Document:

SHARE SALE AND PURCHASE AGREEMENT

This SHARE SALE AND PURCHASE  AGREEMENT (the  "Agreement")  is entered into this
7th day of September, 2000, by and between:

MEMC ELECTRONIC MATERIALS,  INC., a corporation organized and existing under the
laws of the State of Delaware,  U. S. A. and having its principle  office at 501
Pearl Drive, St. Peters, Missouri 63376, U. S. A. ("MEMC"); and

POHANG IRON & STEEL CO.,  LTD., a corporation  organized and existing  under the
laws of the  Republic of Korea and having its  principle  office at 1,  Koedong,
Pohang, Kyungsangbuk-do, Korea ("POSCO").

                                    RECITALS

WHEREAS,  POSCO owns 6,880,000 shares of common stock of POSCO HULS CO., LTD., a
corporation  organized and existing under the laws of the Republic of Korea (the
"Company"),  having a par value of five  thousand  (5,000)  Korean Won per share
(the  "Shares"),   which  comprises  forty  percent  (40%)  of  all  issued  and
outstanding shares of stock of the Company;

WHEREAS, pursuant to Article 7.3 of the Joint Venture Agreement dated August 28,
1990 entered into by and among POSCO,  MEMC and Samsung  Electronics  Co.,  Ltd.
("Samsung"),  as amended by the First Amendment to Joint Venture Agreement dated
as of December 9, 1993 and the Second Amendment to Joint Venture Agreement dated
as of December 30, 1994 (as amended, the "Joint Venture  Agreement"),  POSCO had
offered to MEMC and Samsung to sell and transfer all of the Shares;

WHEREAS,  Samsung notified POSCO of its intention to waive its right to purchase
the Shares in proportion to its shareholding ratio in the Company;

WHEREAS,  MEMC  wishes to purchase  from POSCO all of the Shares  subject to the
terms and based on the conditions set forth herein.

NOW, THEREFORE,  in consideration of the mutual promises and covenants contained
herein  and  for  other  good  and  valuable  consideration,   the  receipt  and
sufficiency of which is hereby acknowledged, POSCO and MEMC agree as follows:

Article 1 Definitions

As used in  this  Agreement,  the  following  terms  shall  have  the  following
meanings:

"Business  Day" means a day other than (i) a Saturday or Sunday or (ii) a day on
which banking  institutions are authorized or required by law or executive order
to remain closed in the domicile of MEMC or POSCO.

"Closing"  means  the  consummation  of the  transactions  contemplated  by this
Agreement in accordance with the provisions of Article 3.

"Consents"  means all of the  consents,  permits or  approvals  of  Governmental
Authorities  and other  persons or entities  necessary or required to consummate
the transactions contemplated hereby.

"Governmental  Authority" means (i) the Republic of Korea, any state, territory,
or possession thereof and any political  subdivision,  including but not limited
to courts,  tribunals,  departments,  commissions,  boards,  bureaus,  agencies,
municipalities, provinces, and other instrumentalities, and (ii) any foreign (as
to the  Republic  of Korea)  sovereign  entity,  including  but not  limited  to
nations,  states,   republics,   kingdoms  and  principalities,   any  province,
commonwealth, territory or possession thereof, and any political subdivision, or
instrumentality of any of the same.

"Legal  Requirements"  means applicable  common law and any applicable  statute,
ordinance,  code or other  law,  rule,  regulation,  order,  technical  or other
standard,  requirement or procedure enacted, adopted,  promulgated or applied by
any Governmental Authority, including any judgment.

"Lien"  means  any  security  agreement,  financing  statement  filed  with  any
Governmental Authority, conditional sale or other title retention agreement, any
lease,  consignment  or bailment  given for the purpose of  security,  any lien,
mortgage,  indenture,  pledge,  option,  encumbrance,  restriction  on transfer,
adverse  interest,   constructive  trust  or  other  trust,  claim,  attachment,
exception to or defect in title or other ownership  interest  (including but not
limited  to   reservations,   rights  of  entry,   possibilities   of  reverter,
encroachments,  easements,  rights-of-way,  restrictive  covenants,  leases  and
licenses)  of any kind,  which  otherwise  constitutes  an  interest in or claim
against property, whether arising pursuant to any Legal Requirement, contract or
otherwise.

"Losses" means any litigation,  losses, liabilities,  damages, Liens, penalties,
costs,  fines and expenses,  including but not limited to interest  which may be
imposed in connection therewith, expenses of investigation,  reasonable fees and
disbursements of counsel and other experts, and the cost to any person or entity
making a claim or seeking  indemnification  under this Agreement with respect to
funds expended by such person or entity by reason of the occurrence of any event
with respect to which indemnification is sought.

Article 2 Terms of Purchase and Sale

2.1  Subject to the terms and conditions hereof,  POSCO shall sell, transfer and
     deliver  to MEMC,  free and clear of all  Liens,  all of the  Shares on the
     Closing Date, and MEMC shall purchase the Shares from POSCO at the Purchase
     Price.

2.2  The aggregate  purchase  price for the Shares is Seventy Six Billion Korean
     Won (KRW76,000,000,000) (the "Purchase Price").

Article 3 Closing

3.1  The Closing  shall take place at the offices of POSCO in Seoul,  Korea,  or
     any other  mutually  agreed  upon  location,  at 2:00 p.m.  Korean  time on
     September 29, 2000 (the "Closing Date"),  or any other mutually agreed upon
     time;  provided,  however that the Closing Date shall not be later than the
     15th day of October, 2000.

3.2  Subject to Article 3.6, on the Closing  Date,  MEMC shall pay Fifty Billion
     (50,000,000,000) Korean Won of the Purchase Price to POSCO by wire transfer
     of  immediately  available  funds to an account  designated  by POSCO.  The
     remaining  balance of the Purchase  Price shall be paid to POSCO by MEMC in
     accordance with the payment schedule as specified in Article 3.6 hereof.

3.3  On the Closing Date, MEMC shall deliver to POSCO the following, in form and
     substance reasonably satisfactory to POSCO and its counsel:

     (a)  A  certificate,  dated  as of the  Closing  Date,  executed  by a duly
          authorized  officer of MEMC,  certifying that (i) the resolutions,  as
          attached to such  certificate,  were duly  adopted by MEMC's  Board of
          Directors,  authorizing  and approving the execution of this Agreement
          and the consummation of the transactions  contemplated hereby and that
          such  resolutions  remain in full  force and  effect and have not been
          modified or amended,  (ii) the  representations and warranties of MEMC
          contained  in Article  5.1 hereof are true in all  respects  as of the
          Closing  Date as if made at and as of such  date,  and (iii) all other
          obligations of MEMC hereunder which should be performed on or prior to
          the Closing Date have been performed or complied with; and

     (b)  Such other documents and instruments as shall be reasonably  necessary
          to effect the intent of this Agreement and consummate the transactions
          contemplated by this Agreement.

3.4  On the Closing Date, POSCO shall deliver to MEMC the following, in form and
     substance reasonably satisfactory to MEMC and its counsel:

     (a)  A certificate or certificates for all of the Shares,  duly endorsed or
          accompanied  by an  appropriate  duly  executed  stock  power  in form
          sufficient to permit transfer of the Shares to MEMC;

     (b)  A  certificate,  dated  as of the  Closing  Date,  executed  by a duly
          authorized   representative   of  POSCO,   certifying   that  (i)  the
          resolutions,  as attached to such  certificate,  were duly  adopted by
          POSCO's Board of Directors, authorizing and approving the execution of
          this Agreement and the consummation of the  transactions  contemplated
          hereby  and that such  resolution  remain in full force and effect and
          have not been  modified  or  amended,  (ii)  the  representations  and
          warranties  of POSCO  contained  in Article 5.2 hereof are true in all
          respects as of the Closing Date as if made at and as of such date, and
          (iii)  all  other  obligations  of POSCO  hereunder  which  should  be
          performed  on or prior to the  Closing  Date  have been  performed  or
          complied with; and

     (c)  Such other documents and instruments as shall be reasonably  necessary
          to effect the intent of this Agreement and consummate the transactions
          contemplated by this Agreement.

3.5  On or immediately  after the Closing Date, MEMC shall apply for a change in
     the  shareholders'  registry  to  reflect  the share  transfer  transaction
     contemplated  hereunder  and  provide to POSCO  certified  evidence of such
     change in registration.

3.6  The remaining balance of the Purchase Price shall be paid as follows:

     (a)  On September 29, 2001,  Thirteen Billion  (13,000,000,000)  Korean Won
          and  interests  on the total  amount of the  remaining  balance of the
          Purchase Price (Twenty Six Billion Korean Won) from the date following
          the Closing  Date up to  September  29, 2001 shall be paid to POSCO by
          wire transfer of immediately  available funds to an account designated
          by POSCO. The interest rate shall be seven and one half percent (7.5%)
          per annum; and

     (b)  On September 29, 2002,  Thirteen Billion  (13,000,000,000)  Korean Won
          and  interests  on the total  amount of the  remaining  balance of the
          Purchase Price  (Thirteen  Billion Korean Won) from Septmeber 30, 2001
          up to  September  29, 2002 shall be paid to POSCO by wire  transfer of
          immediately  available  funds to an account  designated by POSCO.  The
          interest rate shall be seven and one half percent (7.5%) per annum.

     (c)  In the event any of the dates  specified  above is not a Business Day,
          each  payment  shall be made on the  first  Business  Day  immediately
          preceding such date.

3.7  To  guarantee  punctual  payment of the  remaining  balance of the Purchase
     Price in accordance with Article 3.6 hereabove,  MEMC shall provide, on the
     Closing Date,  guarantee issued by an internationally  recognized financial
     institution for the amount of such remaining balance.  Notwithstanding  the
     foregoing  in  Articles  3.2,  3.6 and 3.7,  MEMC  shall have the option of
     paying the total amount of the  Purchase  Price on the Closing Date by wire
     transfer of immediately available funds to an account designated by POSCO.

Article 4 Conditions to Completion

The  obligations  of POSCO to sell the  Shares  and the  obligations  of MEMC to
purchase the Shares and effect the Closing shall be subject to the obtaining of,
or the  satisfaction or waiver by MEMC or POSCO, as the case may be, on or prior
to the Closing Date of all of the following conditions:

     (a)  The issuance of an acceptance by a foreign exchange bank designated by
          the Ministry of Commerce, Industry and Energy of the Republic of Korea
          ("MOCIE")  of the  share  transfer  report  to be  filed  by  MEMC  in
          connection with the purchase of the Shares;

     (b)  All  representations  and warranties of the parties  contained in this
          Agreement having been true when made and being true in all respects at
          and as of the Closing Date as if such  representations  and warranties
          were made at and as of such date;

     (c)  All other  obligations  of MEMC and POSCO under this  Agreement  which
          should  be  performed  on or prior to the  Closing  Date  having  been
          performed or complied with or otherwise  waived,  including the tender
          of all of the closing deliveries required by Articles 3.3 and 3.4;

     (d)  All  Government   Consents  necessary  for  the  consummation  of  the
          transactions contemplated by this Agreement and the performance of the
          parties' obligations  contained herein shall have been obtained and be
          in full force and effect; and

     (e)  No action or  proceeding  shall  have been  instituted  or  threatened
          before any court or other governmental body or by any public authority
          seeking to restrain or  prohibit  the sale and  purchase of the Shares
          hereunder.

Article 5 Representations and Warranties

5.1  MEMC hereby makes the following  representations  and  warranties to POSCO,
     each of which is true and  correct on the date hereof and shall be true and
     correct on the Closing  Date,  and each of which shall  survive the Closing
     Date and the sale contemplated herein:

     (a)  It is a  corporation  duly  organized,  existing and in good  standing
          under the laws of the State of Delaware,  USA,  and has all  requisite
          corporate  power and  authority to execute and deliver this  Agreement
          and  any  other  documents  required  to  be  executed  and  delivered
          hereunder and to perform its obligations hereunder.  In the event MEMC
          assigns  its rights and  obligations  hereunder  to a  subsidiary,  as
          provided  in Article  10.2,  such  subsidiary  will be an entity  duly
          organized, validly existing and in good standing under the laws of its
          jurisdiction  of  organization,  and  such  subsidiary  will  have all
          requisite  entity  power and  authority  to execute  and  deliver  the
          assignment  and any  documents  required to be executed and  delivered
          hereunder and to perform its obligations hereunder.

     (b)  This  Agreement  has been duly and validly  authorized,  executed  and
          delivered  by MEMC  and  constitutes  the  legal,  valid  and  binding
          obligation of MEMC,  enforceable  against MEMC in accordance  with its
          terms, except as such enforceability may be limited by (i) bankruptcy,
          insolvency  or  other  similar  laws  affecting  the   enforcement  of
          creditors'  rights generally or (ii) general  principles of equity. In
          the event that MEMC assigns its rights and obligations  hereunder to a
          subsidiary,  as provided in Article 10.2,  such  assignment  will have
          been duly and  validly  authorized,  executed  and  delivered  by such
          subsidiary  and this Agreement  will  constitute the legal,  valid and
          binding  obligation  of  such  subsidiary,  enforceable  against  such
          subsidiary in accordance with its terms, except as such enforceability
          may be limited by (i)  bankruptcy,  insolvency  or other  similar laws
          affecting  the  enforcement  of  creditors'  rights  generally or (ii)
          general principles of equity.

     (c)  The execution, delivery and performance by MEMC of this Agreement will
          not (i) violate or conflict with its certificate of incorporation  and
          by-laws or other  organizational  documents,  (ii) violate or conflict
          with any law, or (iii) result in any material breach of, or constitute
          a material  default  under any  contract  to which it is a party which
          breach or default would have a material adverse effect on MEMC and its
          subsidiaries,  taken as a whole.  In the event that MEMC  assigns  its
          rights and  obligations  to a subsidiary  as provided in Article 10.2,
          the execution and delivery by such  subsidiary of such  assignment and
          the  performance  by such  subsidiary of this  Agreement  will not (i)
          violate or conflict with its articles of  organization  and by-laws or
          other organizational documents, (ii) violate or conflict with any law,
          or (iii)  result in any material  breach of, or  constitute a material
          default  under any  contract  to which it is a party  which  breach or
          default  would  have  a  material  adverse  effect  on  MEMC  and  its
          subsidiaries, taken as a whole.

     (d)  To the best of its knowledge, the execution,  delivery and performance
          by MEMC (or by any  subsidiary  to which MEMC  assigns  its rights and
          obligations  under this Agreement as provided in Article 10.2) of this
          Agreement do not and will not require any Consent other than described
          in Article 4(a);

5.2  POSCO hereby makes the following  representations  and  warranties to MEMC,
     each of which is true and  correct on the date hereof and shall be true and
     correct on the Closing  Date,  and each of which shall  survive the Closing
     Date and the sale contemplated herein:

     (a)  It is a  corporation  duly  organized,  existing and in good  standing
          under  the  laws of the  Republic  of  Korea,  and  has all  requisite
          corporate  power and  authority to execute and deliver this  Agreement
          and  any  other  documents  required  to  be  executed  and  delivered
          hereunder and to perform its obligations hereunder.

     (b)  This  Agreement  has been duly and validly  authorized,  executed  and
          delivered  by POSCO and  constitutes  the  legal,  valid  and  binding
          obligation of POSCO,  enforceable against POSCO in accordance with its
          terms, except as such enforceability may be limited by (i) bankruptcy,
          insolvency  or  other  similar  laws  affecting  the   enforcement  of
          creditors' rights generally or (ii) general principles of equity.

     (c)  The  execution,  delivery and  performance  by POSCO of this Agreement
          will not (i) violate or conflict with its articles of incorporation or
          other organizational documents, (ii) violate or conflict with any law,
          or (iii)  result in any material  breach of, or  constitute a material
          default  under any  contract  to which it is a party  which  breach or
          default  would  have a  material  adverse  effect  on  POSCO  and  its
          subsidiaries, taken as a whole.

     (d)  To the best of its knowledge, the execution,  delivery and performance
          by POSCO of this  Agreement  do not and will not  require  any Consent
          other than described in Article 4(a).

     (e)  It is the legal owner of the Shares and has full authority to sell and
          transfer the Shares as provided herein.

     (f)  The Shares  represent the entire interest of POSCO in the issued share
          capital of the Company and MEMC will  acquire at the Closing  good and
          marketable title to the Shares, free and clear of all Liens.

     (g)  No outstanding  claim of POSCO exists or to the best of its knowledge,
          is likely to exist,  against the Company arising out of or in relation
          to the Joint Venture  Agreement,  its past  ownership of the shares of
          the  Company  or conduct of its past  business  transactions  with the
          Company in connection therewith.

Article 6 Additional Obligations

6.1  Each of MEMC and POSCO  shall use its  commercially  reasonable  efforts to
     obtain all Government  Consents otherwise to effect or obtain any notice to
     or consents from third parties,  required for the transactions contemplated
     hereunder.

6.2  Each of MEMC and POSCO  shall use its  commercially  reasonable  efforts to
     take,  or cause to be taken,  all such action,  and execute and deliver all
     such  documents,  as  may  be  necessary  to  consummate  the  transactions
     contemplated hereunder.

6.3  On and  after the  Closing  Date,  POSCO  shall  not seek to  exercise  its
     remaining  rights,  if any, under the Joint Venture  Agreement  without the
     prior  written  consent  of MEMC.  If  requested  by MEMC,  POSCO  (a) will
     exercise  any  remaining  rights  under  the  Joint  Venture  Agreement  in
     accordance with MEMC's  instructions and (b) will take all such action, and
     execute and deliver such  documents,  as may be necessary  (i) to terminate
     the Joint Venture  Agreement or (ii) to convey POSCO's remaining rights, if
     any, under the Joint Venture Agreement to MEMC.

6.4  POSCO  covenants and agrees that between the date of this Agreement and the
     Closing  Date,  it will not cause  the  Company  to  conduct  its  business
     otherwise  than in the ordinary  course and  consistent  with the Company's
     past practices.

6.5  POSCO hereby  waives,  and releases  the Company  from,  any and all future
     demands and claims against the Company,  contingent or otherwise, which may
     be made by POSCO  in  connection  with the  Joint  Venture  Agreement,  its
     ownership  of the shares of the  Company  or  conduct of its past  business
     transactions with the Company.

6.6  As of the  Closing  Date,  MEMC  confirms  that  POSCO  will  cease to be a
     shareholder  of the  Company  and MEMC will not,  on and after the  Closing
     Date,  make any demands or claims  against  POSCO as a  shareholder  of the
     Company.

6.7  In the event this  Agreement is terminated or the Closing fails to occur by
     the  Closing  Date due to  reasons  attributable  to MEMC  other than those
     beyond  reasonable  control of MEMC (i.e,  force majeure),  then MEMC shall
     waive  any  claims  it may have  against  POSCO  under  the  Joint  Venture
     Agreement in connection  with POSCO's  subsequent sale of the Shares to any
     third party.

Article 7 Indemnification

7.1  MEMC hereby  agrees to indemnify  and hold POSCO  harmless from and against
     any Loss suffered or incurred by POSCO for or on account of or arising from
     or in connection with any breach of any of the representations,  warranties
     or covenants  contained in this  Agreement,  provided,  however,  that MEMC
     shall not have any liability under this Article 7.1 unless the aggregate of
     all  Losses  relating  thereto  exceed on a  cumulative  basis Two  Hundred
     Million  (200,000,000)  Korean  Won,  and then  only to the  extent of such
     excess and MEMC's maximum  liability  hereunder is expressly limited to the
     Purchase Price.  POSCO  acknowledges and agrees that its sole and exclusive
     remedy with respect to any and all claims for monetary  damages relating to
     the   subject   matter  of  this   Agreement   shall  be  pursuant  to  the
     indemnification provisions set forth in this Article 7.1.

7.2  POSCO hereby  agrees to indemnify  and hold MEMC  harmless from and against
     any Loss  suffered or incurred by MEMC for or on account of or arising from
     or in connection with any breach of any of the representations,  warranties
     or covenants  contained in this Agreement,  provided,  however,  that POSCO
     shall not have any liability under this Article 7.2 unless the aggregate of
     all  Losses  relating  thereto  exceed on a  cumulative  basis Two  Hundred
     Million  (200,000,000)  Korean  Won,  and then  only to the  extent of such
     excess and POSCO's maximum liability  hereunder is expressly limited to the
     Purchase Price.  MEMC  acknowledges  and agrees that its sole and exclusive
     remedy with respect to any and all claims for monetary  damages relating to
     the   subject   matter  of  this   Agreement   shall  be  pursuant  to  the
     indemnification provisions set forth in this Article 7.2.

7.3  The  representations and warranties made by each party contained in Article
     5 hereof, and indemnification  pursuant to Article 7 hereof,  shall survive
     the Closing indefinitely.

Article 8 Dispute Resolution and Arbitration

8.1  The parties shall attempt in good faith to resolve any controversy, dispute
     or claim  arising  out of or  relating  to this  Agreement  or the  breach,
     termination, enforceability or validity thereof (collectively, a "Dispute")
     promptly by negotiation between officers or employees who have authority to
     settle the  Dispute.  Either  party may give the other a written  notice (a
     "Dispute  Notice") setting forth with reasonable  specificity the nature of
     the  Dispute  and the  identity of such  party's  representatives  who will
     attend and  participate in the meeting at which the parties will attempt to
     settle  the  Dispute.  Following  the  receipt  of a  Dispute  Notice,  the
     representatives  of both parties shall meet as soon as is  practicable at a
     mutually  acceptable time and place to negotiate in good faith a settlement
     of  the  Dispute,  and  shall  meet  thereafter  as  they  reasonably  deem
     necessary.   All  negotiations  pursuant  to  this  Article  8.1  shall  be
     confidential   and  shall  be  treated   as   compromise   and   settlement
     negotiations.  Nothing said or disclosed, nor any document produced, in the
     course  of  such   negotiations   which  is  not  otherwise   independently
     discoverable  shall  be  offered  or  received  as  evidence  or  used  for
     impeachment  or for any other purpose in any current or future  arbitration
     or litigation.

8.2  If the Dispute has not been resolved  within 30 days after the receipt of a
     Dispute  Notice  through  negotiation  as provided in Article 8.1, then the
     Dispute shall be finally settled by arbitration pursuant to the U.S.-Korean
     Commercial  Arbitration  Agreement,  dated  December 1, 1974, by which each
     party is bound. The arbitration shall be held in Seoul,  Korea, if the case
     is brought against POSCO and in St. Louis,  Missouri,  U. S. A. if the case
     is brought  against  MEMC,  unless the parties  mutually  agree to have the
     arbitration held elsewhere, and judgment upon the award made therein may be
     entered by any court  having  jurisdiction  over any of the parties to this
     Agreement; provided, however, that nothing contained in the Article 8 shall
     be construed  to limit or preclude a party from  bringing any action in any
     court of competent  jurisdiction for injunctive or other provisional relief
     to compel another party to comply with its obligations under this Agreement
     during the pendency of the arbitration  proceedings.  The arbitrator  shall
     have the authority to grant any equitable and legal  remedies that would be
     available  in any  judicial  proceeding  instituted  to  resolve  any claim
     hereunder.

Article 9 Termination

     This Agreement may be terminated at any time prior to the Closing:

     (a)  By mutual written agreement of all the Parties;

     (b)  By MEMC, by ten (10)  Business Days prior written  notice to POSCO (if
          MEMC is not then materially in default or breach of this Agreement) if
          POSCO shall default or be in material breach in the performance of any
          of its obligations  under this  Agreement,  and such default or breach
          has not been cured by POSCO within seven (7) Business  Days  following
          the  receipt  of  written  notice  from  MEMC of MEMC's  intention  to
          terminate this Agreement;

     (c)  By POSCO,  by ten (10) Business Days prior written  notice to MEMC (if
          POSCO is not then  materially in default or breach of this  Agreement)
          if MEMC shall default or be in material  breach in the  performance of
          any of its  obligations  under  this  Agreement,  and such  default or
          breach  has not been  cured by MEMC  within  seven (7)  Business  Days
          following  the  receipt  of  written  notice  from  POSCO  of  POSCO's
          intention to terminate this Agreement;

     (d)  By MEMC in the event of a  material  adverse  change in the  financial
          condition or  prospects  of the Company or a material  adverse loss or
          damage to or  condemnation  of the  property or assets of the Company;
          and

     (e)  By either  MEMC or POSCO if the  Closing  shall not have  occurred  by
          October  15,  2000 (or such other  date  mutually  agreed  upon by the
          parties in writing); provided, however, that this Agreement may not be
          terminated  under this  paragraph (d) by a party if the failure of the
          Closing  to occur  by such  date  shall  have  resulted  from the such
          party's failure to fulfill any obligation under this Agreement.

Article 10. Miscellaneous

10.1 Confidentiality. Prior to the Closing Date, neither party (a) will disclose
     to any other person or entity the  existence of this  Agreement,  or any of
     the terms,  conditions or other facts of this Agreement or the  transaction
     contemplated  hereby,  including the status thereof, or (b) make any public
     disclosure or publicity release pertaining to the transaction  contemplated
     hereby or the  existence  of this  Agreement,  without  the  prior  written
     consent of the other party.  However,  each party is permitted to make such
     disclosures  to the  public  or to  governmental  agencies  as  are  deemed
     necessary  to  maintain  compliance  with  and  to  prevent  violations  of
     applicable laws and regulations or the rules of any stock exchange on which
     the  securities  of a party (or a majority  stockholder  of a party) may be
     listed,  so long as the party  notifies  the  other  party in  writing  and
     furnishes the other party with a copy of any such proposed  disclosure.  In
     addition,  the parties understand that certain  disclosures  regarding this
     Agreement and the transaction  contemplated  hereby must be made to parties
     whose  consent  or  approval  may  be  required  in  connection  with  such
     transaction.  The parties agree that such  disclosures  may be made without
     any prior  consent or  notification.  In addition,  each party may disclose
     this Agreement and the transaction  contemplated hereby to its accountants,
     attorneys, lenders and majority stockholders provided such parties agree to
     keep the information confidential as provided in this Article 10.1.

10.2 Assignment; Binding Agreement.

     (a)  This  Agreement and all or any part of MEMC's  rights and  obligations
          hereunder  may be  assigned  by  MEMC  at any  time to any one or more
          direct or indirect  subsidiary(ies)  of MEMC  provided that MEMC shall
          remain liable to POSCO for the performance of such  subsidiary(ies) of
          the  obligations  set forth in this  Agreement.  MEMC shall cause such
          subsidiary(ies) to perform any of MEMC's  obligations  hereunder which
          are assigned to such subsidiary(ies).

     (b)  Except as provided in paragraph (a) above,  neither this Agreement nor
          any rights or  obligations  hereunder  may be assigned by either party
          without the prior written consent of the other party.

     (c)  This Agreement shall be binding upon and shall inure to the benefit of
          the  parties  hereto and to their  respective  heirs,  successors  and
          permitted assignees.

10.3 Amendments.  This  Agreement may be amended only in writing  signed by duly
     authorized representatives of all the parties.

10.4 Waiver.  No waiver of this Agreement by a party may be claimed against such
     party unless in writing  signed by such party.  No delay on the part of any
     party in exercising any right,  power or privilege  hereunder shall operate
     as a waiver  thereof,  nor shall any waiver on the part of any party of any
     such right, power or privilege preclude any further exercise thereof or the
     exercise of any other such right, power or privilege.

10.5 Entire Agreement.  This Agreement  constitutes the entire agreement between
     the  parties  pertaining  to the  subject  matter  hereof,  merge all prior
     negotiations  and drafts of the  parties  with  regard to the  transactions
     contemplated  herein,  and  supersede  any and all  other  written  or oral
     understandings   or   agreements   between  the  parties   regarding   such
     transactions.

10.6 Severability.  If any provision of this Agreement shall be determined to be
     unenforceable  by any court or other  governmental  entity,  the  remaining
     provisions  shall be severable and  enforceable  in  accordance  with their
     terms.

10.7 Counterparts.  This  Agreement  may be  executed  in one or more  identical
     counterparts,  each of which shall be deemed an  original  but all of which
     together will constitute one and the same instrument.

10.8 Headings;  Interpretation. The Article headings contained in this Agreement
     are  inserted  for  convenience  only and shall  not  affect in any way the
     meaning or interpretation of the Agreement.

10.9 Specific Performance. The parties agree that irreparable damage would occur
     in  the  event  any  provisions  of  this  Agreement  is not  performed  in
     accordance  with the terms or is otherwise  breached,  and that the parties
     shall be entitled to specific  performance of the terms hereof in any court
     of  competent  jurisdiction,  in  addition  to any  other  remedy at law or
     equity.

10.10No Third Party  Beneficiaries.  No provision of this Agreement,  express or
     implied,  is intended or shall be  construed  to confer upon or give to any
     person other than the parties any rights,  remedies or other benefits under
     or by reason of this  Agreement,  unless  specifically  provided  otherwise
     herein.

10.11Notices.  All written notices,  requests,  demands and other communications
     under  this  Agreement  shall be given by letter  (delivered  by hand,  air
     courier  or  registered  air  mail)  or  by  cable,   telex,  or  facsimile
     transmission  confirmed  by such a letter,  which shall be addressed to the
     respective  party as follows,  or to such other  coordinates  as such party
     shall have designated by written notice to the other party:

           To:      MEMC

                    MEMC Electronic Materials, Inc.
                    501 Pearl Drive (City of O'Fallon)
                    P.O. Box 8 St. Peters, MO 63376-0008
                    Attention: Chief Executive Officer
                    Fax:        1-636-474-5158
                    Telephone:  1-636-474-5000

           To:      POSCO

                    Pohang Iron & Steel Co., Ltd.
                    POSCO Center, 892, Daechi-4dong, Kangnam-gu
                    Seoul, 135-777, Korea
                    Attention: Executive Vice President
                    Fax:        82-2-3457-1914
                    Telephone:  82-2-3457-0058

10.12Governing  Law.  This  Agreement  shall  be  governed,  and  construed  and
     interpreted in accordance with, the laws of the Republic of Korea,  without
     giving effect to its conflict of laws principles.

IN  WITNESS   WHEREOF,   the   parties   have  caused   their  duly   authorized
representatives to execute this Agreement on the date first written above.

MEMC Electronic Materials, Inc.                 Pohang Iron & Steel Co., Ltd.

/s/ Klaus R. von Horde                          /s/ Ku-Taek Lee
--------------------------                      -----------------------------
Name:  Klaus R. von Horde                       Name:  Ku-Taek Lee
Title: President & CEO                          Title:  President & CEOEuro 80,000,000

                                CREDIT AGREEMENT

                         Dated as of September 22, 2000

                                     Between

                        MEMC ELECTRONIC MATERIALS, S.P.A.
                                   as Borrower

                                       and

                         VEBA INTERNATIONAL FINANCE B.V.
                         as Initial Lender and as Agent

<PAGE>
                                CREDIT AGREEMENT

                         Dated as of September 22, 2000

     MEMC  ELECTRONIC  MATERIALS,  S.P.A.,  a company  formed  under the laws of
Italy, as the borrower (the "Borrower"),  and VEBA INTERNATIONAL FINANCE B.V., a
company formed under the laws of the Netherlands ("VEBA"), as the initial lender
(the  "Initial  Lender") and as agent  (together  with any  successor  appointed
pursuant to Article VII, the "Agent") for the Lenders (as hereinafter  defined),
hereby agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

     SECTION  1.01.  Certain  Defined  Terms.  As used in  this  Agreement,  the
following  terms shall have the following  meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

     "Advance" has the meaning specified in Section 2.01.

     "Affiliate"  means,  as to any Person,  any other Person that,  directly or
indirectly,  controls,  is  controlled  by or is under common  control with such
Person  or is a  director  or  officer  of such  Person.  For  purposes  of this
definition,  the term "control" (including the terms "controlling",  "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to vote 50% or more of the voting stock of such Person or
to direct or cause the direction of the  management and policies of such Person,
whether through the ownership of voting stock, by contract or otherwise.

     "Agent"  has the  meaning  specified  in the  recital  of  parties  to this
Agreement.

     "Agent's  Account" means the account of the Agent maintained with such bank
as the Agent shall  specify in writing to the Borrower and the Lenders from time
to time.

     "Applicable Spread" means 5.1325%,  which is the percentage per annum equal
to the excess of (a) the Bloomberg  fair market sector curves  (adjusted for the
chosen interest rate method) applicable two business days prior to September 22,
2000, to a B3 rated industrial  borrower for the period from September 22, 2000,
through  the  Termination  Date  over (b) the  corresponding  Swap Rate for such
period.

     "Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender and an Eligible Assignee and accepted by the Agent, in substantially
the form of Exhibit C hereto.

     "Bank" means any Lender other than the Initial  Lender or any  Affiliate of
the Initial Lender.

     "Borrower"  has the  meaning  specified  in the  recital of parties to this
Agreement.

     "Borrowing"  means the  borrowing  consisting  of the Advances  made by the
Lenders.

     "Borrowing Notice" has the meaning specified in Section 2.02(a).

     "Business  Day" means a day of the year on which banks are not  required or
authorized by law to close in Amsterdam, The Netherlands.

     "Change  of  Control"  means the  Initial  Lender or any  Affiliate  of the
Initial Lender,  through any transaction or series of transactions or otherwise,
no longer has beneficial ownership,  directly or indirectly, of more than 50% of
the shares of common stock of the Borrower.

     "Change  of  Control  Date"  means  the date of  occurrence  of a Change of
Control;  provided,  that if such  occurrence is on or prior to January 1, 2001,
the occurrence shall be deemed to have occurred on January 1, 2001.

     "Commitment" has the meaning specified in Section 2.01.

     "Confidential Information" means information that the Borrower furnishes to
the Agent or any Lender in a writing  designated as  confidential,  but does not
include  any such  information  that is or becomes  generally  available  to the
public or that is or becomes available to the Agent or such Lender from a source
other than the  Borrower,  an  Affiliate  of the Borrower or an Affiliate of the
Initial Lender.

     "Consolidated"  refers to the  consolidation of accounts in accordance with
GAAP.

     "Debt" means (a) indebtedness for borrowed money, (b) obligations evidenced
by bonds, debentures, notes or other similar instruments, (c) obligations to pay
the deferred  purchase price of property or services,  (d) obligations as lessee
under leases which shall have been or should be, in  accordance  with  generally
accepted accounting principles,  recorded as capital leases, and (e) obligations
under direct or indirect  guaranties in respect of, and obligations  (contingent
or  otherwise)  to purchase  or  otherwise  acquire,  or  otherwise  to assure a
creditor  against loss in respect of,  indebtedness  or obligations of others of
the kinds referred to in clause (a) through (d) of this definition.

     "Default" means any Event of Default or any event that would  constitute an
Event of Default but for the requirement  that notice be given or time elapse or
both.

     "Dollars"  and the sign "$" each means lawful money of the United States of
America.

     "Domestic  Lending  Office" means,  with respect to any Bank, the office of
such Bank  specified as its  "Domestic  Lending  Office" in the  Assignment  and
Acceptance  pursuant to which it became a Lender,  or such other  office of such
Bank as such Bank may from time to time specify to the Borrower and the Agent.

     "Effective Date" has the meaning specified in Section 3.01.

     "Eligible  Assignee"  means  any  Person  approved  by all of the  Lenders;
provided,  however,  that neither the Borrower,  MEMC nor any Subsidiary of MEMC
shall qualify as an Eligible Assignee.

     "Euros" and the sign  "Euro"  means the money of the  participating  member
states of the European Union as defined in Article 2 of Regulation  947/98/CE of
May 3, 1998 of the Council of the European Union, as amended.

     "EURIBOR"  means,  at a time selected by the Agent on the Quotation Day for
the offering of deposits in Euro for a period comparable to the Interest Period,
(a) the  applicable  Screen Rate,  or (b) if no Screen Rate is available for the
period of that loan, the arithmetic  mean of the rates (rounded  upwards to four
decimal  places)  as  supplied  to the  Agent  at its  requested  quoted  by the
reference banks (chosen by the Agent) to lending banks in the European interbank
market.

     "Events of Default" has the meaning specified in Section 6.01.

     "GAAP" has the meaning specified in Section 1.03.

     "Governmental Authority" means any nation or government, any state or other
political subdivision thereof, and any federal, state, local or foreign court or
governmental,  executive,  legislative,  judicial,  administrative or regulatory
agency, department,  authority,  instrumentality,  commission,  board or similar
body.

     "Guaranty" means the Guaranty Agreement of MEMC in the form attached hereto
as Exhibit D.

     "Guarantor" means MEMC.

     "Indemnified Party" has the meaning specified in Section 8.04(b).

     "Initial  Lender"  has the meaning  specified  in the recital of parties to
this Agreement.

     "Interest  Period"  means  for  each  Advance  comprising  part of the same
Borrowing,  the period  commencing  on the date of such Advance and ending three
months  thereafter,  and thereafter the period commencing on the last day of the
prior Interest Period and ending three months thereafter.

     "Interest  Rate" for any  Interest  Period means a three months rate at all
times equal to (a) the EURIBOR rate for such  Interest  Period for such Advance,
plus (b) the Applicable Spread.

     "Lender" means the Initial Lender and each Person that shall become a party
hereto pursuant to Section 8.07.

     "Material  Adverse  Change"  means  any  material  adverse  change  in  the
business,   condition   (financial  or  otherwise),   operations,   performance,
properties or prospects of the Borrower and its Subsidiaries taken as a whole.

     "MEMC" means MEMC Electronic Materials, Inc., a Delaware corporation.

     "Note" means a promissory note of the Borrower  payable to the order of any
Lender,  substantially  in the form of Exhibit A hereto,  evidencing the Debt of
the Borrower to such Lender resulting from the Advance made by such Lender.

     "Other Taxes" has the meaning specified in Section 2.12(b).

     "Person"  means  an  individual,  partnership,   corporation  (including  a
business trust), joint stock company, trust, unincorporated  association,  joint
venture,  limited  liability  company or other  entity,  or a government  or any
political subdivision or agency thereof.

     "PHC" means Posco Huls Co.,  Ltd.,  a  corporation  organized  and existing
under the laws of the Republic of Korea.

     "Posco"  means Pohang Iron & Steel Co.,  Ltd.,  corporation  organized  and
existing under the laws of the Republic of Korea.

     "Purchase  Agreement"  means the Share Sale and  Purchase  Agreement  dated
September  7, 2000 by and between  Posco and MEMC,  a true and  correct  copy of
which has been delivered to VEBA.

     "Quotation Day" means, in relation to the Interest Period,  two TARGET Days
before the first day of such Interest Period.

     "Register" has the meaning specified in Section 8.07(c).

     "Repayment  Date"  means,  with  respect  to  the  Advances   comprising  a
Borrowing,  the date specified by the Borrower in the Borrowing  Notice for such
Borrowing on which the Borrower agrees to repay the aggregate  principal  amount
of the Advances comprising such Borrowing;  provided that such date shall not be
later than the Termination Date.

     "Screen Rate" means the percentage rate per annum determined by the Banking
Federation  of the  European  Union for the  relevant  period  displayed  on the
appropriate  page(s) of the Reuters  screen,  as determined by the Agent. If the
agreed page is replaced or service ceases to be available, the Agent may specify
another page or service  displaying the appropriate rate after consultation with
the Borrower and the Lenders.

     "Subsidiary"  of any  Person  means  any  corporation,  partnership,  joint
venture,  limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding  capital stock having ordinary voting
power  to  elect a  majority  of the  board  of  directors  of such  corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation  shall or might have voting power upon the occurrence of any
contingency),  (b) the  interest  in the  capital  or  profits  of such  limited
liability company,  partnership or joint venture or (c) the beneficial  interest
in such  trust  or  estate  is at the  time  directly  or  indirectly  owned  or
controlled  by such  Person,  by  such  Person  and  one or  more  of its  other
Subsidiaries  or by one or more of such Person's other  Subsidiaries;  provided,
however,  that the term "Subsidiary"  shall not include any joint venture of the
Borrower  with  respect to any action or decision of the board of  directors  of
such joint venture if, by written agreement,  such action or decision requires a
vote in excess of the number of members  of such board of  directors  elected or
controlled by the Borrower.

     "Swap Rate" means the US-Dollar  denominated  interbank  interest rate swap
offered  rates as shown on the  appropriate  Reuters  page, as determined by the
Agent, and other comparable brokerage pages, adjusted for a three month period.

     "TARGET" means Trans-European  Automated Real-time Gross Settlement Express
Transfer payment system.

     "TARGET  Day" means any day on which TARGET is open for the  settlement  of
payments in Euro.

     "Taxes" has the meaning specified in Section 2.12(a).

     "Termination  Date" means the earlier of (a)  September  22, 2001,  (b) the
termination  in whole of the  Commitments  pursuant  to Section  2.04 or Section
6.01, or (c) October 16, 2001 if the  acquisition  contemplated  by the Purchase
Agreement has not been consummated.

     "United States" and "U.S." each means the United States of America.

     The  words  "include,"  "includes"  and  "including"  shall be deemed to be
followed by the phrase "without limitation."

     SECTION  1.02.  Computation  of  Time  Periods.  In this  Agreement  in the
computation of periods of time from a specified date to a later  specified date,
the word "from" means "from and  including"  and the words "to" and "until" each
means "to but excluding."

     SECTION 1.03.  Accounting  Terms.  All  accounting  terms not  specifically
defined  herein  shall  be  construed  in  accordance  with  generally  accepted
accounting principles ("GAAP").

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

     SECTION 2.01. The Advances.  Each Lender severally agrees, on the terms and
conditions  hereinafter  set forth, to make advances (each, an "Advance") to the
Borrower  from time to time on any  Business  Day  during  the  period  from the
Effective Date until the Termination  Date in an amount not to exceed the amount
set forth opposite such Lender's name on the signature  pages hereof or, if such
Lender has entered into any Assignment and Acceptance, set forth for such Lender
in the Register  maintained by the Agent  pursuant to Section  8.07(c),  as such
amount may be reduced  pursuant to Section  2.04 (such  Lender's  "Commitment").
Each Borrowing shall be in an aggregate amount of Euro 10,000,000 or an integral
multiple of Euro 100,000 in excess thereof and shall be made  simultaneously  by
the Lenders ratably according to their respective  Commitments.  The Borrower is
not entitled to reborrow any repaid or prepaid portion of any Advance.

     SECTION 2.02.  Making the  Advances.  (a) Each  Borrowing  shall be made on
notice, given not later than 11:00 A.M. (Amsterdam, The Netherlands time) on the
third  Business Day prior to the date of the proposed  Borrowing by the Borrower
to the  Agent,  which  shall  give to  each  Lender  prompt  notice  thereof  by
telecopier or telex. Each notice of a Borrowing (a "Borrowing  Notice") shall be
by telephone,  confirmed  immediately  in writing,  or  telecopier or telex,  in
substantially  the form of Exhibit B hereto,  specifying  therein,  among  other
things,  the requested date of such Borrowing,  the amount of such Borrowing and
the Repayment Date of the Advances comprising such Borrowing. Each Lender shall,
before  11:00  A.M.  (Amsterdam,  The  Netherlands  time)  on the  date  of such
Borrowing,  make available for the account of its Domestic Lending Office to the
Agent at the Agent's Account,  in same day funds,  such Lender's ratable portion
of such Borrowing.  After the Agent's receipt of such funds and upon fulfillment
of the applicable  conditions set forth in Article III, the Agent will make such
funds  available to the Borrower by  depositing  the proceeds of the Advances in
such Euro  account of the  Borrower  (or of such  Person as the  Borrower  shall
specify to the Lender in the Borrowing  Notice or by other written notice to the
Lender given  simultaneously  with or prior to such Borrowing Notice) maintained
with such bank as the  Borrower  shall  specify  to the Agent in such  Borrowing
Notice.

     The parties hereto understand and agree that the Initial Lender may, in its
sole  discretion  (but shall  have no  obligation  to),  designate  a  financial
institution  or  another  Person to perform  the  Initial  Lender's  obligations
hereunder  in  accordance  with the  terms  hereof.  The  Borrower  agrees  that
performance  of any such  obligation by any such designee of the Initial  Lender
shall be deemed to constitute performance by the Initial Lender for all purposes
of this Agreement and the Note and shall  discharge the Initial Lender from such
obligation to the extent of such performance.

     (b) Any  Borrowing  Notice  delivered by the Borrower to the Agent shall be
irrevocable  and binding on the  Borrower.  The Borrower  shall  indemnify  each
Lender against any loss, cost or expense  incurred by such Lender as a result of
any failure to fulfill on or before the date specified in such Borrowing  Notice
for  such  Borrowing  the  applicable  conditions  set  forth  in  Article  III,
including, without limitation, any loss (including loss of anticipated profits),
cost or  expense  incurred  by  reason of the  liquidation  or  reemployment  of
deposits or other  funds  acquired by such Lender to fund the Advance to be made
by such Lender as part of such Borrowing when such Advance,  as a result of such
failure, is not made on such date.

     (c) The Agent shall only make  available to the Borrower on the date of any
Borrowing the ratable  portion of such Borrowing of each Lender that such Lender
has made available to the Agent on or prior to the date of such Borrowing.

     (d) The  failure of any Lender to make the Advance to be made by it as part
of any Borrowing shall not relieve any other Lender of its  obligation,  if any,
hereunder to make its Advance on the date of such Borrowing, but no Lender shall
be  responsible  for the  failure of any other  Lender to make the Advance to be
made by such other Lender on the date of any Borrowing.

     (e) Notwithstanding the foregoing,  the Borrower agrees that there shall be
only one Advance hereunder.

     SECTION 2.03.  Commitment  Fee. The Borrower agrees to pay to the Agent for
the  account  of each  Lender a  commitment  fee on the  unused  portion of such
Lender's  Commitment  from the Effective  Date in the case of the Initial Lender
and from the effective date specified in the Assignment and Acceptance  pursuant
to  which it  became  a  Lender  in the  case of each  other  Lender  until  the
Termination  Date at a rate per annum  equal to 1/4 of 1%,  payable  in  arrears
quarterly  on  the  last  day of  each  March,  June,  September  and  December,
commencing September 30, 2000, and on the Termination Date.

     SECTION 2.04.  Optional  Termination or Reduction of the  Commitments.  The
Borrower shall have the right,  upon at least three Business Days' notice to the
Agent,  to  terminate in whole or reduce in part the unused  Commitments  of the
Lenders,  provided  that each partial  reduction  shall be in the amount of Euro
100,000 or an integral multiple of Euro 100,000 in excess thereof.

     SECTION  2.05.  Repayment.  The  Borrower  shall repay to the Agent for the
ratable  account of the Lenders the aggregate  principal  amount of the Advances
then  outstanding  comprising  each  Borrowing  on the  Repayment  Date for such
Borrowing.

     SECTION 2.06.  Interest.  (a) Interest on the Advances.  The Borrower shall
pay interest on the unpaid principal amount of each Advance owing to each Lender
from the date of such Advance until such  principal  amount shall have been paid
in full at an interest  rate per annum equal to the  Interest  Rate,  payable in
arrears on the last day of such  Interest  Period  and on the date such  Advance
shall be paid in full.

     (b) Interest on Overdue Amounts.  In the event that any principal amount of
any Advance or any interest,  fees,  costs,  expenses or other  amounts  payable
hereunder are not paid when due, the Borrower  shall pay interest on such unpaid
amount  from the date such  amount is due until the date such  amount is paid in
full,  payable on demand,  at an interest  rate per annum equal to the  interest
rate referred to in subsection (a) of this Section 2.06 then in effect plus 2%.

     SECTION 2.07. Reserved.

     SECTION 2.08.  Optional  Prepayments and Reductions of Commitment.  (a) The
Borrower may, upon at least three Business Days' notice to the Agent stating the
proposed date and the aggregate principal amount of the prepayment,  and if such
notice is given the Borrower shall,  prepay the outstanding  principal amount of
the Advances in whole or ratably in part,  together with (i) accrued interest to
the date of such prepayment on the principal  amount prepaid and (ii) any amount
payable pursuant to Section 8.04(c);  provided,  however, that each such partial
prepayment  shall be in an  aggregate  principal  amount  of not less  than Euro
5,000,000 or an integral multiple of Euro 100,000 in excess thereof.

     (b) Upon the  prepayment  in whole or in part of the Advances in accordance
with  subsection (a) of this Section 2.08 or under Section 5.02, the Commitments
of the  Lenders  shall be  automatically  reduced  ratably by the amount of such
prepayment.

     SECTION 2.09.  Increased Costs,  Etc. If due to either (a) the introduction
of or any change (including, without limitation, any change by way of imposition
or increase of reserve  requirements) in or in the  interpretation of any law or
regulation or (b) the compliance  with any guideline or request from any central
bank or other  Governmental  Authority (whether or not having the force of law),
there  shall be any  increase  in the cost to any Lender of  agreeing to make or
making,  funding or maintaining an Advance, then the Borrower shall from time to
time, upon demand by such Lender (with a copy of such demand to the Agent),  pay
to the Agent for the account of such Lender  additional  amounts  sufficient (as
applicable) to compensate  such Lender for such increased cost. A certificate as
to the amount of such increased cost,  submitted to the Borrower by such Lender,
shall be conclusive and binding for all purposes, absent manifest error.

     SECTION  2.10.  Illegality.  Notwithstanding  any other  provision  of this
Agreement, if any Bank shall notify the Borrower that any law or regulation,  or
the  introduction  of or any  change in or in the  interpretation  of any law or
regulation,  makes  it  unlawful,  or any  central  bank or  other  Governmental
Authority  asserts  that  it  is  unlawful,  for  such  Lender  to  perform  its
obligations  hereunder  to make an  Advance  or to fund or  maintain  an Advance
hereunder,  (a) the  obligation  of such Lender to make,  fund and  maintain any
Advance shall be suspended  until such Lender shall notify the Borrower that the
circumstances  causing such  suspension no longer  exist,  (b) such Lender shall
promptly notify the Borrower of such circumstances and such suspension,  and (c)
unless the  Borrower  and such Lender  shall have  otherwise  agreed  within ten
Business  Days of such  notice,  the  Borrower  shall  forthwith  on such  tenth
Business Day prepay in full the Advances then outstanding together with interest
accrued thereon.

     SECTION 2.11.  Payments and Computations.  (a) The Borrower shall make each
payment hereunder and under the Notes not later than 1:00 P.M.  (Amsterdam,  The
Netherlands  time)  on the day  when  due in Euro to the  Agent  at the  Agent's
Account,  in each case in immediately  available  funds. The Agent will promptly
thereafter  cause to be  distributed  like  funds  relating  to the  payment  of
principal or interest or fees ratably  (other than amounts  payable  pursuant to
Section  2.09,  2.12 or  8.04(c))  to the  Lenders  for  the  account  of  their
respective  Domestic Lending Offices,  and like funds relating to the payment of
any other  amount  payable to any Lender to such  Lender for the  account of its
Domestic Lending Office, in each case to be applied in accordance with the terms
of this  Agreement.  Upon its  acceptance of an Assignment  and  Acceptance  and
recording  of the  information  contained  therein in the  Register  pursuant to
Section 8.07(d),  from and after the effective date specified in such Assignment
and Acceptance,  the Agent shall make all payments hereunder and under the Notes
in respect of the interest  assigned thereby to the Lender assignee  thereunder,
and the parties to such  Assignment  and Acceptance  shall make all  appropriate
adjustments  in such payments for periods prior to such  effective date directly
between themselves.

     (b) All computations of interest and of fees shall be made in good faith by
the  Agent on the  basis of a year of 360 days  for the  actual  number  of days
(including the first day but excluding the last day) occurring in the period for
which such interest or fees are payable.

     (c) Whenever any payment hereunder or under the Notes shall be stated to be
due on a day other than a Business  Day,  such payment shall be made on the next
succeeding  Business  Day,  and such  extension  of time  shall in such  case be
included in the computation of payment of interest or fee, as the case may be.

     (d) Unless the Agent shall have received  notice from the Borrower prior to
the date on which any payment is due to the Lenders  hereunder that the Borrower
will not make such  payment in full,  the Agent may assume that the Borrower has
made  such  payment  in full to the Agent on such  date and the  Agent  may,  in
reliance upon such  assumption,  cause to be  distributed to each Lender on such
due date an  amount  equal to the  amount  then due such  Lender.  If and to the
extent the  Borrower  shall not have so made such  payment in full to the Agent,
each Lender shall repay to the Agent forthwith on demand such amount distributed
to such Lender together with interest  thereon,  for each day from the date such
amount is  distributed  to such Lender  until the date such  Lender  repays such
amount to the Agent, at the overnight EURIBOR rate as selected and calculated by
the Agent.

     SECTION 2.12. Taxes. (a) Any and all payments by the Borrower  hereunder or
under the Notes shall be made in accordance with Section 2.11, free and clear of
and without deduction for any and all present or future taxes, levies,  imposts,
deductions,  charges or withholdings,  and all liabilities with respect thereto,
excluding,  in the case of each  Lender  and the  Agent,  net  income  taxes (or
franchise  taxes imposed in lieu thereof) that are imposed on such Lender or the
Agent by the state or foreign  jurisdiction  under the laws of which such Lender
or the  Agent (as the case may be) is  organized  or any  political  subdivision
thereof and, in the case of each Lender,  net income taxes (or  franchise  taxes
imposed in lieu thereof) that are imposed on such Lender by the state or foreign
jurisdiction  of  such  Lender's   Domestic  Lending  Office  or  any  political
subdivision thereof (all such nonexcluded taxes,  levies,  imposts,  deductions,
charges,  withholdings and liabilities in respect of payments hereunder or under
the Notes being  hereinafter  referred to as "Taxes").  If the Borrower shall be
required  by law to  deduct  any Taxes  from or in  respect  of any sum  payable
hereunder  or under any Note,  (i) the sum payable  shall be increased as may be
necessary so that, after making all required  deductions  (including  deductions
applicable to additional  sums payable under this Section 2.12),  such Lender or
the Agent receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant  taxation  authority
or other authority in accordance with applicable law.

     (b) In  addition,  the  Borrower  shall pay any  present  or future  stamp,
documentary,  excise, property or other taxes, charges or levies that arise from
any payment made hereunder or under the Notes or from the execution, delivery or
registration  of, or  otherwise  with  respect to, this  Agreement  or the Notes
(hereinafter referred to as "Other Taxes").

     (c) The  Borrower  shall  indemnify  each Lender and the Agent for the full
amount of Taxes or Other  Taxes and for the full  amount of Taxes or Other Taxes
imposed by any  jurisdiction  on amounts payable under this Section 2.12 imposed
on or paid by such  Lender or the  Agent  (as the case may be) or any  liability
(including penalties, additions to tax, interest and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted.  This indemnification shall be made within 30 days from the
date such Lender or the Agent makes written demand therefor.

     (d) Within 30 days after the date of any  payment  of Taxes,  the  Borrower
shall  furnish to the Agent,  at its address  referred to in Section  8.02,  the
original receipt of payment or a certified copy of such receipt. If no Taxes are
payable in respect of any payment  hereunder  or under the Notes,  the  Borrower
shall furnish to the Agent, at such address, a certificate from each appropriate
taxing authority,  or an opinion of counsel acceptable to the Lenders, in either
case stating that such payment is exempt from or not subject to Taxes.

     (e) Each Lender  organized  under the laws of a jurisdiction  outside Italy
shall,  on or after the Effective  Date in the case of the Initial Lender and on
the date of the Assignment  and Acceptance  pursuant to which it became a Lender
in the case of each other Lender,  and from time to time thereafter if requested
in writing by the Borrower or the Agent (but only so long as such Lender remains
lawfully  able to do so),  provide  each of the  Borrower and the Agent with tax
forms  or   documentation,   as   appropriate,   prescribed  by  Italian  taxing
authorities, certifying that such Lender is exempt from or entitled to a reduced
rate of  Italian  withholding  tax on  payments  of  interest  pursuant  to this
Agreement or the Notes. The Lender shall not be required to provide the Borrower
or Agent with any tax form or  documentation  referred to in this subsection (e)
if such tax form or  documentation  (i) requires the disclosure of  information,
other than  information  necessary  to compute the tax  payable and  information
required on the date hereof by the Italian  taxing  authorities  that the Lender
reasonably  considers to be  confidential,  or (ii) is more onerous (in form, in
procedure  or  in  substance  of  the  information  disclosed)  than  comparable
information  or  other  reporting  requirements  imposed  under  U.S.  tax  law,
regulation or administrative practice (such as Forms W-8, W-BEN or W-8ECI or any
comparable successor form).

     (f) For any period with respect to which a Lender has failed to provide the
Borrower or Agent with the appropriate  form described in Section 2.12(e) (other
than if such failure is due to a change in law occurring  subsequent to the date
on which a form  originally  was  required  to be  provided  or if such  form is
otherwise not  required),  such Lender shall not be entitled to  indemnification
under Section  2.12(a) with respect to Taxes imposed by Italy until such form is
provided;  provided,  however,  that should such Lender become  subject to Taxes
because of its failure to deliver a form  required  hereunder,  the Borrower and
Agent shall take such steps as such Lender  shall  reasonably  request to assist
such Lender to recover such Taxes.

     (g) If  following  any  amount  paid under this  Section  2.12,  the Lender
receives  or is  granted a credit  against or  remission  for any Taxes or Other
Taxes  payable  by such  Lender  which the  Lender  determines,  in its sole and
absolute discretion, is attributable to any Taxes or Other Taxes paid hereunder,
such Lender shall,  subject to the Borrower  having made any  increased  payment
hereunder  and to the extent such Lender can do so in its sole  opinion  without
prejudicing  the retention of the amount of such credit or remission and without
prejudice  to its rights to obtain any other  relief or  allowance  which may be
available  to such  Lender  and to conduct  its own tax  affairs as it sees fit,
reimburse  such  amount  to the  Borrower  as the  Lender  shall in its sole and
absolute  discretion certify to be the proportion of such credit or remission as
will leave the Lender (after such  reimbursement)  in no worse  position than it
would have been in had no payment been required  under this Section  2.12.  Such
reimbursement  shall be made promptly upon the Lender certifying that the amount
of such credit or remission has been received by it; provided,  however, that no
such payment  shall be made so long as an Event of Default  shall have  occurred
and be continuing.  The  disallowance or reduction of any credit or remission of
Taxes or Other  Taxes  with  respect  to which a Lender  has made a  payment  to
Borrower under this Section 2.12 shall be treated as Taxes for which Borrower is
obligated to indemnify  such Lender  hereunder.  Notwithstanding  the above,  no
Lender  shall (i) be under any  obligation  to claim a tax credit in priority to
any other claim, relief, credit or deduction available to such Lender or (ii) be
obligated to disclose any information  regarding its tax affairs or computations
to the Borrower.

     SECTION  2.13.  Sharing of  Payments,  Etc. If any Lender  shall obtain any
payment (whether  voluntary,  involuntary,  through the exercise of any right of
setoff, or otherwise) on account of the Advance owing to it (other than pursuant
to Section 2.09,  2.12 or 8.04(c)) in excess of its ratable share of payments on
account of the Advances obtained by all the Lenders, such Lender shall forthwith
purchase from the other  Lenders such  participations  in the Advances  owing to
them as shall be necessary to cause such  purchasing  Lender to share the excess
payment ratably with each of them; provided, however, that if all or any portion
of such excess payment is thereafter recovered from such purchasing Lender, such
purchase  from each Lender shall be rescinded and such Lender shall repay to the
purchasing  Lender the purchase  price to the extent of such  recovery  together
with an amount equal to such Lender's ratable share (according to the proportion
of (a) the amount of such Lender's required repayment to (b) the total amount so
recovered  from the  purchasing  Lender) of any interest or other amount paid or
payable by the  purchasing  Lender in respect of the total amount so  recovered.
The Borrower agrees that any Lender so purchasing a  participation  from another
Lender  pursuant to this  Section 2.13 may, to the fullest  extent  permitted by
law,  exercise  all its rights of payment  (including  the right of setoff) with
respect  to such  participation  as fully  as if such  Lender  were  the  direct
creditor of the Borrower in the amount of such participation.

     SECTION  2.14.  Use of  Proceeds.  The  proceeds of the  Advances  shall be
available  (and  the  Borrower  agrees  that it  shall  use  such  proceeds)  to
capitalize  one or more  direct or indirect  wholly  owned  subsidiaries  of the
Borrower  and for one of such  subsidiaries  to  purchase  40% of the issued and
outstanding  share  capital  of PHC from Posco  under the terms of the  Purchase
Agreement by paying the full purchase price therefor,  and the balance,  if any,
shall be used for general corporate purposes.

                                   ARTICLE III

                     CONDITIONS TO EFFECTIVENESS AND LENDING

     SECTION  3.01.  Conditions  Precedent  to  Effectiveness  of Section  2.01.
Section 2.01 of this  Agreement  shall  become  effective on and as of the first
date (the  "Effective  Date") on which the following  conditions  precedent have
been satisfied:

     (a) There shall have  occurred no Material  Adverse  Change  since June 30,
2000.

     (b)  There  shall  exist no  action,  suit,  investigation,  litigation  or
proceeding  affecting  the  Borrower  or  any  of its  Subsidiaries  pending  or
threatened in writing before any court,  governmental  agency or arbitrator that
(i) may materially adversely affect the financial condition or operations of the
Borrower or any of its  Subsidiaries  or (ii)  purports to affect the  legality,
validity or  enforceability of this Agreement or any Note or the consummation of
the transactions contemplated hereby.

     (c) On the Effective Date, the following  statements  shall be true and the
Agent shall have received a certificate  signed by a duly authorized  officer of
the Borrower, dated the Effective Date, stating that:

          (i) the representations  and warranties  contained in Section 4.01 are
     correct on and as of the Effective Date, and

          (ii) no event  has  occurred  and is  continuing  that  constitutes  a
     Default.

     (d) The Agent  shall  have  received  on or before the  Effective  Date the
following,  each dated  such date,  in form and  substance  satisfactory  to the
Lenders (except for the Notes):

          (i)  executed   counterparts  of  this  Agreement  duly  executed  and
     delivered by the Borrower;

          (ii) the Notes to the order of the Lenders;

          (iii) certified copies of the resolutions of the board of directors of
     the Borrower  approving this Agreement and the Notes,  and of all documents
     evidencing other necessary corporate action and governmental  approvals, if
     any, with respect to this Agreement and the Notes;

          (iv) a certificate  of the Secretary or an Assistant  Secretary of the
     Borrower  certifying  the names and true  signatures of the officers of the
     Borrower  authorized  to sign  this  Agreement  and the Notes and the other
     documents to be delivered hereunder;

          (v) the Guaranty duly executed and delivered by the Guarantor;

          (vi) certified  copies of the resolutions of the board of directors of
     the Guarantor,  and of all documents  evidencing other necessary  corporate
     action and  governmental  approvals,  if any, with respect to the Guaranty;
     and

          (iv) a certificate  of the Secretary or an Assistant  Secretary of the
     Guarantor  certifying the names and true  signatures of the officers of the
     Guarantor authorized to sign the Guaranty.

     SECTION 3.02.  Conditions  Precedent to each  Borrowing.  The obligation of
each  Lender to make an  Advance  on the  occasion  of each  Borrowing  shall be
subject to the conditions  precedent that the Effective Date shall have occurred
and on the date of such  Borrowing the following  statements  shall be true (and
each of the giving of the applicable  Borrowing Notice and the acceptance by the
Borrower of the proceeds of such Borrowing shall constitute a representation and
warranty by the Borrower that on the date of such Borrowing such  statements are
true):

          (a) the representations  and warranties  contained in Section 4.01 are
     correct on and as of the date of such  Borrowing,  before and after  giving
     effect to such Borrowing and to the application of the proceeds  therefrom,
     as though made on and as of such date, and

          (b) no event has occurred and is continuing, or would result from such
     Borrowing  or  from  the  application  of  the  proceeds  therefrom,   that
     constitutes a Default.

     SECTION  3.03.   Determinations   Under  Section  3.01.   For  purposes  of
determining  compliance  with the  conditions  specified in Section  3.01,  each
Lender  shall be deemed to have  consented  to,  approved  or  accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Agent  responsible  for the  transactions  contemplated by this Agreement
shall have received notice from such Lender prior to the date that the Borrower,
by notice to the Lenders,  designates as the proposed Effective Date, specifying
its  objection  thereto.  The Agent  shall  promptly  notify the  Lenders of the
occurrence of the Effective Date.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

     SECTION 4.01.  Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:

          (a) The Borrower is a company duly organized,  validly existing and in
     good standing under the laws of the Italy.

          (b) The  execution,  delivery and  performance by the Borrower of this
     Agreement and the Notes are within the Borrower's  corporate  powers,  have
     been  duly  authorized  by  all  necessary  corporate  action,  and  do not
     contravene  (i) the  Borrower's  charter  or by-laws or (ii) any law or any
     contractual restriction binding on or affecting the Borrower.

          (c) No  authorization or approval or other action by, and no notice to
     or  filing  with,  any  Governmental  Authority  is  required  for  the due
     execution,  delivery and  performance by the Borrower of this Agreement and
     the Notes.

          (d) This Agreement has been,  and the Notes when  delivered  hereunder
     will have been, duly executed and delivered by the Borrower. This Agreement
     is, and each of the Notes when delivered  hereunder  will be, legal,  valid
     and binding obligations of the Borrower enforceable against the Borrower in
     accordance with their respective terms.

          (e) There is no pending or threatened  action or proceeding  affecting
     the  Borrower  or any of its  Subsidiaries  before any court,  governmental
     agency  or  arbitrator,  that  (i)  may  materially  adversely  affect  the
     financial   condition  or   operations  of  the  Borrower  or  any  of  its
     Subsidiaries  or  (ii)  purports  to  affect  the  legality,   validity  or
     enforceability  of this Agreement or the Notes or the  consummation  of the
     transactions contemplated hereby.

          (f) The Advances  and all related  obligations  of the Borrower  under
     this  Agreement  and the Notes  rank pari  passu  with all other  unsecured
     obligations  of the  Borrower  that are  not,  by  their  terms,  expressly
     subordinate to such other obligations of the Borrower.

          (g) The Purchase  Agreement  has not been  terminated,  and either the
     purchase contemplated by the Purchase Agreement has been consummated or the
     Borrower  believes in good faith that such purchase will be  consummated in
     accordance with the terms of the Purchase Agreement.

          (h) The  Borrower  is not  insolvent  and has a net worth  equal to at
     least US$80,000,000.

                                    ARTICLE V

                            COVENANTS OF THE BORROWER

     SECTION  5.01.  Affirmative  Covenants.  On and after the Change of Control
Date and so long as any Advance shall remain unpaid or any Lender shall have any
Commitment  hereunder,  the Borrower  will,  unless the Lenders shall  otherwise
consent in writing:

          (a)  Compliance  with  Laws,  Etc.  Comply,  and  cause  each  of  its
     Subsidiaries to comply, in all material respects, with all applicable laws,
     rules,   regulations  and  orders,  such  compliance  to  include,  without
     limitation, compliance with environmental laws.

          (b) Payment of Taxes,  Etc. Pay and  discharge,  and cause each of its
     Subsidiaries to pay and discharge, before the same shall become delinquent,
     (i) all taxes,  assessments and governmental charges or levies imposed upon
     it or upon its property and (ii) all lawful claims that,  if unpaid,  might
     by law become a lien upon its property; provided, however, that neither the
     Borrower nor any of its Subsidiaries  shall be required to pay or discharge
     any such tax,  assessment,  charge or claim that is being contested in good
     faith and by proper  proceedings and as to which  appropriate  reserves are
     being maintained, unless and until any lien resulting therefrom attaches to
     its property and becomes enforceable against its other creditors.

          (c) Preservation of Corporate  Existence,  Etc. Preserve and maintain,
     and cause each of its Subsidiaries to preserve and maintain,  its corporate
     existence,  rights  (charter  and  statutory)  and  franchises;   provided,
     however,  that neither the Borrower  nor any of its  Subsidiaries  shall be
     required to preserve  any right or  franchise  if the board of directors of
     the  Borrower or such  Subsidiary  shall  determine  that the  preservation
     thereof  is no longer  desirable  in the  conduct  of the  business  of the
     Borrower or such Subsidiary,  as the case may be, and that the loss thereof
     is not  disadvantageous  in any  material  respect  to the  Borrower,  such
     Subsidiary or the Lenders.

          (d)  Keeping of Books.  Keep,  and cause each of its  Subsidiaries  to
     keep, proper books of record and account, in which full and correct entries
     shall be made of all financial  transactions and the assets and business of
     the Borrower and each such  Subsidiary in accordance with the equivalent of
     GAAP  applicable  in the  jurisdiction  in which the  Borrower  or any such
     Subsidiary is organized.

          (e) Maintenance of Properties,  Etc. Maintain and preserve,  and cause
     each of its  Subsidiaries  to maintain and preserve,  all of its properties
     that are used or useful in the  conduct  of its  business  in good  working
     order and condition, ordinary wear and tear excepted.

          (f) Reporting Requirements. Furnish to the Lenders:

               (i) as soon as  available  and in any event  within 45 days after
          the end of each of the first three quarters of each fiscal year of the
          Borrower,   Consolidated  balance  sheets  of  the  Borrower  and  its
          Subsidiaries as of the end of such quarter and Consolidated statements
          of income and cash flows of the Borrower and its  Subsidiaries for the
          period  commencing  at the end of the previous  fiscal year and ending
          with the end of such  quarter,  duly  certified  (subject  to year-end
          audit  adjustments) by the chief financial  officer of the Borrower as
          having been prepared in accordance with GAAP;

               (ii) as soon as  available  and in any event within 90 days after
          the end of each  fiscal  year of the  Borrower,  a copy of the  annual
          report for such year for the Borrower and its Subsidiaries, containing
          Consolidated balance sheets of the Borrower and its Subsidiaries as of
          the end of such fiscal year and Consolidated  statements of income and
          cash flows of the Borrower and its Subsidiaries for such fiscal year;

               (iii) as soon as possible  and in any event within ten days after
          the  occurrence  of  each  Default  continuing  on the  date  of  such
          statement,  a statement of the chief financial officer of the Borrower
          setting forth details of such Default and the action that the Borrower
          has taken and proposes to take with respect thereto;

               (iv)  promptly  after  the  commencement  thereof,  notice of all
          actions  and  proceedings  before  any court,  governmental  agency or
          arbitrator  affecting the Borrower or any of its  Subsidiaries  of the
          type described in Section 4.01(e); and

               (v) such other information  respecting the Borrower or any of its
          Subsidiaries  as any  Lender  through  the Agent may from time to time
          reasonably request.

     SECTION 5.02.  Mandatory Repayment and Other Covenants.  (a) In addition to
any  other  mandatory  repayments  or  commitment  reductions  pursuant  to this
Agreement, within twenty (20) days after each date upon which any of Borrower or
its  Subsidiaries  receives  any cash  from PHC from  dividends,  reductions  or
repurchases  of  equity,  share  redemptions  or loans,  Borrower  shall pay the
Lenders an amount equal to 75% of the cash received from PHC less any applicable
taxes as a  mandatory  repayment  of the  outstanding  principal  amount  of the
Advances,  together with accrued  interest to the date of such  repayment on the
principal amount repaid.

     (b) In addition to any other mandatory repayments or commitment  reductions
pursuant to this Agreement,  if within  twenty-five (25) days from obtaining the
Advance,  a direct or indirect wholly owned  Subsidiary of the Borrower does not
consummate the purchase  contemplated  by the Purchase  Agreement,  the Borrower
shall pay to the Lenders all amounts then outstanding hereunder.

     (c) The  Borrower  shall not be  required to pay any amount  under  Section
8.04(c) in connection with any Advances repaid pursuant to Section 5.02.

     (d) The  Borrower  will,  unless the  Lenders  shall  otherwise  consent in
writing,  use and cause each of its Subsidiaries to use,  reasonable  commercial
efforts  to  obtain  cash from PHC by way of  dividends  or loans  (taking  into
account tax  consequences  and PHC's  reasonable  capital  requirements),  which
amounts shall then be payable to the Lenders as a mandatory  repayment  pursuant
to this Section 5.02.

                                   ARTICLE VI

                                EVENTS OF DEFAULT

     SECTION 6.01. Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:

          (a) the  Borrower  shall fail to pay (i) any  principal of any Advance
     when the same  becomes due and payable or (ii) any  interest on any Advance
     or any other  amount  payable  under this  Agreement or any Note within ten
     days from the date the same becomes due and payable, or the Guarantor shall
     fail to pay any  amounts  under the  Guaranty  when the same become due and
     payable; or

          (b) any  representation  or warranty made by the Borrower herein or by
     the  Guarantor in the Guaranty or by the Borrower (or any of its  officers)
     in  connection  with  this  Agreement  or by the  Guarantor  (or any of its
     officers)  in  connection  with  the  Guaranty  shall  prove  to have  been
     incorrect in any material respect when made; or

          (c) (i) the  Borrower  shall  fail to  perform  or  observe  any term,
     covenant or agreement  contained in Section 5.01 or in Section  5.02,  (ii)
     the Borrower  shall fail to perform or observe any other term,  covenant or
     agreement  contained  in  this  Agreement  or any  Note  on its  part to be
     performed or observed if such failure shall remain  unremedied  for 30 days
     after written  notice  thereof shall have been given to the Borrower by the
     Agent or any Lender,  (iii) the Guarantor  shall fail to perform or observe
     any term, covenant or agreement contained in Section 10 of the Guaranty, or
     (iv) the  Guarantor  shall  fail to  perform  or  observe  any other  term,
     covenant or agreement contained in the Guaranty on its part to be performed
     or observed  if such  failure  shall  remain  unremedied  for 30 days after
     written  notice thereof shall have been given to the Guarantor by the Agent
     or any Lender; or

          (d) the Borrower or MEMC or any of its Subsidiaries  shall fail to pay
     any principal of or premium or interest on any Debt that is  outstanding in
     a principal  amount of at least  $5,000,000 in the aggregate (but excluding
     Debt outstanding  hereunder) of the Borrower or MEMC or such Subsidiary (as
     the case  may  be),  when the same  becomes  due and  payable  (whether  by
     scheduled   maturity,   required   prepayment,   acceleration,   demand  or
     otherwise),  and such failure shall  continue  after the  applicable  grace
     period, if any,  specified in the agreement or instrument  relating to such
     Debt;  or any other event shall  occur or  condition  shall exist under any
     agreement or instrument  relating to any such Debt and shall continue after
     the  applicable  grace  period,  if any,  specified  in such  agreement  or
     instrument,  if the effect of such event or condition is to accelerate,  or
     to permit the  acceleration of, the maturity of such Debt; or any such Debt
     shall be declared to be due and payable,  or required to be prepaid  (other
     than by a regularly scheduled required prepayment),  redeemed, purchased or
     defeased,  or an offer to prepay,  redeem,  purchase  or defease  such Debt
     shall be  required  to be made,  in each case prior to the stated  maturity
     thereof; or

          (e) the Borrower or MEMC or any of its  Subsidiaries  shall  generally
     not pay its debts as such debts  become  due, or shall admit in writing its
     inability to pay its debts  generally,  or shall make a general  assignment
     for the benefit of creditors;  or any proceeding  shall be instituted by or
     against  the  Borrower  or  MEMC  or  any of its  Subsidiaries  seeking  to
     adjudicate it a bankrupt or insolvent, or seeking liquidation,  winding up,
     reorganization, arrangement, adjustment, protection, relief, or composition
     of it or its debts under any law  relating  to  bankruptcy,  insolvency  or
     reorganization  or relief of debtors,  or seeking the entry of an order for
     relief  or the  appointment  of a  receiver,  trustee,  custodian  or other
     similar official for it or for any substantial part of its property and, in
     the case of any such proceeding  instituted  against it (but not instituted
     by it), either such proceeding  shall remain  undismissed or unstayed for a
     period  of 60  days,  or any of  the  actions  sought  in  such  proceeding
     (including,  without limitation,  the entry of an order for relief against,
     or the  appointment  of a receiver,  trustee,  custodian  or other  similar
     official for, it or for any substantial  part of its property) shall occur;
     or the Borrower or MEMC or any of its Subsidiaries shall take any corporate
     action to  authorize  any of the actions  set forth  above in this  Section
     6.01(e); or

          (f) any  judgment  or order  for the  payment  of money in  excess  of
     $5,000,000  shall be rendered  against  the  Borrower or MEMC or any of its
     Subsidiaries  and  either  (i)  enforcement  proceedings  shall  have  been
     commenced by any creditor  upon such  judgment or order or (ii) there shall
     be any period of 30 consecutive  days during which a stay of enforcement of
     such judgment or order,  by reason of a pending appeal or otherwise,  shall
     not be in effect;

then, and in any such event, the Agent (i) shall at the request, or may with the
consent,  of the Lenders,  by notice to the Borrower,  declare the obligation of
each  Lender  to make  Advances  to be  terminated,  whereupon  the  same  shall
forthwith terminate,  and (ii) shall at the request, or may with the consent, of
the Lenders, by notice to the Borrower,  declare the Notes, all interest thereon
and all other  amounts  payable  under this  Agreement to be  forthwith  due and
payable,  whereupon  the Notes,  all such  interest and all such  amounts  shall
become and be forthwith due and payable, without presentment, demand, protest or
further  notice of any kind,  all of which are  hereby  expressly  waived by the
Borrower;  provided,  however, that in the event of an actual or deemed entry of
an order for relief with respect to the Borrower under any applicable bankruptcy
law, (A) the obligation of each Lender to make Advances shall  automatically  be
terminated  and (B) the Notes,  all such  interest  and all such  amounts  shall
automatically  become  and be due  and  payable,  without  presentment,  demand,
protest or any notice of any kind, all of which are hereby  expressly  waived by
the Borrower.

                                   ARTICLE VII

                                    THE AGENT

     SECTION 7.01.  Authorization  and Action.  Each Lender hereby  appoints and
authorizes  the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the Agent by
the terms  hereof,  together with such powers and  discretion as are  reasonably
incidental  thereto.  As to any  matters  not  expressly  provided  for by  this
Agreement  (including,  without  limitation,  enforcement  or  collection of the
Notes),  the Agent shall not be required to exercise any  discretion or take any
action,  but shall be  required  to act or to refrain  from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the  Lenders,  and such  instructions  shall be binding upon all Lenders and all
holders of Notes;  provided,  however,  that the Agent  shall not be required to
take any action that exposes the Agent to personal liability or that is contrary
to this  Agreement  or  applicable  law. The Agent agrees to give to each Lender
prompt  notice of each notice given to it by the Borrower  pursuant to the terms
of this Agreement.

     SECTION  7.02.  Agent's  Reliance,  Etc.  Neither  the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in  connection  with this  Agreement,
except  for its or their own gross  negligence  or willful  misconduct.  Without
limitation of the  generality  of the  foregoing,  the Agent:  (a) may treat the
payee of any Note as the holder  thereof until the Agent receives and accepts an
Assignment and  Acceptance  entered into by the Lender that is the payee of such
Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section
8.07; (b) may consult with legal counsel  (including  counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be
liable  for any  action  taken or  omitted  to be  taken in good  faith by it in
accordance with the advice of such counsel, accountants or experts; (c) makes no
warranty or  representation  to any Lender and shall not be  responsible  to any
Lender for any statements,  warranties or  representations  (whether  written or
oral) made in or in connection with this Agreement;  (d) shall not have any duty
to ascertain or to inquire as to the  performance  or  observance  of any of the
terms,  covenants or conditions of this Agreement on the part of the Borrower or
to inspect the property  (including the books and records) of the Borrower;  (e)
shall  not be  responsible  to any  Lender  for  the  due  execution,  legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document  furnished pursuant hereto; and (f) shall incur
no  liability  under or in respect of this  Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier,
telegram or telex) believed by it to be genuine and signed or sent by the proper
party or parties.

     SECTION 7.03. VEBA. With respect to its Commitment,  the Advance made by it
and the Note issued to it, Veba shall have the same rights and powers under this
Agreement  as any other  Lender and may  exercise the same as though it were not
the Agent; and the term "Lender" or "Lenders" shall,  unless otherwise expressly
indicated, include Veba in its individual capacity.

     SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that it has,
independently  and without reliance upon the Agent or any other Lender and based
on the financial statements referred to in Section 4.01 and such other documents
and information as it has deemed  appropriate,  made its own credit analysis and
decision to enter into this  Agreement.  Each Lender also  acknowledges  that it
will,  independently and without reliance upon the 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  decisions in taking or not taking action
under this Agreement.

     SECTION 7.05. Indemnification. The Lenders agree to indemnify the Agent (to
the extent not reimbursed by the Borrower),  ratably according to the respective
principal  amounts of the Notes then held by each of them (or if no Notes are at
the time  outstanding  or if any Notes are held by Persons that are not Lenders,
ratably  according to the  respective  amounts of their  Commitments),  from and
against  any and  all  liabilities,  obligations,  losses,  damages,  penalties,
actions,  judgments,  suits,  costs,  expenses or  disbursements  of any kind or
nature  whatsoever that may be imposed on, incurred by, or asserted  against the
Agent in any way  relating  to or arising  out of this  Agreement  or any action
taken or omitted by the Agent under this Agreement or the  Guaranties,  provided
that no Lender shall be liable for any portion of such liabilities, obligations,
losses,  damages,  penalties,  actions,  judgments,  suits,  costs,  expenses or
disbursements resulting from the Agent's gross negligence or willful misconduct.
Without  limitation of the foregoing,  each Lender agrees to reimburse the Agent
promptly  upon  demand  for its  ratable  share  of any  out-of-pocket  expenses
(including   counsel  fees)  incurred  by  the  Agent  in  connection  with  the
preparation,  execution, delivery,  administration,  modification,  amendment or
enforcement (whether through  negotiations,  legal proceedings or otherwise) of,
or legal advice in respect of rights or  responsibilities  under, this Agreement
or the  Guarantees,  to the  extent  that the Agent is not  reimbursed  for such
expenses by the Borrower.

     SECTION 7.06.  Successor  Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and may be removed at any
time with or without cause by the all of the Lenders.  Upon any such resignation
or removal, the Lenders shall have the right to appoint a successor Agent. If no
successor  Agent shall have been so  appointed  by the  Lenders,  and shall have
accepted such  appointment,  within 30 days after the retiring Agent's giving of
notice of resignation or the Lenders'  removal of the retiring  Agent,  then the
retiring Agent may, on behalf of the Lenders,  appoint a successor Agent,  which
shall be a commercial  bank organized  under the laws of the United States or of
any state thereof and having a long-term  senior unsecured debt rating by S&P of
"A" or better.  Upon the acceptance of any  appointment as Agent  hereunder by a
successor  Agent,  such successor  Agent shall  thereupon  succeed to and become
vested with all the rights,  powers,  discretion,  privileges  and duties of the
retiring  Agent,  and the retiring Agent shall be discharged from its duties and
obligations  under this  Agreement.  After any retiring  Agent's  resignation or
removal  hereunder as Agent,  the  provisions of this Article VII shall inure to
its  benefit as to any  actions  taken or omitted to be taken by it while it was
Agent under this Agreement.

                                  ARTICLE VIII

                                  MISCELLANEOUS

     SECTION 8.01.  Amendments,  Etc. No amendment or waiver of any provision of
this Agreement or the Notes or any Guaranty, nor consent to any departure by the
Borrower or the Guarantor therefrom,  shall in any event be effective unless the
same shall be in  writing  and signed by the  Lenders,  and then such  waiver or
consent  shall be effective  only in the specific  instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by all the Lenders, do any of the following:
(a) waive any of the  conditions  specified  in Section  3.01,  (b) increase the
Commitments of the Lenders or subject the Lenders to any additional obligations,
(c)  reduce the  principal  of, or  interest  on, the Notes or any fees or other
amounts  payable  hereunder,  (d)  postpone  any date  fixed for any  payment of
principal  of, or interest  on, the Notes or any fees or other  amounts  payable
hereunder,  (e) change the  percentage  of the  Commitments  or of the aggregate
unpaid  principal  amount of the Notes, or the number of Lenders,  that shall be
required  for the  Lenders  or any of them to take any action  hereunder  or (f)
amend this Section  8.01;  and provided  further  that no  amendment,  waiver or
consent  shall,  unless in writing  and signed by the Agent in  addition  to the
Lenders  required above to take such action,  affect the rights or duties of the
Agent under this Agreement or any Note.

     SECTION 8.02. Notices,  Etc. All notices and other communications  provided
for hereunder shall be in writing  (including  telecopier,  telegraphic or telex
communication) and mailed, telecopied,  telegraphed, telexed or delivered, if to
the  Borrower,  at its  address  at  Viale  Gherzi,  31,  28100  Novara,  Italy,
Attention:  Chief Financial Officer (telecopier number  390-473-333-270);  if to
the Initial Lender or the Agent, at Strawinskylaan 3111, 1070 ZX Amsterdam,  The
Netherlands,  Attention: Peter Pels (telecopier number 3120-442-0319); if to any
other  Lender or any Bank,  at its  Domestic  Lending  Office  specified  in the
Assignment  and Acceptance  pursuant to which it became a Lender;  or, as to any
party,  at such other  address as shall be designated by such party in a written
notice to the other parties.  All such notices and  communications  shall,  when
mailed,  telecopied,  telegraphed or telexed,  be effective when received by the
party to whom such notice is addressed,  except that notices and  communications
pursuant to Section  2.06 shall not be effective  until  confirmed in writing by
the party to whom  such  notice  is  addressed.  Delivery  by  telecopier  of an
executed  counterpart  of any  amendment  or  waiver  of any  provision  of this
Agreement  or the Notes or of any Exhibit  hereto to be executed  and  delivered
hereunder  shall be  effective  as delivery of a manually  executed  counterpart
thereof.

     SECTION 8.03. No Waiver;  Remedies. No failure on the part of any Lender or
the Agent to exercise, and no delay in exercising,  any right hereunder or under
any Note  shall  operate  as a waiver  thereof;  nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

     SECTION 8.04. Costs and Expenses.  (a) The Borrower agrees to pay on demand
all  reasonable  costs  and  expenses  of  the  Agent  in  connection  with  the
preparation,  execution, delivery, modification and amendment of this Agreement,
the Notes,  the  Guaranty and the other  documents  to be  delivered  hereunder,
including,  without limitation,  the reasonable fees and expenses of counsel for
the Agent with respect  thereto and with respect to advising the Agent as to its
rights and responsibilities under this Agreement. The Borrower further agrees to
pay on demand  all  costs and  expenses  of the  Agent and the  Lenders,  if any
(including,  without  limitation,  reasonable  counsel  fees and  expenses),  in
connection with the enforcement (whether through negotiations, legal proceedings
or  otherwise)  of this  Agreement,  the  Notes and the  other  documents  to be
delivered hereunder, including, without limitation, reasonable fees and expenses
of counsel for the Agent and each Lender in connection  with the  enforcement of
rights under this Section 8.04(a).

     (b) The Borrower  agrees to indemnify  and hold harmless the Agent and each
Lender and each of their  Affiliates and their officers,  directors,  employees,
agents and advisors (each, an "Indemnified  Party") from and against any and all
claims,   damages,   losses,   liabilities  and  expenses  (including,   without
limitation,  reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any  Indemnified  Party, in each case arising out of
or in connection with or by reason of, or in connection with the preparation for
a defense  of, any  investigation,  litigation  or  proceeding  arising  out of,
related to or in connection with the Notes, this Agreement, the Guaranty, any of
the  transactions  contemplated  herein  or the  actual or  proposed  use of the
proceeds  of the  Advances,  whether or not such  investigation,  litigation  or
proceeding is brought by the Borrower, its directors,  shareholders or creditors
or an  Indemnified  Party  or any  other  Person  or any  Indemnified  Party  is
otherwise  a party  thereto  and  whether or not the  transactions  contemplated
hereby are consummated, except to the extent such claim, damage, loss, liability
or expense is found in a final,  nonappealable  judgment by a court of competent
jurisdiction to have resulted from such Indemnified  Party's gross negligence or
willful misconduct. The Borrower also agrees not to assert any claim against the
Agent,  any  Lender,  any  of  their  Affiliates,  or any  of  their  respective
directors,   officers,  employees,  attorneys  and  agents,  on  any  theory  of
liability, for special, indirect,  consequential or punitive damages arising out
of or otherwise  relating to the Notes, this Agreement,  any of the transactions
contemplated  herein  or the  actual  or  proposed  use of the  proceeds  of the
Advances.

     (c) If any payment of  principal  of any Advance is made by the Borrower to
or for the account of a Lender other than on the last day of the Interest Period
for  such  Advance,  as a result  of a  payment  pursuant  to  Section  2.08(b),
acceleration  of the  maturity of the Notes  pursuant to Section 6.01 or for any
other  reason,  the Borrower  shall,  upon demand by such Lender (with a copy of
such demand to the  Agent),  pay to the Agent for the account of such Lender any
amounts required to compensate such Lender for any additional  losses,  costs or
expenses  that it may  reasonably  incur as a result of such payment  including,
without limitation,  any loss (including loss of anticipated  profits),  cost or
expense  incurred by reason of the  liquidation or  reemployment  of deposits or
other funds acquired by any Lender to fund or maintain such Advance.

     (d)  Without  prejudice  to the  survival  of any  other  agreement  of the
Borrower hereunder,  the agreements and obligations of the Borrower contained in
Sections  2.09,  2.12 and 8.04 shall  survive the payment in full of  principal,
interest and all other amounts payable hereunder and under the Notes.

     SECTION  8.05.  Right of  Setoff.  Upon (a) the  occurrence  and during the
continuance  of any Event of Default  and (b) the  making of the  request or the
granting of the consent  specified  by Section  6.01 to  authorize  the Agent to
declare the Notes due and payable  pursuant to the  provisions  of Section 6.01,
each Lender and each of its Affiliates is hereby authorized at any time and from
time to time, to the fullest  extent  permitted by law, to set off and apply any
and all deposits (general or special,  time or demand,  provisional or final) at
any time held and other  indebtedness  at any time owing by such  Lender or such
Affiliate  to or for the credit or the account of the  Borrower  against any and
all of the  obligations  of the Borrower now or  hereafter  existing  under this
Agreement  and the Note held by such  Lender,  whether or not such Lender  shall
have  made any  demand  under  this  Agreement  or such Note and  although  such
obligations may be unmatured. Each Lender agrees promptly to notify the Borrower
after any such setoff and  application,  provided  that the failure to give such
notice shall not affect the validity of such setoff and application.  The rights
of each Lender and its  Affiliates  under this  Section  8.05 are in addition to
other  rights and  remedies  (including,  without  limitation,  other  rights of
setoff) that such Lender and its Affiliates may have.

     SECTION 8.06. Binding Effect.  This Agreement shall become effective (other
than Section 2.01,  which shall only become  effective upon  satisfaction of the
conditions precedent set forth in Section 3.01) when it shall have been executed
by the  Borrower,  the Agent and the  Initial  Lender  and  thereafter  shall be
binding upon and inure to the benefit of the Borrower, the Agent and the Initial
Lender and their  respective  successors  and assigns,  except that the Borrower
shall not have the right to assign its rights  hereunder or any interest  herein
without the prior written consent of the Lenders.

     SECTION 8.07. Assignments and Participations. (a) Each Lender may assign to
one or more  Persons all or a portion of its rights and  obligations  under this
Agreement  (including,  without limitation,  all or a portion of its Commitment,
the Advance  owing to it and the Note or Notes held by it);  provided,  however,
that  (i)  each  such  assignment  shall be of a  constant,  and not a  varying,
percentage of all rights and obligations  under this  Agreement,  (ii) except in
the  case  of  an  assignment  to a  Person  that,  immediately  prior  to  such
assignment,  was a Lender  or an  assignment  of all of a  Lender's  rights  and
obligations under this Agreement,  the amount of the Commitment of the assigning
Lender being  assigned  pursuant to each such  assignment  (determined as of the
date of the Assignment and Acceptance with respect to such assignment)  shall in
no event be less than Euro 5,000,000 or an integral  multiple of Euro 100,000 in
excess thereof, (iii) each such assignment shall be to an Eligible Assignee, and
(iv) the parties to each such assignment shall execute and deliver to the Agent,
for its acceptance and recording in the Register,  an Assignment and Acceptance,
together  with  any  Note  subject  to such  assignment.  Upon  such  execution,
delivery,  acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance,  (A) the assignee thereunder shall be a party
hereto  and,  to the extent  that  rights and  obligations  hereunder  have been
assigned to it pursuant to such Assignment and  Acceptance,  have the rights and
obligations of a Lender hereunder and (B) the Lender assignor  thereunder shall,
to the extent that rights and  obligations  hereunder  have been  assigned by it
pursuant  to such  Assignment  and  Acceptance,  relinquish  its  rights  and 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 Lender shall cease to
be a party hereto).

     (b) By executing and  delivering an Assignment and  Acceptance,  the Lender
assignor  thereunder and the assignee  thereunder confirm to and agree with each
other and the other  parties  hereto as  follows:  (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty  and  assumes  no  responsibility   with  respect  to  any  statements,
warranties or  representations  made in or in connection  with this Agreement or
the Guaranty or the execution, legality, validity, enforceability,  genuineness,
sufficiency  or value of this  Agreement  or any other  instrument  or  document
furnished pursuant hereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility  with respect to the financial  condition
of the  Borrower  or the  Guarantor  or the  performance  or  observance  by the
Borrower or the Guarantor of any of its obligations  under this Agreement or the
Guaranty or any other instrument or document  furnished  pursuant hereto;  (iii)
such assignee  confirms that it has received a copy of this Agreement,  together
with copies of the  financial  statements  referred to in Section  4.01 and such
other  documents and  information  as it has deemed  appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance;  (iv)
such assignee  will,  independently  and without  reliance upon the Agent,  such
assigning Lender 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
decisions in taking or not taking action under this Agreement; (v) such assignee
confirms  that it is an  Eligible  Assignee;  (vi) such  assignee  appoints  and
authorizes  the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the Agent by
the terms  hereof,  together with such powers and  discretion as are  reasonably
incidental  thereto;  and (vii) such  assignee  agrees  that it will  perform in
accordance  with their  terms all of the  obligations  that by the terms of this
Agreement are required to be performed by it as a Lender.

     (c) The Agent shall  maintain at its address  referred to in Section 8.02 a
copy of each  Assignment  and  Acceptance  delivered to and accepted by it and a
register for the  recordation  of the names and addresses of the Lenders and the
Commitment  of, and principal  amount of the Advances owing to, each Lender from
time to time (the  "Register").  The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the Agent
and the Lenders may treat each Person  whose name is recorded in the Register as
a Lender  hereunder for all purposes of this  Agreement.  The Register  shall be
available for  inspection by the Borrower or any Lender at any  reasonable  time
and from time to time upon reasonable prior notice.

     (d) Upon  its  receipt  of an  Assignment  and  Acceptance  executed  by an
assigning Lender and an assignee  representing that it is an Eligible  Assignee,
together with any Note or Notes subject to such assignment,  the Agent shall, if
such  Assignment and Acceptance has been completed and is in  substantially  the
form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record
the information  contained  therein in the Register and (iii) give prompt notice
thereof to the  Borrower.  Within five  Business  Days after its receipt of such
notice, the Borrower, at its own expense, shall execute and deliver to the Agent
in exchange for the  surrendered  Note a new Note to the order of such  Eligible
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 Note to the order of the assigning Lender in an amount equal to
the Commitment  retained by it hereunder.  Such new Note or Notes shall be in an
aggregate  principal  amount  equal to the  aggregate  principal  amount of such
surrendered Note or Notes,  shall be dated the effective date of such Assignment
and Acceptance  and shall  otherwise be in  substantially  the form of Exhibit A
hereto.

     (e) Each  Lender  may  sell  participations  to one or more  banks or other
entities  (other than the Borrower or any of its  Affiliates)  in or to all or a
portion of its rights and obligations under this Agreement  (including,  without
limitation, all or a portion of its Commitment, the Advances owing to it and the
Note or Notes held by it); provided, however, that (i) such Lender's obligations
under this  Agreement  (including,  without  limitation,  its  Commitment to the
Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender  shall  remain the holder of any such Note for all purposes of
this  Agreement,  (iv) the  Borrower,  the  Agent and the  other  Lenders  shall
continue to deal solely and directly  with such Lender in  connection  with such
Lender's  rights and  obligations  under this  Agreement and (v) no  participant
under any such  participation  shall have any right to approve any  amendment or
waiver of any  provision of this  Agreement  or any Note,  or any consent to any
departure by the Borrower  therefrom,  except to the extent that such amendment,
waiver or consent  would reduce the  principal  of, or interest on, the Notes or
any fees or other amounts payable hereunder,  in each case to the extent subject
to such  participation,  or postpone any date fixed for any payment of principal
of, or interest on, the Notes or any fees or other amounts payable hereunder, in
each case to the extent subject to such participation.

     (f) Any Lender may, in connection with any assignment or  participation  or
proposed assignment or participation  pursuant to this Section 8.07, disclose to
the assignee or participant or proposed assignee or participant, any information
relating  to the  Borrower  furnished  to such  Lender  by or on  behalf  of the
Borrower;  provided  that,  prior  to  any  such  disclosure,  the  assignee  or
participant  or proposed  assignee or  participant  shall agree to preserve  the
confidentiality  of  any  Confidential  Information  relating  to  the  Borrower
received by it from such Lender.

     (g)  Notwithstanding  any other provision set forth in this Agreement,  any
Lender may at any time  create a security  interest in all or any portion of its
rights under this Agreement (including,  without limitation,  the Advances owing
to it and  the  Note  held  by it) in  favor  of any  Federal  Reserve  Bank  in
accordance  with  Regulation A of the Board of Governors of the Federal  Reserve
System.

     (h)  In  connection  with  the  initial   assignment  or  proposed  initial
assignment by the Initial  Lender  pursuant to this Section  8.07,  the Borrower
shall,  upon the request of the Initial Lender,  furnish to the Initial Lender a
favorable opinion of counsel for the Borrower  acceptable to the Initial Lender,
in form and substance reasonably satisfactory to the Initial Lender.

     SECTION  8.08.  Confidentiality.  Neither  the Agent nor any  Lender  shall
disclose any  Confidential  Information to any Person without the consent of the
Borrower,  other than (a) to the Agent's or such Lender's  Affiliates  and their
officers, directors, employees, agents and advisors and to actual or prospective
assignees and  participants,  and then, in each case, only on a confidential and
need-to-know  basis,  (b) as required by any law, rule or regulation or judicial
process  and (c) as  requested  or  required  by any  state,  federal or foreign
authority or examiner regulating banks or banking.

     SECTION 8.09. Governing Law. This Agreement and the Notes shall be governed
by, and construed in accordance with, the laws of the State of New York.

     SECTION 8.10. Execution in Counterparts.  This Agreement may be executed in
any  number  of  counterparts  and  by  different  parties  hereto  in  separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of which taken  together shall  constitute  one and the same  agreement.
Delivery of an executed  counterpart  of a signature  page to this  Agreement by
telecopier shall be effective as delivery of a manually executed  counterpart of
this Agreement.

     SECTION  8.11.  Jurisdiction,  Etc. (a) Each of the parties  hereto  hereby
irrevocably and  unconditionally  submits,  for itself and its property,  to the
nonexclusive  jurisdiction  of any New York State court or federal  court of the
United States of America  sitting in New York City, and any appellate court from
any  thereof,  in any action or  proceeding  arising  out of or relating to this
Agreement or the Notes, or for  recognition or enforcement of any judgment,  and
each of the parties hereto hereby  irrevocably and  unconditionally  agrees that
all  claims  in  respect  of any such  action  or  proceeding  may be heard  and
determined in any such New York State court or, to the extent  permitted by law,
in such federal  court.  Each of the parties hereto agrees that a final judgment
in any such  action or  proceeding  shall be  conclusive  and may be enforced in
other  jurisdictions  by suit on the judgment or in any other manner provided by
law.  Nothing  in this  Agreement  shall  affect  any  right  that any party may
otherwise  have to bring any action or proceeding  relating to this Agreement or
the Notes in the courts of any jurisdiction.

     (b) Each of the parties hereto irrevocably and  unconditionally  waives, to
the fullest  extent it may legally and  effectively do so, any objection that it
may now or  hereafter  have to the  laying  of  venue  of any  suit,  action  or
proceeding  arising out of or relating to this Agreement or the Notes in any New
York State or federal  court.  Each of the  parties  hereto  hereby  irrevocably
waives,  to the fullest extent  permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

IN WITNESS  WHEREOF,  the parties hereto have duly executed this Agreement as of
the day and year first above written.

                                     MEMC ELECTRONIC MATERIALS, S.P.A., as
                                       Borrower

                                     By  /s/ Giovanni Chiroli
                                     -------------------------------------
                                     Name:  Giovanni Chiroli
                                     Title: Financial Manager

                                     VEBA INTERNATIONAL FINANCE B.V., as
                                       Agent and as Initial Lender

                                     By  /s/ H. J. Wirix and S.A.L. Visser
                                     -------------------------------------
                                     Name:  H. J. Wirix      S.A.L. Visser
                                     Title: Managing Director/Managing Director

<PAGE>

                                                                EXHIBIT A TO THE
                                                                CREDIT AGREEMENT

                             FORM OF PROMISSORY NOTE

Euro ____________________                      Dated: __________________, ______

     FOR VALUE RECEIVED, the undersigned,  MEMC ELECTRONIC MATERIALS,  S.P.A., a
company organized under the laws of Italy (the  "Borrower"),  HEREBY PROMISES TO
PAY to the  order  of [NAME OF  LENDER],  a  [JURISDICTION  OF  INCORPORATION  ]
corporation  (the "Lender") for its account on the Termination  Date (as defined
in the Credit Agreement  referred to below) the principal SUM of Euro [AMOUNT OF
THE LENDER'S  COMMITMENT IN FIGURES] or, if less,  the  principal  amount of the
Advances  made by the Lender to the  Borrower  pursuant to the Credit  Agreement
dated as of  September  22, 2000  between the  Borrower  and VEBA  INTERNATIONAL
FINANCE B.V., a company organized under the laws of the Netherlands ("VEBA"), as
the Lender and as Agent (as amended,  supplemented  or otherwise  modified  from
time to time,  the "Credit  Agreement";  the terms  defined  therein  being used
herein as therein defined) outstanding on the Termination Date.

     The Borrower promises to pay interest on the unpaid principal amount of the
Advances from the date of the Advances  until such  principal  amount is paid in
full, at such interest rates, and payable at such times, as are specified in the
Credit Agreement.

     Both  principal  and  interest  are payable in Euros,  the lawful  money of
participating  states to the European  Union,  to VEBA, as Agent, at the Agent's
Account,  in same day funds.  The  Advances  owing to the Lender by the Borrower
pursuant to the Credit Agreement,  and all payments made on account of principal
thereof,  shall be  recorded by the Lender and,  prior to any  transfer  hereof,
endorsed on the grid attached hereto which is part of this Promissory Note.

     This Promissory Note is one of the Notes referred to in, and is entitled to
the benefits of, the Credit Agreement. The Credit Agreement, among other things,
(i)  provides  for the making of Advances  by the Lender to the  Borrower on any
Business  Day during the period from the  Effective  Date until the  Termination
Date in an  aggregate  amount  not to  exceed at any time  outstanding  the Euro
amount first above mentioned,  the  indebtedness of the Borrower  resulting from
the  Advances  being  evidenced  by this  Promissory  Note,  and  (ii)  contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for  prepayments on account of principal  hereof prior to
the maturity hereof upon the terms and conditions therein specified.

                                          MEMC ELECTRONIC MATERIALS, S.P.A.

                                          By:
                                          ------------------------------------
                                          Title:
<PAGE>

<TABLE>
<CAPTION>
                       ADVANCES AND PAYMENTS OF PRINCIPAL

<S>                      <C>                    <C>                    <C>                      <C>
======================== ====================== ====================== ======================== ====================
                                                  Amount of Principal      Unpaid Principal
           Date             Amount of Advance       Paid or Prepaid           Balance             Notation Made By

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

======================== ====================== ====================== ======================== ====================
</TABLE>

<PAGE>

                                                                EXHIBIT B TO THE
                                                                CREDIT AGREEMENT

                           FORM OF NOTICE OF BORROWING

VEBA INTERNATIONAL FINANCE B.V.,
 as Agent

   for the Lenders parties
   to the Credit Agreement
   referred to below

 Strawinskylaan 3111                                        September   , 2000
 1070 ZX Amsterdam
 The Netherlands
         Attention: Peter Pels

Ladies and Gentlemen:

     The undersigned,  MEMC ELECTRONIC  MATERIALS,  S.P.A., refers to the Credit
Agreement, dated as of September 22, 2000 (as amended, supplemented or otherwise
modified from time to time, the "Credit  Agreement",  the terms defined  therein
being  used  herein  as  therein  defined),  between  the  undersigned  and VEBA
INTERNATIONAL  FINANCE  B.V.,  as Initial  Lender  and as Agent for the  Lenders
thereunder, and hereby gives you notice,  irrevocably,  pursuant to Section 2.02
of the Credit Agreement,  that the undersigned hereby requests a Borrowing under
the Credit  Agreement,  and in that  connection sets forth below the information
relating to such  Borrowing  (the  "Proposed  Borrowing") as required by Section
2.02(a) of the Credit Agreement:

     (a) The Business Day of the Proposed Borrowing is September ___, 2000.

     (b) The aggregate amount of the Proposed Borrowing is Euro _______________.

     (c) The Repayment Date of the Advances  comprising such Proposed  Borrowing
is _____________, _________.

     The undersigned hereby certifies that the following  statements are true on
the  date  hereof,  and  will  be true  on and as of the  date  of the  Proposed
Borrowing:

          (i) the  representations  and warranties  contained in Section 4.01 of
     the Credit  Agreement  are correct,  before and after giving  effect to the
     Proposed  Borrowing and to the  application of the proceeds  therefrom,  as
     though made on and as of such date; and

          (ii) no event has  occurred  and is  continuing,  or would result from
     such Proposed Borrowing or from the application of the proceeds  therefrom,
     that constitutes a Default.

                                            Very truly yours,
                                            MEMC ELECTRONIC MATERIALS, S.P.A.

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

<PAGE>

                                                                EXHIBIT C TO THE
                                                                CREDIT AGREEMENT

                        FORM OF ASSIGNMENT AND ACCEPTANCE

     Reference is made to the Credit  Agreement  dated as of September  22, 2000
(as amended,  supplemented or otherwise  modified from time to time, the "Credit
Agreement") between MEMC ELECTRONIC MATERIALS, S.P.A., a company organized under
the laws of Italy (the  "Borrower"),  and VEBA  INTERNATIONAL  FINANCE  B.V.,  a
company organized under the laws of the Netherlands  ("VEBA"), as Initial Lender
and as Agent (the  "Agent") for the Lenders  thereunder  (each as defined in the
Credit  Agreement).  Terms defined in the Credit  Agreement are used herein with
the same meaning.

     The "Assignor" and the "Assignee" referred to on Schedule 1 hereto agree as
follows:

          1. The  Assignor  hereby  sells and assigns to the  Assignee,  and the
     Assignee hereby purchases and assumes from the Assignor, an interest in and
     to the Assignor's  rights and obligations  under the Credit Agreement as of
     the date hereof equal to the  percentage  interest  specified on Schedule 1
     hereto  of  all  outstanding   rights  and  obligations  under  the  Credit
     Agreement.  After giving effect to such sale and assignment, the Assignee's
     Commitment  and the amount of the Advances owing to the Assignee will be as
     set forth on Schedule 1 hereto.

          2. The Assignor (a)  represents  and warrants that it is the legal and
     beneficial  owner of the interest  being  assigned by it hereunder and that
     such  interest  is free  and  clear  of any  adverse  claim;  (b)  makes no
     representation  or warranty and assumes no  responsibility  with respect to
     any statements, warranties or representations made in or in connection with
     the Credit Agreement or the execution, legality, validity,  enforceability,
     genuineness,  sufficiency  or value of the  Credit  Agreement  or any other
     instrument  or  document   furnished   pursuant   thereto;   (c)  makes  no
     representation  or warranty and assumes no  responsibility  with respect to
     the financial condition of the Borrower or the performance or observance by
     the Borrower of any of its  obligations  under the Credit  Agreement or any
     other instrument or document furnished  pursuant thereto;  and (d) attaches
     the Note held by the  Assignor and requests  that the Agent  exchange  such
     Note for a new Note payable to the order of the Assignee in an amount equal
     to the  Commitment  assumed by the  Assignee  pursuant  hereto or new Notes
     payable to the order of the Assignee in an amount  equal to the  Commitment
     assumed by the Assignee pursuant hereto and the Assignor in an amount equal
     to the  Commitment  retained by the  Assignor  under the Credit  Agreement,
     respectively, as specified on Schedule 1 hereto.

          3. The Assignee (a) confirms that it has received a copy of the Credit
     Agreement,  together with copies of the financial statements referred to in
     Section 4.01 thereof and such other  documents  and  information  as it has
     deemed  appropriate  to make its own credit  analysis and decision to enter
     into this Assignment and Acceptance; (b) agrees that it will, independently
     and without  reliance upon the Agent,  the Assignor 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  decisions  in taking or not taking
     action  under the Credit  Agreement;  (c)  confirms  that it is an Eligible
     Assignee;  (d)  appoints  and  authorizes  the Agent to take such action as
     agent on its behalf and to exercise  such powers and  discretion  under the
     Credit  Agreement  as are  delegated  to the  Agent by the  terms  thereof,
     together  with such  powers and  discretion  as are  reasonably  incidental
     thereto; (e) agrees that it will perform in accordance with their terms all
     of the obligations  that by the terms of the Credit  Agreement are required
     to be  performed  by it as a Lender;  and (f)  attaches  any U.S.  Internal
     Revenue Service forms required under Section 2.12 of the Credit Agreement.

          4. Following the execution of this Assignment and Acceptance,  it will
     be delivered to the Agent for  acceptance  and recording by the Agent.  The
     effective date for this Assignment and Acceptance  (the  "Effective  Date")
     shall be the date of  acceptance  hereof  by the  Agent,  unless  otherwise
     specified on Schedule 1 hereto.

          5.  Upon  such  acceptance  and  recording  by  the  Agent,  as of the
     Effective  Date, (a) the Assignee shall be a party to the Credit  Agreement
     and, to the extent  provided in this  Assignment and  Acceptance,  have the
     rights and  obligations of a Lender  thereunder and (b) the Assignor shall,
     to the extent provided in this  Assignment and  Acceptance,  relinquish its
     rights and be released from its obligations under the Credit Agreement.

          6. Upon such acceptance and recording by the Agent, from and after the
     Effective  Date,  the  Agent  shall  make all  payments  under  the  Credit
     Agreement  and  the  Notes  in  respect  of the  interest  assigned  hereby
     (including,  without  limitation,  all payments of principal,  interest and
     facility  fees with  respect  thereto) to the  Assignee.  The  Assignor and
     Assignee  shall make all  appropriate  adjustments  in  payments  under the
     Credit  Agreement  and the Notes for periods  prior to the  Effective  Date
     directly between themselves.

          7. This Assignment and Acceptance  shall be governed by, and construed
     in accordance with, the laws of the State of New York.

          8. This  Assignment  and  Acceptance  may be executed in any number of
     counterparts and by different parties hereto in separate counterparts, each
     of which  when so  executed  shall be deemed to be an  original  and all of
     which taken together shall constitute one and the same agreement.  Delivery
     of an executed  counterpart of Schedule 1 to this Assignment and Acceptance
     by  telecopier  shall be  effective  as  delivery  of a  manually  executed
     counterpart of this Assignment and Acceptance.

     IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to
this  Assignment and Acceptance to be executed by their officers  thereunto duly
authorized as of the date specified thereon.

<PAGE>
                                   Schedule 1
                                       to
                            Assignment and Acceptance

Percentage interest assigned:                                           _______%
Assignee's Commitment:                                         Euro ____________
Aggregate outstanding principal amount of Advances assigned:   Euro ____________
Principal amount of Note payable to Assignee:                  Euro ____________
Principal amount of Note payable to Assignor:                  Euro ____________
Effective Date* :   ___________________, _____

                                             [NAME OF ASSIGNOR], as Assignor

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

                                             Date: ___________________, _____

                                             [NAME OF ASSIGNEE], as Assignee

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

                                             Domestic Lending office
                                             [ADDRESS]

---------------
[FN]
     *This date should be no earlier than five  Business Days after the delivery
     of this Assignment and Acceptance to the Agent.
</FN>

<PAGE>

Accepted this ______ day
of _______________, ____

VEBA INTERNATIONAL FINANCE B.V.,
as Agent

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

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