstanding Notes and any other Loan Documents,  and any
Default  or  Event  of  Default  waived  shall be  deemed  to be  cured  and not
continuing;  but no such waiver shall extend to any  subsequent or other Default
or Event of Default, or impair any right consequent thereon.

          9.2  Notices.  All  notices,  requests  and  demands  to or  upon  the
respective  parties  hereto to be effective  shall be in writing  (including  by
telecopy),  and, unless otherwise expressly provided herein,  shall be deemed to
have been duly given or made when  delivered by hand,  or three days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received,   addressed   as  follows  in  the  case  of  the   Borrower  and  the
Administrative  Agent,  and as set forth in  Schedule I in the case of the other
parties  hereto,  or to such other  address as may be hereafter  notified by the
respective parties hereto and any future holders of the Notes:
<PAGE>
       The Borrower      Phelps Dodge Corporation
                         2600 North Central Avenue
                         Phoenix, Arizona  85004-3014
                         Attention:  Rodney A. Prokop
                         Telecopy:  (602) 234-4887

        The Administrative
            Agent:       Chase Agency Services Corp.
                         One Chase Manhattan Plaza
                         New York, New York  10081
                         Reference: Phelps Dodge Corporation
                         Attention: Donna Schurmann or
                         Laura Rebecca
                         Telecopy:  (212) 552-7490

         with a copy to: The Chase Manhattan Bank
                         One Chase Manhattan Plaza
                         New York, New York  10081
                         Attention: James Ramage
                         Telecopy:  (212) 552-7784

provided that any notice,  request or demand to or upon the Administrative Agent
or the Lenders  pursuant to  subsection  2.3,  2.4,  2.6, 2.7, 2.8, 2.13 or 2.20
shall not be effective until received.

          9.3 No Waiver;  Cumulative  Remedies.  No failure to  exercise  and no
delay in exercising,  on the part of the Administrative Agent or any Lender, any
right,  remedy,  power or privilege  hereunder or under the other Loan Documents
shall operate as a waiver thereof;  nor shall any single or partial  exercise of
any right,  remedy,  power or privilege  hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights,  remedies,  powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

         9.4 Survival of Representations and Warranties. All representations and
warranties  made  hereunder,  in the other Loan  Documents  and in any document,
certificate or statement  delivered  pursuant  hereto or in connection  herewith
shall survive the execution and delivery of this Agreement and the Notes and the
making of the Loans hereunder.
<PAGE>
         9.5 Payment of Expenses and Taxes; Indemnities. The Borrower agrees (a)
to pay or reimburse the Administrative Agent for all its out-of-pocket costs and
expenses incurred in connection with the development,  preparation and execution
of, and any amendment,  supplement or modification to, this Agreement, the Notes
and any other documents  prepared in connection  herewith or therewith,  and the
consummation  and  administration  of the transactions  contemplated  hereby and
thereby, including, without limitation, the fees and disbursements of counsel to
the  Administrative  Agent,  (b)  to  pay  or  reimburse  each  Lender  and  the
Administrative  Agent for all its costs and expenses incurred in connection with
the enforcement or  preservation  of any rights under this Agreement,  the Notes
and any  such  other  documents,  including,  without  limitation,  the fees and
disbursements of counsel to the Administrative Agent and to the several Lenders,
and (c) to pay,  indemnify,  and hold each Lender and the  Administrative  Agent
harmless from, any and all recording and filing fees and any and all liabilities
with  respect  to, or  resulting  from any delay in  paying,  stamp,  excise and
similar  taxes,  if any,  which may be  payable or  determined  to be payable in
connection  with the execution and delivery of, or any amendment,  supplement or
modification  of,  or any  waiver  or  consent  under  or in  respect  of,  this
Agreement,  the Notes and any such other documents,  and (d) to pay,  indemnify,
and hold each Lender and the Administrative  Agent harmless from and against any
and all other liabilities,  obligations,  losses, damages,  penalties,  actions,
judgments,  suits,  costs,  expenses  or  disbursements  of any  kind or  nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration  of this  Agreement,  the  Notes  and any such  other  documents,
including,  without  limitation,  any of the foregoing relating to the violation
of,  noncompliance  with or liability under, any Environmental Law applicable to
the  operations  of  the  Borrower,  any of its  Subsidiaries  or any  Principal
Property (all the foregoing in this clause (d),  collectively,  the "indemnified
liabilities"), provided, that the Borrower shall have no obligation hereunder to
the Administrative  Agent or any Lender with respect to indemnified  liabilities
arising  from  (i)  the  gross   negligence   or  willful   misconduct   of  the
Administrative  Agent or any  such  Lender,  (ii)  legal  proceedings  commenced
against the  Administrative  Agent or any such Lender by any security  holder or
creditor thereof arising out of and based upon rights afforded any such security
holder or creditor  solely in its  capacity  as such or (iii) legal  proceedings
commenced by any Bank, the Administrative Agent or any Transferee (as defined in
subsection 9.6(h)) against any other Bank, the Administrative Agent or any other
Transferee.  The agreements in this  subsection  shall survive  repayment of the
Notes and all other amounts payable hereunder.

         9.6 Successors and Assigns;  Participations;  Purchasing  Lenders.  (a)
This  Agreement  shall be binding upon and inure to the benefit of the Borrower,
the Lenders,  the  Administrative  Agent,  all future holders of the Notes,  and
their respective successors and assigns, except that the Borrower may not assign
or transfer any of its rights or obligations  under this  Agreement  without the
prior written consent of each Lender.
<PAGE>
             (b) Any  Lender  may,  in the  ordinary  course  of its  commercial
banking  business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participants")  participating interests in any
Loan owing to such Lender,  any Note held by such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder.  In the event of any such
sale by a Lender of  participating  interests to a  Participant,  such  Lender's
obligations  under this Agreement to the other parties to this  Agreement  shall
remain  unchanged,   such  Lender  shall  remain  solely   responsible  for  the
performance  thereof,  such Lender  shall remain the holder of any such Note for
all purposes under this Agreement,  such Lender shall be solely  responsible for
any withholding taxes or any filing or reporting  requirements  relating to such
Participant  and  shall  indemnify  and  hold  harmless  the  Borrower  and  the
Administrative  Agent  and  their  respective  successors,   permitted  assigns,
officers,  directors,  employees, agents and representatives for and against any
Taxes (including interest and penalties thereon and additions thereto),  losses,
costs and expenses  incurred in connection with such withholding taxes or filing
or reporting  requirements,  and the Borrower and the Administrative Agent shall
continue to deal solely and directly  with such Lender in  connection  with such
Lender's rights and obligations  under this Agreement.  The Borrower agrees that
if amounts  outstanding under this Agreement and the Notes are due or unpaid, or
shall  have  been  declared  or  shall  have  become  due and  payable  upon the
occurrence of an Event of Default,  each Participant shall be deemed to have the
right of setoff in respect of its participating  interest in amounts owing under
this  Agreement  and  any  Note  to the  same  extent  as if the  amount  of its
participating  interest  were  owing  directly  to it  as a  Lender  under  this
Agreement  or  any  Note;  provided,  that,  in  purchasing  such  participating
interest,  such  Participant  shall be deemed to have  agreed to share  with the
Lenders the proceeds thereof as provided in subsection  9.7(a) as fully as if it
were a Lender  hereunder.  All  amounts  payable by the  Borrower to such Lender
under  subsection 2.15, 2.17, 2.18 and 9.5 shall be determined as if such Lender
had not sold or agreed to sell such participation.

             (c ) Any  Lender  may,  in the  ordinary  course of its  commercial
banking business and in accordance with applicable law, at any time assign,  (i)
so long as, to the knowledge of the assignor  Lender,  such assignment will not,
and there is no  substantial  likelihood  that in the future it will,  result in
adverse  consequences  to the  Borrower  including  without  limitation  payment
obligations under Sections 2.15 and 2.16, to any Lender or any Affiliate thereof
or, (ii) with the consent of the  Borrower and the  Administrative  Agent (which
consent in each case shall not be unreasonably withheld) to one or more banks or
other  entities ("CAF Advance  Assignees")  any CAF Advance owing to such Lender
and any  Individual  CAF Advance  Note held by such Lender  evidencing  such CAF
Advance,  pursuant to a CAF Advance  Assignment  executed by the assignor Lender
and the CAF Advance  Assignee.  Upon such execution,  from and after the date of
such CAF Advance  Assignment,  the CAF Advance  Assignee shall, to the extent of
the assignment  provided for in such CAF Advance  Assignment,  be deemed to have
the same rights and benefits of payment and enforcement with respect to such CAF
Advance  and  Individual  CAF  Advance  Note and the same  rights of setoff  and
obligation to share pursuant to subsection 9.7 as it would have had if it were a
Lender  hereunder;  provided,  that  unless such CAF  Advance  Assignment  shall
otherwise  specify  and a copy of such CAF  Advance  Assignment  shall have been
delivered to the  Administrative  Agent for its  acceptance and recording in the
Register in accordance with subsection 9.6(d), the assignor thereunder shall act
as  collection  agent  for  the  CAF  Advance  Assignee   thereunder,   and  the
<PAGE>
Administrative  Agent shall pay all amounts received from the Borrower which are
allocable to the assigned CAF Advance or Individual CAF Advance Note directly to
such assignor without any further liability to such CAF Advance Assignee.  A CAF
Advance Assignee under a CAF Advance Assignment shall not, by virtue of such CAF
Advance  Assignment,  become a party to this  Agreement  or have any  rights  to
consent  to or  refrain  from  consenting  to any  amendment,  waiver  or  other
modification  of any  provision  of  this  Agreement  or any  related  document;
provided,  that (x) the assignor under such CAF Advance  Assignment and such CAF
Advance  Assignee may, in their  discretion,  agree between  themselves upon the
manner in which such assignor will exercise its rights under this  Agreement and
any related  document,  and (y) if a copy of such CAF Advance  Assignment  shall
have been delivered to the Administrative Agent for its acceptance and recording
in the Register in  accordance  with  subsection  9.6(d),  neither the principal
amount of, the  interest  rate on, nor the  maturity  date of any CAF Advance or
Individual CAF Advance Note assigned to the CAF Advance Assignee thereunder will
be modified without the written consent of such CAF Advance  Assignee.  If a CAF
Advance  Assignee  has caused a CAF  Advance  Assignment  to be  recorded in the
Register in accordance with  subsection  9.6(d),  such CAF Advance  Assignee may
thereafter,  in the  ordinary  course of its  business  and in  accordance  with
applicable law,  assign such  Individual CAF Advance Note to any Lender,  to any
affiliate or subsidiary of such CAF Advance  Assignee or to any other  financial
institution  that has total assets in excess of  $1,000,000,000  and that in the
ordinary  course of its business  extends  credit of the type  evidenced by such
Individual CAF Advance Note, and the foregoing  provisions of this paragraph (c)
shall apply, mutatis mutandis, to any such assignment by a CAF Advance Assignee.
Except in accordance  with the preceding  sentence,  CAF Advances and Individual
CAF Advance Notes may not be further assigned by a CAF Advance Assignee, subject
to any legal or regulatory  requirement that the CAF Advance  Assignee's  assets
must remain under its control.

             (d) Upon its  receipt of a CAF  Advance  Assignment  executed by an
assignor  Lender  and a CAF  Advance  Assignee,  together  with  payment  to the
Administrative  Agent  of a  registration  and  processing  fee of  $3,500,  the
Administrative  Agent shall promptly accept such CAF Advance Assignment,  record
the information contained therein in a register (the "Register") and give notice
of such  acceptance  and  recordation  to the assignor  Lender,  the CAF Advance
Assignee and the Borrower.

             (e) Any  Lender  may,  in the  ordinary  course  of its  commercial
banking  business and in accordance  with  applicable  law, at any time and from
time to time assign (i) so long as, to the  knowledge  of the  assignor  Lender,
such  assignment  will not, and there is no substantial  likelihood  that in the
future it will, result in adverse consequences to the Borrower including without
limitation  payment  obligations  under Sections 2.15 and 2.16, to any Lender or
any  Affiliate  thereof  or,  (ii)  with the  consent  of the  Borrower  and the
Administrative Agent (which in each case shall not be unreasonably withheld), to
another bank or financial  institution  ("an  Assignee")  all or any part of its
rights  and  obligations  under  this  Agreement  and the Notes  pursuant  to an
Assignment and Acceptance,  substantially  in the form of Exhibit E, executed by
<PAGE>
such Assignee,  such  assigning  Lender (and, in the case of an Assignee that is
not  then  a  Lender  or  an  Affiliate   thereof,   by  the  Borrower  and  the
Administrative  Agent)  and  delivered  to  the  Administrative  Agent  for  its
acceptance  and  recording  in the  Register.  Upon  such  execution,  delivery,
acceptance and recording,  from and after the effective date determined pursuant
to such Assignment and Acceptance,  (x) the Assignee thereunder shall be a party
hereto and, to the extent provided in such  Assignment and Acceptance,  have the
rights and  obligations  of a Lender  hereunder  with a Commitment  as set forth
therein,  and (y) the assigning Lender  thereunder shall, to the extent provided
in such Assignment and Acceptance,  be released from its obligations  under this
Agreement (and, in the case of an Assignment and Acceptance  covering all or the
remaining  portion of an assigning  Lender's rights and  obligations  under this
Agreement, such assigning Lender shall cease to be a party hereto).

             (f) Upon its receipt of an Assignment and Acceptance executed by an
assigning  Lender and an Assignee  (and,  in the case of an Assignee that is not
then a Lender or an affiliate  thereof,  by the Borrower and the  Administrative
Agent) together with payment to the  Administrative  Agent of a registration and
processing fee of $3,500,  the  Administrative  Agent shall (i) promptly  accept
such  Assignment  and  Acceptance  and  (ii) on the  effective  date  determined
pursuant  thereto record the information  contained  therein in the Register and
give notice of such  acceptance and recordation to the Lenders and the Borrower.
On or prior to such  effective  date,  the Borrower,  at its own expense,  shall
execute and deliver to the  Administrative  Agent (in exchange for the Revolving
Credit Note of the assigning Lender) a new Revolving Credit Note to the order of
such  Assignee in an amount  equal to the  Commitment  assumed by it pursuant to
such  Assignment  and  Acceptance  and, if the  assigning  Lender has retained a
Commitment hereunder, a new Revolving Credit Note, to the order of the assigning
Lender in an amount equal to the Commitment,  retained by it hereunder. Such new
Notes shall be dated the Closing Date, and shall otherwise be in the form of the
Note replaced thereby.

             (g) The Administrative Agent shall maintain at its address referred
to in subsection 9.2 a copy of each CAF Advance  Assignment and each  Assignment
and  Acceptance  delivered  to it  and  a  register  (the  "Register")  for  the
recordation of (i) the names and addresses of the Lenders and the Commitment of,
and principal  amount of the Loans owing to, each Lender from time to time,  and
(ii) with respect to each CAF Advance Assignment delivered to the Administrative
Agent, the name and address of the CAF Advance Assignee and the principal amount
of each CAF  Advance  owing to such CAF  Advance  Assignee.  The  entries in the
Register  shall  be  conclusive,  in the  absence  of  manifest  error,  and the
Borrower,  the Administrative  Agent and the Lenders may treat each Person whose
name is recorded in the Register as the owner of the Loan  recorded  therein for
all purposes of this  Agreement.  The Register shall be available for inspection
by the Borrower or any Lender or CAF Advance Assignee at any reasonable time and
from time to time upon reasonable prior notice.
<PAGE>
             (h)  The  Borrower  authorizes  each  Lender  to  disclose  to  any
Participant,  CAF Advance  Assignee or Assignee (each, a  "Transferee")  and any
prospective  Transferee  any  and all  financial  information  in such  Lender's
possession  concerning the Borrower and its Affiliates  which has been delivered
to such Lender by or on behalf of the  Borrower  pursuant to this  Agreement  or
which has been  delivered  to such  Lender by or on  behalf of the  Borrower  in
connection  with  such  Lender's  credit  evaluation  of the  Borrower  and  its
Affiliates  prior to  becoming a party to this  Agreement.  Notwithstanding  the
foregoing,  without the prior  written  consent of the  Borrower,  no Lender may
disclose to any Participant or CAF Advance  Assignee or any proposed  Transferee
information  which has been designated in writing by the Borrower to such Lender
as  non-public  information.  The  Borrower  agrees to respond  promptly  to any
request  by a Lender  pursuant  to the  preceding  sentence  for the  Borrower's
consent to  disclose  non-public  information  and  agrees to give such  consent
unless it has reason to believe that the proposed  recipient of such information
would not treat such information in a confidential manner or unless the Borrower
otherwise deems that a banking  relationship with such proposed  recipient would
be detrimental  to its interests or  inconsistent  with its corporate  policy as
determined  by the  Borrower.  The Borrower  agrees to be  reasonable  in making
determinations  pursuant to this paragraph (h). In addition,  no such non-public
information  shall be  disclosed by any Lender to any  Participant,  CAF Advance
Assignee or proposed Transferee unless such Participant, CAF Advance Assignee or
proposed Transferee shall have agreed in writing for the benefit of the Borrower
to comply with the requirements of this paragraph (h) as if it were a Lender.

             (i) If, pursuant to this subsection, any interest in this Agreement
or any Note is transferred to any Transferee  which is organized  under the laws
of any  jurisdiction  other than the  United  States or any State  thereof,  the
transferor   Lender  shall  cause  such   Transferee,   concurrently   with  the
effectiveness of such transfer,  (i) to represent to the transferor  Lender (for
the benefit of the transferor Lender, the Administrative Agent and the Borrower)
that under  applicable law and treaties no taxes will be required to be withheld
by the Administrative  Agent, the Borrower or the transferor Lender with respect
to any payments to be made to such  Transferee in respect of the Loans,  (ii) to
furnish to the transferor  Lender (and, in the case of any Purchasing Lender and
any CAF Advance Assignee  registered in the Register,  the Administrative  Agent
and the  Borrower)  the  documents  and  certifications  required by  subsection
2.16(b) to be  furnished  by each Lender that is an  original  party  hereto and
(iii) to agree (for the benefit of the  transferor  Lender,  the  Administrative
Agent and the  Borrower) to furnish the  transferor  Lender (and, in the case of
any Purchasing  Lender and any CAF Advance Assignee  registered in the Register,
the  Administrative  Agent and the Borrower)  the  documents and  certifications
required  by  subsection  2.16(b)  to be  furnished  by each  Lender  that is an
original party hereto subsequent to the date of effectiveness of such transfer.
<PAGE>
             (j) Nothing  herein  shall  prohibit  any Lender  from  pledging or
assigning  any Note to any Federal  Reserve Bank in accordance  with  applicable
law.

         9.7  Adjustments;  Set-off.  (a) If any Lender (a "benefitted  Lender")
shall at any time  receive any payment of all or part of its Loans,  or interest
thereon,  or receive any collateral in respect thereof  (whether  voluntarily or
involuntarily,  by  set-off,  pursuant  to events or  proceedings  of the nature
referred to in Section 7(f), or  otherwise),  in a greater  proportion  than any
such payment to or collateral  received by any other Lender,  if any, in respect
of such other Lender's Loans, or interest thereon,  such benefitted Lender shall
purchase  for cash  from the  other  Lenders a  participating  interest  in such
portion of each such other  Lender's  Loan,  or shall provide such other Lenders
with the benefits of any such collateral,  or the proceeds thereof,  as shall be
necessary  to cause  such  benefitted  Lender to share  the  excess  payment  or
benefits  of such  collateral  or  proceeds  ratably  with each of the  Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter  recovered  from such  benefitted  Lender,  such purchase shall be
rescinded,  and the purchase price and benefits returned,  to the extent of such
recovery, but without interest.

             (b) In addition to any rights and remedies of the Lenders  provided
by law, each Lender shall have the right,  without prior notice to the Borrower,
any such notice being expressly  waived by the Borrower to the extent  permitted
by  applicable  law,  upon any amount  becoming  due and payable by the Borrower
hereunder or under the Notes (whether at the stated maturity, by acceleration or
otherwise) to set-off and  appropriate and apply against such amount any and all
deposits  (general or special,  time or demand,  provisional  or final),  in any
currency,  and any other credits,  indebtedness or claims,  in any currency,  in
each case  whether  direct or  indirect,  absolute  or  contingent,  matured  or
unmatured,  at any time  held or owing by such  Lender  or any  branch or agency
thereof to or for the credit or the account of the Borrower.  Each Lender agrees
promptly  to notify the  Borrower  and the  Administrative  Agent after any such
set-off and application  made by such Lender,  provided that the failure to give
such notice shall not affect the validity of such set-off and application.

         9.8 Counterparts.  This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate  counterparts  (including by
telecopy),  and all of said  counterparts  taken  together  shall be  deemed  to
constitute  one and the same  instrument.  A set of the copies of this Agreement
signed  by  all  the  parties   shall  be  lodged  with  the  Borrower  and  the
Administrative Agent.

         9.9  Severability.  Any provision of this Agreement which is prohibited
or  unenforceable  in  any  jurisdiction  shall,  as to  such  jurisdiction,  be
ineffective  to the  extent  of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof,  and any such  prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.
<PAGE>
          9.10  Integration.   This  Agreement  and  the  other  Loan  Documents
represent  the  agreement  of the  Borrower,  the  Administrative  Agent and the
Lenders with respect to the subject  matter  hereof,  and there are no promises,
undertakings,  representations or warranties by the Administrative  Agent or any
Lender  relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.

         9.11  GOVERNING  LAW.  THIS  AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS  OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND  INTERPRETED  IN ACCORDANCE  WITH, THE LAW OF THE STATE OF
NEW YORK.

         9.12  Submission  To   Jurisdiction;   Waivers.   The  Borrower  hereby
irrevocably and unconditionally:

             (a)  submits  for itself and its  property  in any legal  action or
proceeding  relating to this  Agreement and the Notes,  or for  recognition  and
enforcement of any judgment in respect  thereof,  to the  non-exclusive  general
jurisdiction  of the  Courts of the State of New York,  the courts of the United
States of America for the Southern  District of New York,  and appellate  courts
from any thereof;

             (b) consents that any such action or  proceeding  may be brought in
such courts and waives any  objection  that it may now or hereafter  have to the
venue of any such action or  proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

             (c )  agrees  that  service  of  process  in  any  such  action  or
proceeding  may be effected by mailing a copy thereof by registered or certified
mail (or any  substantially  similar  form of  mail),  postage  prepaid,  to the
Borrower at its address set forth in subsection  9.2 or at such other address of
which the Administrative Agent shall have been notified pursuant thereto; and

             (d) agrees that  nothing  herein  shall  affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction.

         9.13 Acknowledgements. The Borrower hereby acknowledges that:

             (a) it has been  advised by counsel in the  negotiation,  execution
and delivery of this Agreement and the Notes;

             (b)  neither  the  Administrative  Agent  nor  any  Lender  has any
fiduciary  relationship  with  or  duty  to the  Borrower  arising  out of or in
connection  with this  Agreement  or any of the other  Loan  Documents,  and the
relationship  between  Administrative  Agent and Lenders,  on one hand,  and the
Borrower,  on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and

             ( c) no joint  venture  is  created  hereby  or by the  other  Loan
Documents or otherwise exists by virtue of the transactions  contemplated hereby
among the Lenders or among the Borrower and the Lenders.

         9.14 WAIVERS OF JURY TRIAL. THE BORROWER,  THE ADMINISTRATIVE AGENT AND
THE LENDERS HEREBY  IRREVOCABLY AND  UNCONDITIONALLY  WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING  RELATING TO THIS  AGREEMENT OR THE NOTES AND FOR ANY
COUNTERCLAIM THEREIN.
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly  authorized  officers as of
the day and year first above written.

                                        PHELPS DODGE CORPORATION



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


                                        THE CHASE MANHATTAN BANK,
                                        as Administrative Agent and as a
                                        Lender



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



                                        THE BANK OF NOVA SCOTIA



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


                                        BANK OF TOKYO-MITSUBISHI TRUST
                                        COMPANY



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


                                        BANK OF AMERICA ILLINOIS



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

<PAGE>
                                        BARCLAYS BANK PLC



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


                                        CIBC INC.



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


                                        CITIBANK, N.A.



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





                                        DEUTSCHE BANK AG, NEW YORK
                                        AND/OR CAYMAN ISLANDS BRANCHES



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


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


                                        WELLS FARGO BANK, N.A.



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


                                        THE INDUSTRIAL BANK OF JAPAN,
                                        LIMITED, LOS ANGELES AGENCY



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

<PAGE>
                                        MORGAN GUARANTY TRUST
                                        COMPANY OF NEW YORK



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



                                        FIRST UNION NATIONAL BANK



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


                                        SOCIETE GENERALE



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

<PAGE>
                                                                     Schedule II
                            PHELPS DODGE CORPORAT10N
                         PRINCIPAL DOMESTIC SUBSIDIARIES

                                                        Percentage
                                                         of Voting
                                                      Securities held
                                                       by PDC and its
                                   Associated           jurisdiction
Name                               Companies          of Incorporation
----                               ----------         ----------------

Accuride Corporation                100.00                Delaware
Columbian Chemicals Company         100.00                Delaware
Phelps Dodge Chino, Inc.            100.00                Delaware
Phelps Dodge Industries, Inc.       100.00                Delaware
Phelps Dodge Morenci, Inc.          100.00                Delaware
Phelps Dodge Refining Corporation   100.00                New York
<PAGE>
                            PHELPS DODGE CORPORATION
                                  SUBSIDIARIES
                  (Other than Principal Domestic Subsidiaries)

                                                     Percentage
                                                      of Voting
                                                   Securities held
                                                   by PDC and its
                                                     Associated
Name                                                  Companies

Accuride Canada Inc.                                   100.00
Accuride Texas Inc.                                    100.00
Aislamientos Plasticos, C.A. (PLASTICA)                 80.08
Ajo Improvement Company                                100.00
Alambres y Cables de Panama, S.A. (ALCAP)               78.08
Alambres y Cables Venezolanos, C.A. (ALCAVE)            80.08
ALCAP Commercial, S.A. (ALCOMER)                        78.08
Alcave Trading                                          80.08
Alicanto, S.A.                                         100.00
AOT, Inc.                                               50.00
Apache Nitrogen Products, Inc.                          38.70
Arizona Community Investment Corporation               100.00
Armasa                                                  60.52
Ashfork Mines Limited                                  100.00
Asian Telecommunications Products                       39.99
Bisbee Queen Mining Company                             65.90
Black Mountain Mineral Development (PTY) Ltd.           44.56
Burro Chief Copper Company                             100.00
Busa Mining Co., Inc.                                  100.00
Cables Electricos Ecuatorianos, C.A. (CABLEC)           67.10
Cahosa, S.A.                                            78.08
Celbac, S.A.                                            66.63
Chino Mines Company                                     66.67
Cobre Cerrillos, S.A. (COCESA)                          90.04
Cobre Colada Continua, C.C.C., C.A.                     40.04
Cobre del Mayo, S.A. de C.V.                            70.00
Cocesa Ingenieria y Construccion, S.A. (COCETEL)        63.03
Cocesa Trading                                          90.00
Cocetel del Plata, S.A.                                 59.88
Cocetel El Salvadore                                    63.03
Cocetel Ingenieria y Construccion, C.A.                 63.03
Colada Continua Chilena                                 36.92
Columbian (U.K.) Limited (CUKL)                        100.00
Columbian Carbon Deutschland GmbH                      100.00
Columbian Cargon Europa S.R.L.                         100.00
Columbian Carbon International (France), S.A.          100.00
Columbian Carbon Japan Ltd.                             50.00
Columbian Carbon Philippines, Inc.                      88.20
Columbian Carbon Spain, S.A.                           100.00
Columbian Chemicals Canada, Ltd.                       100.00
Columbian Chemicals Europa, Gmbh                       100.00
Columbian Foreign Export Corporation                   100.00
Columbian Holding Company                              100.00
Columbian International Chemicals Corporation          100.00
Columbian International Trading Company                100.00
Columbian Technology Company                           100.00
Columbian Tiszai Carbon Ltd.                            60.00
Comercial ECOHSA, S.A. de C.V.                          60.52
Cominesa, Ltd.                                         100.00
Compania Contractual Minera Candelaria                  80.00
Compania Contractual Minera Ojos del Salado            100.00
CONAL, Conductores y Aluminio, C.A.                     80.08
<PAGE>
CONDUCEN, S.A.                                          78.57
CONDUCOMER, S.A. (formerly INDELEC)                     78.57
Conductores Electricos de Centro America, S.A. (CONELCA)57.57
Condutel                                                78.57
Corobong Mining Co., Inc.                              100.00
Coronado Power & Water, Inc.                           100.00
Dagma Mining Co., Inc.                                 100.00
Dodge & James Insurance Company, LTD.                  100.00
Dongguan Keystone Elec.  Wire & Cable Co.Ltd.           16.00
Dongguan Keystone Machinery Co. Ltd.                    16.00
Dulugan Mining Co., Inc.                               100.00
Electroconductores de Honduras, S.A. de C.V. (ECOHSA)   60.52
Elektrodraht Mureck, Phelps Dodge Eldra GmbH            51.00
Erawan Mining Limited                                  100.00
Fabrica de Conductores Electricos, S.A. (FACELEC)       57.57
Habirshaw Cable and Wire Corporation                   100.00
Hudson International Conductors                        100.00
Hudson International Conductors Japan, Ltd.            100.00
Hudson Wire - Europe, Inc.                             100.00
Industria de Conductores Electricos, C.A. (ICONEL)      80.08
Iponan Mining Co., Inc.                                100.00
Isulan Mining Co., Inc.                                100.00
Kalahari Investments Limited                           100.00
Kalayaan Realty Company, Inc.                           35.28
Kasamahan Power Corporation                             20.00
Kasamahan Realty Development Corp.                      35.00
Keystone Electric Wire and Cable Company Limited        20.00
Kidapawan Mining Co., Inc.                             100.00
Kumakata Mining Co., Inc.                              100.00
Kyruso Mining Co., Inc.                                100.00
Lumintao Mining Co., Inc.                              100.00
Macote Mining Co., Inc.                                100.00
Makilala Mining Co., Inc.                              100.00
Malampay Mining Co., Inc.                              100.00
Malibato Mining Co., Inc.                              100.00
Mambalili Mining Co., Inc.                             100.00
Marico Fluorspar (PTY) Limited                         100.00
Metal Fabricators of Zambia Limited (ZAMEFA)            51.00
Minera Aguas Calientes, S.A.                           100.00
Minera Cerro Lindo, S.A.                                55.00
Minera Las Claditas, S.A.                               85.00
Minera Pampa de Cobre, S.A.                             70.00
Minera Papago, S.A. de C.V.                            100.00
Minera Phelps Dodge de Colombia, Inc.                  100.00
Minera Phelps Dodge del Peru S.A.                      100.00
Minera Phelps Dodge Mexico, S. de R.L. de C.V.         100.00
Minera Pilares, S.A. de C.V.                            49.00
MineX, Inc.                                            100.00
Minuet Realty Corporation                               39.99
Mosega Fluorspar Works (PTY) Limited                   100.00
Nesor Alloy Corporation                                100.00
Norala Mining Co., Inc.                                100.00
Oclaves Limited                                        100.00
Pacific Western Land Company                           100.00
Pakham Exploration and Mining Limited                   49.00
Palimbang Mining Co., Inc.                             100.00
Patong Exploration and Mining Limited                   49.00
PD - Siam Rod Company Limited                           39.36
PD Bolivia, Inc.                                       100.00
PD Candelaria, Inc.                                    100.00
PD Cobre del Mayo, Inc.                                100.00
PD Explorations, Inc.                                  100.00
<PAGE>
PD Indonesia Corporation                               100.00
PD Las Bambas Corporation                              100.00
PD Mineral Development Co (U.K.) Ltd.                  100.00
PD Ojos del Salado, Inc.                               100.00
PD Peru,Inc.                                           100.00
PD Puthep Limited                                      100.00
PDMTR de El Salvador                                    57.57
PDMTR de Guatemala                                      57.57
PDTL Trading Company Limited                            40.00
Peru Mining Expl & Development Company                  16.25
Phelps Dodge (Namibia) (Pty) Ltd.                      100.00
Phelps Dodge Africa Cable Corporation                  100.00
Phelps Dodge Australasia, Inc.                         100.00
Phelps Dodge Chapi, Inc.                               100.00
Phelps Dodge Corporation of Canada, Limited            100.00
Phelps Dodge Development Corporation                   100.00
Phelps Dodge Do Brasil Mineracao LTDA                  100.00
Phelps Dodge Enfield Corporation                       100.00
Phelps Dodge Europa, Ltd.                              100.00
Phelps Dodge Exploration Corporation                   100.00
Phelps Dodge Exploration De Argentina S.A.             100.00
Phelps Dodge Exploration East, Inc.                    100.00
Phelps Dodge Foundation                                     -
Phelps Dodge Fuel Development Corporation              100.00
Phelps Dodge Hidalgo, Inc.                             100.00
Phelps Dodge Industries Gesellschaft m.b.H             100.00
Phelps Dodge International Corporation                 100.00
Phelps Dodge Madagascar S.A.R.L.                       100.00
Phelps Dodge Mercantile Company                        100.00
Phelps Dodge Mining (Pty) Limited                      100.00
Phelps Dodge Mining (Zambia) Limited                   100.00
Phelps Dodge Mining Services, Inc.                     100.00
Phelps Dodge Molybdenum Corporation                    100.00
Phelps Dodge of Africa, Ltd.                           100.00
Phelps Dodge of Botswana (Pty) Ltd.                    100.00
Phelps Dodge of Portugal, Ltd.                         100.00
Phelps Dodge of Turkey, Inc.                           100.00
Phelps Dodge Overseas Capital Corporation              100.00
Phelps Dodge Overseas Marketing Corporation            100.00
Phelps Dodge Philippines, Inc.                          39.99
Phelps Dodge Sales Company, Incorporated               100.00
Phelps Dodge Thailand Limited                           55.47
Phelps Dodge Tyrone, Inc.                              100.00
Phelps Dodge Yantai Cable Company Limited               40.00
Phelps Dodge Yantai China Holdings Inc.                 66.67
Pietersburg Iron Company (Proprietary) Limited          50.00
Pollac Mining Co., Inc.                                100.00
PT Kutaraja Tembaga Raya                                75.00
Puthep Limited                                          49.00
<PAGE>
Representaciones de Industries Venezdanas, C.A.
               (REDIVENCA)                              80.08
RPG Telecom, Ltd                                          .80
Sabang Mining Co., Inc.                                100.00
Savanna Development Co., Ltd.                          100.00
Sevalco Limited                                        100.00
Seven-Up Pete Venture                                   72.30
Siam Electric Industries, Co. Ltd.                       9.43
Skyline Estates, Inc.                                  100.00
Soner, Inc.                                            100.00
Sonoran Mining Company                                 100.00
Southern Peru Copper Corporation                        16.25
Southern Peru Copper Sales Corporation                  16.00
SPD Magnet Wire Company                                 50.00
St. Joseph Phelps Dodge Exploration Pty. Ltd.           50.00
Tambali Mining Co., Inc.                               100.00
T.I.E. (Trading Import Export)                         100.00
Thai Copper Rod Company Limited                         13.09
The Morenci Water & Electric Company                   100.00
Tucson, Cornelia and Gila Bend Railroad Co.            100.00
Tulipan Company, Inc.                                   16.25
Viohalco                                                 2.80
Warren Company                                         100.00
Western Nuclear Australia Limited                      100.00
Western Nuclear, Inc.                                  100.00
Western Nuclear Mines, Ltd.                            100.00
Woodlawn Properties                                     33.33
<PAGE>
                                                                    SCHEDULE III



                          ENVIRONMENTAL REPRESENTATION



         As indicated in the  Borrower's  Form 10-K Report for the 1996 calendar
year,  Phelps Dodge  Corporation  and its  consolidated  subsidiaries  have been
identified  as a  potentially  responsible  party at 36 sites  identified on the
National Priorities List (NPL) under the Comprehensive  Environmental  Response,
Compensation,  and  Liability Act (CERCLA) or a state  equivalent.  Phelps Dodge
Corporation  and its  consolidated  subsidiaries  also own or  operate  13 sites
identified  in  the  Comprehensive  Environmental  Response,  Compensation,  and
Liability  Information System (CERCLIS),  which consists of approximately 35,000
sites  throughout  the  United  States  that are  being  reviewed  by the EPA to
determine  if they  qualify  for  inclusion  on the NPL.  Among the sites  being
reviewed  by the EPA are mining  sites or  portions  thereof in Arizona  and New
Mexico.  Some of these mining  sites are owned  and/or  operated by Phelps Dodge
Corporation and its subsidiaries,  including Phelps Dodge Morenci,  Inc., Phelps
Dodge Chino,  Inc., and Burro Chief Copper  Company.  Whether any of the CERCLIS
sites  which  are  owned  or  operated  by  Phelps  Dodge  Corporation  and  its
subsidiaries, including the Arizona or New Mexico mining sites, will be included
on the NPL, or will become the subject of state  environmental  response action,
cannot be determined at this time.
<PAGE>
                                                                     SCHEDULE IV
                                                                     -----------

                             EXISTING CAF ADVANCES

Lender                                  Amount                   Maturity
------                                  ------                   --------
Date
----

Morgan Guaranty Trust Company
   of New York                          $50,000,000              July 1, 1997

Morgan Guaranty Trust Company
   of New York                          $25,000,000              July 16,
1997

The Chase Manhattan Bank                $50,000,000              July 16,
1997
<PAGE>

                            SCHEDULE OF CAF ADVANCES

                                     Date of
                                     Transer
Date     Amount            Interest                    to Indi-
of       of     Interest   Payment  Maturity  Payment  vidual  Author-
Loan     Loan   Rate       Dates    Date      Date      Note    ization
----     ------ --------   -------  --------  -------  ------- -------

----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
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----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
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----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
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----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
----     ------ --------   -------  --------  -------  ------- -------
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----     ------ --------   -------  --------  -------  ------- -------
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----     ------ --------   -------  --------  -------  ------- -------