Document:

<PAGE>

                                                        CONFORMED COPY

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                         U.S. $300,000,000

               364-DAY MULTICURRENCY CREDIT AGREEMENT

                   Dated as of November 23, 1999,

                               Among

                            SOLUTIA INC.,
                             as Borrower

                 THE INITIAL LENDERS NAMED HEREIN,
                         as Initial Lenders

                       BANK OF AMERICA, N.A.
                        as Syndication Agent

                                and

                          CITIBANK, N.A.,
                      as Administrative Agent

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                     T A B L E   O F   C O N T E N T S
                     - - - - -   - -   - - - - - - - -

                                                                          Page
                                                                          ----

                                 ARTICLE I
                     DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Certain Defined Terms.........................................1
SECTION 1.02. Computation of Time Periods................................. 14
SECTION 1.03. Accounting Terms and Determinations......................... 14
SECTION 1.04. Currencies; Currency Equivalents............................ 14

                                  ARTICLE II
                     AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01. The A Advances.............................................. 15
SECTION 2.02. Making the A Advances....................................... 15
SECTION 2.03. The B Advances.............................................. 16
SECTION 2.04. Fees........................................................ 20
SECTION 2.05. Termination, Reduction and Extension of Commitments......... 20
SECTION 2.06. Repayment of Advances; Evidence of Debt..................... 21
SECTION 2.07. Interest on A Advances...................................... 22
SECTION 2.08. Interest Rate Determination; Changes in Rating Systems...... 22
SECTION 2.09. Optional Conversion of A Advances........................... 23
SECTION 2.10. Prepayments, Etc............................................ 24
SECTION 2.11. Increased Costs............................................. 25
SECTION 2.12. Illegality.................................................. 26
SECTION 2.13. Payments and Computations................................... 27
SECTION 2.14. Notations on the A Notes.................................... 28
SECTION 2.15. Taxes....................................................... 29
SECTION 2.16. Sharing of Payments, Etc.................................... 31
SECTION 2.17. Borrowings by Designated Borrowers.......................... 31

                                ARTICLE III
                  CONDITIONS TO EFFECTIVENESS AND LENDING

SECTION 3.01. Conditions Precedent to Initial Borrowing................... 31
SECTION 3.02. Conditions Precedent to Each A Borrowing.................... 32
SECTION 3.03. Conditions Precedent to Each B Borrowing.................... 33
SECTION 3.04. Determinations Under Section 3.01........................... 33

                                ARTICLE IV
                      REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Company............... 34
SECTION 4.02. Representation and Warranty of the Lenders.................. 36

                                 ARTICLE V
                         COVENANTS OF THE COMPANY

SECTION 5.01. Affirmative Covenants....................................... 36
SECTION 5.02. Negative Covenants.......................................... 39
SECTION 5.03. Financial Covenants......................................... 41

                                    -i-

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                                                                          Page
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                                ARTICLE VI
                             EVENTS OF DEFAULT

SECTION 6.01. Events of Default........................................... 41

                                ARTICLE VII
                         THE ADMINISTRATIVE AGENT

SECTION 7.01. Authorization and Action.................................... 43
SECTION 7.02. Administrative Agent's Reliance, Etc........................ 43
SECTION 7.03. Citibank and Affiliates..................................... 44
SECTION 7.04. Lender Credit Decision...................................... 44
SECTION 7.05. Indemnification............................................. 44
SECTION 7.06. Successor Administrative Agent.............................. 44
SECTION 7.07. The Syndication Agent....................................... 45

                               ARTICLE VIII
                               MISCELLANEOUS

SECTION 8.01. Amendments, Etc............................................. 45
SECTION 8.02. Notices, Etc................................................ 46
SECTION 8.03. No Waiver, Remedies......................................... 46
SECTION 8.04. Costs and Expenses.......................................... 47
SECTION 8.05. Right of Set-off............................................ 47
SECTION 8.06. Binding Effect.............................................. 48
SECTION 8.07. Assignments and Participations, Register.................... 48
SECTION 8.08. Governing Law............................................... 51
SECTION 8.09. Execution in Counterparts................................... 51
SECTION 8.10. Jurisdiction, Etc........................................... 51
SECTION 8.11. Judgment Currency........................................... 52

                                ARTICLE IX
                                 GUARANTEE

SECTION 9.01. The Guarantee............................................... 52
SECTION 9.02. Obligations Unconditional................................... 52
SECTION 9.03. Reinstatement............................................... 53
SECTION 9.04. Subrogation................................................. 53
SECTION 9.05. Remedies.................................................... 53
SECTION 9.06. Instrument for the Payment of Money......................... 54
SECTION 9.07. Continuing Guarantee........................................ 54

                                    -ii-

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<TABLE>
                                    SCHEDULES
                                    ---------
<S>                <C>
Schedule 1     -   Certain Existing Liens
Schedule 2A    -   Pricing Grid
Schedule 2B    -   Copy of Pricing Grid from Bank Book

                                     EXHIBITS
                                     --------

Exhibit A-1    -   Form of A Note
Exhibit A-2    -   Form of B Note
Exhibit B-1    -   Form of Notice of A Borrowing
Exhibit B-2    -   Form of Notice of B Borrowing
Exhibit C-1    -   Form of Assignment and Acceptance
Exhibit C-2    -   Form of Assumption and Acceptance
Exhibit D      -   Form of Opinion of General Counsel for the Company
Exhibit E      -   Form of Opinion of Special New York Counsel to the Administrative Agent
Exhibit F-1    -   Form of Designation Letter
Exhibit F-2    -   Form of Termination Letter
</TABLE>

                                       -iii-

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        364-DAY MULTICURRENCY CREDIT AGREEMENT dated as of November
23, 1999 among SOLUTIA INC., a Delaware corporation (the "Company"),
                                                          -------
the banks (each an "Initial Lender" and, collectively, the "Initial
                    --------------                          -------
Lenders") listed on the signature pages hereof, BANK OF AMERICA, N.A.,
-------
as Syndication Agent (in such capacity, together with its successors in
such capacity, the "Syndication Agent") and CITIBANK, N.A.
                    -----------------
("Citibank"), as administrative agent (in such capacity, together with
  --------
its successors in such capacity, the "Administrative Agent") as herein
                                      --------------------
provided.

        The Company has requested that the Lenders make loans to the
Borrowers in an aggregate principal amount not exceeding $300,000,000 at
any one time outstanding solely to finance the working capital needs and
other general corporate purposes of the Borrowers, including to support
the Borrowers' respective commercial paper programs, and the Lenders are
prepared to make such loans upon the terms and conditions hereof.
Accordingly, the parties hereto 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):

        "A Advance" means an advance by a Lender to a Borrower as
         ---------
   part of an A Borrowing and refers to a Base Rate Advance or a
   Eurocurrency Rate Advance, each of which shall be a "Type" of A
                                                        ----
   Advance.

        "A Borrowing" means a borrowing consisting of simultaneous
         -----------
   A Advances of the same Type made by each of the Lenders pursuant to
   Section 2.01.

        "A Note" means a promissory note of a Borrower payable to
         ------
   the order of any Lender, in substantially the form of Exhibit A-1
   hereto, evidencing the aggregate indebtedness of such Borrower to
   such Lender resulting from the A Advances made by such Lender to
   such Borrower.

        "Acceptance" means an Assignment and Acceptance and/or an
         ----------
   Assumption and Acceptance.

        "Adjusted EBITDA" means, for any period, the sum, for the
         ---------------
   Company and its Consolidated Subsidiaries (determined on a
   Consolidated basis without duplication in accordance with GAAP),
   of the following:  (a) net income (calculated before taxes,
   Interest Expense, extraordinary and unusual items and income or
   loss attributable to equity in Affiliates (other than Affiliates
   that are Specified Joint Ventures or Consolidated Subsidiaries))
   for such period plus (b) depreciation and amortization (to the
   extent deducted in determining net income) for such period;
   provided that charges taken (including cash charges in an
   aggregate amount not exceeding $44,000,000) and reserves
   established by the Company and its Consolidated Subsidiaries in
   connection with (x) the Astaris LLC phosphate joint venture that
   Solutia is in the process of establishing with FMC Corporation,
   (y) acquisitions and (z) restructuring of existing operations (all
   on or prior to December 31, 2000) in an aggregate amount not
   exceeding $60,000,000 shall be added back to net income for such
   period (to the extent such charges and reserves were deducted in
   determining net income for such period).

                                          364-DAY CREDIT AGREEMENT

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                                 -2-

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

        "Administrative Agent's Account" means, for each Currency,
         ------------------------------
   an account in respect of such Currency designated by the
   Administrative Agent in a notice to the Company and the Lenders.

        "Administrative Questionnaire" means an administrative
         ----------------------------
   questionnaire in a form supplied by the Administrative Agent.

        "Advance" means an A Advance or a B Advance.
         -------

        "Affected Lender" has the meaning specified in Section 2.12.
         ---------------

        "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 5% 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.

        "Applicable Lending Office" means, with respect to each
         -------------------------
   Lender, such Lender's Domestic Lending Office in the case of a
   Base Rate Advance and such Lender's Eurocurrency Lending Office in
   the case of a Eurocurrency Rate Advance and, in the case of a B
   Advance, the office of such Lender notified by such Lender to the
   Administrative Agent as its Applicable Lending Office with respect
   to such B Advance.

        "Applicable Margin" has the meaning assigned to such term in
         -----------------
   Schedule 2A.

        "Assignment and Acceptance" means an assignment and
         -------------------------
   acceptance entered into by a Lender and an Eligible Assignee, and
   accepted by the Administrative Agent, in substantially the form of
   Exhibit C-1 hereto.

        "Assumption and Acceptance" means an assumption and
         -------------------------
   acceptance entered into by an Eligible Assignee, and accepted by
   the Administrative Agent, in substantially the form of Exhibit C-2
   hereto.

        "B Advance" means an advance by a Lender to a Borrower as
         ---------
   part of a B Borrowing resulting from the auction bidding procedure
   described in Section 2.03.

        "B Borrowing" means a borrowing consisting of simultaneous B
         -----------
   Advances from each of the Lenders whose offer to make one or more
   B Advances as part of such borrowing has been accepted by the
   Company under the auction bidding procedure described in Section
   2.03.

        "B Note" means a promissory note of a Borrower payable to
         ------
   the order of any Lender, in substantially the form of Exhibit A-2
   hereto, evidencing the indebtedness of such Borrower to such
   Lender resulting from a B Advance made by such Lender to such
   Borrower.

        "B Reduction" has the meaning specified in Section 2.01.
         -----------

                                          364-DAY CREDIT AGREEMENT

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                                 -3-

        "Bank of America" means Bank of America, N.A.
         ---------------

        "Base Rate" means a fluctuating interest rate per annum in
         ---------
   effect from time to time, which rate per annum shall at all times
   be equal to the highest of:

             (a)  the rate of interest announced publicly by Citibank in
        New York, New York, from time to time, as Citibank's base rate;

             (b)  the sum (adjusted to the nearest 1/16 of 1% or,
        if there is no nearest 1/16 of 1%, to the next higher 1/16
        of 1%) of (i) 1/2 of 1% per annum, plus (ii) the rate
        obtained by dividing (A) the latest three-week moving
        average of secondary market morning offering rates in the
        United States for three-month certificates of deposit of
        major United States money market banks, such three-week
        moving average (adjusted to the basis of a year of 360 days)
        being determined weekly on each Monday (or, if such day is
        not a Business Day, on the next succeeding Business Day) for
        the three-week period ending on the previous Friday by
        Citibank on the basis of such rates reported by certificate
        of deposit dealers to and published by the Federal Reserve
        Bank of New York or, if such publication shall be suspended
        or terminated, on the basis of quotations for such rates
        received by Citibank from three New York certificate of
        deposit dealers of recognized standing selected by Citibank,
        by (B) a percentage equal to 100% minus the average of the
        daily percentages specified during such three-week period by
        the Board of Governors of the Federal Reserve System (or any
        successor) for determining the maximum reserve requirement
        (including, but not limited to, any emergency, supplemental
        or other marginal reserve requirement) for Citibank with
        respect to liabilities consisting of or including (among
        other liabilities) three-month U.S. dollar non-personal time
        deposits in the United States, plus (iii) the average during
        such three-week period of the annual assessment rates
        estimated by Citibank for determining the then current
        annual assessment payable by Citibank to the Federal Deposit
        Insurance Corporation (or any successor) for insuring U.S.
        dollar deposits of Citibank in the United States; and

             (c)  1/2 of 1% per annum above the Federal Funds Rate.

        "Base Rate Advance" means an A Advance that bears interest
         -----------------
   as provided in Section 2.07(a)(i).

        "Borrowers" means, at any time, collectively, the Company
         ---------
   (both as a Borrower and as guarantor under Article IX of Advances
   made to the Designated Borrowers) and each Designated Borrower.

        "Borrowing" means an A Borrowing or a B Borrowing.
         ---------

        "Business Combination" means any reorganization, merger or
         --------------------
   consolidation or sale or other disposition of all or substantially
   all of the assets of the Company or the acquisition of assets or
   stock of another corporation.

        "Business Day" means a day of the year on which banks are
         ------------
   not required or authorized by law to close in New York City and,
   if the applicable Business Day relates to any Eurocurrency Rate
   Advances denominated in any Currency, on which dealings are
   carried on in the London interbank market for such Currency.

                                          364-DAY CREDIT AGREEMENT

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                                 -4-

        "Capitalized Lease Obligation" means, with respect to any
         ----------------------------
   Person for any period, an obligation of such Person to pay rent or
   other amounts under a lease that is required to be capitalized for
   financial reporting purposes in accordance with GAAP; and the
   amount of such obligation shall be the capitalized amount shown on
   the balance sheet of such Person as determined in accordance with
   GAAP.

        "Change of Control" means the occurrence of any of the
         -----------------
   following events:

        (a)  the acquisition by any individual, entity or group
   (within the meanings of Section 13(d)(3) or 14(d)(2) of the
   Exchange Act) (a "Person or Group") of beneficial ownership
                     ---------------
   (within the meaning of Rule 13d-3 promulgated under the Exchange
   Act) of 30% or more of either (i) the then outstanding shares of
   common stock of the Company (the "Outstanding Company Common
                                     --------------------------
   Stock") or (ii) the combined voting power of the then outstanding
   -----
   voting securities of the Company entitled to vote generally in the
   election of directors (the "Outstanding Company Voting
                               --------------------------
   Securities"); provided that, for purposes of this paragraph (a),
   ----------
   the following acquisitions shall not constitute a Change of
   Control:  (i) any acquisitions directly from the Company, (ii) any
   acquisition by the Company, (iii) any acquisition by any employee
   benefit plan (or related trust) sponsored or maintained by the
   Company or any corporation controlled by the Company or (iv) any
   acquisition by any corporation pursuant to a transaction which
   complies with clauses (i), (ii) and (iii) of paragraph (c) below; or

        (b)  individuals who, as of the date hereof, constitute the
   Board of Directors of the Company (the "Incumbent Board") cease
                                           ---------------
   for any reason to constitute at least a majority of the Board of
   Directors of the Company; provided that any individual becoming a
   director subsequent to the date hereof whose election, or
   nomination for election by the Company's shareholders, was
   approved by a vote of at least a majority of the directors then
   comprising the Incumbent Board shall be considered as though such
   individual were a member of the Incumbent Board, but excluding,
   for this purpose, any such individual whose initial assumption of
   office occurs as a result of an actual or threatened election
   contest with respect to the election or removal of directors or
   other actual or threatened solicitation of proxies or consents by
   or on behalf of a Person other than the Board of Directors; or

        (c)  consummation by the Company of a Business Combination,
   in each case unless following such Business Combination:  (i) all
   or substantially all of the individuals and entities who were the
   beneficial owners, respectively, of the Outstanding Company Common
   Stock and Outstanding Company Voting Securities immediately prior
   to such Business Combination beneficially own, directly or
   indirectly, more than 50% of, respectively, the then outstanding
   shares of common stock and the combined voting power of the then
   outstanding voting securities entitled to vote generally in the
   election of directors, as the case may be, of the corporation
   resulting from such Business Combination (including, without
   limitation, a corporation which as a result of such transaction
   owns the Company or all or substantially all of the Company's
   assets either directly or through one or more Subsidiaries) in
   substantially the same proportions as their ownership, immediately
   prior to such Business Combination of the Outstanding Company
   Common Stock and Outstanding Company Voting Securities, as the
   case may be, (ii) no Person or Group (excluding any corporation
   resulting from such Business Combination or any employee benefit
   plan (or related trust) of the Company or such corporation
   resulting from such Business Combination) beneficially owns,
   directly or indirectly, 30% or more of, respectively, the then
   outstanding shares of common stock of the corporation resulting
   from such Business Combination or the combined voting power of the
   then outstanding voting securities of such corporation except to
   the extent that such ownership existed prior to the Business
   Combination and (iii) at least a majority of the members of the
   board of directors of the corporation resulting

                                          364-DAY CREDIT AGREEMENT

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                                 -5-

   from such Business Combination were members of the Incumbent Board
   at the time of the execution of the initial agreement, or of the
   action of the Board of Directors, providing for such Business
   Combination; or

        (d)  approval by the shareholders of the Company of a
   complete liquidation or dissolution of the Company.

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

        "Closing Date" means the earliest date as of which the
         ------------
   conditions precedent to effectiveness set forth in Section 3.01
   shall have been satisfied or waived.

        "Commitment" means, as to each Lender, the obligation of
         ----------
   such Lender to make A Advances in an aggregate principal amount at
   any one time outstanding up to but not exceeding the amount set
   opposite the name of such Lender on the signature pages hereof
   under the caption "Commitment" or, in the case of a Person that
   becomes a Lender pursuant to an assignment permitted under Section
   8.07, or pursuant to an assumption of obligations under Section
   2.05, as specified in the Register (as such Commitment may be
   reduced from time to time pursuant hereto). The original
   aggregate principal amount of the Commitments is $300,000,000.

        "Commitment Termination Date" means November 21, 2000 or, in
         ---------------------------
   the case of any Lender whose Commitment is extended pursuant to
   Section 2.05(b), the date to which such Commitment is extended;
   provided in each case that if any such date is not a Business Day,
   the relevant Commitment Termination Date of such Lender shall be
   the immediately preceding Business Day. When the term "Commitment
   Termination Date" is used herein without reference to any
   particular Lender, such term shall, in such instance, be deemed to
   be a reference to the latest Commitment Termination Date of any of
   the Lenders then in effect hereunder.

        "Consolidated" refers to the consolidation of the accounts
         ------------
   of the Company and its Subsidiaries in accordance with generally
   accepted accounting principles, including principles of
   consolidation, consistent with those applied in the preparation of
   the financial statements referred to in Section 4.01(e)(i).

        "Consolidated Net Tangible Assets" means, at any time, for
         --------------------------------
   the Company and its Consolidated Subsidiaries (determined on a
   Consolidated basis without duplication in accordance with GAAP),
   Consolidated Tangible Assets at such time after deducting
   therefrom all current liabilities, other than current liabilities
   in respect of (a) notes and loans payable, (b) current maturities
   of long-term debt and (c) current maturities of the principal
   component of Capitalized Lease Obligations.

        "Consolidated Net Worth" means, at any time, the sum for the
         ----------------------
   Company and its Consolidated Subsidiaries (determined on a
   Consolidated basis without duplication in accordance with GAAP),
   the amount of capital stock plus the amount of surplus and
   retained earnings (or, in the case of a surplus or retained
   earnings deficit, minus the amount of such deficit).

        "Consolidated Subsidiary" means a Subsidiary of the Company,
         -----------------------
   the accounts of which in accordance with generally accepted
   accounting principles are consolidated with those of the Company.

        "Consolidated Tangible Assets" means, at any time, for the
         ----------------------------
   Company and its Consolidated Subsidiaries (determined on a
   Consolidated basis without duplication in accordance

                                          364-DAY CREDIT AGREEMENT

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                                 -6-

   with GAAP), the aggregate amount of all assets (less applicable
   reserves and other properly deductible items) after deducting
   therefrom all goodwill, trade names, trademarks, patents,
   unamortized debt discount and expenses (to the extent included in
   said aggregate amount of assets) and other like intangibles.

        "Convert", "Conversion" and "Converted" each refers to a
         -------    ----------       ---------
   conversion of A Advances of one Type denominated in Dollars into A
   Advances of the other Type denominated in Dollars pursuant to
   Section 2.08 or 2.09.

        "Currency" means Dollars or Euros.
         --------

        "Debt" of any Person means, without duplication: (a) indebtedness
         ----
   of such Person for borrowed money, (b) obligations of such Person
   evidenced by bonds, debentures, notes or other similar instruments,
   (c) obligations of such Person to pay the deferred purchase price of
   property or services (other than trade accounts payable arising, and
   accrued expenses incurred, in the ordinary course of business so long
   as such trade accounts payable are payable on customary trade terms or
   on other trade terms that are more advantageous to the Company),
   (d) Capitalized Lease Obligations of such Person and (e) obligations
   of such Person 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
   clauses (a) through (d) above.

        "Debt to Adjusted EBITDA Ratio" means, at any date, the ratio of:
         -----------------------------

             (a)  Debt of the Company and its Consolidated Subsidiaries
        on a Consolidated basis as of such date to
                                                --

             (b)  Adjusted EBITDA for the Rolling Period ending on or
        most recently ended prior to such date.

        "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.

        "Designated Borrower" means any wholly owned Subsidiary of
         -------------------
   the Company as to which a Designation Letter has been delivered to
   the Administrative Agent and as to which a Termination Letter has
   not been delivered to the Administrative Agent in accordance with
   Section 2.17.

        "Designation Letter" has the meaning specified in
         ------------------
   Section 2.17(a).

        "Dollar Equivalent" means with respect to any Borrowing
         -----------------
   denominated in Euros, the amount of Dollars that would be required
   to purchase the amount of Euros of such Borrowing on the date two
   Business Days prior to the date of such Borrowing (or, in the case
   of any determination made under Section 2.10(c) or redenomination
   under Section 2.13(e), on the date of determination or
   redenomination therein referred to), based upon the spot selling
   rate at which the Administrative Agent offers to sell Euros for
   Dollars in the London foreign exchange market at approximately
   11:00 a.m., London time, for delivery two Business Days later.

        "Dollars" or "$" refers to lawful money of the United
         -------      -
   States of America.

                                          364-DAY CREDIT AGREEMENT

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                                 -7-

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

        "Eligible Assignee" means (i) a Lender; (ii) an Affiliate of
         -----------------
   a Lender; (iii) a commercial bank organized under the laws of the
   United States, or any State thereof, and having total assets in
   excess of $5,000,000,000; (iv) a savings and loan association or
   savings bank organized under the laws of the United States, or any
   State thereof, and having total assets in excess of
   $3,000,000,000; (v) a commercial bank organized under the laws of
   any other country that is a member of the Organization for
   Economic Cooperation and Development or has concluded special
   lending arrangements with the International Monetary Fund
   associated with its General Arrangements to Borrow or of the
   Cayman Islands, or a political subdivision of any such country,
   and having total assets in excess of $5,000,000,000, so long as
   such bank is acting through a branch or agency located in the
   country in which it is organized or another country that is
   described in this clause (v); (vi) a finance company, insurance
   company or other financial institution or fund (whether a
   corporation, partnership, trust or other entity) that is engaged
   in making, purchasing or otherwise investing in commercial loans
   in the ordinary course of its business and having total assets in
   excess of $3,000,000,000; and (vii) any other Person approved by
   the Administrative Agent and the Company, such approval not to be
   unreasonably withheld or delayed; provided that neither the
   Company nor an Affiliate of the Company shall qualify as an
   Eligible Assignee.

        "Environmental Laws" means any and all applicable laws and
         ------------------
   regulations relating to the protection of the environment,
   including laws relating to emissions, discharges, releases, spills
   and disposal of material into the environment (e.g., air, surface
   water, groundwater and the land).

        "Environmental Permit" means any permit, license or other
         --------------------
   governmental approval required under any Environmental Laws.

        "ERISA" means the Employee Retirement Income Security Act of
         -----
   1974, as amended from time to time, and the regulations promulgated
   and rulings issued thereunder.

        "ERISA Affiliate" means any Person that for purposes of
         ---------------
   Title IV of ERISA is a member of the Company's controlled group,
   or under common control with the Company, within the meaning of
   Section 414 of the Internal Revenue Code.

        "ERISA Event" means (a) the occurrence of a reportable
         -----------
   event, within the meaning of Section 4043 of ERISA, that would
   have a Material Adverse Effect with respect to any Plan unless the
   30-day notice requirement with respect to such event has been
   waived by the PBGC; (b) the application for a minimum funding
   waiver with respect to a Plan; (c) the provision by the
   administrator of any Plan of a notice of intent to terminate such
   Plan pursuant to Section 4041(c) of ERISA; (d) the cessation of
   operations at a facility of the Company or any of its ERISA
   Affiliates in the circumstances described in Section 4062(e) of
   ERISA; (e) the failure by the Company or any of its ERISA
   Affiliates to make a payment to a Plan if the conditions for the
   imposition of a lien under Section 302(f)(1) of ERISA are
   satisfied; (f) the adoption of an amendment to a Plan requiring
   the provision of security to such Plan, pursuant to Section 307 of
   ERISA; or (g) the institution by the PBGC of proceedings to
   terminate a Plan, pursuant to Section 4042 of ERISA, or the
   occurrence of any event or condition described in Section 4042 of
   ERISA that could constitute grounds for the termination of, or the
   appointment of a trustee to administer, a Plan.

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                 -8-

        "Euro Equivalent" means with respect to any amount in
         ---------------
   Dollars, the amount of Euros that could be purchased with such
   amount of Dollars using the reciprocal of the foreign exchange
   rate(s) specified in the definition of "Dollar Equivalent", as
   determined by the Administrative Agent.

        "Eurocurrency Lending Office" means, with respect to any
         ---------------------------
   Lender, the office of such Lender specified as its "Eurocurrency
   Lending Office" in the Administrative Questionnaire of such Lender
   or in the Acceptance pursuant to which it became a Lender (or, if
   no such office is specified, its Domestic Lending Office), or such
   other office of such Lender as such Lender may from time to time
   specify to the Company and the Administrative Agent.

        "Eurocurrency Liabilities" has the meaning assigned to that
         ------------------------
   term in Regulation D of the Board of Governors of the Federal
   Reserve System, as in effect from time to time.

        "Eurocurrency Rate" means:
         -----------------

        (a) For any Interest Period for each Eurocurrency Rate
   Advance comprising part of the same Borrowing denominated in
   Dollars, an interest rate per annum equal to the rate per annum
   obtained by dividing (i) the average (rounded upward to the
   nearest whole multiple of 1/16 of 1% per annum, if such average is
   not such a multiple) of the rate per annum at which deposits in
   U.S. dollars are offered by the principal office of each of the
   Reference Banks in London, England to prime banks in the London
   interbank market at 11:00 A.M. (London time) two Business Days
   before the first day of such Interest Period in an amount
   substantially equal to such Reference Bank's Eurocurrency Rate
   Advance comprising part of such Borrowing to be outstanding during
   such Interest Period and for a period equal to such Interest
   Period by (ii) a percentage equal to 100% minus the Eurocurrency
   Rate Reserve Percentage for such Interest Period. The
   Eurocurrency Rate for any Interest Period for each Eurocurrency
   Rate Advance comprising part of the same Borrowing denominated in
   Dollars shall be determined by the Administrative Agent on the
   basis of applicable rates furnished to and received by the
   Administrative Agent from the Reference Banks two Business Days
   before the first day of such Interest Period, subject, however, to
   the provisions of Section 2.08;

        (b) For any Interest Period for each Eurocurrency Rate
   Advance comprising part of the same Borrowing denominated in
   Euros, an interest rate per annum equal to the rate per annum
   obtained by dividing (i) the rate appearing on the Screen at
   approximately 11:00 a.m., London time, two Business Days before
   the first day of such Interest Period, as the Eurocurrency Rate
   for deposits denominated in Euros with a maturity compatible to
   such Interest Period, by (ii) a percentage equal to 100% minus the
   Eurocurrency Rate Reserve Percentage for such Interest Period. In
   the event that such rate is not available on the Screen at such
   time for any reason, then the Eurocurrency Rate for such Interest
   Period shall be the rate at which deposits in Euros in the amount
   of $5,000,000 and for a maturity comparable to such Interest
   Period are offered by the principal London office of the
   Administrative Agent in immediately available funds in the London
   interbank market at approximately 11:00 a.m., London time, two
   Business Days before the first day of such Interest Period.

        "Eurocurrency Rate Advance" means an A Advance that bears
         -------------------------
   interest as provided in Section 2.07(a)(ii).

        "Eurocurrency Rate Reserve Percentage" for any Interest
         ------------------------------------
   Period for all Eurocurrency Rate Advances comprising part of the
   same Borrowing means the reserve percentage applicable

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                 -9-

   two Business Days before the first day of such Interest Period
   under regulations issued from time to time by the Board of
   Governors of the Federal Reserve System (or any successor) for
   determining the maximum reserve requirement (including, without
   limitation, any emergency, supplemental or other marginal reserve
   requirement) for a member bank of the Federal Reserve System in
   New York City with respect to liabilities or assets consisting of
   or including Eurocurrency Liabilities (or with respect to any
   other category of liabilities that includes deposits by reference
   to which the interest rate on Eurocurrency Rate Advances is
   determined) having a term equal to such Interest Period.

        "Euros" means the single currency of participating member
         -----
   states of the European Union.

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

        "Exchange Act" means the Securities Exchange Act of 1934, as
         ------------
   amended.

        "Excluded Representations" means the representations and
         ------------------------
   warranties set forth in Section 4.01(e)(ii), Section 4.01(f)
   (excluding clause (ii) thereof) and the second sentence of Section
   4.01(c).

        "Facility Fee" has the meaning specified in Section 2.04(a).
         ------------

        "Facility Fee Rate" has the meaning assigned to such term in
         -----------------
   Schedule 2A.

        "Federal Funds Rate" means, for any period, a fluctuating
         ------------------
   interest rate per annum equal for each day during such period to
   the weighted average of the rates on overnight Federal funds
   transactions with members of the Federal Reserve System arranged
   by Federal funds brokers, as published for such day (or, if such
   day is not a Business Day, for the next preceding Business Day) by
   the Federal Reserve Bank of New York, or, if such rate is not so
   published for any day that is a Business Day, the average of the
   quotations for such day on such transactions received by the
   Administrative Agent from three Federal funds brokers of
   recognized standing selected by it.

        "Fixed Rate Advances" has the meaning specified in Section
         -------------------
   2.03(a)(i).

        "Floating Rate Advances" has the meaning specified in
         ----------------------
   Section 2.03(a)(i).

        "GAAP" has the meaning specified in Section 1.03.
         ----

        "Guaranteed Obligations" has the meaning specified in
         ----------------------
   Section 9.01.

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

        "Information" has the meaning specified in Section
         -----------
   4.01(j)(i).

        "Interest Coverage Ratio" means, at any date, the ratio of
         -----------------------
   (a) Adjusted EBITDA for the Rolling Period ending on or most
   recently ended prior to such date to (b) Interest Expense for such
   Rolling Period.

        "Interest Expense" means, for any period, the sum, for the
         ----------------
   Company and its Consolidated Subsidiaries (determined on a
   consolidated basis without duplication in accordance with GAAP),
   of all interest in respect of Debt (including, without limitation,
   the interest component of any

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -10-

   payments in respect of Capitalized Lease Obligations) accrued or
   capitalized during such period (whether or not actually paid
   during such period).

        "Interest Period" means, for each Eurocurrency Rate Advance
         ---------------
   comprising part of the same A Borrowing, the period commencing on
   the date of such Eurocurrency Rate Advance or the date of the
   Conversion of any Base Rate Advance into such Eurocurrency Rate
   Advance and ending on the last day of the period selected by the
   Company pursuant to the provisions below and, thereafter, each
   subsequent period commencing on the last day of the immediately
   preceding Interest Period and ending on the last day of the period
   selected by the Company pursuant to the provisions below. The
   duration of each such Interest Period shall be one, two, three or
   six months (or, with respect to such portion of any Eurocurrency
   Advance denominated in Euros that is scheduled to be repaid on the
   Commitment Termination Date, a period of less than one month's
   duration) commencing on the date of such Advance and ending on the
   Commitment Termination Date, as the Company (on its own behalf and
   on behalf of all other Borrowers) may, upon notice received by the
   Administrative Agent not later than 11:00 A.M. (New York City
   time) on the third Business Day prior to the first day of such
   Interest Period, select; provided that:

             (i)   the Company may not select any Interest Period
        that ends after the Commitment Termination Date;

             (ii)  Interest Periods commencing on the same date for
        Eurocurrency Rate Advances comprising part of the same A
        Borrowing shall be of the same duration;

             (iii) whenever the last day of any Interest Period
        would otherwise occur on a day other than a Business Day,
        the last day of such Interest Period shall be extended to
        occur on the next succeeding Business Day, provided that, if
        such extension would cause the last day of such Interest
        Period to occur in the next following calendar month, the
        last day of such Interest Period shall occur on the next
        preceding Business Day; and

             (iv)  whenever the first day of any Interest Period,
        other than an Interest Period pertaining to a Eurocurrency
        Borrowing denominated in Euros that ends on the Commitment
        Termination Date that is permitted to be of less than one
        month's duration as provided in this definition, occurs on a
        day of an initial calendar month for which there is no
        numerically corresponding day in the calendar month that
        succeeds such initial calendar month by the number of months
        equal to the number of months in such Interest Period, such
        Interest Period shall end on the last Business Day of such
        succeeding calendar month.

        "Internal Revenue Code" means the Internal Revenue Code of
         ---------------------
   1986, as amended from time to time, and the regulations
   promulgated and rulings issued thereunder.

        "Lenders" means the Initial Lenders listed on the signature
         -------
   pages hereof and each institution that shall become a party hereto
   pursuant to Section 2.05 or Section 8.07(a), (b) or (d).

        "Lien" means any lien, security interest or other charge or
         ----
   encumbrance of any kind, or any other type of preferential
   arrangement, including, without limitation, the lien or retained
   security title of a conditional vendor and any easement, right of
   way or other encumbrance on title to real property.

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -11-

        "Majority Lenders" means at any time Lenders owed at least
         ----------------
   66-2/3% of the then aggregate unpaid principal amount of the A
   Advances owing to Lenders, or, if no such principal amount is then
   outstanding, Lenders having at least 66-2/3% of the Commitments.

        "Margin Stock" has the meaning specified in Regulation U of
         ------------
   the Board of Governors of the Federal Reserve System.

        "Material Adverse Effect" means a material adverse effect on
         -----------------------
   (a) the financial condition or results of operations of the
   Company and its Subsidiaries, taken as a whole or (b) the
   legality, validity or enforceability of this Agreement or any Note.

        "Material Contract" means any contractual, legal or other
         -----------------
   obligation binding upon the Company or a Material Subsidiary under
   which a default in payment by the Company or such Material
   Subsidiary would have a Material Adverse Effect.

        "Material Subsidiary" means, at any time, any Consolidated
         -------------------
   Subsidiary that, on a consolidated basis with its Subsidiaries, has:

             (a)  at least 5% (in the case of Solutia UK Ltd. and
        Solutia Europe S.A./N.V.) or 10% (in the case of each other
        Consolidated Subsidiary) of the total Consolidated assets of
        the Company and its Consolidated Subsidiaries (determined as
        of the last day of the most recent fiscal quarter of the
        Company); or

             (b)  at least 5% (in the case of Solutia UK Ltd. and
        Solutia Europe S.A./N.V.) or 10% (in the case of each other
        Consolidated Subsidiary) of the Consolidated net sales of
        the Company and its Consolidated Subsidiaries for the
        twelve-month period ending on the last day of the most
        recent fiscal quarter of the Company.

        "Moody's" means Moody's Investors Service, Inc. and its
         -------
   successors.

        "Multiemployer Plan" means a multiemployer plan, as defined
         ------------------
   in Section 4001(a)(3) of ERISA, to which the Company or any of its
   ERISA Affiliates is making or accruing an obligation to make
   contributions, or has within any of the preceding five plan years
   made or accrued an obligation to make contributions.

        "Multiple Employer Plan" means a single employer plan, as
         ----------------------
   defined in Section 4001(a)(15) of ERISA, that (a) is maintained
   for employees of the Company (or its predecessor's chemicals
   business) or any of its ERISA Affiliates and at least one Person
   other than the Company (or its predecessor's chemicals business)
   and its ERISA Affiliates or (b) was so maintained and in respect
   of which the Company (or its predecessor's chemicals business) or
   any of its ERISA Affiliates could have liability under Section
   4064 or 4069 of ERISA in the event such plan has been or were to
   be terminated.

        "Note" means an A Note or a B Note.
         ----

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

        "Notice of B Borrowing" has the meaning specified in Section
         ---------------------
   2.03(a)(i).

        "Ownership Interest" in (or of) any corporation, partnership,
         ------------------
   joint venture, limited liability company, trust or estate means
   (a) issued and outstanding capital stock having ordinary voting power

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                 -12-

   in the election 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) an interest in
   the capital or profits of such partnership, joint venture or
   limited liability company or (c) a beneficial interest in such
   trust or estate.

        "PBGC" means the Pension Benefit Guaranty Corporation.
         ----

        "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.

        "Plan" means a Single Employer Plan or a Multiple Employer Plan.
         ----

        "Post-Closing Date Information" has the meaning specified in
         -----------------------------
   Section 4.01(j)(iv).

        "Principal Property" means any building, structure or other
         ------------------
   facility, together with the land upon which it is erected and
   fixtures comprising a part thereof, used primarily for
   manufacturing, the gross book value of which on the date as of
   which such determination is being made exceeds 1% of the gross
   property, plant and equipment of the Company as shown in its
   Consolidated financial statements, provided that any property
   which, in the opinion of the Company, is not of material
   importance to the business of the Company and its Consolidated
   Subsidiaries, taken as a whole, shall not be deemed to be a
   Principal Property.

        "Rated Securities" means, at any time, the long-term senior
         ----------------
   unsecured, unguaranteed debt securities of the Company outstanding
   at such time.

        "Rating Level" means Rating Level 1, Rating Level 2, Rating
         ------------
   Level 3, Rating Level 4, Rating Level 5 or Rating Level 6. For
   purposes hereof, Rating Level 1 shall be deemed to be the highest
   Rating Level and Rating Level 6 shall be deemed to be the lowest
   Rating Level.

        "Rating Level 1" means a rating of the Rated Securities better
         --------------
   than or equal to A2 by Moody's or better than or equal to A by S&P.

        "Rating Level 2" means a rating of the Rated Securities equal
         --------------
   to A3 by Moody's or A- by S&P.

        "Rating Level 3" means a rating of the Rated Securities
         --------------
   equal to Baa1 by Moody's or BBB+ by S&P.

        "Rating Level 4" means a rating of the Rated Securities
         --------------
   equal to Baa2 by Moody's or BBB by S&P.

        "Rating Level 5" means a rating of the Rated Securities
         --------------
   equal to Baa3 by Moody's or BBB- by S&P.

        "Rating Level 6" means a rating of the Rated Securities less
         --------------
   than Baa3 by Moody's and less than BBB- by S&P. If Moody's or S&P
   shall not have in effect a rating for the Rated Securities at any
   time, then the Rated Securities shall be deemed to be rated by
   Moody's or S&P, as the case may be, in Rating Level 6.

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -13-

        "Rating Level Change" means a change in the rating of the
         -------------------
   Rated Securities by either or both of Moody's and S&P (other than
   as a result of a change in the rating system of such rating
   agency) that results in the change from one Rating Level to
   another, which Rating Level Change shall be effective on the date
   on which the relevant change in the rating of the Rated Securities
   is first announced by Moody's or S&P, as the case may be.

        "Reference Banks" means Citibank, Bank of America and
         ---------------
   Societe Generale; provided that the Company (on its own behalf and
   on behalf of the other Borrowers) may at any time substitute
   another Lender as one of the Reference Banks, but such substitution
   shall terminate after 30 days if within such period the Majority
   Lenders shall have notified the Administrative Agent of their
   objection to such substitution.

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

        "Rolling Period" means the period of four consecutive calendar
         --------------
   quarters ending on or most recently ended prior to such date.

        "S&P" means Standard & Poor's Ratings Services, presently a
         ---
   division of The McGraw-Hill Companies, Inc., and its successors.

        "Screen" means Telerate Page 3750 (or such other page as may
         ------
   replace such Telerate Page 3750 for purposes of displaying the
   Eurocurrency Rate for Euros); provided that, if the Administrative
   Agent determines that there is no such relevant display page on
   the Telerate Service for the Eurocurrency Rate for Euros, "Screen"
   shall mean the relevant display page for the Eurocurrency Rate for
   Euros (as determined by the Administrative Agent) on the Reuter
   Monitor Money Rates Service.

        "Single Employer Plan" means a single employer plan, as
         --------------------
   defined in Section 4001(a)(15) of ERISA, that (a) is maintained
   for employees of the Company (or its predecessor's chemicals
   business) or any of its ERISA Affiliates and no Person other than
   the Company (or its predecessor's chemicals business) and its
   ERISA Affiliates or (b) was so maintained and in respect of which
   the Company (or its predecessor's chemicals business) or any of
   its ERISA Affiliates could have liability under Section 4069 of
   ERISA in the event such plan has been or were to be terminated.

        "Solvent" means, with respect to any Person on a particular
         -------
   date, that on such date (a) the present fair salable value of the
   assets of such Person is not less than the amount that will be
   required to pay the probable liability of such Person on its debts
   as they become absolute and matured, (b) such Person does not
   intend to, and does not believe that it will, incur debts or
   liabilities beyond such Person's ability to pay as such debts and
   liabilities mature and (c) such Person is not engaged in business
   or a transaction, and is not about to engage in business or a
   transaction, for which such Person's property would be unreasonably
   small in relation to such business or such transaction.

        "Specified Joint Venture" means a joint venture or other
         -----------------------
   Person (other than a Consolidated Subsidiary of the Company) of
   which (or in which) at least 50% of the Ownership Interests
   thereof is at the time directly or indirectly owned by the
   Company, by the Company and one or more of its Consolidated
   Subsidiaries or by one or more of the Company's Consolidated
   Subsidiaries, provided that the Company's joint venture partners
   in such joint venture or other Person do not, in the aggregate,
   control (or possess the ability to control) such joint venture or
   other Person. For purposes of this definition, a "joint venture
   partner" means a Person that owns any Ownership Interests in the
   related joint venture or other Person and that is not the Company
   or one of its Consolidated Subsidiaries.

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -14-

        "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 the Ownership Interests thereof 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.

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

        "Taxes" has the meaning specified in Section 2.15(a).
         -----

        "Threshold Amount" means, at any time:  (a) if the
         ----------------
   Company's Consolidated Net Worth at such time is greater than zero,
   $50,000,000; and (b) at any other time, $25,000,000.

        "Utilization Fee" has the meaning specified in Section 2.04(c).
         ---------------

        "Utilization Fee Rate" has the meaning assigned to such term
         --------------------
   in Schedule 2A.

        "Voting Stock" means capital stock issued by a corporation,
         ------------
   or equivalent interests in any other Person, the holders of which
   are ordinarily, in the absence of contingencies, entitled to vote
   for the election of directors (or persons performing similar
   functions) of such Person, even if the right so to vote has been
   suspended by the happening of such a contingency.

        "Withdrawal Liability" has the meaning specified in Part I
         --------------------
   of Subtitle E of Title IV of ERISA.

        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 mean "to but excluding".

        SECTION 1.03.  Accounting Terms and Determinations. All
                       -----------------------------------
accounting terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles consistent with
those applied in the preparation of the financial statements referred to
in Section 4.01(e)(i) ("GAAP"). All determinations of Adjusted EBITDA,
                        ----
Consolidated Net Tangible Assets, Consolidated Net Worth, Consolidated
Tangible Assets and Interest Expense shall be made on the basis of the
financial statements most recently delivered pursuant to Section 4.01(e)(i)
and Sections 5.01(i)(i) and (ii). In the event that, after the date of this
Agreement, there are any changes in GAAP, the Lenders will consider a
request by the Company to amend this Agreement to take account of such
changes.

        SECTION 1.04.  Currencies; Currency Equivalents. At any time,
                       --------------------------------
any reference in the definition of the term "Euros" or in any other
provision of this Agreement to the currency of the participating member
states of the European Union means the lawful currency of such
participating member states at such time whether the name of such
currency is the same as it was on the date hereof. Except as provided
in Section 2.10(c) and Section 2.13(e), for purposes of determining
(i) whether the amount of any Borrowing, together with all other
Borrowings then outstanding or to be borrowed at the same time as such
Borrowing, would exceed the aggregate amount of the Commitments,
(ii) the aggregate unutilized amount of the Commitments and (iii) the
outstanding aggregate principal amount of Borrowings, the outstanding
principal amount of any Borrowing that is denominated in Euros shall be
deemed to be the Dollar Equivalent of the amount of Euros of such
Borrowing determined as of the date of such Borrowing. Wherever in this
Agreement in connection with a Borrowing or Advance an amount, such as a
required minimum or multiple amount, is expressed in Dollars, but such
Borrowing or Advance

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -15-

is denominated in Euros, such amount shall be the relevant Euro
Equivalent of such Dollar amount (rounded to the nearest 1,000 units of
Euros).

                             ARTICLE II

                 AMOUNTS AND TERMS OF THE ADVANCES

        SECTION 2.01.  The A Advances. Each Lender severally agrees,
                       --------------
on the terms and conditions hereinafter set forth, to make A Advances
to the Company and any Designated Borrower (in Dollars or in Euros, at
the election of the Company on its own behalf or on behalf of the
applicable Borrower) from time to time on any Business Day during
the period from the Closing Date to and including the Commitment
Termination Date in an aggregate amount not to exceed at any time
outstanding the amount of such Lender's Commitment; provided that the
aggregate amount of the Commitments of the Lenders shall be deemed used
from time to time to the extent of the Dollar Equivalent of the
aggregate amount of the B Advances then outstanding and such deemed use
of the aggregate amount of the Commitments shall be allocated among the
Lenders ratably according to their respective Commitments (such deemed
use of the aggregate amount of the Commitments being a "B Reduction").
                                                        -----------
Each A Borrowing shall be in an aggregate amount of $10,000,000 or an
integral multiple of $1,000,000 in excess thereof, or the aggregate
amount of the unused portion of the Lenders' Commitments; provided that
any A Borrowing in an aggregate amount less than $10,000,000 shall
consist solely of Base Rate Advances. In addition, each A Borrowing
shall consist of A Advances of the same Type and Currency and having the
same Interest Period made on the same day by the Lenders ratably
according to their respective Commitments. Within the limits of each
Lender's Commitment, the Borrowers may borrow under this Section 2.01,
prepay pursuant to Section 2.10 and, on or prior to the Commitment
Termination Date, reborrow under this Section 2.01.

        SECTION 2.02.  Making the A Advances.
                       ---------------------

        (a)  Each A Borrowing shall be made on notice, given not
later than 11:00 A.M. (New York City time) on the third Business Day
prior to the date of the proposed A Borrowing (in the case of an A
Borrowing to consist of Eurocurrency Rate Advances), or by 11:00 A.M.
(New York City time) on the day of the proposed A Borrowing (in the case
of an A Borrowing to consist of Base Rate Advances), by the Company (on
its own behalf and on behalf of the other Borrowers) to the
Administrative Agent, which shall give to each Lender prompt notice
thereof by telecopier or by telex. Each such notice of an A Borrowing
(a "Notice of A Borrowing") shall be by telecopier or by telex,
    ---------------------
confirmed immediately in writing, in substantially the form of Exhibit
B-1 hereto, specifying therein (i) the date of such A Borrowing, (ii)
the Type of A Advances comprising such A Borrowing, (iii) the aggregate
amount of such A Borrowing and the Currency thereof (except that Base
Rate Advances must be denominated in Dollars), (iv) in the case of an A
Borrowing consisting of Eurocurrency Rate Advances, the initial Interest
Period for each such A Advance and (v) the name of the Borrower of such
A Advance (which shall be the Company or a Designated Borrower). Each
Lender shall on the date of such A Borrowing, before 11:00 A.M. (New
York City time), in the case of an A Borrowing to consist of
Eurocurrency Rate Advances, and before 1:00 P.M. (New York City time),
in the case of an A Borrowing to consist of Base Rate Advances, make
available for the account of its Applicable Lending Office to the
Administrative Agent at its address referred to in Section 8.02, in the
relevant Currency and in same day funds, such Lender's ratable portion
of such A Borrowing. After the Administrative Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in
Article III, the Administrative Agent will make such funds available to
the Company at the Administrative Agent's aforesaid address (or, in the
case of an A Borrowing by a Designated Borrower, the Administrative
Agent will make such funds available to the relevant Borrower in such
manner as the Administrative Agent and the Company may agree).

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -16-

        (b)  Anything in subsection (a) above to the contrary
notwithstanding (1) no Borrower may select Eurocurrency Rate Advances
for any A Borrowing if the obligation of the Lenders to make
Eurocurrency Rate Advances shall then be suspended pursuant to
Section 2.08 or 2.12 (except as otherwise provided in Section
2.12(b)(ii)) and (2) Base Rate Advances shall be denominated solely in
Dollars.

        (c)  Each Notice of A Borrowing shall be binding on the
Company and each Designated Borrower. In the case of any A Borrowing
that the related Notice of A Borrowing specifies is to consist of
Eurocurrency Rate Advances, the Company (and, if a Designated Borrower
is the borrower of the related A Advances, such Designated Borrower)
shall indemnify each Lender against any loss, cost or expense incurred
by such Lender as a result of any revocation of such Notice of A
Borrowing by the Company (or such Designated Borrower) or any failure to
fulfill on or before the date specified in such Notice of A Borrowing
for such A Borrowing the applicable conditions set forth in Article III,
including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the A Advance to be made by such Lender
as part of such A Borrowing when such A Advance, as a result of such
revocation or failure, is not made on such date.

        (d)  Unless the Administrative Agent shall have received
notice from a Lender prior to the date of any A Borrowing (in the case
of an A Borrowing to consist of Eurocurrency Rate Advances) and not
later than 12:00 Noon (New York City time) on the Business Day of the
proposed A Borrowing (in the case of an A Borrowing to consist of Base
Rate Advances) that such Lender will not make available to the
Administrative Agent such Lender's ratable portion of such A Borrowing,
the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such A
Borrowing in accordance with subsection (a) of this Section 2.02 and the
Administrative Agent may, in reliance upon such assumption, make
available to the relevant Borrower on such date a corresponding amount;
provided that nothing in this subsection (d) shall be construed to
relieve any Lender from any obligation hereunder to make available to
the Administrative Agent its ratable portion of such A Borrowing in
accordance with subsection (a) of this Section 2.02. If and to the
extent that such Lender shall not have so made such ratable portion
available to the Administrative Agent, such Lender and the relevant
Borrower severally agree to repay to the Administrative Agent forthwith
on demand such corresponding amount together with interest thereon, for
each day from the date such amount is made available to the relevant
Borrower until the date such amount is repaid to the Administrative
Agent, at (i) in the case of such Borrower, the interest rate applicable
at such time to the A Advances comprising such A Borrowing and (ii) in
the case of such Lender, the Federal Funds Rate. If such Lender shall
repay to the Administrative Agent such corresponding amount, such amount
so repaid shall constitute such Lender's A Advance as part of such A
Borrowing for purposes of this Agreement.

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

        SECTION 2.03.  The B Advances.
                       --------------

        (a)  Each Lender severally agrees that the Borrowers may
make B Borrowings in Dollars or in Euros under this Section 2.03 from
time to time on any Business Day during the period from the Closing Date
until the date occurring seven days prior to the Commitment Termination
Date in the manner set forth below; provided that, following the making
of each B Borrowing, (X) the Dollar Equivalent of the aggregate amount
of the B Advances of all Lenders then outstanding shall not exceed the
aggregate amount of the Commitments of the Lenders, and (Y) the Dollar
Equivalent of the aggregate amount of all Advances then outstanding
shall not exceed the aggregate amount of the Commitments of the Lenders.

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -17-

        (i)  The Company (on its own behalf and on behalf of
   the other Borrowers) may request a B Borrowing under this
   Section 2.03 by delivering to the Administrative Agent, by
   telecopier or telex, confirmed immediately in writing, a notice of
   a B Borrowing (a "Notice of B Borrowing"), in substantially the
                     ---------------------
   form of Exhibit B-2 hereto, specifying therein:

             (1)  the date of such proposed B Borrowing;

             (2)  the aggregate amount of such proposed B Borrowing
        and the Currency thereof;

             (3)  the maturity date for repayment of each B Advance
        to be made as part of such B Borrowing (which maturity date
        may not be earlier than the date occurring thirty days after
        the date of such B Borrowing or later than the Commitment
        Termination Date);

             (4)  the interest payment date or dates relating thereto;

             (5)  whether such B Borrowing is to consist of Fixed
        Rate Advances or Floating Rate Advances;

             (6)  the name of the applicable Borrower (which shall
        be the Company or a Designated Borrower); and

             (7)  any other terms to be applicable to such B Borrowing,

   not later than 10:00 A.M. (New York City time) in the case of B
   Advances to be denominated in Dollars, and not later than 10:00
   A.M. (London time) in the case of B Advances to be denominated in
   Euros, (A) at least one Business Day prior to the date of the
   proposed B Borrowing, if the Company shall specify in the Notice
   of B Borrowing that the rates of interest to be offered by the
   Lenders shall be fixed rates per annum (the B Advances comprising
   any such B Borrowing being referred to herein as "Fixed Rate
                                                     ----------
   Advances") and (B) at least four Business Days (in the case of B
   --------
   Advances to be denominated in Dollars), or five Business Days (in
   the case of B Advances to be denominated in Euros) prior to the
   date of the proposed B Borrowing, if the Company shall instead
   specify in the Notice of B Borrowing the basis to be used by the
   Lenders in determining the rates of interest to be offered by them
   (the B Advances comprising such B Borrowing being referred to
   herein as "Floating Rate Advances"). The Administrative Agent
              ----------------------
   shall in turn promptly notify each Lender of each request for a B
   Borrowing received by it from the Company by sending such Lender a
   copy of the related Notice of B Borrowing.

        (ii)  Each Lender may, if, in its sole discretion, it elects
   to do so, irrevocably offer to make one or more B Advances to the
   applicable Borrower as part of such proposed B Borrowing at
   a rate or rates of interest specified by such Lender in its sole
   discretion, by notifying the Administrative Agent (which shall
   give prompt notice thereof to the Company), before 10:00 A.M. (New
   York City time) in the case of B Advances to be denominated in
   Dollars, and not later than 10:00 A.M. (London time) in the case
   of B Advances to be denominated in Euros, on the date of such
   proposed B Borrowing, in the case of a B Borrowing consisting of
   Fixed Rate Advances and three Business Days before the date of
   such proposed B Borrowing, in the case of a B Borrowing consisting
   of Floating Rate Advances, of the minimum amount and maximum
   amount of each B Advance which such Lender would be willing to
   make as part of such proposed B Borrowing (which amounts may,
   subject to the proviso to the first sentence of this Section
   2.03(a), exceed such Lender's Commitment, if any), the rate or
   rates of interest therefor and such Lender's Applicable Lending
   Office with respect to such B Advance; provided that if the
   Administrative Agent in its capacity as a Lender shall, in its
   sole discretion, elect to make any such offer, it shall notify the
   Company of such offer before 9:00

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -18-

   A.M. (New York City time or London time, as applicable) on the
   date on which notice of such election is to be given to the
   Administrative Agent by the other Lenders. If any Lender shall
   elect not to make such an offer, such Lender shall so notify the
   Administrative Agent, before 10:00 A.M. (New York City time or
   London time, as applicable) on the date on which notice of such
   election is to be given to the Administrative Agent by the other
   Lenders, and such Lender shall not be obligated to, and shall not,
   make any B Advance as part of such B Borrowing; provided that the
   failure by any Lender to give such notice shall not cause such
   Lender to be obligated to make any B Advance as part of such
   proposed B Borrowing.

        (iii) The Company (on its own behalf and on behalf of
   the other Borrowers) shall, in turn, before 12:00 Noon (New York
   City time) in the case of B Advances consisting of Fixed Rate
   Advances to be denominated in Dollars, and not later than 12:00
   Noon (London time) in the case of B Advances consisting of Fixed
   Rate Advances to be denominated in Euros, on the date of such
   proposed B Borrowing, and before 1:00 P.M. (New York City time) in
   the case of B Advances consisting of Floating Rate Advances to be
   denominated in Dollars, and not later than 1:00 P.M. (London time)
   in the case of B Advances consisting of Floating Rate Advances to
   be denominated in Euros, three Business Days before the date of
   such proposed B Borrowing, either:

              (x)  cancel such B Borrowing by giving the Administrative
        Agent notice to that effect, or

              (y)  accept one or more of the offers made by any Lender
        or Lenders pursuant to paragraph (ii) above, in order of the
        lowest to highest rates of interest or margins (or, if two or
        more Lenders bid at the same rate of interest, and the amount
        of accepted offers is less than the aggregate amount of such
        offers, the amount to be borrowed from such Lenders as part
        of such B Borrowing shall be allocated among such Lenders pro
        rata on the basis of the maximum amount offered by such Lenders
        at such rates or margin in connection with such B Borrowing),
        by giving notice to the Administrative Agent of the amount of
        each B Advance (which amount shall be equal to or greater than
        the minimum amount, and equal to or less than the maximum
        amount, notified to the Company by the Administrative Agent
        on behalf of such Lender for such B Advance pursuant to
        paragraph (ii) above) to be made by each Lender as part of
        such B Borrowing, and reject any remaining offers made by
        Lenders pursuant to paragraph (ii) above by giving the
        Administrative Agent notice to that effect.

        (iv)  If the Company notifies the Administrative Agent that
   such B Borrowing is canceled pursuant to paragraph (iii)(x) above,
   the Administrative Agent shall give prompt notice thereof to the
   Lenders and such B Borrowing shall not be made.

        (v)   If the Company (on its own behalf or on behalf of
   another Borrower) accepts one or more of the offers made by any
   Lender or Lenders pursuant to paragraph (iii)(y) above, the
   Administrative Agent shall in turn promptly notify (A) each Lender
   that has made an offer as described in paragraph (ii) above, of
   the date and aggregate amount of such B Borrowing and whether or
   not any offer or offers made by such Lender pursuant to paragraph
   (ii) above have been so accepted by the Company, (B) each Lender
   that is to make a B Advance as part of such B Borrowing, of the
   amount of each B Advance to be made by such Lender as part of such
   B Borrowing, and (C) each Lender that is to make a B Advance as
   part of such B Borrowing, upon receipt, that the Administrative
   Agent has received forms of documents appearing to fulfill the
   applicable conditions set forth in Article III. Each Lender that
   is to make a B Advance as part of such B Borrowing shall, before
   1:00 P.M. (New York City time) in the case of B Advances to be
   denominated in Dollars, and not later than 1:00 P.M. (London time)
   in the case of B Advances to be denominated in Euros, on the date
   of such B Borrowing specified in the notice received from the

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -19-

   Administrative Agent pursuant to clause (A) of the preceding
   sentence or any later time when such Lender shall have received
   notice from the Administrative Agent pursuant to clause (C) of the
   preceding sentence, make available for the account of its
   Applicable Lending Office to the Administrative Agent at the
   Administrative Agent's Account, in the relevant Currency and in
   same day funds, such Lender's portion of such B Borrowing. Upon
   fulfillment of the applicable conditions set forth in Article III
   and after receipt by the Administrative Agent of such funds, the
   Administrative Agent will make such funds available to the Company
   at the Administrative Agent's address referred to in Section 8.02
   (or, in the case of a B Borrowing by a Designated Borrower, the
   Administrative Agent will make such funds available to the
   relevant Borrower in such manner as the Administrative Agent and
   the Company may agree). Promptly after each B Borrowing the
   Administrative Agent will notify each Lender of the amount of the
   B Borrowing, the consequent B Reduction and the dates upon which
   such B Reduction commenced and will terminate.

        (b)  Each B Borrowing shall be in an aggregate amount of
$10,000,000 or an integral multiple of $1,000,000 in excess thereof, or
the aggregate amount of the unused portion of the Lenders' Commitments
and, following the making of each B Borrowing, the Company shall be in
compliance with the limitations set forth in the proviso to the first
sentence of subsection (a) above.

        (c)  Within the limits and on the conditions set forth in
this Section 2.03, the Company may from time to time borrow under this
Section 2.03, repay pursuant to subsection (d) below, and reborrow under
this Section 2.03; provided that a B Borrowing shall not be made within
three Business Days of the date of any other B Borrowing.

        (d)  Each Borrower shall repay to the Administrative Agent
for the account of each Lender that has made a B Advance to such
Borrower, on the maturity date of each B Advance made to such Borrower
(such maturity date being that specified by the Company for repayment of
such B Advance in the related Notice of B Borrowing delivered pursuant
to subsection (a)(i) above and provided in the B Note evidencing such B
Advance), the then unpaid principal amount of such B Advance. No
Borrower shall have the right to prepay any B Advance.

        (e)  Each Borrower shall pay interest on the unpaid principal
amount of each B Advance made to such Borrower from the date of such
B Advance to the date the principal amount of such B Advance is paid in
full, in the applicable Currency and at the rate of interest for such
B Advance specified by the Lender making such B Advance in its notice
with respect thereto delivered pursuant to subsection (a)(ii) above,
payable (i) on the interest payment date or dates specified by the Company
for such B Advance in the related Notice of B Borrowing delivered pursuant
to subsection (a)(i) above, as provided in the B Note evidencing such
B Advance, and (ii) on the date such B Advance shall be paid in full.
Upon the occurrence and during the continuance of any Event of Default,
each Borrower shall pay interest on the amount of unpaid principal of each
B Advance made to such Borrower owing to a Lender, payable in arrears on
the date or dates interest is payable thereon, at a rate per annum equal at
all times to 2% per annum above the rate per annum required to be paid on
such B Advance under the terms of the B Note evidencing such B Advance
unless otherwise agreed in such B Note.

        (f)  If requested by a Lender making a B Advance, the indebtedness
of each Borrower resulting from each B Advance made to such Borrower as
part of a B Borrowing shall be evidenced by a separate B Note of such
Borrower payable to the order of the Lender making such B Advance.

        (g)  The Company (on its own behalf and on behalf of the
other Borrowers) shall pay to the Administrative Agent for its own account
the Competitive Bid Administration Fee described in Section 2.04(b) with
each request for a B Borrowing whether or not any B Borrowing is in fact made.

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -20-

        SECTION 2.04.  Fees.
                       ----

        (a)  Facility Fee. The Company agrees to pay to the
             ------------
Administrative Agent for the account of each Lender a facility fee (the
"Facility Fee") in Dollars on the aggregate amount (whether used or
 ------------
unused) of such Lender's Commitment from the date hereof (in the case of
each Initial Lender) and from the effective date specified in the
Acceptance pursuant to which it became a Lender (in the case of each
other Lender) until the Commitment Termination Date of such Lender at a
rate per annum equal to the Facility Fee Rate in effect from time to
time. The Facility Fee shall be payable quarterly in arrears on the
last Business Day of each March, June, September and December and, for
each Lender, on the Commitment Termination Date of such Lender.

        (b)  Competitive Bid Administration Fee. The Company
             ----------------------------------
shall pay to the Administrative Agent for its own account a fee in
Dollars an amount heretofore agreed between the Company and the
Administrative Agent with each request for a B Borrowing whether or not
any B Borrowing is in fact made.

        (c)  Utilization Fee. The Company agrees to pay a utilization
             ---------------
fee (the "Utilization Fee") in Dollars to the Administrative Agent for
          ---------------
account of each Lender, which shall accrue at the Utilization Fee Rate
on the daily aggregate outstanding principal amount of the Advances of
such Lender for each day on which the aggregate outstanding principal
amount of the Advances (including all B Advances) equals or exceeds an
amount equal to 33% of the Commitments. The Utilization Fee shall be
payable monthly in arrears on the last Business Day of month and, for
each Lender, on the Commitment Termination Date of such Lender.

        SECTION 2.05.  Termination, Reduction and Extension of
                       ---------------------------------------
Commitments.
-----------

        (a)  Commitment Reductions. The Commitment of each Lender
             ---------------------
shall be automatically reduced to zero on the Commitment Termination
Date of such Lender. In addition, the Company (on its own behalf and on
behalf of the other Borrowers) shall have the right, upon at least three
Business Days' notice to the Administrative Agent, to terminate in whole
or reduce ratably in part the unused portions of the respective
Commitments of the Lenders, provided that (i) the aggregate amount of
the Commitments of the Lenders shall not be reduced to an amount which
is less than the aggregate principal amount of the Advances then
outstanding; and (ii) each partial reduction shall be in an aggregate
amount of $10,000,000 or an integral multiple of $1,000,000 in excess
thereof. Once terminated, a Commitment cannot be reinstated.

        (b)  Commitment Extensions.
             ---------------------

        (i)  The Company (on its own behalf and on behalf of the
   other Borrowers) may, by notice to the Administrative Agent (which
   shall promptly notify the Lenders) not more than 60 days and not
   less than 40 days prior to the Commitment Termination Date then in
   effect hereunder (the "Existing Commitment Termination Date"),
                          ------------------------------------
   request that each Lender extend such Lender's Commitment
   Termination Date for an additional 364 days from the Existing
   Commitment Termination Date.

        (ii) Each Lender, acting in its sole and individual discretion,
   shall, by notice to the Administrative Agent given not more than 30
   days immediately prior to the Existing Commitment Termination Date
   but in any event no later than the date (the "Notice Date") that is
                                                 -----------
   20 days prior to the Existing Commitment Termination Date, advise the
   Administrative Agent whether or not such Lender agrees to such
   extension (and each Lender that determines not to so extend its
   Commitment Termination Date (a "Non-Extending Lender") shall notify
                                   --------------------
   the Administrative Agent(which shall notify the other Lenders) of
   such fact promptly after such determination (but in any event no later
   than the Notice Date) and any Lender that does not so advise the
   Administrative Agent on or before

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -21-

   the Notice Date shall be deemed to be a Non-Extending Lender. The
   election of any Lender to agree to such extension shall not
   obligate any other Lender to so agree.

        (iii) The Administrative Agent shall notify the Company of
   each Lender's determination under this Section 2.05(b) no later
   than the date 15 days prior to the Existing Commitment Termination
   Date (or, if such date is not a Business Day, on the next
   preceding Business Day).

        (iv)  The Company (on its own behalf and on behalf of the
   other Borrowers) shall have the right on or before the Existing
   Commitment Termination Date to replace each Non-Extending Lender
   with, and add as "Lenders" under this Agreement in place thereof,
   one or more Eligible Assignees (each, an "Additional Commitment
                                             ---------------------
   Lender") with the approval of the Administrative Agent and the
   ------
   Syndication Agent (which approvals shall not be unreasonably
   withheld), each of which Additional Commitment Lenders shall have
   entered into an Assumption and Acceptance pursuant to which such
   Additional Commitment Lender shall, effective as of the Existing
   Commitment Termination Date, undertake a Commitment (and, if any
   such Additional Commitment Lender is already a Lender, its
   Commitment shall be in addition to such Lender's Commitment
   hereunder on such date).

        (v)   If (and only if) the total of the Commitments of the
   Lenders that have agreed so to extend their Commitment Termination
   Date and the additional Commitments of the Additional Commitment
   Lenders shall be more than 51% of the aggregate amount of the
   Commitments in effect immediately prior to the Existing Commitment
   Termination Date, then, effective as of the Existing Commitment
   Termination Date, the Commitment Termination Date of each Extending
   Lender and of each Additional Commitment Lender shall be extended
   to the date falling 364 days after the Existing Commitment
   Termination Date (except that, if such date is not a Business Day,
   such Commitment Date as so extended shall be the next preceding
   Business Day) and each Additional Commitment Lender shall thereupon
   become a "Lender" for all purposes of this Agreement.

        (vi)  Notwithstanding the foregoing, the extension of the
   Commitment Termination Date pursuant to this Section 2.05(b) shall
   not be effective with respect to any Lender unless:

              (x)  no Default shall have occurred and be continuing on
        either of the date of the notice requesting such extension or
        the Existing Commitment Termination Date; and

              (y)  on or before the Commitment Termination Date of
        each Non-Extending Lender, (1) each Borrower shall have paid
        in full the principal of and interest on all of the Advances
        made by such Non-Extending Lender to such Borrower
        hereunder; and (2) the Company shall have paid in full all
        other amounts owing to such Lender hereunder.

        SECTION 2.06.  Repayment of Advances; Evidence of Debt.
                       ---------------------------------------

        (a)   A Advances. Each Borrower shall repay the principal amount
              ----------
of each A Advance made by each Lender to such Borrower, in the Currency
of such A Advance, and each A Advance made by such Lender shall mature,
on the Commitment Termination Date of such Lender.

        (b)   B Advances. Each Borrower shall repay the principal
              ----------
amount of each B Advance made by each Lender to such Borrower as
provided in Section 2.03(e).

        (c)   Note Option. Any Lender may request that the A Advances
              -----------
made or to be made by it to a Borrower to be evidenced by an A Note
payable by such Borrower. In such event, the Company (on its own behalf
and on behalf of the other Borrowers) shall prepare, have executed by
the relevant Borrower and

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -22-

deliver to such Lender an A Note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered
assigns). If a Lender whose A Advances are so evidenced by an A Note
thereafter assigns such A Advances, such A Advances will be evidenced by
an A Note only if the assignee so requests in accordance with this
Section 2.06(c) and Section 8.07

        SECTION 2.07.  Interest on A Advances.
                       ----------------------

        (a)  Scheduled Interest. Each Borrower shall pay interest
             ------------------
on the unpaid principal amount of each A Advance owing by such Borrower
to each Lender, in the Currency in which such A Advance is denominated,
from the date of such A Advance until such principal amount shall be
paid in full, at the following rates per annum:

        (i)  Base Rate Advances. During such periods as such A
             ------------------
   Advance is a Base Rate Advance, a rate per annum equal at all
   times to the Base Rate in effect from time to time, payable in
   arrears quarterly on the last day of each March, June, September
   and December during such periods and on the date such Base Rate
   Advance shall be Converted or paid in full.

        (ii) Eurocurrency Rate Advances. During such periods as
             --------------------------
   such A Advance is a Eurocurrency Rate Advance, a rate per annum
   equal at all times during each Interest Period for such A Advance
   to the sum of (x) the Eurocurrency Rate for such Interest Period
   for such Advance plus (y) the Applicable Margin in effect from
   time to time, payable in arrears on the last day of such Interest
   Period and, if such Interest Period has a duration of more than
   three months, on each day that occurs during such Interest Period
   every three months from the first day of such Interest Period and
   on the date such Eurocurrency Rate Advance shall be Converted or
   paid in full.

        (b)  Default Interest. Upon the occurrence and during the
             ----------------
continuance of any Event of Default, each Borrower shall pay interest on
the unpaid principal amount of each A Advance owing by such Borrower to
each Lender, in the Currency in which such A Advance is denominated,
payable in arrears on the dates referred to in clause (a)(i) or (a)(ii)
above, at a rate per annum equal at all times to 2% per annum above the
rate per annum required to be paid on such A Advance pursuant to clause
(a)(i) or (a)(ii) above.

        SECTION 2.08.  Interest Rate Determination; Changes in
                       ---------------------------------------
Rating Systems.
--------------

        (a)  Each Reference Bank agrees to furnish to the Administrative
Agent timely information for the purpose of determining the Eurocurrency
Rate for Advances denominated in Dollars. If any one or more of the
Reference Banks shall not furnish such timely information to the
Administrative Agent for the purpose of determining any such interest
rate, the Administrative Agent shall determine such interest rate on the
basis of timely information furnished by the remaining Reference Banks.
The Administrative Agent shall give prompt notice to the Company and the
Lenders of the applicable interest rate determined by the Administrative
Agent for purposes of Section 2.07(a)(i) or (ii), and the rate, if any,
furnished by each Reference Bank for the purpose of determining the
interest rate under Section 2.07(a)(ii).

        (b)  If, with respect to any Eurocurrency Rate Advances
denominated in any Currency, the Majority Lenders notify the
Administrative Agent that the Eurocurrency Rate for any Interest Period
for such Advances in such Currency will not adequately reflect the cost
to such Majority Lenders of making, funding or maintaining their
respective Eurocurrency Rate Advances in such Currency for such Interest
Period, the Administrative Agent shall forthwith so notify the Company
and the Lenders, whereupon (i) if such Currency is Euros, the related
Notice of Borrowing shall be ineffective, (ii) if such Currency is
Dollars, such Eurocurrency Rate Advance will automatically, on the last
day of the then existing Interest Period therefor, Convert into a Base
Rate Advance, and (iii) regardless of Currency, the obligation of the
Lenders to make, or (in the case of Dollars) to Convert A Advances into,
Eurocurrency Rate Advances shall be suspended until

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -23-

the Administrative Agent shall notify the Company and the Lenders that
the circumstances causing such suspension no longer exist.

        (c)   If the Company shall fail to select the duration of any
Interest Period for any Eurocurrency Rate Advances in accordance with
the provisions contained in the definition of "Interest Period" in
Section 1.01, the Administrative Agent will forthwith so notify the
Company and the Lenders and such Advances will automatically, on the
last day of the then existing Interest Period therefor, Convert into
Base Rate Advances.

        (d)   On the date on which the aggregate unpaid principal
amount of Eurocurrency Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than
$10,000,000, such Advances shall automatically Convert into Base Rate
Advances and on and after such date the right of the Borrowers to
Convert such A Advances shall terminate.

        (e)   Upon the occurrence and during the continuance of any
Event of Default, (i) each Eurocurrency Rate Advance denominated in
Dollars will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Base Rate Advance and (ii) the
obligation of the Lenders to make, or to Convert A Advances denominated
in Dollars into, Eurocurrency Rate Advances shall be suspended.

        (f)   If fewer than two Reference Banks furnish timely
information to the Administrative Agent for determining the Eurocurrency
Rate for any Eurocurrency Rate Advances denominated in Dollars,

        (i)   the Administrative Agent shall forthwith notify the
   Company and the Lenders that the interest rate cannot be determined
   for such Eurocurrency Rate Advances,

        (ii)  each such A Advance will automatically, on the last day of
   the then existing Interest Period therefor, Convert into a Base Rate
   Advance (or if such Advance is then a Base Rate Advance, will continue
   as a Base Rate Advance), and

        (iii) the obligation of the Lenders to make, or to Convert
   A Advances into, Eurocurrency Rate Advances shall be suspended until
   the Administrative Agent shall notify the Company and the Lenders that
   the circumstances causing such suspension no longer exist.

        (g)   If the rating system of either Moody's or S&P shall change,
or if either such rating agency shall cease to be in the business of
rating corporate debt obligations, the Company (on its own behalf and on
behalf of the other Borrowers) and the Administrative Agent (on behalf of
the Lenders) shall negotiate in good faith to amend the references to
specific ratings in this Agreement to reflect such changed rating system
or the non-availability of ratings from such rating agency (provided that
any such amendment to such specific ratings shall in no event be effective
without the approval of the Majority Lenders).

        SECTION 2.09.  Optional Conversion of A Advances. The Company
                       ---------------------------------
(on its own behalf and on behalf of the other Borrowers) may on any
Business Day, upon notice given to the Administrative Agent not
later than 11:00 A.M. (New York City time) on the third Business Day
prior to the date of the proposed Conversion and subject to the
provisions of Sections 2.08 and 2.12, Convert all Dollar-denominated
A Advances of one Type comprising the same Borrowing by a Borrower into
Dollar-denominated A Advances owing by such Borrower of the other Type;
provided that any Conversion of Dollar-denominated Eurocurrency Rate
Advances into Base Rate Advances shall be made only on the last day of
an Interest Period for such Eurocurrency Rate Advances. Each such notice
of a Conversion shall, within the restrictions specified above, specify
(i) the date of such Conversion, (ii) the A Advances to be Converted,
and (iii) if such Conversion is into Eurocurrency Rate Advances, the
duration of the initial Interest Period for each such A

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -24-

Advance. Each notice of Conversion shall be irrevocable and binding on
the Company and each other Borrower.

        SECTION 2.10.  Prepayments, Etc.
                       -----------------

        (a)  Optional Payments of A Advances. Each Borrower may,
             -------------------------------
upon notice by the Company to the Administrative Agent stating the
proposed date and aggregate principal amount of the prepayment, given to
the Administrative Agent not later than 11:00 A.M. (New York City time)
on the proposed date in the case of Base Rate Advances and at least two
Business Days prior to the proposed date in the case of Eurocurrency
Rate Advances, and if such notice is given by the Company the applicable
Borrower shall, prepay the outstanding principal amount of the A
Advances owing by such Borrower in whole or ratably in part, together
with accrued interest to the date of such prepayment on the principal
amount prepaid; provided that (x) each partial prepayment shall be in an
aggregate principal amount of $10,000,000 or an integral multiple of
$1,000,000 in excess thereof and (y) in the event of any such prepayment
of a Eurocurrency Rate Advance, the applicable Borrower and the Company
shall be jointly and severally obligated to reimburse the Lenders in
respect thereof pursuant to Section 8.04(c).

        (b)  Change of Control. If any Change of Control shall
             -----------------
occur, then, upon notice to the Company by the Administrative Agent
(acting at the request, or with the consent, of the Majority Lenders) to
such effect and stating that the same is a "Change of Control Prepayment
Notice", the Commitments shall be automatically reduced to zero and each
Borrower shall prepay the Advances made to such Borrower in full.

        (c)  Changes in Dollar/Euro Exchange Rate.
             ------------------------------------

        (i)  Determination of Amount Outstanding. On the last
             -----------------------------------
   Business Day of each March, June, September and December and
   promptly upon the receipt by the Administrative Agent of a
   Currency Valuation Notice (as defined below), the Administrative
   Agent shall determine the aggregate outstanding principal amount
   of the Advances. For the purpose of this determination, the
   outstanding principal amount of any Advance that is denominated in
   Euros shall be deemed to be the Dollar Equivalent of the amount in
   Euros of such Advance, determined as of such date or, in the case
   of a Currency Valuation Notice received by the Administrative
   Agent prior to 11:00 a.m., New York City time, on a Business Day,
   on such Business Day or, in the case of a Currency Valuation
   Notice otherwise received, on the first Business Day after such
   Currency Valuation Notice is received. Upon making such
   determination, the Administrative Agent shall promptly notify the
   Lenders and the Company thereof.

        (ii) Prepayment. If, on the date of such determination the
             ----------
   aggregate outstanding principal amount of the Advances exceeds
   105% of the aggregate amount of the Commitments as then in effect,
   the Company shall, if requested by the Majority Lenders (through
   the Administrative Agent), cause the Borrowers to prepay the
   Advances in such amount as shall be necessary so that after giving
   effect thereto the aggregate outstanding principal amount of the
   Advances does not exceed the Commitments.

For purposes hereof, "Currency Valuation Notice" means a notice given
                      -------------------------
by the Majority Lenders to the Administrative Agent stating that such
notice is a "Currency Valuation Notice" and requesting that the
Administrative Agent determine the aggregate outstanding principal
amount of the Advances. The Administrative Agent shall not be required
to make more than one valuation determination pursuant to Currency
Valuation Notices within any rolling three month period.

        (d)  If (i) the obligations of the Company under Article IX
with respect to any outstanding Guaranteed Obligations owing by any
Designated Borrower (herein, the "Affected Borrower") shall for
                                  -----------------

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -25-

any reason (x) be terminated, (y) cease to be in full force and effect
or (z) not be the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with its terms, and (ii)
such condition continues unremedied for 15 days after written notice
thereof shall have been given to the Company by the Administrative Agent
or any Lender, then the Affected Borrower shall, no later than the 15th
day after the date of such notice, prepay (and the Company shall cause
to be prepaid) the full principal of and interest on the Advances owing
by, and the Notes payable by, such Affected Borrower and all other
amounts whatsoever payable hereunder by such Affected Borrower
(including, without limitation, all amounts payable under
Section 8.04(c) as a result of such prepayment).

        SECTION 2.11.  Increased Costs.
                       ---------------

        (a)  If due to either (i) the introduction of or any change
in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), in each
case, after the date hereof, there shall be any increase in the cost to
any Lender of agreeing to make or making, funding or maintaining
Eurocurrency Rate Advances or Floating Rate Advances, then such Lender
may from time to time give notice of such circumstances to the Company
(with a copy to the Administrative Agent); provided that each Lender
agrees, before giving any such notice, to use its best efforts
(consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the
making of such a designation would avoid the need for, or reduce the
amount of, such increased costs and would not be disadvantageous to such
Lender. The amount sufficient to compensate such Lender in light of
such increase in costs to such Lender or any corporation controlling
such Lender shall be determined by such Lender in good faith on a basis
that allocates the amounts sufficient to compensate such Lender in light
of such increase ratably among all applicable Advances. A certificate
specifying the event referred to in this Section 2.11(a), the amount
sufficient to compensate such Lender and the basis of its computation
(which shall be reasonable), submitted in good faith to the Company and
the Administrative Agent by such Lender, shall be conclusive and binding
for all purposes absent manifest error. Each Lender agrees to provide
reasonably prompt notice to the Company of the occurrence of any event
referred to in the first sentence of this Section 2.11(a).

        (b)  If any Lender determines that compliance with any law
or regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) after
the date hereof affects or would affect the amount of capital required
or expected to be maintained by such Lender or any corporation
controlling such Lender and that the amount of such capital is increased
by or based upon the existence of such Lender's commitment to lend
hereunder and other commitments of this type, then, such Lender may from
time to time give notice of such circumstances to the Company (with a
copy to the Administrative Agent); provided that each Lender agrees,
before giving any such notice, to use its best efforts (consistent with
its internal policy and legal and regulatory restrictions) to designate
a different Applicable Lending Office if the making of such a
designation would avoid the need for, or reduce the amount of, the cost
to the Lender of such increase in the amount of capital maintained by
such Lender and would not be disadvantageous to such Lender. The amount
sufficient to compensate such Lender in light of such increase in the
amount of capital maintained by such Lender or any corporation
controlling such Lender shall be determined by such Lender in good faith
to the extent that such Lender reasonably determines such increase in
capital to be allocable to the existence of such Lender's commitment to
lend hereunder. A certificate specifying the event referred to in this
Section 2.11(b), the amount sufficient to compensate such Lender and the
basis of its computation (which shall be reasonable), submitted in good
faith to the Company and the Administrative Agent by such Lender, shall
be conclusive and binding for all purposes absent manifest error. Each
Lender agrees to provide reasonably prompt notice to the Company of the
occurrence of any event referred to in the first sentence of this
Section 2.11(b).

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -26-

        (c)  The Company shall, within five days of receiving a
notice from any Lender pursuant to clause (a) or (b) of this Section
2.11, elect (and shall notify such Lender and the Administrative Agent
of such election) to:

        (i)  pay to the Administrative Agent in Dollars for the
   account of such Lender, from time to time commencing on the date
   of notice by such Lender and as specified by such Lender, (A) the
   amount such Lender has set forth in the certificate which such
   Lender has delivered to the Company pursuant to clause (a) of this
   Section 2.11 or (B) the amount such Lender has set forth in the
   certificate which such Lender has delivered to the Company
   pursuant to clause (b) of this Section 2.11; or

        (ii) if no Default shall have occurred and be continuing,
   require that such Lender assign to the Company's designated
   assignee or assignees, in accordance with the terms of Section
   8.07, all Advances then owing to such Lender and all rights and
   obligations of such Lender hereunder; provided that (A) each such
   assignment shall be either an assignment of all of the rights and
   obligations of the assigning Lender under this Agreement or an
   assignment of a portion of such rights and obligations made
   concurrently with another such assignment or assignments which
   together cover all of the rights and obligations of the assigning
   Lender under this Agreement, (B) no Lender shall be obligated to
   make any such assignment as a result of a demand by the Company
   pursuant to this Section 2.11(c) unless and until such Lender
   shall have received one or more payments from either the Company
   or one or more assignees in an aggregate amount at least equal to
   the aggregate outstanding principal amount of the A Advances owing
   to such Lender, together with accrued interest thereon to the date
   of payment of such principal amount, all Facility Fees,
   Utilization Fees and other fees payable to such Lender and all
   other amounts payable to such Lender under this Agreement
   (including, but not limited to, any increased costs or other
   additional amounts (computed in accordance with this Section
   2.11), and any Taxes, incurred by such Lender prior to the
   effective date of such assignment and amounts payable under
   Section 8.04(a)) and (C) each such assignment shall be made
   pursuant to an Assignment and Acceptance; provided that such
   assignment shall not be effective if, after giving effect to such
   assignment, the aggregate amount of the Commitments so assigned or
   terminated under this Section 2.11, Section 2.12(b) and Section
   2.15(g) during the term of this Agreement would exceed 25% of the
   aggregate amount of the Commitments as of the Closing Date. Upon
   such payments and prepayments, the obligations of such Lender
   hereunder, by the provisions hereof, shall be released and
   discharged; provided that such Lender's rights under Sections
   2.11, 2.15 and 8.04(b), and its obligations under Section 7.05,
   shall survive such release and discharge as to matters occurring
   prior to the date of termination of such Lender's Commitment.

        SECTION 2.12.  Illegality.
                       ----------

        (a)  Notwithstanding any other provision of this Agreement,
if any Lender (any such Lender being referred to herein as an "Affected
                                                               --------
Lender") shall notify the Administrative Agent that 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 any Lender or its Eurocurrency Lending Office
to perform its obligations hereunder to make Eurocurrency Rate Advances
or Floating Rate Advances in any Currency or to fund or maintain
Eurocurrency Rate Advances or Floating Rate Advances in any Currency
hereunder, the obligation of the Lenders to make, or to Convert A
Advances into, Eurocurrency Rate Advances in such Currency shall be
suspended until the Administrative Agent shall notify the Company and
the Lenders that the circumstances causing such suspension no longer
exist; provided that such suspension shall not become effective in the
event the Company requires the assignment of the Affected Lender's
Advances owing to it and its other rights and obligations hereunder
pursuant to clause (b)(ii) below. The Company's right to require an
assignment in accordance with clause (b)(ii) below shall not be
effective to the

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -27-

extent that Lenders representing a majority of the Commitments then
outstanding shall be "Affected Lenders".

        (b)  The Company shall, within five days of receiving a
notice from any Affected Lender pursuant to clause (a) of this Section
2.12, elect (and shall notify such Affected Lender and the
Administrative Agent of such election) to:

        (i)  prepay in full all Eurocurrency Rate Advances or
   Floating Rate Advances in such Currency then outstanding, together
   with interest thereon, unless the Company, within five Business
   Days of notice from the Administrative Agent Converts all
   Eurocurrency Rate Advances or Floating Rate Advances of all
   Lenders then outstanding into Base Rate Advances in accordance
   with Section 2.09; or

        (ii) if no Default shall have occurred and be continuing,
   require that such Affected Lender assign to the Company's
   designated assignee or assignees, in accordance with the terms of
   Section 8.07, all Advances then owing to such Affected Lender and
   all rights and obligations of such Affected Lender hereunder;
   provided that (A) each such assignment shall be either an
   assignment of all of the rights and obligations of the assigning
   Affected Lender under this Agreement or an assignment of a portion
   of such rights and obligations made concurrently with another such
   assignment or assignments which together cover all of the rights
   and obligations of the assigning Affected Lender under this
   Agreement, (B) no Affected Lender shall be obligated to make any
   such assignment as a result of a demand by the Company pursuant to
   this Section 2.12(b) unless and until such Affected Lender shall
   have received one or more payments from either the Borrowers or
   one or more assignees in an aggregate amount at least equal to the
   aggregate outstanding principal amount of the A Advances owing to
   such Affected Lender, together with accrued interest thereon to
   the date of payment of such principal amount, all Facility Fees,
   Utilization Fees and other fees payable to such Affected Lender
   and all other amounts payable to such Affected Lender under this
   Agreement (including, but not limited to, any increased costs or
   other additional amounts (computed in accordance with Section
   2.11), and any Taxes, incurred by such Affected Lender prior to
   the effective date of such assignment and amounts payable under
   Section 8.04(a)) and (C) each such assignment shall be made
   pursuant to an Assignment and Acceptance; provided that such
   assignment shall not be effective if, after giving effect to such
   assignment, the aggregate amount of the Commitments so assigned or
   terminated under this Section 2.12(b), Section 2.11 and Section
   2.15(g) during the term of this Agreement would exceed 25% of the
   aggregate amount of the Commitments as of the Closing Date. Upon
   such payments and prepayments, the obligations of such Affected
   Lender hereunder, by the provisions hereof, shall be released and
   discharged; provided that such Affected Lender's rights under
   Sections 2.11, 2.15 and 8.04(b), and its obligations under Section
   7.05, shall survive such release and discharge as to matters
   occurring prior to the date of termination of such Affected
   Lender's Commitment.

        SECTION 2.13.  Payments and Computations.
                       -------------------------

        (a)  The Borrowers shall make each payment hereunder and
under the Notes not later than 12:00 noon (New York City time) on the
day when due in the relevant Currency to the Administrative Agent at the
Administrative Agent's Account for such Currency in same day funds. The
Administrative Agent will promptly thereafter cause to be distributed
like funds relating to the payment of principal or interest, Facility
Fees or Utilization Fees ratably (other than amounts payable pursuant to
Sections 2.03, 2.04(b), 2.05(b), 2.11, 2.12, 2.15 or 8.04(c)) to the
Lenders for the account of their respective Applicable 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 Applicable 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

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -28-

Register pursuant to Section 8.07(c) from and after the effective date
specified in such Assignment and Acceptance, the Administrative 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 based on the Base Rate
shall be made by the Administrative Agent on the basis of a year of 365
or 366 days, as the case may be, and all computations of interest based
on the Eurocurrency Rate or the Federal Funds Rate and of Facility Fees
and Utilization Fees shall be made by the Administrative Agent on the
basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the
period for which such interest or Facility Fees or Utilization Fees are
payable. Each determination by the Administrative Agent of an interest
rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.

        (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, Facility Fee or Utilization Fee, as the case may be; provided
that, if such extension would cause payment of interest on or principal
of Eurocurrency Rate Advances or Floating Rate Advances to be made in
the next following calendar month, such payment shall be made on the
next preceding Business Day.

        (d)  Unless the Administrative Agent shall have received
notice from the Company prior to the date on which any payment is due to
the Lenders hereunder that a Borrower will not make such payment in
full, the Administrative Agent may assume that each Borrower has made
such payment in full to the Administrative Agent on such date and the
Administrative 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 a Borrower shall not
have so made such payment in full to the Administrative Agent, each
Lender shall repay to the Administrative 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 Administrative Agent, at
the Federal Funds Rate.

        (e)  All amounts owing under this Agreement (including
payments required under Section 2.11, and payments required under
Section 8.04(c) relating to any Advance denominated in Dollars, but not
including principal of, and interest on, any Advance denominated in
Euros or payments relating to any such Advance required under
Section 8.04(c), which are payable in Euros) are payable in Dollars.
Notwithstanding the foregoing, if a Borrower shall fail to pay any
principal of any Advance when due (whether at stated maturity, by
acceleration, by mandatory prepayment or otherwise), the unpaid portion
of such Advance shall, if such Advance is not denominated in Dollars,
automatically be redenominated in Dollars on the due date thereof (or,
if such due date is a day other than the last day of the Interest Period
therefor, on the last day of such Interest Period) in an amount equal to
the Dollar Equivalent thereof on the date of such redenomination and
such principal shall be payable on demand; and if a Borrower shall fail
to pay any interest on any Advance that is not denominated in Dollars,
such interest shall automatically be redenominated in Dollars on the due
date therefor (or, if such due date is a day other than the last day of
the Interest Period therefor, on the last day of such Interest Period)
in an amount equal to the Dollar Equivalent thereof on the date of such
redenomination and such interest shall be payable on demand.

        SECTION 2.14.  Notations on the A Notes. Each Borrower and each
                       ------------------------
Lender whose A Advances are evidenced by an A Note agree that (a) all
A Advances made by such Lender to such Borrower pursuant to this Agreement
and all payments made on account of principal thereof shall be recorded
by such Lender and, prior to any assignment by such Lender of the A Note
issued to it, all unpaid A Advances shall

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -29-

be endorsed on the grid attached to such A Note; provided that the
failure of such Lender to make any such notations shall not limit or
otherwise affect such Borrower's obligations to such Lender with respect
to such A Advances and (b) upon the payment in full of any Lender's A
Advances then outstanding and the termination in full of such Lender's
Commitment, such Lender shall cancel and return such Lender's A Note to
the Company (on its own behalf and on behalf of the other Borrowers) and
be fully responsible for any claims or liabilities arising in connection
with or resulting from any sale of participations therein.

        SECTION 2.15.  Taxes.
                       -----

        (a)  Any and all payments by the Borrowers hereunder or
under the Notes shall be made, in accordance with Section 2.13, 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 Administrative Agent, taxes imposed on its income, and franchise
taxes imposed on it in lieu of income taxes, by the jurisdiction under
the laws of which such Lender or the Administrative Agent (as the case
may be) is organized or any political subdivision thereof and, in the
case of each Lender, taxes imposed on its income, and franchise taxes
imposed on it in lieu of income taxes, by the jurisdiction of such
Lender's Applicable Lending Office or any political subdivision thereof
(all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as
"Taxes"). If any Borrower shall be required by law to deduct any
 -----
Taxes from or in respect of any sum payable hereunder or under any Note
to any Lender or the Administrative Agent, (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 2.15) such Lender or the Administrative Agent (as the
case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) such Borrower shall make such
deductions and (iii) such Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with
applicable law.

        (b)  In addition, the Company (on its own behalf and on
behalf of the other Borrowers) agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or
similar 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 Borrowers will indemnify each Lender and the
Administrative Agent for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.15) paid by such
Lender or the Administrative Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom
or with respect thereto. This indemnification shall be made within 30
days from the date such Lender or the Administrative Agent (as the case
may be) makes written demand therefor.

        (d)  Within 30 days after the date of any payment of Taxes,
the Company (on its own behalf and on behalf of the other Borrowers)
will furnish to the Administrative Agent, at its address referred to in
Section 8.02, the original or a certified copy of a receipt evidencing
payment thereof. In the case of any payment hereunder or under the
Notes by or on behalf of a Borrower through an account or branch outside
the United States or on behalf of a Borrower by a payor that is not a
United States person, if the Company determines that no Taxes are
payable in respect thereof, the Company shall furnish, or shall cause
such payor to furnish, to the Administrative Agent, at such address, an
opinion of counsel acceptable to the Administrative Agent stating that
such payment is exempt from Taxes. For purposes of this subsection (d)
and subsection (e), the terms "United States" and "United States
                               -------------       --------------
person" shall have the meanings specified in Section 7701 of the
------
Internal Revenue Code.

                                          364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                -30-

        (e)  Each Lender organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and
delivery of this Agreement (in the case of each Initial Lender) and on
the date of the Acceptance pursuant to which it becomes a Lender (in the
case of each other Lender), and from time to time thereafter if
requested in writing by the Company (but only so long as such Lender
remains lawfully able to do so), shall provide the Company with Internal
Revenue Service form 1001 or 4224, as appropriate, or any successor or
other form prescribed by the Internal Revenue Service, certifying that
such Lender is exempt from or entitled to a reduced rate of United
States withholding tax on payments of interest pursuant to this
Agreement or the Notes. If the form provided by a Lender at the time
such Lender first becomes a party to this Agreement indicates a United
States interest withholding tax rate in excess of zero, withholding tax
at such rate shall be considered excluded from "Taxes" as defined in
Section 2.15(a). If any form or document referred to in this subsection
(e) requires the disclosure of information, other than information
necessary to compute the tax payable and information required by the
versions of Internal Revenue Service Form 1001 or 4224 in effect on the
date hereof, that the Lender reasonably considers to be confidential,
the Lender shall give notice thereof to the Company and shall not be
obligated to include in such form or document such confidential
information.

        (f)  For any period with respect to which a Lender has
failed to provide the Company with the appropriate form described in
Section 2.15(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 otherwise is not required under the
first sentence of subsection (e) above), such Lender shall not be
entitled to indemnification under Section 2.15(a) with respect to Taxes
imposed by the United States; provided that should a Lender become
subject to Taxes because of its failure to deliver a form required
hereunder, the Company shall take such steps as the Lender shall
reasonably request to assist the Lender to recover such Taxes.

        (g)  So long as no Default shall have occurred and be
continuing, if a Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder or under any Note to any
Lender or shall be required to indemnify any Lender for any Taxes under
Section 2.15(c) (each such Lender, a "Specified Lender"), the Company
                                      ----------------
may, within five days of receiving a notice from any Specified Lender
pursuant to clause (a) of this Section 2.15, elect (and shall notify
such Specified Lender and the Administrative Agent of such election) to
require that such Specified Lender assign to the Company's designated
assignee or assignees, in accordance with the terms of Section 8.07, all
Advances then owing to such Specified Lender and all rights and
obligations of such Specified Lender hereunder; provided that (A) each
such assignment shall be either an assignment of all of the rights and
obligations of the assigning Specified Lender under this Agreement or an
assignment of a portion of such rights and obligations made concurrently
with another such assignment or assignments which together cover all of
the rights and obligations of the assigning Specified Lender under this
Agreement, (B) no Specified Lender shall be obligated to make any such
assignment as a result of a demand by the Company pursuant to this
Section 2.15(g) unless and until such Specified Lender shall have
received one or more payments from either the Borrowers or one or more
assignees in an aggregate amount at least equal to the aggregate
outstanding principal amount of the A Advances owing to such Specified
Lender, together with accrued interest thereon to the date of payment of
such principal amount, all Facility Fees, Utilization Fees and other
fees payable to such Specified Lender and all other amounts payable to
such Specified Lender under this Agreement (including, but not limited
to, any increased costs or other additional amounts (computed in
accordance with Section 2.11), and any Taxes, incurred by such Specified
Lender prior to the effective date of such assignment and amounts
payable under Section 8.04(a)) and (C) each such assignment shall be
made pursuant to an Assignment and Acceptance; provided that such
assignment shall not be effective if, after giving effect to such
assignment, the aggregate amount of the Commitments so assigned or
terminated under this Section 2.15(g), Section 2.11 and Section 2.12
during the term of this Agreement would exceed 25% of the aggregate
amount of the Commitments as of the Closing Date. Upon such payments
and prepayments, the obligations of such Specified Lender hereunder, by
the provisions hereof, shall be released and

                                          364-DAY CREDIT AGREEMENT

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                                -31-

discharged; provided that such Specified Lender's rights under Sections
2.11, 2.12, 2.15 and 8.04(b), and its obligations under Section 7.05,
shall survive such release and discharge as to matters occurring prior
to the date of termination of such Specified Lender's Commitment.

        SECTION 2.16.  Sharing of Payments, Etc. If any Lender
                       -------------------------
shall obtain any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) on account of the A
Advances owing to it (other than pursuant to Sections 2.05(b), 2.11,
2.12, 2.15 or 8.04(c)) in excess of its ratable share of payments on
account of the A Advances obtained by all the Lenders, such Lender shall
forthwith purchase from the other Lenders such participation in the A
Advances owing to them as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with each of them; provided
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 each 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 (i) the amount of such Lender's required repayment to (ii)
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. Each Borrower agrees that any
Lender so purchasing a participation from another Lender pursuant to
this Section 2.16 may, to the fullest extent permitted by law, exercise
all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct
creditor of such Borrower in the amount of such participation.

        SECTION 2.17.  Borrowings by Designated Borrowers.
                       ----------------------------------

        (a)  The Company may, at any time or from time to time,
   designate one or more wholly owned Subsidiaries of the Company as
   "Borrowers" hereunder by furnishing to the Administrative Agent a
   letter (a "Designation Letter") in duplicate, in substantially
              ------------------
   the form of Exhibit F-1, duly completed and executed by the
   Company and such Subsidiary. Upon any such designation of a
   Subsidiary, such Subsidiary shall be a Designated Borrower and a
   Designated Borrower entitled to borrow A Advances and B Advances
   on and subject to the terms and conditions of this Agreement.

        (b)  So long as all principal of and interest on all
   Advances made to any Designated Borrower have been paid in full,
   the Company may terminate the status of such Designated Borrower
   as a Designated Borrower hereunder by furnishing to the
   Administrative Agent a letter (a "Termination Letter") in
                                     ------------------
   substantially the form of Exhibit F-2, duly completed and executed
   by the Company. Any Termination Letter furnished hereunder shall
   be effective upon receipt by the Administrative Agent, which shall
   promptly notify the Lenders, whereupon the Lenders shall promptly
   deliver to the Company (through the Administrative Agent) the Notes,
   if any, of such former Designated Borrower. Notwithstanding the
   foregoing, the delivery of a Termination Letter with respect to any
   Designated Borrower shall not terminate (i) any obligation of such
   Designated Borrower that remains unpaid at the time of such delivery
   (including without limitation any obligation arising thereafter in
   respect of such Designated Borrower under Section 2.15 or 2.11) or
   (ii) the obligations of the Company under Article IX with respect
   to any such unpaid obligations.

                            ARTICLE III

              CONDITIONS TO EFFECTIVENESS AND LENDING

        SECTION 3.01.  Conditions Precedent to Initial Borrowing.
                       -----------------------------------------
The obligation of each Lender to make an Advance on the occasion of the
initial Borrowing is subject to the condition precedent that

                                          364-DAY CREDIT AGREEMENT

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<PAGE>
                                -32-

the Administrative Agent shall have received the following, each (unless
otherwise specified below) dated the Closing Date, in form and substance
satisfactory to the Administrative Agent (and, to the extent specified
below, each Lender) and (except for the Notes) in sufficient copies for
each Lender:

        (a)  Charter Documents, Etc.
             -----------------------

             (1)  Certified copies of (x) the charter and by-laws
        of the Company, (y) the resolutions of the Board of Directors
        of the Company authorizing and approving this Agreement and
        the Notes, and (z) all documents evidencing other necessary
        corporate action and governmental approvals, if any, with
        respect to this Agreement and the Notes.

             (2)  A certificate of the Secretary or an Assistant
        Secretary of the Company certifying the names and true
        signatures of the officers of the Company authorized to sign
        this Agreement and the Notes and the other documents to be
        delivered hereunder.

             (3)  A certificate from the Secretary of State of the
        State of Delaware dated a date reasonably close to the
        Closing Date as to the good standing of and charter documents
        filed by the Company.

        (b)  Opinions.
             --------

             (1)  A favorable opinion of the General Counsel of the
        Company, substantially in the form of Exhibit D.

             (2)  A favorable opinion of Milbank, Tweed, Hadley &
        McCloy LLP, special New York counsel for the Administrative
        Agent, substantially in the form of Exhibit E.

        (c)  Solvency. A certificate of a senior financial officer
             --------
   of the Company to the effect that the Company (both individually
   and collectively with its Consolidated Subsidiaries) is Solvent.

        (d)  Representations, Etc. A certificate signed by a duly
             ---------------------
   authorized officer of the Company stating that:

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

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

        (e)  Other. Such other approvals, opinions and documents
             -----
   relating to material ERISA and, environmental matters as the
   Administrative Agent or any Lender may, through the Administrative
   Agent, reasonably request.

        SECTION 3.02.  Conditions Precedent to Each A Borrowing.
                       ----------------------------------------
The obligation of each Lender to make an A Advance on the occasion of
each A Borrowing shall be subject to the conditions precedent that the
Closing Date shall have occurred and on the date of such A Borrowing:

        (a)  the following statements shall be true (and each of the
   giving of the applicable Notice of A Borrowing and the acceptance
   by the relevant Borrower of the proceeds of such A Borrowing shall
   constitute a representation and warranty by the Company that on
   the date of such A Borrowing such statements are true):

                                          364-DAY CREDIT AGREEMENT

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<PAGE>
                                -33-

             (i)  the representations and warranties contained in
        Section 4.01 (except the Excluded Representations) are
        correct on and as of the date of such A Borrowing, before
        and after giving effect to such A 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 A Borrowing or from the application
        of the proceeds therefrom, that constitutes a Default;

        (b)  the Administrative Agent shall have received such other
   approvals, opinions or documents as any Lender through the
   Administrative Agent may reasonably request; and

        (c)  in the case of the first Borrowing by a Designated
   Borrower, such Borrower shall have furnished to the Administrative
   Agent such corporate documents, resolutions and legal opinions
   relating to such Designated Borrower as the Administrative Agent
   may reasonably require.

        SECTION 3.03.  Conditions Precedent to Each B Borrowing.
                       ----------------------------------------
The obligation of each Lender that is to make a B Advance on the
occasion of each B Borrowing to make such B Advance as part of such B
Borrowing is subject to the conditions precedent that the Closing Date
shall have occurred and (a) the Administrative Agent shall have received
the Notice of B Borrowing with respect thereto, (b) if (and only if)
requested by such Lender, on or before the date of such B Borrowing, but
prior to such B Borrowing, the Administrative Agent shall have received
a B Note payable to the order of such Lender for each of the one or more
B Advances to be made by such Lender as part of such B Borrowing, in a
principal amount equal to the principal amount of the B Advance to be
evidenced thereby and otherwise on such terms as were agreed to for such
B Advance in accordance with Section 2.03, and (c) on the date of such B
Borrowing the following statements shall be true (and each of the giving
of the applicable Notice of B Borrowing and the acceptance by the
relevant Borrower of the proceeds of such B Borrowing shall constitute a
representation and warranty by the Company that on the date of such B
Borrowing such statements are true):

        (i)  the representations and warranties contained in Section
   4.01 (except the Excluded Representations) are correct on and as
   of the date of such B Borrowing, before and after giving effect to
   such B 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 B Borrowing or from the application of the proceeds
   therefrom, that constitutes a Default.

        SECTION 3.04.  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 Administrative Agent responsible for the
transactions contemplated by this Agreement shall have received notice
from such Lender prior to the proposed Closing Date (as notified by the
Company or the Administrative Agent to the Lenders) specifying its
objection thereto. The Administrative Agent shall promptly notify the
Lenders of the occurrence of the Closing Date.

                                          364-DAY CREDIT AGREEMENT

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<PAGE>

                              - 34 -

                             ARTICLE IV

                   REPRESENTATIONS AND WARRANTIES

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

          (a)  Incorporation; Good Standing.  The Company is a
               ----------------------------
     corporation duly organized, validly existing and in good standing
     under the laws of the State of Delaware.

          (b)  Corporate Authority; No Breach.  The execution,
               ------------------------------
     delivery and performance by the Company of this Agreement and the
     Notes, and the other transactions contemplated hereby, are within
     the Company's corporate powers, have been duly authorized by all
     necessary corporate action, and do not contravene (i) the
     Company's charter or bylaws or (ii) law or any contractual
     restriction binding on or affecting the Company.

          (c)  No Consents or Approvals.  No authorization or approval
               ------------------------
     or other action by, and no notice to or filing with, any
     governmental authority or regulatory body or any other third party
     is required for the due execution, delivery and performance by the
     Company of this Agreement or the Notes, other than those
     authorizations, approvals, notices, filings and actions that have
     been obtained, filed or taken on or before the Closing Date by the
     Company.  No authorization or approval or other action by, and no
     notice to or filing with, any governmental authority or regulatory
     body or any other third party is required for the transactions
     contemplated thereby, except for the authorizations, approvals,
     actions, notices and filings (i) the failure to obtain would not
     have a Material Adverse Effect or (ii) which have been (or, prior
     to the Closing Date, will be) duly obtained, taken, given or made
     and are in full force and effect.

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

          (e)  Financial Statements, Etc.
               --------------------------

          (i)  The statement of financial position of the Company as
     at December 31, 1998 and the related statements of income and cash
     flows of the Company for the twelve months then ended, accompanied
     by an opinion of Deloitte & Touche LLP, independent public
     accountants, and the balance sheet of the Company as at June 30,
     1999 and the related statements of income and cash flows of the
     Company for the six months then ended, copies of which have been
     made available to each Lender, present fairly, in all material
     respects (subject, in the case of said balance sheet as at June
     30, 1999, and said statements of income and cash flows for the six
     months then ended, to year-end audit adjustments) the financial
     condition of the Company as at such dates and the results of the
     operations of the Company for the periods ended on such dates, all
     in accordance with generally accepted accounting principles
     applied on a consistent basis.

          (ii)  Since December 31, 1998, there has been no material
     adverse change in the financial condition or results of operations
     of the Company and its Subsidiaries, taken as a whole.

          (f)  No Litigation, Etc.  Except as described in the
               -------------------
     Company's Report on Form 10-K for the fiscal year ended December
     31, 1998 or in the Company's Report on Form 10-Q for the fiscal
     quarter

                                         364-DAY CREDIT AGREEMENT

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<PAGE>

                              - 35 -

     ended September 30, 1999, there is no pending or, to the best of
     the Company's knowledge, threatened action or proceeding affecting
     the Company or any of its Consolidated Subsidiaries before any
     court, or governmental agency or arbitrator which (i) would have a
     Material Adverse Effect or (ii) purports to affect, or would
     affect, the legality, validity or enforceability of this Agreement
     or any Note.

          (g)  ERISA.  No ERISA Event that would have a Material
               -----
     Adverse Effect has occurred or is reasonably expected to occur
     with respect to any Plan.  As of the Closing Date, neither the
     Company nor any ERISA Affiliate participates in any Multiple
     Employer Plan or in any Multiemployer Plan with respect to which
     the Company or any ERISA Affiliate has any Withdrawal Liability or
     other liability (other than the ordinary liability of a sponsor
     for contributions to or benefits under such Plan) that, in either
     case, would have a Material Adverse Effect.

          (h)  Environmental Laws.  The Company (i) is in substantial
               ------------------
     compliance with any and all applicable Environmental Laws, (ii)
     has (to the best of its knowledge) received, applied for or been
     assigned all required Environmental Permits and (iii) is in
     substantial compliance with all terms and conditions of any such
     Environmental Permits, except where any such noncompliance with
     Environmental Laws, failure to receive, apply for or be assigned
     an Environmental Permit, or failure to comply with the terms and
     conditions of an Environmental Permit, would not have a Material
     Adverse Effect.

          (i)  Investment Company; Public Utility.  Neither the
               ----------------------------------
     Company nor any of its Material Subsidiaries is an "investment
     company", or an "affiliated person" of, or "promoter" or
     "principal underwriter" for, an "investment company," as such
     terms are defined in the Investment Company Act of 1940, as
     amended.  Neither the Company nor any of its Material Subsidiaries
     is a "holding company", or an "affiliate" of a "holding company"
     or a "subsidiary company" of a "holding company", within the
     meaning of the Public Utility Holding Company Act of 1935, as
     amended.

          (j)  Accuracy of Information.
               -----------------------

          (i)  All written information, reports, financial statements,
     exhibits and schedules (except as to assumptions, statements,
     estimates and projections with respect to anticipated future
     performance or events) concerning the operations, business,
     financial condition, properties and prospects of the Company and
     its Subsidiaries ("Information") furnished by or on behalf of the
                        -----------
     Company to the Administrative Agent, the Syndication Agent or any
     Lender on or prior to the Closing Date in connection with the
     negotiation, preparation or delivery of this Agreement or included
     herein or delivered pursuant to Article III, when taken as a
     whole, as of the date of such Information, does not contain any
     untrue statement of material fact or, to the best of the Company's
     knowledge, omit to state any material fact necessary to make the
     statements therein, in light of the circumstances in which they
     were made, not misleading.

          (ii)  All Post-Closing Date Information furnished by or on
     behalf of the Company to the Administrative Agent or any Lender
     after the Closing Date, when taken as a whole, as of the date of
     such Post-Closing Date Information, will not contain any untrue
     statement of material fact or, to the best of the Company's
     knowledge, omit to state any material fact necessary to make the
     statements therein, in light of the circumstances in which they
     were made, not misleading.

          (iii)  Financial projections and pro forma adjustments
     contained in the Information may be based on estimates and
     assumptions about circumstances and events that have not taken
     place at the time of delivery thereof; although such information
     reflects the Company's good faith projections and estimates as of
     the date thereof, based upon methods and data the Company believes
     to be reasonable

                                         364-DAY CREDIT AGREEMENT

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<PAGE>

                              - 36 -

     and accurate, actual results during the period covered by such
     projections and pro forma adjustments may differ materially from
     the projections and pro forma adjustments.

          (iv)  For purposes of this Section 4.01(j), "Post-Closing
                                                       ------------
     Date Information" means:
     ----------------

               (x)  all Information furnished by the Company and its
          Subsidiaries after the date hereof under Sections 5.01(i)(i)
          through (vii), inclusive; and

               (y)  all Information furnished by the Company and its
          Subsidiaries after the date hereof under Section 5.01(i)(viii),
          provided that the request for such information is made in
          writing and delivered to the Company, at the address specified
          in Section 8.02, to the attention of the Company's Treasurer
          and stating that such request is being made in connection with
          this Agreement.

          (k)  Margin Stock.  The Company is not principally engaged
               ------------
     in the business of extending credit for the purpose of purchasing
     or carrying Margin Stock, and no proceeds of any Advance will be
     used for any purpose which violates the provisions of the
     regulations of the Board of Governors of the Federal Reserve
     System.  After applying the proceeds of each Advance, not more
     than 25% of the value of the assets of the Company and the
     Company's Subsidiaries (as determined in good faith by the
     Company) that are subject to Section 5.02(a) will consist of or be
     represented by Margin Stock.  If requested by any Lender or the
     Administrative Agent, the Company will furnish to the
     Administrative Agent and each Lender a statement in conformity
     with the requirements of Federal Reserve Form U-1 referred to in
     Regulation U, the statements made in which shall be such, in the
     opinion of each Lender, as to permit the transactions contemplated
     hereby in accordance with Regulation U.

          SECTION 4.02.  Representation and Warranty of the Lenders.
                         ------------------------------------------
Each Lender represents and warrants that in good faith it has not
relied, and will not rely, upon any Margin Stock as collateral in the
making and maintaining of its Advances hereunder.

                             ARTICLE V

                      COVENANTS OF THE COMPANY

          SECTION 5.01.  Affirmative Covenants.  So long as any
                         ---------------------
Advance shall remain unpaid or any Lender shall have any Commitment
hereunder, the Company will:

          (a)  Preservation of Corporate Existence, Etc.  Do or cause
               -----------------------------------------
     to be done all things necessary to preserve and keep in full force
     and effect its corporate existence, rights (charter and statutory)
     and franchises, provided that the Company shall not be required to
     preserve any such right or franchise if it shall determine that
     the preservation thereof is no longer desirable in the conduct of
     its business.  Cause each Material Subsidiary of the Company to do
     or cause to be done all things necessary to preserve and keep in
     full force and effect the corporate existence, rights (charter and
     statutory) and franchises of such Material Subsidiary, except in
     each case if the Company shall determine that the preservation
     thereof is no longer desirable in the conduct of the business of
     the Company and its Subsidiaries, taken as a whole.

          (b)  Compliance with Laws, Etc.  Comply, and cause each of
               --------------------------
     its Consolidated Subsidiaries to comply, in all material respects,
     with all applicable laws, rules, regulations and orders, such

                                         364-DAY CREDIT AGREEMENT

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<PAGE>

                              - 37 -

compliance to include, without limitation, compliance with ERISA and all
applicable Environmental Laws, except such noncompliance as would not
have a Material Adverse Effect.

          (c)  Payment of Taxes.  Duly pay and discharge, and cause
               ----------------
     each of its Consolidated Subsidiaries to pay and discharge, all
     taxes, assessments and governmental charges whatsoever and by
     whomsoever imposed upon it or against its properties prior to the
     date on which penalties are attached thereto, unless and to the
     extent only that the same (i) shall be contested in good faith and
     by appropriate proceedings by the Company or (ii) are not of
     material importance to the business, financial condition or
     operating results of the Company and its Consolidated
     Subsidiaries.

          (d)  Payment of Material Obligations, Etc.  Pay, and cause
               -------------------------------------
     each of its Material Subsidiaries to pay, all obligations under
     Material Contracts.  Perform, and cause each of its Material
     Subsidiaries to perform, each other obligation (other than
     obligations that the Company determines, in good faith and upon
     the advice of its counsel, not to be binding on it) of the Company
     or such Material Subsidiary, as the case may be, under the
     Material Contracts except where the failure to do so would not
     (either individually or in the aggregate) have a Material Adverse
     Effect.

          (e)  Visitation.  Permit, and cause each of its Material
               ----------
     Subsidiaries to permit, the Administrative Agent or any of the
     Lenders or any agents or representatives thereof (at any
     reasonable time and as may be reasonably requested from time to
     time and, so long as no Default shall have occurred and is
     continuing, upon reasonable advance notice):

               (i)  to visit the properties of the Company and any of
          its Material Subsidiaries in the presence of an appropriate
          officer or representative of the Company;

               (ii)  if any Default shall have occurred and then be
          continuing, to examine and make copies of and abstracts from
          the records and books of account of the Company and any of
          its Material Subsidiaries (other than trade secrets and
          information and materials subject to confidentiality
          agreements with third parties) in the presence of an
          appropriate officer or representative of the Company); and

               (iii)  to discuss the affairs, finances and accounts
          of the Company and any of its Material Subsidiaries with any
          of their officers or directors and with their independent
          certified public accountants.

          (f)  Keeping of Books.  Keep, and cause each of its
               ----------------
     Consolidated 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 Company
     and each such Consolidated Subsidiary in accordance with generally
     accepted accounting standards in effect from time to time.

          (g)  Properties.  Cause all Principal Properties to be
               ----------
     maintained and kept in good condition, repair and working order,
     and cause to be made all necessary repairs, renewals,
     replacements, betterments and improvements thereto, in each case
     as in the judgment of the Company may be necessary so that the
     business carried on in connection therewith may be properly and
     advantageously conducted at all times, provided that nothing in
     this paragraph (g) shall prevent the Company or any of its
     Subsidiaries from discontinuing the operation and maintenance of
     any such Principal Properties or from omitting to make any
     repairs, renewals, replacements, betterments or improvements if
     such discontinuance or omission is, in the judgment of the
     Company, desirable in the conduct of the business of the Company
     and its Subsidiaries taken as a whole.

                                         364-DAY CREDIT AGREEMENT

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                              - 38 -

          (h)  Maintenance of Insurance.  From and after the Closing
               ------------------------
     Date, maintain insurance, and cause each of its Consolidated
     Subsidiaries to maintain insurance, with financially sound and
     reputable insurers, with respect to such of its properties,
     against such risks, casualties and contingencies and in such types
     and amounts as are consistent with sound business practice, it
     being understood that this paragraph (h) shall not prevent the use
     of deductible or excess loss insurance and shall not prevent (i)
     the Company or any of its Subsidiaries from acting as a self-
     insurer or maintaining insurance with another Subsidiary or
     Subsidiaries of the Company so long as such action is consistent
     with sound business practice or (ii) the Company from obtaining
     and owning insurance policies covering activities of its
     Consolidated Subsidiaries.

          (i)  Reporting Requirements.  Furnish to the Lenders:
               ----------------------

               (i)  as soon as available and in any event within 60
          days after the end of each of the first three quarters of
          each fiscal year of the Company, Consolidated balance sheets
          of the Company and its Subsidiaries as of the end of such
          quarter and Consolidated statements of income and cash flows
          of the Company 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 Controller, Assistant
          Controller or other authorized financial officer of the
          Company as having been prepared in accordance with GAAP,
          together with (A) a certificate of said officer stating that
          no Default has occurred and is continuing or, if a Default
          has occurred and is continuing, a statement as to the nature
          thereof, and (B) a schedule in form and substance
          satisfactory to the Administrative Agent of the computations
          used by the Company in determining compliance with the
          covenants contained in Section 5.03;

               (ii)  as soon as available and in any event within 120
          days after the end of each fiscal year of the Company, a
          copy of the annual audit report for such year for the
          Company and its Subsidiaries, containing Consolidated
          balance sheets of the Company and its Subsidiaries as of the
          end of such fiscal year and Consolidated statements of
          income, shareowners' equity and cash flows of the Company
          and its Subsidiaries for such fiscal year, in each case
          accompanied by an opinion acceptable to the Majority Lenders
          by Deloitte & Touche LLP or other independent public
          accountants of recognized national standing, together with
          (a) a certificate of the Controller, Assistant Controller or
          other authorized financial officer of the Company stating
          that no Default has occurred and is continuing or, if a
          Default has occurred and is continuing, a statement as to
          the nature thereof, and (B) a schedule in form and substance
          satisfactory to the Administrative Agent of the computations
          used by the Company in determining compliance with the
          covenants contained in Section 5.03;

               (iii)  as soon as possible and in any event within
          five Business Days after the determination by the Company
          that a Default has occurred and is continuing on the date of
          such statement, a statement of either the Chief Financial
          Officer, Treasurer, Controller, Assistant Controller or
          other authorized financial officer of the Company setting
          forth details of such Default and the action that the
          Company has taken and proposes to take with respect thereto;

               (iv)  promptly and in any event within 30 days after
          the Company knows or has reason to know that any ERISA Event
          that would have a Material Adverse Effect has occurred, a
          statement of an authorized financial officer of the Company
          describing such ERISA Event and the action, if any, that the
          Company or such ERISA Affiliate has taken and proposes to
          take with respect thereto;

                                         364-DAY CREDIT AGREEMENT

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                              - 39 -

               (v)  promptly and in any event within ten Business
          Days after receipt thereof by the Company or any of its
          ERISA Affiliates, copies of each notice from the PBGC
          stating its intention to terminate any Plan or to have a
          trustee appointed to administer any such Plan;

               (vi)  promptly and in any event within 45 days after
          the receipt thereof by the Company or any of its ERISA
          Affiliates, a copy of the latest annual actuarial report for
          each Plan if the ratio of the fair market value of the
          assets of such Plan to its current liability (as defined in
          Section 412 of the Internal Revenue Code) is less than 80%;

               (vii)  as soon as possible and in any event within
          five days after the determination by the Company that a
          Change of Control has occurred, the Company shall deliver to
          the Administrative Agent (which shall forward a copy thereof
          to each Lender promptly) notice thereof, together with such
          other information as the Administrative Agent or any Lender
          (through the Administrative Agent) may reasonably request;
          and

               (viii)  such other information (excluding trade
          secrets) respecting the financial condition and operations
          of the Company and its Subsidiaries as the Administrative
          Agent or any Lender may from time to time reasonably request
          (which information shall constitute "Post-Closing Date
          Information" only to the extent provided in Section
          4.01(j)).

          (j)  Use of Proceeds.  Use the proceeds of the Advances
               ---------------
     hereunder solely to finance the working capital needs and other
     general corporate purposes of the Borrowers (including to support
     the commercial paper programs of the respective Borrowers, to
     finance acquisitions, treasury stock purchases and capital
     investments), in each case in compliance with all applicable legal
     and regulatory requirements; provided that neither the
     Administrative Agent nor any Lender shall have any responsibility
     as to the use of any such proceeds.

          SECTION 5.02.  Negative Covenants.  So long as any Advance
                         ------------------
shall remain unpaid or any Lender shall have any Commitment hereunder,
the Company will not:

          (a)  Liens, Etc.  Create or suffer to exist, or permit any
               -----------
of its Consolidated Subsidiaries to create or suffer to exist, any Lien
on or with respect to any of its properties (other than, in the case of
the Company, the Company's treasury stock), whether now owned or
hereafter acquired, or assign, or permit any of its Subsidiaries to
assign, any right to receive income in order to secure Debt, other than:

          (i)  (A)  Liens for taxes, assessments, governmental charges
     or levies or other amounts owed to governmental entities other
     than for borrowed money; (B) Liens imposed by law, such as
     materialmen's, mechanics', carriers', workmen's and repairmen's
     Liens and other similar Liens arising in the ordinary course of
     business securing obligations that are not overdue for a period of
     more than 30 days or that are being contested in good faith;
     (C) pledges or deposits to secure obligations under workers'
     compensation laws or similar legislation or to secure public or
     statutory obligations; (D) easements, rights of way and other
     encumbrances on title to real property that do not render title to
     the property encumbered thereby unmarketable or materially
     adversely affect the use of such property for its present
     purposes; and (E) Liens in favor of a landlord arising in the
     ordinary course of business,

          (ii)  purchase money Liens upon or in any property, assets
     or stock acquired or held by the Company or any Subsidiary in the
     ordinary course of business to secure the purchase price or
     construction cost of such property or to secure Debt incurred
     solely for the purpose of financing the acquisition

                                         364-DAY CREDIT AGREEMENT

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<PAGE>

                              - 40 -

     or construction of such property whether incurred prior or
     subsequent to such acquisition or construction, or Liens existing
     on such property at the time of its acquisition (other than any
     such Lien created in contemplation of such acquisition) or
     extensions, renewals or replacements of any of the foregoing for
     the same or a lesser amount, provided that no such Lien shall
     extend to or cover any property other than the property being
     acquired, and no such extension, renewal or replacement shall
     extend to or cover any property not theretofore subject to the
     Lien being extended, renewed or replaced,

          (iii)  Liens securing Debt, judgments and ERISA claims
     existing on the date hereof and identified on Schedule 1, and
     other Liens existing on the date hereof,

          (iv)  other Liens or assignments in an aggregate principal
     amount at any time outstanding not to exceed 10% of Consolidated
     Net Tangible Assets,

          (v)  the replacement, extension or renewal of any Lien
     permitted by clauses (ii) and (iii) above upon or in the same
     property theretofore subject thereto or the replacement, extension
     or renewal (without increase in the amount or change in any direct
     or contingent obligor) of the amount secured thereby, and

          (vi)  intercompany Liens.

          (b)  Mergers, Etc.  Merge or consolidate with or into (or
               -------------
permit any of its Material Subsidiaries to merge or consolidate with or
into), or convey, transfer, lease or otherwise dispose of (or permit any
of its Material Subsidiaries to convey, transfer, lease or otherwise
dispose of), whether in one transaction or in a series of related
transactions, all or substantially all of the assets (whether now owned
or hereafter acquired) of the Company or such Material Subsidiary to,
any Person, except that:

          (i)  any Material Subsidiary of the Company may merge or
     consolidate with or into (or convey, transfer, lease or otherwise
     dispose of any or all the assets of such Material Subsidiary to)
     the Company or any wholly owned Material Subsidiary of the
     Company; provided that the Company or a wholly owned Material
     Subsidiary is the survivor of any such merger or consolidation;
     and

          (ii)  the Company may merge or consolidate with or into any
     other Person so long as (x) immediately after giving effect to
     such transaction, no Default would exist and (y) the Company is
     the surviving corporation.

          (c)  Accounting Changes.  Make or permit, or permit any of
               ------------------
its Subsidiaries to make or permit, any change in accounting policies or
reporting practices, except as required or permitted by generally
accepted accounting principles.

          (d)  Change in Nature of Business.  Change the nature of the
               ----------------------------
business of the Company and its Subsidiaries, taken as a whole, such
that such business differs materially from the lines of business engaged
in on the Closing Date and lines of business related thereto; provided
that the foregoing shall not prohibit the Company and its Subsidiaries
from engaging in other lines of business (or investing in joint ventures
engaged in other lines of business) so long as the aggregate book value
of assets of the Company and its Subsidiaries directly relating to such
other lines of business does not exceed 20% of the aggregate book value
of the Consolidated assets of the Company and its Consolidated
Subsidiaries as at the last day of the fiscal quarter most recently
ended prior to the date of determination.

          (e)  Margin Stock.  Permit more than 25%, after the making
               ------------
of each Advance and giving effect to the use of the proceeds thereof, of
the value of the assets of the Company and its Subsidiaries (as

                                         364-DAY CREDIT AGREEMENT

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<PAGE>

                              - 41 -

determined in good faith by the Company) that are subject to
Section 5.02(a) to consist of or be represented by Margin Stock.

          (f)  Transactions with Affiliates.  Other than transactions
               ----------------------------
with Specified Joint Ventures, enter into, or permit any of its
Subsidiaries to enter into, any transaction with an Affiliate of the
Company (other than the Company's Subsidiaries) that would be material
in relation to the Company and its Subsidiaries, taken as a whole, even
if otherwise permitted under this Agreement, except on terms determined
by the Company to be fair and reasonable to the Company and its
Subsidiaries and in the best interests of the Company (considered as a
whole in conjunction with all other existing arrangements and
relationships with such Affiliate).

          SECTION 5.03.  Financial Covenants.  So long as any Advance
                         -------------------
shall remain unpaid or any Lender shall have any Commitment hereunder,
the Company shall not:

          (a)  Debt to Adjusted EBITDA.  Permit the Debt to Adjusted
               -----------------------
     EBITDA Ratio at any time to exceed 3.50 to 1.00.

          (b)  Interest Coverage Ratio.  Permit the Interest Coverage
               -----------------------
     Ratio at any time to be less than 4.50 to 1.00.

                             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)  Any Borrower shall fail to pay any principal of any
     Advance owing by such Borrower when the same becomes due and
     payable; or any Borrower shall fail to pay any interest on any
     Advance owing by such Borrower or make any other payment under
     this Agreement or any Note within five Business Days after the
     same becomes due and payable; or

          (b)  Any representation or warranty made or deemed to have
     been made by the Company herein or in connection with this
     Agreement shall prove to have been incorrect in any material
     respect when made; or

          (c)  (i) The Company shall fail to perform or observe any
     term, covenant or agreement contained in Sections 5.01(a),
     5.01(i)(iii), 5.01(j), 5.02 or 5.03; or (ii) the Company shall
     fail to perform or observe any other term, covenant or agreement
     contained in this Agreement 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 Company by the
     Administrative Agent or any Lender (other than any failure by the
     Company to comply with the terms of Section 5.01(i)(iv), (v) or
     (vi)); or

          (d)  the Company or any of its Material Subsidiaries shall
     fail to pay any principal of, premium or interest on or any other
     amount payable in respect of any Debt that is outstanding in a
     principal or notional amount of at least the Threshold Amount (or
     such lower amount as provided for in the proviso to this clause
     (d)) in the aggregate (but excluding Debt outstanding hereunder)
     of the Company or such Material 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 applicable agreement;

                                         364-DAY CREDIT AGREEMENT

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<PAGE>

                              - 42 -

     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 otherwise to cause, or to permit the
     holder or holders (or an agent or trustee on its or their behalf)
     thereof to cause, such Debt to mature; or any such Debt shall be
     declared to be due and payable or required to be prepaid or
     redeemed (other than by a regularly scheduled required prepayment
     or redemption), 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; provided
     that if the Company in any agreement or instrument relating to any
     such Debt, shall have agreed to, or shall agree to, a lesser
     threshold of the kind specified this clause (d) with respect to
     itself or any of its Material Subsidiaries, then, in such event,
     the amount provided for above shall be reduced to such lesser
     amount(s) with respect to such entity; or

          (e)  Any judgment or order for the payment of money in
     excess of the Threshold Amount shall be rendered against the
     Company or any of its Material Subsidiaries and not timely
     satisfied or discharged, and either (i) proceedings to attach or
     levy upon any assets of the Company or such Material Subsidiary
     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;
     or

          (f)  The Company or any of its Material 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 Company or
     any of its Material 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 Company or any of its Material
     Subsidiaries shall take any corporate action to authorize any of
     the actions set forth above in this subsection (e);

          (g)  Any ERISA Event that would result in a Lien in an
     amount in excess of $30,000,000 on the properties or assets of the
     Company or any of its Subsidiaries shall have occurred and shall
     not have been remedied within 90 days;

then, and in any such event, the Administrative Agent (i) shall at the
request, or may with the consent, of the Majority Lenders, by notice to
the Company (on its own behalf and on behalf of the other Borrowers),
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 Majority Lenders, by notice to
the Company, declare the Advances, the Notes, all interest thereon and
all other amounts payable under this Agreement to be forthwith due and
payable, whereupon the Advances, 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 Company and the other Borrowers;
provided that in the event of an actual or deemed entry of an order for
relief with respect to the Company under the Federal Bankruptcy Code,
(A) the obligation of each Lender to make Advances shall automatically
be terminated and (B) the Advances, the Notes, all such interest and all
such amounts shall

                                         364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>

                              - 43 -

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 Company and the other Borrowers.

          Notwithstanding anything to the contrary set forth in this
Agreement, in the event of an entry of an order for relief with respect
to a Designated Borrower under the Federal Bankruptcy Code (or under any
analogous law applicable to such Designated Borrower, if such Designated
Borrower is not organized under the laws of the United States or any
state thereof), (A) the obligation of each Lender to make Advances to
such Designated Borrower shall automatically be terminated, (B) on the
date that is three Business Days after the Company becomes aware of the
entry of such order for relief, the Advances, the Notes, all interest
and all other amounts owing by such Designated Borrower 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 Company and such Designated Borrower and (C)
such Designated Borrower shall cease to be a Designated Borrower
hereunder.

                            ARTICLE VII

                      THE ADMINISTRATIVE AGENT

          SECTION 7.01.  Authorization and Action.  Each Lender hereby
                         ------------------------
appoints and authorizes the Administrative 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 Administrative 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 Administrative 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 Majority Lenders,
and such instructions shall be binding upon all Lenders and all holders
of Notes; provided that the Administrative Agent shall not be required
to take any action that exposes the Administrative Agent to personal
liability or that is contrary to this Agreement or applicable law.  The
Administrative Agent agrees to give to each Lender prompt notice of each
notice given to it by the Company pursuant to the terms of this
Agreement.

          SECTION 7.02.  Administrative Agent's Reliance, Etc.
                         -------------------------------------
Neither the Administrative 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
Administrative Agent:  (i) may treat the payee of any Note as the holder
thereof until the Administrative 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; (ii) may consult with legal counsel (including
counsel for the Company), 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; (iii) 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; (iv) 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 Borrowers or to inspect the property (including the books
and records) of the Borrowers; (v) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of
any lien or security interest created or purported to be created under
or in connection with, this Agreement or any other instrument or
document furnished pursuant hereto; and (vi) shall incur no liability
under or in respect of this Agreement by acting upon any notice,
consent,

                                         364-DAY CREDIT AGREEMENT

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<PAGE>

                              - 44 -

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.  Citibank and Affiliates.  With respect to its
                         -----------------------
Commitment, the Advances made by it and the Notes issued to it, Citibank
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
Administrative Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include Citibank in its individual
capacity.  Citibank and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, the
Company, any of its Subsidiaries and any Person who may do business with
or own securities of the Company or any such Subsidiary, all as if
Citibank were not the Administrative Agent and without any duty to
account therefor to the Lenders.

          SECTION 7.04.  Lender Credit Decision.  Each Lender
                         ----------------------
acknowledges that it has, independently and without reliance upon the
Administrative 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
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this
Agreement.

          SECTION 7.05.  Indemnification.  The Lenders agree to
                         ---------------
indemnify the Administrative Agent and the Syndication Agent (each, an
"Agent") (in each case to the extent not reimbursed by the Company),
 -----
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 such
Agent in any way relating to or arising out of this Agreement or any
action taken or omitted by such Agent under this Agreement, 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 such Agent's gross
negligence or willful misconduct.  Without limitation of the foregoing,
each Lender agrees to reimburse the Administrative Agent promptly upon
demand for its ratable share of any out-of-pocket expenses (including
counsel fees) incurred by the Administrative 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, to the extent that the
Administrative Agent is not reimbursed for such expenses by the Company.

          SECTION 7.06.  Successor Administrative Agent.  The
                         ------------------------------
Administrative Agent may resign at any time by giving five Business
Days' written notice thereof to the Lenders and the Company and may be
removed at any time with or without cause (i) by the Majority Lenders
with the Company's approval, which approval shall not unreasonably be
withheld, or (ii) by the Company, subject to the approval of the
Majority Lenders, which approval shall not unreasonably be withheld.
Upon any such resignation or removal, the Company shall have the right
to appoint a successor Administrative Agent, subject to the Majority
Lenders' approval, which approval shall not be unreasonably withheld;
provided that upon and during the continuance of an Event of Default,
the Majority Lenders shall have the right to appoint a successor
Administrative Agent.  If no successor Administrative Agent shall have
been so appointed by the Majority Lenders, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent's
giving of notice of resignation or the Majority Lenders' removal of the
retiring Administrative Agent, then the retiring Administrative Agent
may, on behalf of the Lenders, appoint a successor Administrative Agent,
which shall be a commercial bank organized or licensed under the laws of
the United States of America or of any State

                                         364-DAY CREDIT AGREEMENT

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<PAGE>

                              - 45 -

thereof and having a combined capital and surplus of at least
$500,000,000.  Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, discretion, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations under this
Agreement.  After any retiring Administrative Agent's resignation or
removal hereunder as Administrative 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 Administrative Agent under this
Agreement.

          SECTION 7.07.  The Syndication Agent.  Except as expressly
                         ---------------------
provided herein, the Syndication Agent shall not have any right, power,
obligation, liability, responsibility or duty under this Agreement other
than those applicable to all Lenders as such.  Without limiting the
foregoing, the Syndication Agent shall not have or be deemed to have any
fiduciary relationship with any other Lender in connection herewith.
Each Lender acknowledges that it has not relied, and will not rely, on
the Syndication Agent in deciding to enter into this Agreement or in
taking or not taking action hereunder.

                            ARTICLE VIII

                            MISCELLANEOUS

          SECTION 8.01.  Amendments, Etc.  No amendment or waiver of
                         ----------------
any provision of this Agreement or the Notes, nor consent to any
departure by the Company therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Majority Lenders,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided that:

          (a)  no amendment, waiver or consent shall, unless in
     writing and signed by all the Lenders, do any of the following:

                 (1)  waive any of the conditions specified in Section
          3.01 or 3.02;

                 (2)  increase the Commitments of the Lenders or
          subject the Lenders to any additional obligations (other
          than as permitted by Sections 2.05(b) and 2.05(d) to the
          extent any Lender consents thereunder);

                 (3)  reduce the principal of, or interest on, the A
          Notes or any fees or other amounts payable hereunder;

                 (4)  postpone any date fixed for any payment of
          principal of, or interest on, the A Notes or any fees or
          other amounts payable hereunder (excluding any amounts
          payable in connection with the B Notes);

                 (5)  change the percentage of the Commitments or of
          the aggregate unpaid principal amount of the A Notes, or the
          number of Lenders, that shall be required for the Lenders or
          any of them to take any action hereunder;

                 (6)  amend this Section 8.01; or

                 (7)  release the Company from any of its obligations
          under Article IX;

                                         364-DAY CREDIT AGREEMENT

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<PAGE>

                              - 46 -

          (b)  no amendment, waiver or consent shall, unless in
     writing and signed by the Administrative Agent in addition to the
     Lenders required above to take such action, affect the rights or
     duties of the Administrative Agent under this Agreement or any
     Note;

          (c)  no amendment, waiver or consent shall, unless in
     writing and signed by the Syndication Agent in addition to the
     Lenders required above to take such action, affect the rights or
     duties of the Syndication Agent under this Agreement or any Note;
     and

          (d)  this Section 8.01 shall not apply to changes in
     Commitments pursuant to Section 2.05, 2.11 or any other Section of
     this Agreement.

          SECTION 8.02.  Notices, Etc.  All notices and other
                         -------------
communications provided for hereunder shall be in writing (including
telecopier) and mailed, telecopied or delivered by hand:

          (a)  If to the Company or any other Borrower:

               Solutia Inc.
               575 Maryville Centre Drive
               St. Louis, Missouri  63141
               Attention: Treasurer

               Telephone No.:  (314) 674-8081
               Telecopier No.: (314) 674-6755

          (b)  If to the Administrative Agent:

               Citibank, N.A.
               2 Penns Way
               New Castle Delaware, 19720

               Attention: Anne Hieronimus

               Telephone No.:  (302) 894-6034
               Telecopier No.: (302) 894-6120

          (c)  If to any Lender, at the Domestic Lending Office
     specified in the Administrative Questionnaire of such Lender,

or, as to the Company (or any other Borrower) or the Administrative
Agent, at such other address as shall be designated by such party in a
written notice to the other parties and, as to each other party, at such
other address as shall be designated by such party in a written notice
to the Company and the Administrative Agent.  All such notices and
communications shall be deemed to have been duly given or made (i) in
the case of hand deliveries, when delivered by hand, (ii) in the case of
mailed notices, when received, and (iii) in the case of telecopier
notice, when transmitted and confirmed during normal business hours (or,
if delivered after the close of normal business hours, at the beginning
of business hours on the next Business Day), except that notices and
communications to the Administrative Agent pursuant to Article II or VII
shall not be effective until received by the Administrative Agent.

          SECTION 8.03.  No Waiver, Remedies.  No failure on the part
                         -------------------
of any Lender or the Administrative 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

                                         364-DAY CREDIT AGREEMENT

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                              - 47 -

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 Company agrees to pay on demand all out-of-pocket
costs and expenses of the Administrative Agent in connection with the
preparation, execution, delivery, modification and amendment of this
Agreement, the Notes and the other documents to be delivered hereunder,
including, without limitation, the reasonable fees and expenses of
counsel for the Administrative Agent with respect thereto and with
respect to advising the Administrative Agent as to its rights and
responsibilities under this Agreement.  The Company further agrees to
pay on demand all costs and expenses of the Administrative 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
Administrative Agent and each Lender in connection with the enforcement
of rights under this Section 8.04(a).

          (b)  The Company agrees to indemnify and hold harmless the
Administrative Agent, the Syndication 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 actual or proposed use of the proceeds of the Advances, in each
case whether or not such investigation, litigation or proceeding is
brought by the Company, 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 by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct.

          (c)  If any payment of principal of, or Conversion of, any
Eurocurrency Rate Advance is made by any Borrower to or for the account
of a Lender other than on the last day of the Interest Period for such
Advance, or if any payment of principal of any B Advance consisting of a
Fixed Rate Advance is made by any Borrower to or for the account of a
Lender other than on the maturity date of such Advance, as a result of a
prepayment or Conversion pursuant to Sections 2.05(b), 2.08(d) or (e),
2.10 or 2.12, acceleration of the maturity of the Notes pursuant to
Section 6.01 or for any other reason, the Company and such Borrower
jointly and severally agree, upon demand by such Lender (with a copy of
such demand to the Administrative Agent), to pay to the Administrative
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 or Conversion, 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 Company or the other Borrowers hereunder, the
agreements and obligations of the Company and the other Borrowers
contained in Sections 2.11, 2.15 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 Set-off.  Nothing herein shall
                         ----------------
derogate any Lender's right, if any, if and to the extent payment owed
to such Lender is not made when due hereunder or under any A Note or B
Note held by such Lender, to set off from time to time against any or
all of the Company's or the relevant

                                         364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>

                              - 48 -

Borrowers' respective deposit (general or special, time or demand,
provisional or final) accounts with such Lender any amount so due.  Each
Lender agrees promptly to notify the Company (on its own behalf and on
behalf of the relevant Borrower, if applicable) after any such set-off
and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such set-off and
application.  The rights of each Lender under this Section 8.05 are in
addition to other rights and remedies which such Lender may have.

          SECTION 8.06.  Binding Effect.  This Agreement shall become
                         --------------
effective when it shall have been executed by the Company and the
Administrative Agent and when the Administrative Agent shall have been
notified by each Initial Lender that such Initial Lender has executed it
and thereafter shall be binding upon and inure to the benefit of the
Company, the Administrative Agent and each Lender and their respective
successors and assigns, except that no Borrower shall 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, Register.
                         ----------------------------------------

          (a)  Each Lender may (and shall if requested to do so by the
Company pursuant to Section 2.11, Section 2.12 or 2.15) 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 A Advances owing to it and the A Note held by it, but
excluding the B Advances owing to it and the B Note or B Notes held by
it (other than with respect to an assignment pursuant to Section 2.11,
2.12 or 2.15)); provided that:

          (i)  other than in the case of an assignment to an Affiliate
     of such Lender or assignments of the type described in subsection
     (g) below, such Lender shall have obtained the prior written
     consent of the Company, the Syndication Agent and the
     Administrative Agent, no such consent to be unreasonably withheld;

          (ii)  each such assignment shall be of a constant, and not a
     varying, percentage of all rights and obligations under this
     Agreement;

          (iii)  except in the case of an assignment to a Person that,
     immediately prior to such assignment, was a Lender, or an
     assignment by a Lender to an Affiliate of such 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 $10,000,000 or an
     integral multiple of $1,000,000 in excess thereof;

          (iv)  each such assignment shall be to an Eligible Assignee;
     and

          (v)  the parties to each such assignment shall execute and
     deliver to the Administrative Agent, for its acceptance and
     recording in the Register, an Assignment and Acceptance, together
     with any A Note subject to such assignment and a processing and
     recordation fee of $3,500.

Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five Business Days after the execution
and delivery thereof to the Administrative Agent, (x) 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 (y) 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

                                         364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>

                              - 49 -

(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
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 Company or the other Borrowers or the performance or
observance by the Company or the other Borrowers of any of their
respective obligations under this Agreement 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 Administrative 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
Administrative 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 Administrative 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.

          By executing and delivering an Assumption and Acceptance,
the Person assuming a Commitment hereunder confirms to and agrees with
the parties hereto as follows:  (i) neither the Administrative Agent,
the Syndication Agent nor any other Lender makes any representation or
warranty and assumes no responsibility with respect to the financial
condition of the Company or the other Borrowers or the performance or
observance by the Company or the other Borrowers of any of its
obligations under this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Person 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 Assumption and Acceptance; (iii) such
Person will, independently and without reliance upon the Administrative
Agent or any other Lender and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (iv) such
Person confirms that it is an Eligible Assignee; (v) such assignee
appoints and authorizes the Administrative 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 Administrative Agent by the terms
hereof, together with such powers and discretion as are reasonably
incidental thereto; and (vi) such Person 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 Administrative Agent shall maintain at its address
referred to in Section 8.02 a copy of each 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 A Advances owing to each such Lender from time to time (the
"Register").  The entries in the Register shall be conclusive and
 --------
binding for all purposes, absent manifest error, and each Borrower, the
Administrative 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
Company or any Lender at any reasonable time and from time to time upon
reasonable prior notice.

                                         364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>

                              - 50 -

          (d)  Upon the Administrative Agent's receipt of an
Acceptance (executed, in the case of an Assignment and Acceptance, by an
assigning Lender and an assignee representing that it is an Eligible
Assignee and accompanied by any A Note subject to such assignment, and
executed, in the case of an Assumption and Acceptance, by the Person
assuming a Commitment hereunder), the Administrative Agent shall, if
such Acceptance has been completed and is in substantially the form of
Exhibit C-1 or C-2, as applicable, (i) accept such Acceptance,
(ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Company.

          Within five Business Days after its receipt of such notice,
each Borrower, at its own expense, shall execute and deliver to the
Administrative Agent:

          (x)  In the case of an assignment where (1) A Advances of
     the assigning Lender are evidenced by an A Note and (2) the
     assigning Lender has retained a Commitment hereunder, in exchange
     for the surrendered A Note a new A Note payable to the order of
     the assigning Lender in an amount equal to the Commitment retained
     by it hereunder;

          (y)  In the case of an assignment to an Eligible Assignee
     where such Eligible Assignee has requested that its A Advances be
     evidenced by an A Note in accordance with Section 2.06(c), an A
     Note payable to the order of such Eligible Assignee in an amount
     equal to the Commitment assumed by it pursuant to such Acceptance.

          (z)  In the case of an assumption of a Commitment hereunder,
     where the Person assuming the relevant Commitment hereunder has
     requested that its A Advances be evidenced by an A Note in
     accordance with Section 2.06(c), a new A Note payable to the order
     of such Person in an amount equal to the Commitment assumed by it
     pursuant to such Acceptance.

          The new A Notes to be executed and delivered by a Borrower
     under clauses (x) and (y) above shall be in an aggregate principal
     amount equal to the aggregate principal amount of the A Note
     surrendered in connection with the related assignment, shall be
     dated the effective date of such Assignment and Acceptance and
     shall otherwise be in substantially the form of Exhibit A-1
     hereto.  The new A Note to be executed and delivered under clause
     (z) above shall be dated the effective date of such Acceptance and
     shall otherwise be in substantially the form of Exhibit A-1
     hereto.

          (e)  Each Lender may sell participations to one or more
banks or other entities 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/or the Note or
Notes held by it); provided that (i) such Lender's obligations under
this Agreement (including, without limitation, its Commitment 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 Company, each other Borrower, the
Administrative 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 Company or any other 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.
Upon the sale of a participation pursuant to this Section 8.07(e), such
Lender shall promptly provide notice to the Company of the sale of a
participation (other than a

                                         364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>

                              - 51 -

sale of a participation pursuant to Section 2.16); provided that the
failure by such Lender to provide such notice shall not invalidate the
sale of 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 Company or any
other Borrower furnished to such Lender by or on behalf of the Company
or such 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 Company and the other Borrowers received by it from such Lender;
provided further that the Company (on its own behalf and on behalf of
the other Borrowers) shall have consented in advance to the disclosure
of any non-public information.

          (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 Notes 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)  Each Lender agrees that it will not assign any Note or
Notes or sell any participation in any manner or under any circumstances
that would require registration, qualification or filings under the
securities laws of the United States of America, of any state or of any
country.

          SECTION 8.08.  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 8.09.  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 8.10.  Jurisdiction, Etc.
                         ------------------

          (a)  Each of the parties hereto (and each Designated
Borrower, by its acceptance of the proceeds of Advances made to it)
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 and each Designated Borrower 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 or, to
the extent permitted by law, in such federal court.  Each of the parties
hereto and each Designated Borrower 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 and each Designated Borrower
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 and each
Designated Borrower 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.

                                         364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>

                              - 52 -

          SECTION 8.11.  Judgment Currency.  This is an international
                         -----------------
loan transaction in which the specification of Dollars or Euros, as the
case may be (the "Specified Currency"), and payment in New York City or
                  ------------------
the country of the Specified Currency, as the case may be (the
"Specified Place"), is of the essence, and the Specified Currency shall
 ---------------
be the currency of account in all events relating to Advances
denominated in the Specified Currency.  The payment obligations of the
Company and the other Borrowers under this Agreement shall not be
discharged or satisfied by an amount paid in another currency or in
another place, whether pursuant to a judgment or otherwise, to the
extent that the amount so paid on conversion to the Specified Currency
and transfer to the Specified Place under normal banking procedures does
not yield the amount of the Specified Currency at the Specified Place
due hereunder.  If for the purpose of obtaining judgment in any court it
is necessary to convert a sum due hereunder in the Specified Currency
into another currency (the "Second Currency"), the rate of exchange that
                            ---------------
shall be applied shall be the rate at which in accordance with normal
banking procedures the Administrative Agent could purchase the Specified
Currency with the Second Currency on the Business Day next preceding the
day on which such judgment is rendered.  The obligation of the Company
and the other Borrowers in respect of any such sum due from it to the
Administrative Agent or any Lender hereunder (in this Section called an
"Entitled Person") shall, notwithstanding the rate of exchange actually
 ---------------
applied in rendering such judgment, be discharged only to the extent
that on the Business Day following receipt by such Entitled Person of
any sum adjudged to be due hereunder in the Second Currency such
Entitled Person may in accordance with normal banking procedures
purchase and transfer to the Specified Place the Specified Currency with
the amount of the Second Currency so adjudged to be due; and the Company
and the applicable Borrower hereby, as a separate obligation and
notwithstanding any such judgment, jointly and severally agree to
indemnify such Entitled Person against, and to pay such Entitled Person
on demand, in the Specified Currency, the amount (if any) by which the
sum originally due to such Entitled Person in the Specified Currency
hereunder exceeds the amount of the Specified Currency so purchased and
transferred.

                             ARTICLE IX

                             GUARANTEE

          SECTION 9.01.  The Guarantee.  The Company hereby guarantees
                         -------------
to each Lender and the Administrative Agent and their respective
successors and assigns the prompt payment in full when due (whether at
stated maturity, by acceleration or otherwise) of the principal of and
interest on the Advances made by the Lenders to each Designated Borrower
and all other amounts from time to time owing to the Lenders or the
Administrative Agent by any Designated Borrower under this Agreement and
by the Company under any of the other Notes, in each case strictly in
accordance with the terms thereof (such obligations being herein
collectively called the "Guaranteed Obligations").  The Company hereby
                         ----------------------
further agrees that if any Designated Borrower shall fail to pay in full
when due (whether at stated maturity, by acceleration or otherwise) any
of the Guaranteed Obligations owing by such Designated Borrower, the
Company will promptly pay the same, without any demand or notice
whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Guaranteed Obligations, the same will be promptly
paid in full when due (whether at extended maturity, by acceleration or
otherwise) in accordance with the terms of such extension or renewal.

          SECTION 9.02.  Obligations Unconditional.  The obligations
                         -------------------------
of the Company under Section 9.01 are irrevocable, absolute and
unconditional irrespective of the value, genuineness, validity,
regularity or enforceability of the obligations of any of the Designated
Borrowers under this Agreement or any other agreement or instrument
referred to herein, or any substitution, release or exchange of any
other guarantee of or security for any of the Guaranteed Obligations,
and, to the fullest extent permitted

                                         364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>

                              - 53 -

by applicable law, irrespective of any other circumstance whatsoever
that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, it being the intent of this Article IX
that the obligations of the Company hereunder shall be absolute and
unconditional under any and all circumstances.  Without limiting the
generality of the foregoing, it is agreed that the occurrence of any one
or more of the following shall not alter or impair the liability of the
Company hereunder, which shall remain absolute and unconditional as
described above:

          (i)  at any time or from time to time, without notice to the
     Company, the time for any performance of or compliance with any of
     the Guaranteed Obligations shall be extended, or such performance
     or compliance shall be waived;

          (ii)  any of the acts mentioned in any of the provisions of
     this Agreement or any other agreement or instrument referred to
     herein shall be done or omitted;

          (iii)  the maturity of any of the Guaranteed Obligations
     shall be accelerated, or any of the Guaranteed Obligations shall
     be modified, supplemented or amended in any respect, or any right
     under this Agreement or any other agreement or instrument referred
     to herein  shall be waived or any other guarantee of any of the
     Guaranteed Obligations or any security therefor shall be released
     or exchanged in whole or in part or otherwise dealt with; or

          (iv)  any lien or security interest granted to, or in favor
     of, the Administrative Agent or any Lender or Lenders as security
     for any of the Guaranteed Obligations shall fail to be perfected.

The Company hereby expressly waives diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that
the Administrative Agent or any Lender exhaust any right, power or
remedy or proceed against any of the Designated Borrowers under this
Agreement or any other agreement or instrument referred to herein, or
against any other Person under any other guarantee of, or security for,
any of the Guaranteed Obligations.

          SECTION 9.03.  Reinstatement.  The obligations of the
                         -------------
Company under this Article IX shall be automatically reinstated if and
to the extent that for any reason any payment by or on behalf of any of
the Designated Borrowers in respect of the Guaranteed Obligations is
rescinded or must be otherwise restored by any holder of any of the
Guaranteed Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, and the Company agrees that
it will indemnify the Administrative Agent and each Lender on demand for
all reasonable costs and expenses (including fees of counsel) incurred
by the Administrative Agent or such Lender in connection with such
rescission or restoration, including any such costs and expenses
incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under
any bankruptcy, insolvency or similar law.

          SECTION 9.04.  Subrogation.  The Company hereby agrees that
                         -----------
until the payment and satisfaction in full of all Guaranteed Obligations
and the expiration and termination of the Commitments of the Lenders
under this Agreement it shall not exercise any right or remedy arising
by reason of any performance by it of its guarantee in Section 9.01,
whether by subrogation or otherwise, against any Designated Borrower or
any other guarantor of any of the Guaranteed Obligations or any security
for any of the Guaranteed Obligations.

          SECTION 9.05.  Remedies.  The Company agrees that, as
                         --------
between the Company and the Lenders, the obligations of the Designated
Borrowers under this Agreement may be declared to be forthwith due and
payable as provided in Article VI (and shall be deemed to have become
automatically due and payable in the circumstances provided in
Article VI) for purposes of Section 9.01

                                         364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>

                              - 54 -

notwithstanding any stay, injunction or other prohibition preventing
such declaration (or such obligations from becoming automatically due
and payable) as against any of the Designated Borrowers and that, in the
event of such declaration (or such obligations being deemed to have
become automatically due and payable), such obligations (whether or not
due and payable by such Designated Borrower) shall forthwith become due
and payable by the Company for purposes of Section 9.01.

          SECTION 9.06.  Instrument for the Payment of Money.  The
                         -----------------------------------
Company hereby acknowledges that the guarantee in this Article IX
constitutes an instrument for the payment of money, and consents and
agrees that any Lender or the Administrative Agent, at its sole option,
in the event of a dispute by the Company in the payment of any moneys
due hereunder, shall have the right to bring motion-action under New
York CPLR Section 3213.

          SECTION 9.07.  Continuing Guarantee.  The guarantee in this
                         --------------------
Article IX is a continuing guarantee of payment (and not of collection),
and shall apply to all Guaranteed Obligations whenever arising.

              [remainder of page intentionally blank]

                                         364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>

                              - 55 -

          IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.

                                    SOLUTIA INC.

                                    By  /s/ R.L. Bishop
                                      ---------------------------------
                                      Name:  R.L. Bishop
                                      Title: Vice President & Treasurer

                                    CITIBANK, N.A.,
                                      as Administrative Agent

                                    By  /s/ Eileen G. Ogimachi
                                      ---------------------------------
                                      Name:  Eileen G. Ogimachi
                                      Title: Attorney-in-Fact

                                    BANK OF AMERICA, N.A.,
                                      as Syndication Agent

                                    By  /s/ David Noda
                                      ---------------------------------
                                      Name:  David Noda
                                      Title: Managing Director

                                         364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>

                              - 56 -

Commitment                          INITIAL LENDERS
----------                          ---------------

$25,000,000.00                      CITIBANK, N.A.

                                    By  /s/ Eileen G. Ogimachi
                                      ----------------------------------
                                      Name:  Eileen G. Ogimachi
                                      Title: Attorney-in-Fact

$25,000,000.00                      BANK OF AMERICA, N.A.

                                    By  /s/ David Noda
                                      ----------------------------------
                                      Name:  David Noda
                                      Title: Managing Director

$20,000,000.00                      ABN AMRO BANK N.V.

                                    By  /s/ Steven M. Buehler
                                      ----------------------------------
                                      Name:  Steven M. Buehler
                                      Title: Assistant Vice President

                                    By  /s/ Scott J. Albert
                                      ----------------------------------
                                      Name:  Scott J. Albert
                                      Title: Group Vice President

$20,000,000.00                      THE BANK OF TOKYO-MITSUBISHI, LTD.,
                                     CHICAGO BRANCH

                                    By  /s/ Hisashi Miyashiro
                                      ----------------------------------
                                      Name:  Hisashi Miyashiro
                                      Title: Deputy General Manager

$20,000,000.00                      BANK ONE, N.A.

                                    By  /s/ William J. Oleferchik
                                      ----------------------------------
                                      Name:  William J. Oleferchik
                                      Title: Vice President

                                         364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>

                              - 57 -

$20,000,000.00                      THE CHASE MANHATTAN BANK

                                    By  /s/ Lawrence Palumbo, Jr.
                                      ----------------------------------
                                      Name:  Lawrence Palumbo, Jr.
                                      Title: Vice President

$20,000,000.00                      DEUTSCHE BANK A.G.,
                                     NEW YORK BRANCH

                                    By  /s/ Jean M. Hannigan
                                      ----------------------------------
                                      Name:  Jean M. Hannigan
                                      Title: Vice President

                                    By  /s/ Sheryl Paynter
                                      ----------------------------------
                                      Name:  Sheryl Paynter
                                      Title: Assistant Vice President

$20,000,000.00                      HSBC BANK, USA

                                    By  /s/ Christopher M. Samms
                                      ----------------------------------
                                      Name:  Christopher M. Samms
                                      Title: Vice President - Officer
                                             #9426

$20,000,000.00                      KBC BANK N.V.

                                    By  /s/ Robert Snauffer
                                      ----------------------------------
                                      Name:  Robert Snauffer
                                      Title: First Vice President

                                    By  /s/ Raymond F. Murray
                                      ----------------------------------
                                      Name:  Raymond F. Murray
                                      Title: First Vice President

$20,000,000.00                      MORGAN GUARANTY TRUST COMPANY
                                     OF NEW YORK

                                    By  /s/ Dennis Wilczek
                                      ----------------------------------
                                      Name:  Dennis Wilczek
                                      Title: Associate

                                         364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>

                              - 58 -

$20,000,000.00                      THE NORTHERN TRUST COMPANY

                                    By  /s/ Lisa M. Taylor
                                      ----------------------------------
                                      Name:  Lisa M. Taylor
                                      Title: Second Vice President

$20,000,000.00                      WACHOVIA BANK, N.A.

                                    By  /s/ Walter R. Gilikin
                                      ----------------------------------
                                      Name:  Walter R. Gilikin
                                      Title: Senior Vice President

$12,500,000.00                      MELLON BANK, N.A.

                                    By  /s/ Jeffrey R. Dickson
                                      ----------------------------------
                                      Name:  Jeffrey R. Dickson
                                      Title: Vice President

$12,500,000.00                      MERCANTILE BANK NATIONAL ASSOCIATION

                                    By  /s/ Gregory L. Dryden
                                      ----------------------------------
                                      Name:  Gregory L. Dryden
                                      Title: Vice President

$12,500,000.00                      SOCIETE GENERALE

                                    By  /s/ Steven R. Fercho
                                      ----------------------------------
                                      Name:  Steven R. Fercho
                                      Title: Director

                                         364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>

                              - 59 -

$12,500,000.00                      THE SUMITOMO BANK, LIMITED

                                    By  /s/ John H. Kemper
                                      ----------------------------------
                                      Name:  John. H. Kemper
                                      Title: Senior Vice President

$300,000,000.00                     Total of Commitments
===============

                                         364-DAY CREDIT AGREEMENT

<PAGE>
<PAGE>
                                                  SCHEDULE 1

                           Existing Liens
                           --------------

          By a Deed of Trust and Security Agreement dated as of
August 26, 1999 and a Funding, Mortgage and Lease Agreement of the same
date, made by Solutia Inc., Solutia granted a lien upon and security
interest in Solutia rights as lessee in and against an office building
(which is Solutia's new headquarters) consisting of approximately
270,000 square feet and other fixtures and improvements located on the
site at 575 Maryville Centre, St. Louis County, Missouri.  This is a
synthetic lease with State Street Bank and Trust of Missouri NA as
lessor and Solutia as Lessee.

<PAGE>
<PAGE>
                                                  SCHEDULE 2A

                            Pricing Grid
                            ------------

          "Applicable Margin" means, for any A Advance (whether
           -----------------
denominated in Dollars or Euros) that is a Eurocurrency Rate Advance for
any period during which the Rated Securities are within any Rating Level
set forth below, the rate set forth below opposite the reference to such
Rating Level:

             Rating Level               Applicable Margin (p.a.)
             ------------               ------------------------

            Rating Level 1                      0.205%
            Rating Level 2                      0.290%
            Rating Level 3                      0.450%
            Rating Level 4                      0.625%
            Rating Level 5                      0.850%
            Rating Level 6                      1.000%;

provided that, if the ratings of the Rated Securities established by S&P
and Moody's shall fall within different Rating Levels, the Applicable
Margin shall be determined by reference to the higher of the two Rating
Levels (except that, if the lower such Rating Level is more than one
Rating Level below the higher such Rating Level, the Applicable Margin
shall be determined by reference to the Rating Level that is one Rating
Level higher than the lower such Rating Level).  Each change in the
Applicable Margin resulting from a Rating Level Change shall be
effective on the effective date of such Rating Level Change.

          "Facility Fee Rate" means, for any period during which the
           -----------------
Rated Securities are within any Rating Level set forth below, the rate
set forth below opposite the reference to such Rating Level:

             Rating Level               Facility Fee Rate (p.a.)
             ------------               ------------------------

            Rating Level 1                      0.070%
            Rating Level 2                      0.085%
            Rating Level 3                      0.100%
            Rating Level 4                      0.125%
            Rating Level 5                      0.150%
            Rating Level 6                      0.250%;

provided that, if the ratings of the Rated Securities established by S&P
and Moody's shall fall within different Rating Levels, the Facility Fee
Rate shall be determined by reference to the higher of the two Rating
Levels (except that, if the lower such Rating Level is more than one
Rating Level below the higher such Rating Level, the Facility Fee Rate
shall be determined by reference to the Rating Level that is one Rating
Level higher than the lower such Rating Level).  Each change in the
Facility Fee Rate resulting from a Rating Level Change shall be
effective on the effective date of such Rating Level Change.

<PAGE>
<PAGE>

                              - 2 -

          "Utilization Fee Rate" means, for any period during which
           --------------------
the Rated Securities are within any Rating Level set forth below, the
rate set forth below opposite the reference to such Rating Level:

             Rating Level             Utilization Fee Rate (p.a.)
             ------------             ---------------------------

            Rating Level 1                      0.125%
            Rating Level 2                      0.125%
            Rating Level 3                      0.125%
            Rating Level 4                      0.125%
            Rating Level 5                      0.125%
            Rating Level 6                      0.250%;

provided that, if the ratings of the Rated Securities established by S&P
and Moody's shall fall within different Rating Levels, the Utilization
Fee Rate shall be determined by reference to the higher of the two
Rating Levels (except that, if the lower such Rating Level is more than
one Rating Level below the higher such Rating Level, the Utilization Fee
Rate shall be determined by reference to the Rating Level that is one
Rating Level higher than the lower such Rating Level).  Each change in
the Utilization Fee Rate resulting from a Rating Level Change shall be
effective on the effective date of such Rating Level Change.

<PAGE>
<PAGE>
                                             SCHEDULE 2B

<TABLE>

                                              SOLUTIA INC.<F1>
                                   $300MM 364-DAY REVOLVING CREDIT FACILITY
                                                PRICING GRID
-----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
                    LEVEL 1              LEVEL 2            LEVEL 3             LEVEL 4            LEVEL 5             LEVEL 6

BASIS FOR       Long Term Senior    Long Term Senior   Long Term Senior    Long Term Senior   Long Term Senior    Long Term Senior
PRICING<F2>     Unsecured Debt      Unsecured Debt     Unsecured Debt      Unsecured Debt     Unsecured Debt      Unsecured Debt
                Rated At Least A    Rated Less Than    Rated Less Than     Rated Less Than    Rated Less Than     Rated Lower Than
                By Standard &       Level 1 But At     Level 2 But At      Level 3 But At     Level 4 But At      Level 5 Or Not
                Poor's or A2        Least A- By        Least BBB+ By       Least BBB By       Least BBB- By       Rated.
                       --           Standard & Poor's  Standard & Poor's   Standard & Poor's  Standard & Poor's
                By Moody's          or A3 By           or Baa1 By          or Baa2 By         or Baa3 By
                                    --                 --                  --                 --
                                    Moody's            Moody's             Moody's            Moody's
-----------------------------------------------------------------------------------------------------------------------------------
<S>             <C>                 <C>                <C>                 <C>                <C>                 <C>
FACILITY FEE         7.0 bps             8.5 bps           10.0 bps            12.5 bps           15.0 bps             25.0 bps
-----------------------------------------------------------------------------------------------------------------------------------
APPLICABLE          20.5 bps            29.0 bps           45.0 bps            62.5 bps           85.0 bps            100.0 bps
MARGIN
-----------------------------------------------------------------------------------------------------------------------------------
DRAWN COST<F3>  LIBOR + 27.5 bps    LIBOR + 37.5 bps   LIBOR + 55.0 bps    LIBOR + 75.0 bps   LIBOR + 100.0 bps   LIBOR + 125.0 bps
-----------------------------------------------------------------------------------------------------------------------------------
UTILIZATION FEE     12.5 bps            12.5 bps           12.5 bps            12.5 bps           12.5 bps             25.0 bps
USAGE > 33%
-----------------------------------------------------------------------------------------------------------------------------------
FULLY DRAWN     LIBOR + 40.0 bps    LIBOR + 50.0 bps   LIBOR + 67.5 bps    LIBOR + 87.5 bps   LIBOR + 112.5 bps   LIBOR + 150.0 bps
COST<F4>
-----------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> This pricing grid is intended to be a summary of the Applicable Margin, Facility Fee Rate and Rating Level definitions in the
     Credit Agreement.  In the event of any inconsistency between this pricing grid and the actual terms of the Credit Agreement
     (including the definitions set forth on Schedule 2A), the terms of the Credit Agreement shall control and govern.

<F2> If Solutia Inc. is split-rated and the ratings fall in different Rating Levels, the higher of the two Rating Levels will apply
     (except that, if the lower such Rating Level is more than one Rating Level below the higher such Rating Level, the Rating
     Level that is one Rating Level higher than the lower such Rating Level will apply).

<F3> Facility Fee plus Applicable Margin.

<F4> Drawn Cost plus Utilization Fee.
</TABLE>

<PAGE>
<PAGE>
                                                           EXHIBIT A-1

                          [Form of A Note]

U.S. $                                               Dated:
      -----------                                           ----------

          FOR VALUE RECEIVED, the undersigned, [insert name of
Borrower], a [insert type of entity] organized under the laws of [insert
jurisdiction]<F1> (the "Borrower"), HEREBY PROMISES TO PAY to the
                        --------
order of            (the "Lender") for the account of its Applicable
         ----------       ------
Lending Office the principal sum of [INSERT DOLLARS AND CENTS IN WORDS]
(or, to the extent of any A Advances that are denominated in Euros, the
aggregate principal amount thereof in such Currency) or such lesser
amount as shall equal the aggregate unpaid principal amount of the A
Advances made by the Lender to the Borrower under the Credit Agreement,
in immediately available funds, on the dates, in such Currency and in
the principal amounts provided in the Credit Agreement referred to
below.  Terms used in this Note and not otherwise defined have the
meanings assigned to them in the Credit Agreement referred to below.

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

          Both principal and interest of each A Advance are payable in
the Currency in which such A Advance is denominated to Citibank, N.A.
("Citibank"), as Administrative Agent, at the Administrative Agent's
  --------
Account, in same day funds.  Each A Advance made by the Lender to 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 Note; provided that the failure of the Lender to make any
such recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Credit Agreement.

          This Note is one of the A Notes referred to in, and is
entitled to the benefits of, the 364-Day Multicurrency Credit Agreement
dated as of November 23, 1999 (as from time to time amended, the
"Credit Agreement") among Solutia Inc. (the "Company"), the Lender
 ----------------                            -------
and certain other lenders parties thereto, Bank of America, N.A., as
Syndication Agent, and Citibank, as Administrative Agent for the Lender
and such other lenders.  The Credit Agreement, among other things,
(i) provides for the making of advances (the "A Advances") by the
                                              ----------
Lender to the Borrower from time to time in Dollars and Euros in an
aggregate amount not to exceed at any time outstanding the U.S. dollar
amount (or Dollar Equivalent) first above mentioned, the indebtedness of
the Borrower resulting from each such A Advance being evidenced by this
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.

          [Pursuant to Article IX of the Credit Agreement, this Note
is absolutely and unconditionally guaranteed by the Company.]<F2>

          The Borrower hereby waives presentment, demand, protest and
notice of any kind.  No failure to exercise, and no delay in exercising,
any rights hereunder on the part of the holder hereof shall operate as a
waiver of such rights.

[FN]
---------------
<F1> For A Notes for the Company as Borrower, insert "SOLUTIA INC., a
     corporation organized under the laws of the State of Delaware".
     For A Notes for a Designated Borrower as Borrower, insert
     analogous information.
<F2> Include in Notes of Designated Borrowers.

<PAGE>
<PAGE>

                              - 2 -

          This Note shall be governed by, and construed in accordance
with, the law of the State of New York, United States.

                                    [NAME OF BORROWER]

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

<PAGE>
<PAGE>

<TABLE>
                                             ADVANCES AND PAYMENTS OF PRINCIPAL
===================================================================================================================================
<CAPTION>
                                                                            AMOUNT OF
                                                                            PRINCIPAL           UNPAID
                AMOUNT OF           CURRENCY OF          MATURITY OF         PAID OR          PRINCIPAL           NOTATION
DATE            A ADVANCE            A ADVANCE            A ADVANCE          PREPAID           BALANCE            MADE BY
-----------------------------------------------------------------------------------------------------------------------------------
<S>             <C>                 <C>                  <C>                <C>               <C>                 <C>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>
<PAGE>
                                                            EXHIBIT A-2

                      [Form of B Note]

[U.S.$] [EUROS]                                       Dated:
                -----------                                  ----------

          FOR VALUE RECEIVED, the undersigned, [insert name of
Borrower], a [insert type of entity] organized under the laws of [insert
jurisdiction]<F3> (the "Borrower"), HEREBY PROMISES TO PAY to the
                        --------
order of            (the "Lender") for the account of its Applicable
         ----------       ------
Lending Office the principal sum of [INSERT DOLLARS AND CENTS (OR EUROS)
IN WORDS] on [           ,     ].  Terms used in this Note and not
              -------- --  ----
otherwise defined have the meanings assigned to them in the Credit
Agreement referred to below.

          The Borrower promises to pay interest on the unpaid
principal amount hereof from the date hereof until such principal amount
is paid in full, in the Currency, at the interest rate and payable on
the interest payment date or dates provided below:

      Currency:                        [Dollars][Euros]

      Interest Rate:                        % per annum (calculated on
                                       -----
                                       the basis of a year of       days
                                                              -----
                                       for the actual number of days
                                       elapsed).

      Interest Payment Date or Dates:
                                       --------------------------------

        Both principal and interest are payable in [Dollars] [Euros]
to Citibank, N.A. ("Citibank"), as Administrative Agent, at the
                    --------
Administrative Agent's Account, in same day funds, free and clear of and
without any deduction, with respect to the payee named above, for any
and all present and future taxes, deductions, charges or withholdings,
and all liabilities with respect thereto, as set forth in the Credit
Agreement.

        This Note is one of the B Notes referred to in, and is
entitled to the benefits of, the 364-Day Multicurrency Credit Agreement
dated as of November 23, 1999 (as from time to time amended, the
"Credit Agreement") among Solutia Inc. (the "Company"), the Lender
 ----------------                            -------
and certain other lenders parties thereto, Bank of America, N.A., as
Syndication Agent, and Citibank, as Administrative Agent for the Lender
and such other lenders.  The Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events.

        [Pursuant to Article IX of the Credit Agreement, this Note
is absolutely and unconditionally guaranteed by the Company.]<F4>

        The Borrower hereby waives presentment, demand, protest and
notice of any kind.  No failure to exercise, and no delay in exercising,
any rights hereunder on the part of the holder hereof shall operate as a
waiver of such rights.

[FN]
----------------
<F3> For A Notes for the Company as Borrower, insert "SOLUTIA INC., a
     corporation organized under the laws of the State of Delaware".
     For A Notes for a Designated Borrower as Borrower, insert
     analogous information.
<F4> Include in Notes of Designated Borrowers.

<PAGE>
<PAGE>

                              - 2 -

        This Note shall be governed by, and construed in accordance
with, the law of the State of New York, United States.

                                    [NAME OF BORROWER]

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

<PAGE>
<PAGE>
                                                            EXHIBIT B-1

                    [Form of Notice of A Borrowing]

                                [Date]

Citibank, N.A., as Administrative
  Agent for the Lenders parties
  to the Credit Agreement
  referred to below
2 Penns Way
New Castle, Delaware  19720

Attention:  Anne Hieronimus

Ladies and Gentlemen:

        The undersigned, Solutia Inc., refers to the 364-Day
Multicurrency Credit Agreement dated as of November 23, 1999 (as amended
from time to time, the "Credit Agreement", the terms defined therein
                        ----------------
being used herein as therein defined), among the undersigned, certain
Lenders parties thereto, Bank of America, N.A., as Syndication Agent,
and Citibank, N.A., as Administrative Agent for said Lenders, and hereby
gives you notice, irrevocably, pursuant to Section 2.02 of the Credit
Agreement that the undersigned hereby requests an A Borrowing (the
"Proposed A Borrowing") under the Credit Agreement, and in that
 --------------------
connection sets forth below the information relating to the Proposed A
Borrowing as required by Section 2.02(a) of the Credit Agreement:

        (1)  The Business Day of the Proposed A Borrowing is
                     ,     .
             --------  ----

        (2)  The Type of Advances comprising the Proposed A
             Borrowing is [Base Rate Advances] [Eurocurrency Rate
             Advances].

        (3)  The Currency of the Proposed A Borrowing is
             [Dollars][Euros].

        (4)  The aggregate amount of the Proposed A Borrowing is
             [U.S. $] [Euros]          .
                              ---------

        (5)  The initial Interest Period for each Eurocurrency Rate
             Advance made as part of the Proposed A Borrowing is
             [  ] month[s].<F5>
              --

        (6)  the Borrower of the A Advances to be made as part of
             the Proposed A Borrowing is [the Company][the
             following Designated Borrower:                  ].
                                            -----------------

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

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

[FN]
-------------
<F5> Include in borrowing notices relating to Eurocurrency Rate
     Advances.

<PAGE>
<PAGE>

                              - 2 -

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

                              Very truly yours,

                              SOLUTIA INC. [on behalf of the Designated
                                Borrower referred to above]<F6>

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

[FN]
-------------
<F6> Insert if applicable.

<PAGE>
<PAGE>
                                                           EXHIBIT B-2

                   [Form of Notice of B Borrowing]

                               [Date]

Citibank, N.A., as Administrative
  Agent for the Lenders parties
  to the Credit Agreement
  referred to below
2 Penns Way
New Castle, Delaware  19720

Attention:  Anne Hieronimus

Ladies and Gentlemen:

        The undersigned, Solutia Inc., refers to the 364-Day
Multicurrency Credit Agreement dated as of November 23, 1999 (as amended
from time to time, the "Credit Agreement", the terms defined therein
                        ----------------
being used herein as therein defined), among the undersigned, certain
Lenders parties thereto, Bank of America, N.A., as Syndication Agent,
and Citibank, N.A., as Administrative Agent for said Lenders, and hereby
gives you notice, irrevocably pursuant to Section 2.03 of the Credit
Agreement that the undersigned hereby requests a B Borrowing (the
"Proposed B Borrowing") under the Credit Agreement, and in that
 --------------------
connection sets forth the terms on which the Proposed B Borrowing is
requested to be made:

            (1)  Date of B Borrowing:
                                                --------------------

            (2)  Amount of B Borrowing:
                                                --------------------

            (3)  Currency of B Borrowing:       [Dollars][Euros]

            (4)  Maturity Date of B Borrowing:                      <F7>
                                                --------------------

            (5)  Interest Rate Basis:
                                                --------------------

            (6)  Interest Payment Date(s)
                                                --------------------

            (7)  Type of B Borrowing:           [Fixed Rate Advance]
                                                [Floating Rate Advance]

            (8)  Name of Borrower:              [the Company][The
                                                following Designated
                                                Borrower:           ]
                                                          ----------
            (9)  Other Terms:
                                                -----------------------

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

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

[FN]
-------------
<F7> Maturity date may not be earlier than the date occurring thirty
     days after the date of the Proposed B Borrowing or later than the
     Commitment Termination Date.

<PAGE>
<PAGE>

                              - 2 -

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

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

        (c)   in compliance with Section 2.03(a) of the Credit
   Agreement, the aggregate amount of the Proposed B Borrowing in
   Dollars or in Euros and all other Borrowings to be made on the
   same day under the Credit Agreement is within the aggregate amount
   of the unused Commitments of the Lenders.

        The undersigned hereby confirms that the Proposed B
Borrowing is to be made available to it in accordance with Section
2.03(a)(v) of the Credit Agreement.

                       Very truly yours,

                       SOLUTIA INC. [on behalf of the Designated
                         Borrower referred to above]<F8>

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

[FN]
------------
<F8> Insert if applicable.

<PAGE>
<PAGE>
                                                          EXHIBIT C-1

                 [Form of Assignment and Acceptance]

        Reference is made to the 364-Day Multicurrency Credit
Agreement dated as of November 23, 1999 (as amended from time to time,
the "Credit Agreement") among Solutia Inc., a Delaware corporation
     ----------------
(the "Company"), the Lenders (as defined in the Credit Agreement),
      -------
Bank of America, N.A., as Syndication Agent, and Citibank, N.A., as
administrative agent for the Lenders (the "Administrative Agent").
                                           --------------------
Terms defined in the Credit Agreement are used herein with the same
meaning unless otherwise defined herein.

        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 (other than in respect
   of B Advances and B Notes) equal to the percentage interest
   specified on Schedule 1 hereto of all outstanding rights and
   obligations of the Assignor under the Credit Agreement (other than
   in respect of B Advances and B Notes) including, without
   limitation, such interest in the Assignor's Commitment, the A
   Advances owing to the Assignor and any A Notes held by the
   Assignor.  After giving effect to such sale and assignment, the
   Assignee's Commitment and the amount of the A Advances owing to
   the Assignee will be as set forth on Schedule 1 hereto.

        2.  The Assignor (i) 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; (ii) 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; (iii) makes no
   representation or warranty and assumes no responsibility with
   respect to the financial condition of the Company (or any other
   Borrower) or the performance or observance by the Company (or any
   other Borrower) of any of its obligations under the Credit
   Agreement or any other instrument or document furnished pursuant
   thereto; [and] (iv) represents and warrants that the assignment
   being made hereby shall not require registration, qualification or
   any filings to be made under the securities laws of the United
   States of America, of any state or of any country; [and (v)
   attaches the A Note of each Borrower held by the Assignor and
   requests that the Administrative Agent exchange such A Notes for
   new A Notes payable by the respective Borrowers to the order of
   the Assignor in an amount equal to the Commitment retained by the
   Assignor under the Credit Agreement, as specified on Schedule 1
   hereto].<F9>

        3.  The Assignee (i) 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; (ii) agrees that it will, independently and without
   reliance upon the Administrative Agent, the Syndication 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; (iii) confirms that it is an Eligible
   Assignee; (iv) appoints and authorizes the Administrative Agent to
   take such action as agent on its behalf and to exercise such
   powers and

[FN]
-------------
<F9> Include bracketed text if the Assignor is retaining a Commitment
     under the Credit Agreement and holds A Notes executed pursuant to
     a request made by such Assignor under Section 2.06(c) of the
     Credit Agreement.

<PAGE>
<PAGE>

                              - 2 -

   discretion under the Credit Agreement as are delegated to the
   Administrative Agent by the terms thereof, together with such
   powers and discretion as are reasonably incidental thereto; (v)
   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] (vi) attaches
   any U.S. Internal Revenue Service forms required under Section
   2.15 of the Credit Agreement; [and (vi) requests, in accordance
   with Section 2.06(c) of the Credit Agreement, that its A Advances
   to each Borrower be evidenced by an A Note payable by such
   Borrower to the order of the Assignee in an amount equal to the
   Commitment assumed by it, as specified on Schedule 1 hereto]<F10>.

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

        5.  Upon such acceptance and recording by the Administrative
   Agent, as of the Effective Date, (i) 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 (ii) 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 Administrative
   Agent, from and after the Effective Date, the Administrative Agent
   shall make all payments under the Credit Agreement and the A Notes
   in respect of the interest assigned hereby (including, without
   limitation, all payments of principal, interest, Facility Fees and
   Utilization Fees with respect thereto) to the Assignee.  The
   Assignor and Assignee shall make all appropriate adjustments in
   payments under the Credit Agreement and the A 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 law 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.

[FN]
------------
<F10> Include bracketed text if the Assignee requests that its A
      Advances be evidenced by promissory notes in accordance with
      Section 2.06(c) of the Credit Agreement.

<PAGE>
<PAGE>

                             Schedule 1
                                 to
                     Assignment and Acceptance

Percentage interest assigned:                                       %
                                                             -------

Assignee's Commitment:                                  $
                                                         ------------

Aggregate outstanding principal
     amount of A Advances assigned:                     $
                                                         ------------
                                              and Euros
                                                        -------------
Principal amount of A Note of each
     Borrower payable to Assignee:                      $
                                                         ------------

Principal amount of A Note of each
     Borrower payable to Assignor:                      $
                                                         ------------

Effective Date<F*> (if other than date of
 acceptance by the Administrative Agent):                      ,
                                                   ------------  ----

Dated:               ,           [NAME OF ASSIGNOR], as Assignor
       --------------  ----

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

Dated:               ,           [NAME OF ASSIGNEE], as Assignee
       --------------  ----

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

                                 Domestic Lending Office:      [Address]

                                 Eurocurrency Lending Office:  [Address]

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

<PAGE>
<PAGE>

                              - 2 -

Accepted <F**>[and consented to] this
   day of       , 19
--        ------    --

CITIBANK, N.A., as Administrative Agent

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

<F**>[Consented to:

BANK OF AMERICA, N.A., as Syndication Agent

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

<F**>[Consented to this    day
                        --
of           ,
   ----------  ----

SOLUTIA INC., on its own behalf and on
  behalf of each of the Designated Borrowers

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

[FN]
---------------
<F**> Required if the assignment is other than to an Affiliate of the
      Assignor or pursuant to the terms of Section 8.07(g) of the Credit
      Agreement.

<PAGE>
<PAGE>

                                                          EXHIBIT C-2

                [Form of Assumption and Acceptance]

                     Dated               ,
                           --------------  ----

Solutia Inc.

Citibank, N.A., as
  Administrative Agent for
  the Lenders parties
  to the Credit Agreement
  referred to below
2 Penns Way
New Castle, Delaware  19720

Attention:  Anne Hieronimus

Ladies and Gentlemen:

        Reference is made to the 364-Day Multicurrency Credit
Agreement dated as of November 23, 1999 (as amended from time to time,
the "Credit Agreement") among Solutia Inc., a Delaware corporation
     ----------------
(the "Company"), the Lenders (as defined in the Credit Agreement),
      -------
Bank of America, N.A., as Syndication Agent, and Citibank, N.A., as
administrative agent for the Lenders (the "Administrative Agent").
                                           --------------------
Terms defined in the Credit Agreement are used herein with the same
meaning unless otherwise defined herein.

        1.  [INSERT NAME OF ADDITIONAL COMMITMENT LENDER] (the
   "Additional Commitment Lender") agrees to become a party to the
    ----------------------------
   Credit Agreement and to have the rights and perform the
   obligations of a Lender under the Credit Agreement, and to be
   bound in all respects by the terms of the Credit Agreement.

        2.  The Additional Commitment Lender hereby agrees to a
   Commitment of [INSERT AMOUNT OF PROPOSED COMMITMENT] (the
   "Proposed Commitment").
    -------------------

        3.  The Additional Commitment Lender (i) agrees that no
   Lender has made any representation or warranty, or assumes any
   responsibility with respect to, (x) 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 or (y) the
   financial condition of the Company (or any other Borrower) or the
   performance or observance by the Company (or any other Borrower)
   of any of its obligations under the Credit Agreement or any other
   instrument or document furnished pursuant thereto; (ii) 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 Assumption and Acceptance; (iii) agrees that it will,
   independently and without reliance upon the Administrative Agent,
   the Syndication 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 the Credit Agreement; (iv) confirms that it is
   an Eligible Assignee; (v) appoints and authorizes the
   Administrative Agent to take such action as agent on its behalf
   and to exercise such powers and

<PAGE>
<PAGE>

                              - 2 -

   discretion under the Credit Agreement as are delegated to the
   Administrative Agent by the terms thereof, together with such
   powers and discretion as are reasonably incidental thereto; (vi)
   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 (vii) attaches any
   U.S. Internal Revenue Service forms required under Section 2.15 of
   the Credit Agreement.

        4.  The effective date for this Acceptance shall be
   [              ,     ] (the "Assumption Date"); provided that
    --------------  ----        ---------------
   this Acceptance has been fully executed and delivered to the
   Administrative Agent for acceptance and recording by the
   Administrative Agent on or prior to such Assumption Date.

        5.  Upon such execution, delivery, acceptance and recording
   and as of the Assumption Date, the Additional Commitment Lender
   shall be a party to the Credit Agreement with a Commitment equal
   to the Proposed Commitment and, to the extent provided in this
   Acceptance, have the rights and obligations of a Lender
   thereunder.

        6.  Upon such acceptance and recording, from and after the
   Assumption Date, the Administrative Agent shall make all payments
   under the Credit Agreement in respect of the Proposed Commitment
   provided for in this Acceptance (including, without limitation,
   all payments of principal, interest, Facility Fees and Utilization
   Fees with respect thereto) to the Additional Commitment Lender.

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

        8.  This Acceptance may be signed in any number of
   counterparts, each of which shall be an original, with the same as
   if the signatures were upon the same instrument.

              [remainder of page intentionally blank]

<PAGE>
<PAGE>

                              - 3 -

        IN WITNESS WHEREOF, the Additional Commitment Lender has
caused Acceptance to be executed by its officers thereunto duly
authorized as of the date specified above.

                              [NAME OF ADDITIONAL COMMITMENT
                                 LENDER]

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

                              Domestic Lending Office:      [Address]

                              Eurocurrency Lending Office:  [Address]

This Assumption and Acceptance is
hereby acknowledged and agreed on
as of the date set forth above.
SOLUTIA INC.

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

CITIBANK, N.A., as Administrative Agent

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

BANK OF AMERICA, N.A., as Syndication Agent

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

<PAGE>
<PAGE>

                                                          EXHIBIT D

            [Form of Opinion of Counsel for the Company]

                         November 23, 1999

To the Lenders party to the
  Credit Agreement referred to
  below

Citibank, N.A., as Administrative
  Agent
399 Park Avenue
New York, New York  10043

Ladies and Gentlemen:

        This opinion is furnished to you pursuant to Section 3.01(b)(1)
of the 364-Day Multicurrency Credit Agreement dated as of November 23,
1999 (the "Credit Agreement"), among Solutia Inc., a Delaware corporation
           ----------------
(the "Company"), the Lenders parties thereto, Bank of America, N.A., as
      -------
Syndication Agent, and Citibank, N.A., as Administrative Agent for said
Lenders.  Terms defined in the Credit Agreement are used herein as therein
defined.

        I am General Counsel of the Company and am familiar with the
preparation, execution and delivery of the Credit Agreement.

        In that connection, I or persons under my supervision have
examined or are familiar with:  (1) the Credit Agreement, the A Notes
and the form of the B Note; (2) the documents furnished by the Company
pursuant to Article III of the Credit Agreement; (3) the certificate of
incorporation of the Company and all amendments thereto (the "Charter");
                                                              -------
(4) the by-laws of the Company and all amendments thereto (the
"By-laws"); and (5) a certificate of the Secretary of State of
 -------
Delaware, dated November 23, 1999, certifying as to the continued
corporate existence and good standing of the Company in that State.

        In addition, I or persons under my supervision have examined
or are familiar with the originals, or copies certified to my
satisfaction, of such other corporate records of the Company,
certificates of public officials and of officers of the Company, and
agreements, instruments and other documents, and made such other
investigations and review of relevant documents as I have deemed
necessary as a basis of the opinions expressed below.  I have assumed
the due execution and delivery, pursuant to due authorization, of the
Credit Agreement by the Lenders and the Administrative Agent.

        I am qualified to practice law in the State of Missouri.  My
opinions expressed below are limited to the law of the State of
Missouri, the General Corporation Law of the State of Delaware and the
Federal law of the United States.

        Based upon the foregoing and upon such investigation as I
have deemed necessary, I am of the following opinion:

        1.  The Company is a corporation duly organized, validly
   existing and in good standing under the laws of the State of
   Delaware.

        2.  The execution, delivery and performance by the Company
   of the Credit Agreement and the Notes, and the other transactions
   contemplated by the Credit Agreement, are within the

<PAGE>
<PAGE>

                              - 2 -

   Company's corporate powers, have been duly authorized by all
   necessary corporate action, and do not contravene (i) the Charter
   or the By-laws, (ii) any law, rule or regulation applicable to the
   Company (including, without limitation, Regulation X of the Board
   of Governors of the Federal Reserve System) or (iii) to the best
   of my knowledge, any contractual or legal restriction contained in
   any indenture or other agreement or instrument to which the
   Company or any of its Consolidated Subsidiaries is a party or is
   bound.  The Credit Agreement, and the Notes delivered today, have
   been duly executed and delivered on behalf of the Company.

        3.  No authorization, approval or other action by, and no
   notice to or filing with, any governmental authority or regulatory
   body or any other third party is required for the due execution,
   delivery and performance by the Company of the Credit Agreement
   and the Notes.

        4.  The Credit Agreement is, and each Note of the Company
   when delivered under the Credit Agreement will be, legal, valid
   and binding obligations of the Company enforceable against the
   Company in accordance with their respective terms.

        5.  In any action or proceeding arising out of or relating
   to the Credit Agreement or the Notes in any court of the State of
   Missouri or in any Federal court sitting in the State of Missouri,
   such court would recognize and give effect to the provisions of
   Section 8.08 of the Credit Agreement wherein the parties thereto
   agree that the Credit Agreement and the Notes shall be governed
   by, and construed in accordance with, the law of the State of New
   York.  Without limiting the generality of the foregoing, a court
   of the State of Missouri or a Federal court sitting in the State
   of Missouri would apply the usury law of the State of New York to
   the Credit Agreement and the Notes.  However, if a court were to
   hold that the Credit Agreement and the Notes are governed by, and
   to be construed in accordance with, the law of the State of
   Missouri, the Credit Agreement and the Notes of the Company would
   be, under the laws of the State of Missouri, legal, valid and
   binding obligations of the Company enforceable against the Company
   in accordance with their respective terms.

        6.  Except as described in the Company's Report on Form 10-K
   for the fiscal year ended December 31, 1998 or in the Company's
   Report on Form 10-Q for the fiscal quarter ended September 30,
   1999, there is no pending or overtly threatened action or
   proceeding affecting the Company or any of its Consolidated
   Subsidiaries before any court, governmental agency or arbitrator
   which (i) would have a Material Adverse Effect or (ii) purports to
   affect, or would affect, the legality, validity or enforceability
   of the Credit Agreement or any Note.

        7.  Neither the Company nor any of its Material Subsidiaries
   is an "investment company", or an "affiliated person" of, or
   "promoter" or "principal underwriter" for, an "investment
   company," as such terms are defined in the Investment Company Act
   of 1940, as amended.  Neither the Company nor any of its Material
   Subsidiaries is a "holding company", or an "affiliate" of a
   "holding company" or a "subsidiary company" of a "holding
   company", within the meaning of the Public Utility Holding Company
   Act of 1935, as amended.

        References herein to the Credit Agreement include the
guarantee by the Company of obligations of Designated Borrowers set
forth in Article IX of the Credit Agreement.

        The foregoing opinions are subject to the following comments
and qualifications:

        (A)  The enforceability of Section 8.04(b) of the Credit
   Agreement (and any other similar provisions therein) may be
   limited by laws limiting the enforceability of provisions
   exculpating or exempting a party from, or requiring
   indemnification of a party for, its own action or inaction, to the
   extent such action or inaction involves gross negligence,
   recklessness or willful or unlawful conduct.

<PAGE>
<PAGE>

                              - 3 -

        (B)  Clause (iii) of the second sentence of Section 9.02 of
   the Credit Agreement may not be enforceable to the extent that the
   Guaranteed Obligations are materially modified.

        (C)  The enforceability of provisions in the Credit
   Agreement and the Notes to the effect that terms may not be waived
   or modified except in writing may be limited under certain
   circumstances.

        (D)  I express no opinion as to (i) the effect of the laws
   of any jurisdiction in which any Lender is located (other than the
   State of Missouri) that limit the interest, fees or other charges
   such Lender may impose, (ii) the second sentence of Section 2.16
   of the Credit Agreement, (iii) the first sentence of Section 8.10(a)
   of the Credit Agreement, insofar as such sentence relates to the
   subject matter jurisdiction of any federal court sitting in New York
   City to adjudicate any controversy related to the Credit Agreement
   and the Notes, (iv) the second sentence of Section 8.10(a), (v) the
   waiver of inconvenient forum set forth in Section 8.10(b) of the
   Credit Agreement with respect to proceedings in any federal court
   sitting in New York City, (vi) Section 8.11 of the Credit Agreement
   and (vii) Section 9.06 of the Credit Agreement.

        (E)  My opinion in paragraph 4 above as to the enforceability
   of the Credit Agreement and the Notes is subject to the effect of
   (a) any applicable bankruptcy, insolvency (including, without
   limitation, all laws relating to fraudulent transfer or preferential
   transfers), reorganization, moratorium or similar law affecting
   creditors' rights generally and (b) general principles of equity,
   including, without limitation, concepts of materiality, reasonableness,
   good faith and fair dealing (regardless of whether considered in a
   proceeding in equity or at law).

                                 Very truly yours,

<PAGE>
<PAGE>

                                                          EXHIBIT E

            [Form of Opinion of Special New York Counsel
                    to the Administrative Agent]

                         November 23, 1999

To the Lenders party to the
  Credit Agreement referred to
  below

Citibank, N.A., as Administrative
  Agent
399 Park Avenue
New York, New York  10043

Ladies and Gentlemen:

        We have acted as special New York counsel to the Administrative
Agent in connection with the 364-Day Multicurrency Credit Agreement
dated as of November 23, 1999 (the "Credit Agreement") among Solutia Inc.
                                    ----------------
(the "Company"), the Lenders parties thereto, Bank of America, N.A.,
      -------
as Syndication Agent, and Citibank, N.A., as Administrative Agent,
providing for loans to be made by said Lenders to the Company and the
Designated Borrowers in an aggregate principal amount not exceeding
$300,000,000.  Terms defined in the Credit Agreement are used herein
as defined therein.  This opinion is being delivered pursuant to
Section 3.01(b)(2) of the Credit Agreement.

        In rendering the opinions expressed below, we have examined
the Credit Agreement and the Notes being executed and delivered on the
date hereof (the "Notes" and collectively with the Credit Agreement,
                  -----
the "Loan Documents").
     --------------

        In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as
originals and the conformity with authentic original documents of all
documents submitted to us as copies.

        In rendering the opinions expressed below, we have assumed,
with respect to the Loan Documents, that:

        (i)   the Loan Documents have been duly authorized by, have
   been duly executed and delivered by, and (except to the extent set
   forth in the opinions below as to the Company) constitute legal,
   valid, binding and enforceable obligations of, all of the parties
   thereto;

        (ii)  all signatories to the Loan Documents have been duly
   authorized; and

        (iii) all of the parties to the Loan Documents are duly
   organized and validly existing and have the power and authority
   (corporate or other) to execute, deliver and perform the Loan
   Documents.

        Based upon and subject to the foregoing and subject also to
the comments and qualifications set forth below, and having considered
such questions of law as we have deemed necessary as a basis for the
opinions expressed below, we are of the opinion that each Loan Document
constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium,

<PAGE>
<PAGE>

                              - 2 -

   fraudulent conveyance or transfer or other similar laws relating
   to or affecting the rights of creditors generally and except as
   the enforceability of such Loan Document is subject to the
   application of general principles of equity (regardless of whether
   considered in a proceeding in equity or at law), including,
   without limitation, (a) the possible unavailability of specific
   performance, injunctive relief or any other equitable remedy and
   (b) concepts of materiality, reasonableness, good faith and fair
   dealing.

        The foregoing opinions are subject to the following comments
and qualifications:

        (A)  The enforceability of Section 8.04(b) of the Credit
   Agreement (and any other similar provisions therein) may be
   limited by laws limiting the enforceability of provisions
   exculpating or exempting a party from, or requiring
   indemnification of a party for, its own action or inaction, to the
   extent such action or inaction involves gross negligence,
   recklessness or willful or unlawful conduct.

        (B)  Clause (iii) of the second sentence of Section 9.02 of
   the Credit Agreement may not be enforceable to the extent that the
   Guaranteed Obligations are materially modified.

        (C)  The enforceability of provisions in the Loan Documents
   to the effect that terms may not be waived or modified except in
   writing may be limited under certain circumstances.

        (D)  We express no opinion as to (i) the effect of the laws
   of any jurisdiction in which any Lender is located (other than the
   State of New York) that limit the interest, fees or other charges
   such Lender may impose, (ii) the second sentence of Section 2.16
   of the Credit Agreement, (iii) the first sentence of Section 8.10(a)
   of the Credit Agreement, insofar as such sentence relates to the
   subject matter jurisdiction of any federal court sitting in New York
   City to adjudicate any controversy related to the Loan Documents,
   (iv) the second sentence of Section 8.10(a), (v) the waiver of
   inconvenient forum set forth in Section 8.10(b) of the Credit Agreement
   with respect to proceedings in any federal court sitting in New York
   City, (vi) Section 8.11 of the Credit Agreement and (vii) Section 9.06
   of the Credit Agreement.

        (E)  We point out with reference to obligations stated to be
   payable in a currency other than Dollars that (i) a New York
   statute provides that a judgment rendered by a court of the State
   of New York in respect of an obligation denominated in any such
   other currency would be rendered in such other currency and would
   be converted into Dollars at the rate of exchange prevailing on
   the date of entry of the judgment and (ii) a judgment rendered by
   a Federal court sitting in the State of New York in respect of an
   obligation denominated in any such other currency may be expressed
   in Dollars, but we express no opinion as to the rate of exchange
   such Federal court would apply.

        The foregoing opinions are limited to matters involving the
Federal laws of the United States and the law of the State of New York,
and we do not express any opinion as to the laws of any other
jurisdiction.

        This opinion letter is, pursuant to Section 3.01(b)(2) of
the Credit Agreement, provided to you by us in our capacity as special
New York counsel to the Administrative Agent and may not be relied upon
by any Person for any purpose other than in connection with the
transactions contemplated by the Credit Agreement without, in each
instance, our prior written consent.

                                 Very truly yours,

EKM/RJW

<PAGE>
<PAGE>

                                                          EXHIBIT F-1

                     FORM OF DESIGNATION LETTER

                                          ,
                           ------------ --  ----

Citibank, N.A., as Administrative
  Agent for the Lenders parties
  to the Credit Agreement
  referred to below
2 Penns Way
New Castle, Delaware  19720

Attention:  Anne Hieronimus

Ladies and Gentlemen:

        We refer to the Credit Agreement (as amended, supplemented
and otherwise modified and in effect from time to time, the "Credit
                                                             ------
Agreement") dated as of November 23, 1999 among Solutia Inc. (the
---------
"Company"), the Lenders party thereto, Bank of America, N.A., as
 -------
Syndication Agent, and Citibank, as Administrative Agent for the
Lenders.  Terms defined in the Credit Agreement are used herein as
defined therein.

        The Company hereby designates [            ] (the "Designated
                                       ------------        ----------
Borrower"), a wholly owned Subsidiary of the Company and a
--------
[corporation duly incorporated under the laws of [             ]], as a
                                                  -------------
Borrower in accordance with Section 2.17 of the Credit Agreement until
such designation is terminated in accordance with said Section 2.17.

        The Designated Borrower hereby accepts the above designation
and hereby expressly and unconditionally accepts the obligations of a
Borrower under the Credit Agreement, adheres to the Credit Agreement and
agrees and confirms that, upon your execution and return to the Company
of the enclosed copy of this letter, it shall be a Borrower for purposes
of the Credit Agreement and agrees to be bound by and perform and comply
with the terms and provisions of the Credit Agreement applicable to it
as if it had originally executed the Credit Agreement as a Borrower.
The Designated Borrower hereby authorizes and empowers the Company to
act as its representative and attorney-in-fact for the purposes of
signing documents and giving and receiving notices (including notices of
Borrowing under the Credit Agreement) and other communications in
connection with the Credit Agreement and the transactions contemplated
thereby and for the purposes of modifying or amending any provision of
the Credit Agreement and further agrees that the Administrative Agent,
the Syndication Agent and each Lender may conclusively rely on the
foregoing authorization.

        The Company hereby represents and warrants to the
Administrative Agent and each Lender that, before and after giving
effect to this Designation Letter, (i) the representations and
warranties set forth in Section 4.01 of the Credit Agreement (except the
Excluded Representations) are true and correct on the date hereof as if
made on and as of the date hereof and (ii) no Default has occurred and
is continuing.  The Designated Borrower represents and warrants that
each of the representations and warranties set forth in Section 4.01
(a), (b), (c) and (d) of the Credit Agreement are true as if each
reference therein to the Company were a reference to the Designated
Borrower and as if each reference therein to the Credit Agreement and
the Notes were a reference to this Designation Letter and the Notes
executed by the Designated Borrower in connection herewith.

<PAGE>
<PAGE>

                              - 2 -

        The Designated Borrower hereby agrees that this Designation
Letter, the Credit Agreement and the Notes shall be governed by, and
construed in accordance with, the law of the State of New York.  The
Designated Borrower hereby submits to the nonexclusive jurisdiction of
the United States District Court for the Southern District of New York
and of any New York state court sitting in New York City for the
purposes of all legal proceedings arising out of or relating to this
Designation Letter, the Credit Agreement or the transactions
contemplated thereby.  The Designated Borrower irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought
in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.  The Designated
Borrower further agrees that service of process in any such action or
proceeding brought in New York may be made upon it by service upon the
Company at the "Address for Notices" specified below its name on the
signature pages to the Credit Agreement.

        THE DESIGNATED BORROWER IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS DESIGNATION LETTER, THE
CREDIT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.

                                    Very truly yours,

                                    SOLUTIA INC.

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

                                    [NAME OF DESIGNATED BORROWER]

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

CITIBANK, N.A,
 as Administrative Agent

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

<PAGE>
<PAGE>

                                                          EXHIBIT F-2

                     FORM OF TERMINATION LETTER

                                        ,
                           ---------- --  ----

To Citibank, N.A.,
 as Administrative Agent

Attention:  Anne Hieronimus

Ladies and Gentlemen:

        We refer to the Credit Agreement (as amended, supplemented
and otherwise modified and in effect from time to time, the "Credit
                                                             ------
Agreement") dated as of November 23 , 1999 among Solutia Inc., the
---------
Lenders party thereto, Bank of America, N.A., as Syndication Agent, and
Citibank, N.A., as Administrative Agent.  Terms defined in the Credit
Agreement are used herein as defined therein.

        The Company hereby terminates the status as a Designated
Borrower of [                 ], a [corporation incorporated under the
             -----------------
laws of [               ]], in accordance with Section 2.17 of the
         ---------------
Credit Agreement, effective as of the date of receipt of this notice by
the Administrative Agent.  The undersigned hereby represent and warrant
that all principal of and interest on all Advances of the above-
referenced Designated Borrower and all other amounts payable by such
Designated Borrower pursuant to the Credit Agreement have been paid in
full on or prior to the date hereof.  Notwithstanding the foregoing,
this Termination Letter shall not affect any obligation which by the
terms of the Credit Agreement survives termination thereof.

                                    Very truly yours,

                                    SOLUTIA INC.

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

THE SECURITIES  REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH
THE  UNITED  STATES  SECURITIES  AND  EXCHANGE   COMMISSION  OR  THE  SECURITIES
COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM  REGISTRATION  PROVIDED BY
SECTION  3(b) OF THE  SECURITIES  ACT OF 1933,  AS  AMENDED,  AND THE  RULES AND
REGULATIONS  PROMULGATED THEREUNDER (THE "1933 ACT"), AND RULE 504 OF REGULATION
D PROMULGATED THEREUNDER.

A-001(a)                                                             US $300,000
                                  MAGICINC.COM

  5% SERIES A SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE DEBENTURE DUE OCTOBER
                                     20,2001

         THIS  DEBENTURE of  MagicInc.Com,  a  corporation  duly  organized  and
existing under the laws of Delaware  ("Company"),  designated as its 5% Series A
Senior Subordinated  Convertible  Redeemable Debentures Due October 20, 2001, in
an aggregate  principal face amount not exceeding Three Hundred Thousand Hundred
Dollars (U.S.  $300,000),  which Debentures are being,  purchased at 100% of the
face amount of such Debentures.

         FOR VALUE RECEIVED, the Company promises to pay to M&B Trading,  L.L.C.
the registered holder hereof and his authorized successors and permitted assigns
("Holder"),  the  aggregate  principal  face  sum not to  exceed  Three  Hundred
Thousand Dollars (U.S.  $300,000) on October 20, 2001 ("Maturity  Date"), and to
pay  interest  on the  principal  sum  outstanding,  at the rate of 5% per annum
commencing  November 20, 1999 and due in full at the Maturity  Date  pursuant to
paragraph  4(b) herein.  Accrual of  outstanding  principal sum has been made or
duly  provided  for. The interest so payable will be paid to the person in whose
name this  Debenture  is  registered  on the  records of the  Company  regarding
registration and transfers of the Debentures ("Debenture  Register");  provided,
however,  that the Company's obligation to a transferee of this Debenture arises
only if such transfer,  sale or other disposition is made in accordance with the
terms  and  conditions  of the  Securities  Subscription  Agreement  dated as of
October 20, 1999  between the  Company and M&B  Trading,  L.L.C.  ("Subscription
Agreement").  The principal  of, and interest on, this  Debenture are payable at
the  address  last  appearing  on  the  Debenture  Register  of the  Company  as
designated in writing by the Holder  hereof from time to time.  The Company will
pay the outstanding  principal due upon this Debenture before or on the Maturity
Date, less any amounts required by law to be deducted or withheld, to the Holder
of this  Debenture by check if paid more than 10 days prior to the Maturity Date
or by wire transfer and  addressed to such Holder at the last address  appearing
on the Debenture  Register.  The forwarding of such check or wire transfer shall
constitute a payment of  outstanding  principal  hereunder and shall satisfy and
discharge the liability for principal on this Debenture to the extent of the sum
represented by such check or wire transfer.  Interest shall be payable in Common
Stock (as defined below) pursuant to paragraph 4(b) herein.

     This Debenture is subject to the following additional provisions:

     1. The Debentures  are issuable in  denominations  of Ten Thousand  Dollars
(US$10,000) and integral multiples thereof.  The Debentures are exchangeable for
an equal  aggregate  principal  amount of  debentures  of  different  authorized
denominations,  as requested by the Holders  surrendering the same, but not less
than U.S.  $10,000.  No service  charge  will be made for such  registration  or
transfer or exchange, except that Holder shall pay any tax or other governmental
charges payable in connection therewith.

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     2. The Company  shall be entitled to withhold from all payments any amounts
required to be withheld under the applicable laws.

     3. This Debenture may be  transferred or exchanged only in compliance  with
the Securities Act of 1933, as amended ("Act") and applicable  state  securities
laws.  Prior to due presentment for transfer of this Debenture,  the Company and
any agent of the  Company may treat the person in whose name this  Debenture  is
duly registered on the Company's  Debenture Register as the owner hereof for all
other  purposes,  whether or not this  Debenture  be  overdue,  and  neither the
Company nor any such agent shall be affected or bound by notice to the contrary.
Any Holder of this  Debenture,  electing to exercise the right of conversion set
forth in Section  4(a)  hereof,  in  addition to the  requirements  set forth in
Section  4(a),  and any  prospective  transferee  of this  Debenture,  are  also
required to give the Company  written  confirmation  that the Debenture is being
converted ("Notice of Conversion") in the form annexed hereto as Exhibit 1.

     4. (a) The Holder of this Debenture is entitled, at its option, at any time
immediately  following execution of this Agreement and delivery of the Debenture
hereof,  to convert all or any amount over $10,000 of the principal  face amount
of this Debenture then outstanding into shares of Common Stock, $0.001 par value
per share, of the Company freely tradeable and without restrictive legend of any
kind ("Common Stock"), at a conversion price ("Conversion Price") for each share
of Common  Stock  equal to 75% of the  average  closing  bid price of the Common
Stock of the Common Stock as reported on the National  Association of Securities
Dealers  Electronic  Bulletin  Board ("OTC  Bulletin  Board ") for the three (3)
trading  days  immediately  preceding  the date of receipt  by the  Company of a
Notice  of  Conversion   ("Conversion  Shares").  If  the  number  of  resultant
Conversion  Shares would as a matter of law or pursuant to regulatory  authority
require the Company to seek shareholder  approval of such issuance,  the Company
shall, as soon as  practicable,  take the necessary steps to seek such approval.
Such conversion shall be effectuated,  as provided in a certain Escrow Agreement
executed  simultaneously  with this  Debenture,  by the Company  delivering  the
Conversion Shares to the Holder within 5 business days of receipt by the Company
of the  Notice of  Conversion.  Once the  Holder has  received  such  Conversion
Shares,  the Escrow Agent shall  surrender the Debentures to be converted to the
Company,  executed  by the Holder of this  Debenture  evidencing  such  Holder's
intention  to  convert  this  Debenture  or  a  specified  portion  hereof,  and
accompanied by proper  assignment  hereof in blank.  Accrued but unpaid interest
shall be subject  to  conversion.  No  fractional  shares or scrip  representing
fractions  of  shares  will be issued on  conversion,  but the  number of shares
issuable shall be rounded to the nearest whole share.

     (b)  Interest at the rate of 8% per annum  shall be paid by issuing  Common
Stock of the Company as follows:  Based on the average  closing bid price of the
Common  Stock as  reported on the OTC  Bulletin  Board for the three (3) trading
days immediately preceding the date of the monthly interest payment due ("Market
Price"),  the  Company  shall issue to the Holder  shares of Common  Stock in an
amount equal to the total monthly interest accrued and due divided by 75% of the
Market Price ("Interest Shares"). The dollar amount of interest payable pursuant
to this  paragraph  4(b)  shall be  calculated  based  upon the total  amount of
payments  actually  made by the Holder in  connection  with the  purchase of the
Debentures  at the time any interest  payment is due. If such payment is made by
check,  interest  shall  accrue  beginning  10 days  from the date the  check is
received by the Company.  If such payment is made by wire transfer directly into
the  Company's  account,  interest  shall accrue  beginning on the date the wire
transfer is received by the Company.  Common Stock issued  pursuant hereto shall
be issued  pursuant to Rule 504 of Regulation D in accordance  with the terms of
the Subscription Agreement and shall be freely tradeable and without restrictive
legend of any kind.

     (c) At any time after 90 days the  Company  shall have the option to pay to
the Holder 125% of the principal amount of the Debenture, in full, to the extent
conversion  has not  occurred  pursuant to paragraph  4(a)  herein,  or pay upon
maturity if the Debenture is not converted.  The Company shall give the Holder 5
days written  notice and the Holder  during such 5 days shall have the option to
convert the  Debenture  or any part  thereof  into shares of Common Stock at the
Conversion Price set forth in paragraph 4(a) of this Debenture.

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     5. No provision of this  Debenture  shall alter or impair the obligation of
the  Company,  which  is  absolute  and  unconditional,  to pay the  outstanding
principal of, and interest on, this Debenture at the time,  place, and rate, and
in the form, herein prescribed.

     6. The Company hereby  expressly waives demand and presentment for payment,
notice of non- payment,  protest, notice of protest, notice of dishonor,  notice
of acceleration  or intent to accelerate,  and diligence in taking any action to
collect amounts called for hereunder and shall be directly and primarily  liable
for the payment of all sums owing and to be owing hereto.

     7. The Company agrees to pay all costs and expenses,  including  reasonable
attorneys'  fees,  which may be incurred by the Holder in collecting  any amount
due under this Debenture.

     8. If one or more of the  following  described  "Events of  Default"  shall
occur and continue for 30 days, unless a different time frame is noted below:

          (a)  The Company shall default in the payment of principal or interest
               on this Debenture; or

          (b)  Any of the  representations  or  warranties  made by the  Company
               herein, in the Subscription  Agreement,  or in any certificate or
               financial or other  written  statements  heretofore  or hereafter
               furnished by or on behalf of the Company in  connection  with the
               execution  and  delivery of this  Debenture  or the  Subscription
               Agreement shall be false or misleading in any material respect at
               the time made or the Company  shall  violate any covenants in the
               Subscription  Agreement including but not limited to Section 5(b)
               or I 0; or

          (c)  The  Company  shall fail to perform or observe,  in any  material
               respect,  any  other  covenant,   term,   provision,   condition,
               agreement or obligation of the Company under this Debenture,  the
               Subscription  Agreement or the Escrow  Agreement and such failure
               shall  continue  uncured  for a period of  thirty  0) days  after
               notice from the Holder of such failure; or

          (d)  The Company shall (1) become insolvent;  (2) admit in writing its
               inability to pay its debts generally as they mature;  (3) make an
               assignment  for the benefit of creditors or commence  proceedings
               for its dissolution;  (4) apply for or consent to the appointment
               of a trustee, liquidator or receiver for its or for a substantial
               part  of its  property  or  business;  (5)  file a  petition  for
               bankruptcy relief, consent to the filing of such petition or have
               filed against it an involuntary  petition for bankruptcy  relief,
               all under federal or state laws as applicable; or

          (e)  A trustee,  liquidator  or receiver  shall be  appointed  for the
               Company or for a  substantial  part of its  property  or business
               without  its consent and shall not be  discharged  within  thirty
               (30) days after such appointment; or

          (f)  Any governmental agency or any court of competent jurisdiction at
               the instance of any  governmental  agency shall assume custody or
               control of the whole or any substantial portion of the properties
               or assets of the Company; or

          (g)  Any money  judgment,  writ or warrant of  attachment,  or similar
               process,  in excess of One Hundred Thousand ($100,000) Dollars in
               the  aggregate  shall be entered or filed  against the Company or
               any of its  properties  or other assets and shall remain  unpaid,
               unvacated,

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               unbonded or unstayed  for a period of fifteen (15) days or in any
               event later than five (5) days prior to the date of any  proposed
               sale thereunder; or

          (h)  Bankruptcy,    reorganization,    insolvency    or    liquidation
               proceedings, or other proceedings for relief under any bankruptcy
               law or any law for the  relief  of  debtors  shall be  instituted
               voluntarily by or involuntarily against the Company; or

          (i)  The  Company  shall  have  its  Common  Stock  delisted  from the
               over-the-counter  market or other market or exchange on which the
               Common Stock is or becomes  listed or trading in the Common Stock
               shall be suspended for more than 10 consecutive days; or

          (j)  The  Company  shall not  deliver  to the Buyer the  Common  Stock
               pursuant to paragraph 4 herein without  restrictive legend within
               5 business days.

Then, or at anytime  thereafter,  unless cured, and in each and every such case,
unless  such  Event of Default  shall have been  waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any  subsequent  default) at
the option of the Holder and in the  Holder's  sole  discretion,  the Holder may
consider  this  Debenture  immediately  due and  payable,  without  presentment,
demand,  protest  or  (further)  notice  of  any  kind  (other  than  notice  of
acceleration),  all of which are hereby expressly waived,  anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately,  and without expiration of any period of grace,  enforce
any and all of the  Holder's  rights and remedies  provided  herein or any other
rights or remedies afforded by law.

     9. This  Debenture  represents  a  prioritized  obligation  of the Company.
However,  no recourse  shall be had for the payment of the  principal of, or the
interest  on, this  Debenture,  or for any claim based  hereon,  or otherwise in
respect hereof, against any incorporator,  shareholder,  officer or director, as
such,  past,  present or future,  of the Company or any  successor  corporation,
whether  by  virtue  of any  constitution,  statute  or rule  of law,  or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance  hereof and as part of the consideration for the issue hereof,
expressly waived and released.

     10. In case any provision of this Debenture is held by a court of competent
jurisdiction  to be excessive in scope or  otherwise  invalid or  unenforceable,
such provision shall be adjusted rather than voided, if possible,  so that it is
enforceable to the maximum extent possible,  and the validity and enforceability
of the remaining provisions of this Debenture will not in any way be affected or
impaired thereby.

     11.  This  Debenture  and the  agreements  referred  to in  this  Debenture
constitute the full and entire  understanding  and agreement between the Company
and the Holder with respect to the subject  hereof.  Neither this  Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.

     12. This  Debenture  shall be governed by and construed in accordance  with
the laws of Colorado  applicable  to  contracts  made and wholly to be performed
within  the State of  Colorado  and shall be  binding  upon the  successors  and
assigns of each party hereto.  The Holder and the Company hereby  mutually waive
trial by jury and consent to exclusive  jurisdiction  and venue in the courts of
the State of  Colorado.  At either  party's  election,  any dispute  between the
parties may be  arbitrated  rather  than  litigated  in the  courts,  before the
American  Arbitration  Association  in Denver and  pursuant  to its rules.  Upon
demand made by either party,  each party agrees to submit to and  participate in
such  arbitration.  This  Agreement  may be  executed in  counterparts,  and the
facsimile  transmission  of an executed  counterpart to this Agreement  shall be
effective as an original.

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     IN WITNESS  WHEREOF,  the  Company has caused  this  instrument  to be duty
executed by an officer thereunto duly authorized.

Dated:   October 20, 1999

                                             MAGICINC.COM

                                             By: /s/ Gordon Scott Venters
                                                 --------------------------
                                             Gordon Scott Venters
                                             Title: President

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