Document:

exv4w1

 

Exhibit 4.1

EXECUTION COPY

U.S. $1,100,000,000

CREDIT AGREEMENT

Dated as of April 20, 2004

Among

PHELPS DODGE CORPORATION

as Borrower

and

THE INITIAL LENDERS NAMED HEREIN

as Initial Lenders

and

CITIGROUP GLOBAL MARKETS INC.

as Sole Arranger and Book Manager

and

JPMORGAN CHASE BANK

THE BANK OF NOVA SCOTIA

THE BANK OF TOKYO-MITSUBISHI, LTD.

WACHOVIA BANK, NATIONAL ASSOCIATION

THE ROYAL BANK OF SCOTLAND PLC

ABN AMRO BANK, N.V.

and

MORGAN STANLEY BANK

as Co-Syndication Agents

and

CITIBANK, N.A.

as Administrative Agent

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	ARTICLE I DEFINITIONS AND ACCOUNTING TERMS	 	 	1	 
	 
	 	SECTION 1.01	 	Certain Defined Terms	 	 	1	 
	 
	 	SECTION 1.02	 	Computation of Time Periods	 	 	13	 
	 
	 	SECTION 1.03	 	Accounting Terms	 	 	14	 
	ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT	 	 	14	 
	 
	 	SECTION 2.01	 	The Revolving Credit Advances and Letters of Credit	 	 	14	 
	 
	 	SECTION 2.02	 	Making the Revolving Credit Advances	 	 	14	 
	 
	 	SECTION 2.03	 	The Competitive Bid Advances	 	 	15	 
	 
	 	SECTION 2.04	 	Issuance of and Drawings and Reimbursement Under Letters of Credit	 	 	18	 
	 
	 	SECTION 2.05	 	Fees	 	 	20	 
	 
	 	SECTION 2.06	 	Optional Termination or Reduction of the Commitments	 	 	20	 
	 
	 	SECTION 2.07	 	Repayment of Revolving Credit Advances and Letter of Credit Drawings	 	 	20	 
	 
	 	SECTION 2.08	 	Interest on Revolving Credit Advances	 	 	21	 
	 
	 	SECTION 2.09	 	Interest Rate Determination	 	 	22	 
	 
	 	SECTION 2.10	 	Optional Conversion of Revolving Credit Advances	 	 	23	 
	 
	 	SECTION 2.11	 	Prepayments of Revolving Credit Advances	 	 	23	 
	 
	 	SECTION 2.12	 	Requirements of Law	 	 	23	 
	 
	 	SECTION 2.13	 	Illegality	 	 	24	 
	 
	 	SECTION 2.14	 	Payments and Computations	 	 	24	 
	 
	 	SECTION 2.15	 	Taxes	 	 	25	 
	 
	 	SECTION 2.16	 	Sharing of Payments, Etc.	 	 	26	 
	 
	 	SECTION 2.17	 	Evidence of Debt	 	 	27	 
	ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING	 	 	27	 
	 
	 	SECTION 3.01	 	Conditions Precedent to Effectiveness of Sections 2.01 and 2.03	 	 	27	 
	 
	 	SECTION 3.02	 	Conditions Precedent to Each Revolving Credit Borrowing and Issuance	 	 	28	 
	 
	 	SECTION 3.03	 	Conditions Precedent to Each Competitive Bid Borrowing	 	 	29	 
	 
	 	SECTION 3.04	 	Determinations Under Section 3.01	 	 	29	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES	 	 	29	 
	 
	 	SECTION 4.01	 	Representations and Warranties of the Borrower	 	 	29	 
	ARTICLE V COVENANTS OF THE BORROWER	 	 	32	 
	 
	 	SECTION 5.01	 	Affirmative Covenants	 	 	32	 
	 
	 	SECTION 5.02	 	Negative Covenants	 	 	35	 

 

 

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	ARTICLE VI EVENTS OF DEFAULT	 	 	37	 
	 
	 	SECTION 6.01	 	Events of Default	 	 	37	 
	 
	 	SECTION 6.02	 	Actions in Respect of the Letters of Credit upon Default	 	 	39	 
	ARTICLE VII THE AGENT	 	 	40	 
	 
	 	SECTION 7.01	 	Authorization and Action	 	 	40	 
	 
	 	SECTION 7.02	 	Agent's Reliance, Etc.	 	 	40	 
	 
	 	SECTION 7.03	 	Citibank and Affiliates	 	 	41	 
	 
	 	SECTION 7.04	 	Lender Credit Decision	 	 	41	 
	 
	 	SECTION 7.05	 	Indemnification	 	 	41	 
	 
	 	SECTION 7.06	 	Successor Agent	 	 	42	 
	 
	 	SECTION 7.07	 	Other Agents	 	 	42	 
	ARTICLE VIII MISCELLANEOUS	 	 	42	 
	 
	 	SECTION 8.01	 	Amendments, Etc.	 	 	42	 
	 
	 	SECTION 8.02	 	Notices, Etc.	 	 	42	 
	 
	 	SECTION 8.03	 	No Waiver; Remedies	 	 	43	 
	 
	 	SECTION 8.04	 	Costs and Expenses	 	 	43	 
	 
	 	SECTION 8.05	 	Right of Set-off	 	 	44	 
	 
	 	SECTION 8.06	 	Binding Effect	 	 	45	 
	 
	 	SECTION 8.07	 	Assignments and Participations	 	 	45	 
	 
	 	SECTION 8.08	 	Confidentiality	 	 	47	 
	 
	 	SECTION 8.09	 	Governing Law	 	 	47	 
	 
	 	SECTION 8.10	 	Execution in Counterparts	 	 	47	 
	 
	 	SECTION 8.11	 	Jurisdiction, Etc.	 	 	47	 
	 
	 	SECTION 8.12	 	No Liability of the Issuing Banks	 	 	48	 
	 
	 	SECTION 8.13	 	Patriot Act	 	 	48	 
	 
	 	SECTION 8.14	 	Waiver of Jury Trial	 	 	49	 

	 	 	 	 	 
	Schedules
	 	 	 	 
	 	 	 	 	 
	Schedule 2.01(b)

	 	-	 	Existing Letters of Credit
	 	 	 	 	 
	Schedule I

	 	-
	 	List of Applicable Lending Offices
	 	 	 	 	 
	Schedule II

	 	-
	 	Principal Domestic Subsidiaries and other Subsidiaries
	 	 	 	 	 
	Schedule III

	 	-
	 	Environmental Representation
	 	 	 	 	 
	Schedule IV

	 	-
	 	Disclosed Litigation

 

 

iii

	 	 	 	 	 
	Exhibits
	 	 	 	 
	 	 	 	 	 
	Exhibit A-1

	 	-
	 	Form of Revolving Credit Note
	 	 	 	 	 
	Exhibit A-2

	 	-
	 	Form of Competitive Bid Note
	 	 	 	 	 
	Exhibit B-1

	 	-
	 	Form of Notice of Revolving Credit Borrowing
	 	 	 	 	 
	Exhibit B-2

	 	-
	 	Form of Notice of Competitive Bid Borrowing
	 	 	 	 	 
	Exhibit C

	 	-
	 	Form of Assignment and Acceptance
	 	 	 	 	 
	Exhibit D

	 	-
	 	Form of Opinion of Counsel for the Borrower

 

 

CREDIT AGREEMENT

Dated as of April 20, 2004

               PHELPS DODGE CORPORATION, a New York corporation (the “Borrower”), the
banks, financial institutions and other institutional lenders (the “Initial
Lenders”) and initial issuing banks (the “Initial Issuing Banks”) listed on the
signature pages hereof, CITIGROUP GLOBAL MARKETS INC., as sole arranger and
book manager, JPMORGAN CHASE BANK, THE BANK OF NOVA SCOTIA, THE BANK OF
TOKYO-MITSUBISHI, LTD., WACHOVIA BANK, NATIONAL ASSOCIATION, THE ROYAL BANK OF
SCOTLAND PLC, ABN AMRO BANK, N.V. and MORGAN STANLEY BANK, as co-syndication
agents, and CITIBANK, N.A. (“Citibank”), as administrative agent (the “Agent”)
for the Lenders (as hereinafter defined), agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

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

          “Advance” means a Revolving Credit Advance or a Competitive Bid
Advance.

          “Affiliate” means, as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For
purposes of this definition, “control” of a Person means the power,
directly or indirectly, either to (a) vote 20% or more of the securities
having ordinary voting power for the election of directors of such Person
or (b) direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise.

          “Agent’s Account” means the account of the Agent maintained by the
Agent at Citibank at its office at 399 Park Avenue, New York, New York
10043, Account No. 36852248, Attention: Bank Loan Syndications.

          “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 Eurodollar Lending Office in the case of a Eurodollar Rate
Advance and, in the case of a Competitive Bid Advance, the office of such
Lender notified by such Lender to the Agent as its Applicable Lending
Office with respect to such Competitive Bid Advance.

          “Applicable Margin” means as of any date, a percentage per annum
determined by reference to the Public Debt Rating in effect on such date
as set forth below:

 

 

2

	 	 	 	 	 	 	 	 	 
	Public Debt Rating	 	Applicable Margin for	 	Applicable Margin for
	S&P/Moody’s
	 	Base Rate Advances
	 	Eurodollar Rate Advances

	Level 1

BBB+ or Baa1 or above
	 	 	0.000	%	 	 	0.475	%
	Level 2

BBB or Baa2
	 	 	0.000	%	 	 	0.675	%
	Level 3

BBB- or Baa3
	 	 	0.000	%	 	 	0.875	%
	Level 4

BB+ or Ba1
	 	 	0.000	%	 	 	1.025	%
	Level 5

Lower than Level 4
	 	 	0.000	%	 	 	1.000	%

          “Applicable Percentage” means, as of any date a percentage per annum
determined by reference to the Public Debt Rating in effect on such date
as set forth below:

	 	 	 	 	 
	Public Debt Rating	 	Applicable
	S&P/Moody’s
	 	Percentage

	Level 1

BBB+ or Baa1 or above
	 	 	0.125	%
	Level 2

BBB or Baa2
	 	 	0.200	%
	Level 3

BBB- or Baa3
	 	 	0.250	%
	Level 4

BB+ or Ba1
	 	 	0.350	%
	Level 5

Lower than Level 4

	 	 	0.500	%

          “Applicable Utilization Fee” means, as of any date that the sum of
the aggregate principal amount of the Advances plus the Available Amount
of all Letters of Credit exceeds 33% of the aggregate Commitments, a
percentage per annum determined by reference to the Public Debt Rating in
effect on such date as set forth below:

	 	 	 	 	 
	Public Debt Rating	 	Applicable
	S&P/Moody’s
	 	Utilization Fee

	Level 1

BBB+ or Baa1 or above
	 	 	0.125	%
	Level 2

BBB or Baa2
	 	 	0.125	%
	Level 3

BBB- or Baa3
	 	 	0.125	%
	Level 4

BB+ or Ba1
	 	 	0.125	%
	Level 5

Lower than Level 4
	 	 	0.250	%

 

 

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

          “Attributable Debt” means, at any time, the present value,
discounted at a rate per annum equal to the weighted average of the
interest rates for any Advances outstanding under this Agreement, and if
no Advances are outstanding under this Agreement, the Base Rate at such
time, compounded quarterly, of the obligation of the lessee for rental
payments (not including amounts payable by the lessee for maintenance,
property taxes and insurance) during the remaining term of any lease
(including any period for which such lease has been extended or may, at
the option of the lessor, be extended).

          “Available Amount” of any Letter of Credit means, at any time, the
maximum amount available to be drawn under such Letter of Credit at such
time (assuming compliance at such time with all conditions to drawing).

          “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 1/32 of 1% or, if there
is no nearest 1/32 of 1%, to the next higher 1/32 of 1%) of (i) 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 one percent per annum above the Federal Funds
Rate.

          “Base Rate Advance” means a Revolving Credit Advance that bears
interest as provided in Section 2.08(a)(i).

          “Board of Directors” means the Board of Directors of the Borrower,
or the Executive Committee of the Board of Directors of the Borrower.

          “Borrowing” means a Revolving Credit Borrowing or a Competitive Bid
Borrowing.

 

 

4

          “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 Eurodollar Rate Advances or LIBO
Rate Advances, on which dealings are carried on in the London interbank
market.

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

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

          “Capitalized Lease Obligation” means at any time, the aggregate
amounts which, in accordance with GAAP, are shown as liabilities on the
balance sheet of the lessee with respect to the minimum rental commitment
under a Capitalized Lease of the lessee.

          “Code” means the Internal Revenue Code of 1986, as amended from time
to time.

          “Commitment” means a Revolving Credit Commitment or a Letter of
Credit Commitment.

          “Commonly Controlled Entity” means an entity, whether or not
incorporated, which is under common control with the Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Borrower and which is treated as a single employer under Section 414 of
the Code.

          “Competitive Bid Advance” means an advance by a Lender to the
Borrower as part of a Competitive Bid Borrowing resulting from the
competitive bidding procedure described in Section 2.03 and refers to a
Fixed Rate Advance or a LIBO Rate Advance.

          “Competitive Bid Borrowing” means a borrowing consisting of
simultaneous Competitive Bid Advances from each of the Lenders whose
offer to make one or more Competitive Bid Advances as part of such
borrowing has been accepted under the competitive bidding procedure
described in Section 2.03.

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

          “Confidential Information” means information that the Borrower
furnishes to the Agent or any Lender, but does not include any such
information that is or becomes generally available to the public or that
is or becomes available to the Agent or such Lender from a source other
than the Borrower.

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

          “Consolidated Tangible Net Worth” means at any date, the excess at
such date of total assets over total liabilities of the Borrower and its
Consolidated Subsidiaries determined in accordance with GAAP, on a
Consolidated basis, excluding, however, from the determination of total
assets (i) all goodwill, trade names, trademarks, patents, organization
expenses, unamortized debt discount and expense and other like
intangibles, (ii) to the extent not already deducted from total assets,
reserves for depreciation, depletion, obsolescence and/or amortization of
properties and all other reserves or appropriations of retained earnings
which, in accordance with GAAP, should be established in

 

 

5

connection with the business conducted by the relevant corporation,
and (iii) any revaluation or other write-up in book value of assets
subsequent to December 31, 2003 except in accordance with GAAP.

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

          “Convert”, “Conversion” and “Converted” each refers to a conversion
of Revolving Credit Advances of one Type into Revolving Credit Advances
of the other Type pursuant to Section 2.09 or 2.10.

          “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.

          “Domestic Lending Office” means, with respect to any Lender, the
office of such Lender specified as its “Domestic Lending Office” opposite
its name on Schedule I hereto or in the Assignment and 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 Borrower and the
Agent.

          “EBITDA” means, for any period, operating income or loss of the
Borrower and its Consolidated Subsidiaries adjusted to (i) exclude
depreciation, depletion and amortization expenses, (ii) exclude non-cash
expenses resulting from the grant of stock options and restricted stock
to management and employees of the Borrower and its Consolidated
Subsidiaries for such period, (iii) exclude non-cash Special Items and
Provisions (e.g., asset impairments and write-downs), in each case
determined in accordance with GAAP for such period, (iv) exclude gains or
losses from the sale of assets designated as Special Items and Provisions
for such period, (v) exclude provisions for environmental obligations
designated as Special Items and Provisions for such period and (vi)
include the effect of cash received or paid during such period for
environmental obligations designated as Special Items and Provisions for
such period.

          “Effective Date” has the meaning specified in Section 3.01.

          “Eligible Assignee” means (i) a Lender; (ii) an Affiliate of a
Lender; and (iii) any other bank or financial institution other than an
Affiliate of the Borrower.

          “Environmental Action” means any action, suit, demand, demand
letter, claim, notice of non-compliance or violation, notice of liability
or potential liability, investigation, proceeding, consent order or
consent agreement relating in any way to any Environmental Law,
Environmental Permit or Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment,
including, without limitation, (a) by any governmental or regulatory
authority for enforcement, cleanup, removal, response, remedial or other
actions or damages and (b) by any governmental or regulatory authority or
any third party for damages, contribution, indemnification, cost
recovery, compensation or injunctive relief.

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

 

 

6

          “Environmental Permit” means any permit, approval, identification
number, license or other authorization required under any Environmental
Law.

          “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended from time to time.

          “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.

          “Eurodollar Lending Office” means, with respect to any Lender, the
office of such Lender specified as its “Eurodollar Lending Office”
opposite its name on Schedule I hereto or in the Assignment and
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 Borrower and
the Agent.

          “Eurodollar Rate” means, for any Interest Period for each Eurodollar
Rate Advance comprising part of the same Revolving Credit Borrowing, an
interest rate per annum equal to the rate per annum obtained by dividing
(a) the rate per annum (rounded upward to the nearest whole multiple of
1/32 of 1% per annum) appearing on Moneyline Telerate Markets Page 3750
(or any successor page) as the London interbank offered rate for deposits
in U.S. dollars at approximately 11:00 A.M. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable
to such Interest Period or, if for any reason such rate is not available,
the average (rounded upward to the nearest whole multiple of 1/32 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 Eurodollar Rate Advance comprising part of
such Revolving Credit Borrowing to be outstanding during such Interest
Period and for a period equal to such Interest Period by (b) a percentage
equal to 100% minus the Eurodollar Rate Reserve Percentage for such
Interest Period. If Moneyline Telerate Markets Page 3750 (or any
successor page) is unavailable, the Eurodollar Rate for any Interest
Period for each Eurodollar Rate Advance comprising part of the same
Revolving Credit Borrowing shall be determined by the Agent on the basis
of applicable rates furnished to and received by the Agent from the
Reference Banks two Business Days before the first day of such Interest
Period, subject, however, to the provisions of Section 2.09.

          “Eurodollar Rate Advance” means a Revolving Credit Advance that
bears interest as provided in Section 2.08(a)(ii).

          “Eurodollar Rate Reserve Percentage” for any Interest Period for all
Eurodollar Rate Advances or LIBO Rate Advances comprising part of the
same Borrowing means the reserve percentage applicable 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 Eurodollar Rate Advances or LIBO Rate Advances is
determined) having a term equal to such Interest Period.

          “Events of Default” has the meaning specified in Section 6.01.

 

 

7

          “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 Agent from three Federal funds brokers of recognized standing
selected by it.

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

          “Fixed Rate Advances” has the meaning specified in Section
2.03(a)(i).

          “GAAP” means generally accepted accounting principles in the United
States of America in effect from time to time.

          “Governmental Authority” means any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government.

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

          “Hazardous Materials” means (a) petroleum and petroleum products, by
products or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls,
ureaformaldehyde and radon gas and (b) any other chemicals, materials,
substances or wastes designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.

          “Indebtedness” of a Person, at a particular date, means (without
duplication) the following: (a) all items of indebtedness which in
accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet of such Person as at
such date, (b) indebtedness for the repayment of borrowed money secured
by any Mortgage existing on a Principal Property owned subject to such
Mortgage, whether or not the indebtedness secured thereby shall have been
assumed, (c) Guarantees, (d) Capitalized Lease Obligations and (e)
Production Payments, provided, however, that the term “Indebtedness”
shall not include liabilities in respect of advance payments made under
contracts for the sale of goods and/or services, or lease obligations
other than Capitalized Lease Obligations, or guarantees of any such
liabilities or lease obligations.

 

 

8

          “Indebtedness for Money Borrowed” of a Person, at a particular date,
means the sum (without duplication) of the following (a) all
Indebtedness, whether or not represented by bonds, debentures, notes,
commercial paper or other securities, for the repayment of borrowed
money, (b) all deferred obligations for the payment of the purchase price
of property or assets purchased and secured by a purchase money mortgage,
conditional sale agreement, security agreement or any title retention
agreement, (c) Indebtedness of the character described in clauses (b) and
(c) of the definition of “Indebtedness” if such Indebtedness relates to
Indebtedness for Money Borrowed of others, (d) Capitalized Lease
Obligations and (e) Production Payments.

          “Information Memorandum” means the information memorandum dated
March 16, 2004 used by the Agent in connection with the syndication of
the Commitments.

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

          “Insolvent” means pertaining to a condition of Insolvency.

          “Interest Period” means, for each Eurodollar Rate Advance comprising
part of the same Revolving Credit Borrowing and each LIBO Rate Advance
comprising part of the same Competitive Bid Borrowing, the period
commencing on the date of such Eurodollar Rate Advance or LIBO Rate
Advance or the date of the Conversion of any Base Rate Advance into such
Eurodollar Rate Advance and ending on the last day of the period selected
by the Borrower pursuant to the provisions below and, thereafter, with
respect to Eurodollar Rate Advances, 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 Borrower pursuant to the
provisions below. The duration of each such Interest Period shall be
one, two, three or six months or if available by all Lenders, nine or
twelve months, as the Borrower may, upon notice received by the Agent not
later than 2:00 P.M. (New York City time) on the third Business Day prior
to the first day of such Interest Period, select; provided, however, that

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

          (ii) Interest Periods commencing on the same date for
Eurodollar Rate Advances comprising part of the same Revolving
Credit Borrowing or for LIBO Rate Advances comprising part of the
same Competitive Bid 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, however, 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 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.

 

 

9

          “Issuing Bank” means an Initial Issuing Bank or any Eligible
Assignee to which a portion of the Letter of Credit Commitment hereunder
has been assigned pursuant to Section 8.07 so long as such Eligible
Assignee expressly agrees to 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 an Issuing Bank and notifies the Agent of its
Applicable Lending Office (which information shall be recorded by the
Agent in the Register), for so long as such Initial Issuing Bank or
Eligible Assignee, as the case may be, shall have a Letter of Credit
Commitment.

          “L/C Cash Deposit Account” means an interest bearing cash deposit
account to be established and maintained by the Agent, over which the
Agent shall have sole dominion and control, upon terms as may be
satisfactory to the Agent.

          “L/C Related Documents” has the meaning specified in Section
2.07(b)(i).

          “Lease” or “lease” means any lease or other similar arrangement for
the use of property and “lessee” thereunder shall include any lessee or
user thereunder.

          “Lenders” means the Initial Lenders, each Issuing Bank and each
Person that shall become a party hereto pursuant to Section 8.07.

          “Letter of Credit” has the meaning specified in Section 2.01(b).

          “Letter of Credit Agreement” has the meaning specified in Section
2.04(a).

          “Letter of Credit Commitment” means, with respect to each Issuing
Bank, the obligation of such Issuing Bank to issue Letters of Credit for
the account of the Borrower and its specified Subsidiaries in (a) the
maximum aggregate amount set forth opposite the Issuing Bank’s name on
the signature pages hereto under the caption “Letter of Credit
Commitment” or (b) if such Issuing Bank has entered into one or more
Assignment and Acceptances, the amount set forth for such Issuing Bank in
the Register maintained by the Agent pursuant to Section 8.07(d) as such
Issuing Bank’s “Letter of Credit Commitment”, in each case as such amount
may be reduced prior to such time pursuant to Section 2.06.

          “Letter of Credit Facility” means, at any time, an amount equal to
the least of (a) the aggregate amount of the Issuing Banks’ Letter of
Credit Commitments at such time, (b) $300,000,000 and (c) the aggregate
amount of the Revolving Credit Commitments, as such amount may be reduced
at or prior to such time pursuant to Section 2.06.

          “LIBO Rate” means, for any Interest Period for all LIBO Rate
Advances comprising part of the same Competitive Bid Borrowing, an
interest rate per annum equal to the rate per annum obtained by dividing
(a) the rate per annum (rounded upward to the nearest whole multiple of
1/32 of 1% per annum) appearing on Moneyline Telerate Markets Page 3750
(or any successor page) as the London interbank offered rate for deposits
in U.S. dollars at approximately 11:00 A.M. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable
to such Interest Period or, if for any reason such rate is not available,
the average (rounded upward to the nearest whole multiple of 1/32 of 1%
per annum, if such average is not such a multiple) of the rate per annum
at which deposits in U.S. dollars 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 the
amount that would be the Reference Banks’ respective ratable shares of
such Borrowing if such Borrowing were to be a Revolving Credit Borrowing
to be outstanding during such Interest Period and

 

 

10

for a period equal to
such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage for such Interest Period. If the Moneyline Telerate
Markets Page 3750 (or any successor page) is unavailable, the LIBO Rate
for any Interest Period for each LIBO Rate Advance comprising part of the
same Competitive Bid Borrowing shall be determined by the Agent on the
basis of applicable rates furnished to and received by the Agent from the
Reference Banks two Business Days before the first day of such Interest
Period, subject, however, to the provisions of Section 2.09.

          “LIBO Rate Advances” means a Competitive Bid Advance bearing
interest based on the LIBO Rate.

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

          “Loan Documents” means this Agreement and the Notes.

          “Material Adverse Change” means a material adverse change in the
financial condition of the Borrower and its Consolidated Subsidiaries
taken as a whole from that reflected in the Borrower’s Consolidated
balance sheet as at December 31, 2003 referred to in Section 4.01(a).

          “Mortgage” means any mortgage, pledge, lien or other security
interest.

          “Moody’s” means Moody’s Investors Service, Inc.

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

          “Note” means a Revolving Credit Note or a Competitive Bid Note.

          “Notice of Competitive Bid Borrowing” has the meaning specified in
Section 2.03(a).

          “Notice of Issuance” has the meaning specified in Section 2.04(a).

          “Notice of Revolving Credit Borrowing” has the meaning specified in
Section 2.02(a).

          “PBGC” means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.

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

          “Principal Domestic Subsidiary” means each of the Subsidiaries
designated as a “Principal Domestic Subsidiary” on Schedule II attached
hereto.

 

 

11

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

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

          “Public Debt Rating” means, as of any date, the rating that has been
most recently announced by either S&P or Moody’s, as the case may be, for
any class of non-credit enhanced long-term senior unsecured debt issued
by the Borrower. For purposes of the foregoing, (a) if only one of S&P
and Moody’s shall have in effect a Public Debt Rating, the Applicable
Margin, the Applicable Percentage and the Applicable Utilization Fee
shall be determined by reference to the available rating; (b) if neither
S&P nor Moody’s shall have in effect a Public Debt Rating, the Applicable
Margin and the Applicable Percentage will be set in accordance with Level
5 under the definition of “Applicable Margin”, “Applicable Percentage” or
“Applicable Utilization Fee”, as the case may be; (c) if the ratings
established by S&P and Moody’s shall fall within different levels, the
Applicable Margin, the Applicable Percentage and the Applicable
Utilization Fee shall be based upon the higher rating except if the lower
of such ratings is more than one level below the higher of such ratings,
the Applicable Margin, the Applicable Percentage and the Applicable
Utilization Fee shall be set at the level that is one level above the
lower of such ratings; (d) if any rating established by S&P or Moody’s
shall be changed, such change shall be effective as of the date on which
such change is first announced publicly by the rating agency making such
change; and (e) if S&P or Moody’s shall change the basis on which ratings
are established, each reference to the Public Debt Rating announced by
S&P or Moody’s, as the case may be, shall refer to the then equivalent
rating by S&P or Moody’s, as the case may be.

          “Ratable Share” of any amount means, with respect to any Lender at
any time, the product of such amount times a fraction the numerator of
which is the amount of such Lender’s Revolving Credit Commitment at such
time (or, if the Revolving Credit Commitments shall have been terminated
pursuant to Section 2.06 or 6.01, such Lender’s Revolving Credit
Commitment as in effect immediately prior to such termination) and the
denominator of which is the aggregate amount of all Revolving Credit
Commitments at such time (or, if the Revolving Credit Commitments shall
have been terminated pursuant to Section 2.06 or 6.01, the aggregate
amount of all Revolving Credit Commitments as in effect immediately prior
to such termination).

          “Reference Banks” means Citibank, Wachovia Bank, National
Association and JPMorgan Chase Bank.

          “Register” has the meaning specified in Section 8.07(d).

 

 

12

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

          “Reportable Event” means any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .12, .13, .14, .16, .18, .19 or
..20 of PBGC Reg. SS2615.

          “Required Lenders” means at any time Lenders owed at least a
majority in interest of the then aggregate unpaid principal amount of the
Revolving Credit Advances owing to Lenders, or, if no such principal
amount is then outstanding, Lenders having at least a majority in
interest of the Revolving Credit Commitments or, if no Revolving Credit
Advances are outstanding and the Revolving Credit Commitments have been
terminated, Lenders having at least a majority in interest of the
Competitive Bid Advances, if any, then outstanding.

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

          “Responsible Officer” means the chief executive officer, the
president or any vice-president of the Borrower or, with respect to
financial matters, the chief financial officer, any vice-president with
responsibility primarily for accounting or financial matters, the
treasurer or the controller of the Borrower.

          “Revolving Credit Advance” means an advance by a Lender to the
Borrower as part of a Revolving Credit Borrowing and refers to a Base
Rate Advance or a Eurodollar Rate Advance (each of which shall be a
“Type” of Revolving Credit Advance).

          “Revolving Credit Borrowing” means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type made by each of
the Lenders pursuant to Section 2.01.

          “Revolving Credit Commitment” means as to any Lender (a) the amount
set forth opposite such Lender’s name on the signature pages hereof as
such Lender’s “Revolving Credit Commitment” or (b) if such Lender has
entered into any Assignment and Acceptance, the amount set forth for such
Lender in the Register maintained by the Agent pursuant to Section
8.07(d), as such amount may be reduced pursuant to Section 2.06.

          “Revolving Credit Note” means a promissory note of the Borrower
payable to the order of any Lender, delivered pursuant to a request made
under Section 2.17 in substantially the form of Exhibit A-1 hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Revolving Credit Advances made by such Lender.

          “S&P” means Standard & Poor’s, a division of The McGraw-Hill
Companies, Inc.

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

 

 

13

or the cost or obligations involving constructing or
improving the property subject to such arrangement.

          “Single Employer Plan” means any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.

          “Special Items and Provisions” means charges or credits to income
that are unpredictable and atypical of the Borrower’s operations in a
given period.

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

          “Termination Date” means the earlier of (a) April 20, 2009 and (b)
the date of termination in whole of the Commitments pursuant to Section
2.06 or 6.01.

          “Total Capitalization” means, at any date, the sum of Consolidated
Tangible Net Worth at such date and Indebtedness for Money Borrowed of
the Borrower and its Consolidated Subsidiaries determined on a
Consolidated basis in accordance with GAAP at such date.

          “Unissued Letter of Credit Commitment” means, with respect to any
Issuing Bank, the obligation of such Issuing Bank to issue Letters of
Credit for the account of the Borrower or its specified Subsidiaries in
an amount equal to the excess of (a) the amount of its Letter of Credit
Commitment over (b) the aggregate Available Amount of all Letters of
Credit issued by such Issuing Bank.

          “Unused Commitment” means, with respect to each Lender at any time,
(a) such Lender’s Revolving Credit Commitment at such time minus (b) the
sum of (i) the aggregate principal amount of all Revolving Credit
Advances made by such Lender (in its capacity as a Lender) and
outstanding at such time, plus (ii) such Lender’s Ratable Share of (A)
the aggregate Available Amount of all the Letters of Credit outstanding
at such time, (B) the aggregate principal amount of all Revolving Credit
Advances made by each Issuing Bank pursuant to Section 2.04(c) that have
not been ratably funded by such Lender and outstanding at such time and
(C) the aggregate principal amount of Competitive Bid Advances then
outstanding.

          “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.

               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”.

 

 

14

               SECTION 1.03 Accounting Terms. 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(a).

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT

               SECTION 2.01 The Revolving Credit Advances and Letters of Credit. (a)
The Revolving Credit Advances. Each Lender severally agrees, on the terms and
conditions hereinafter set forth, to make Revolving Credit Advances to the
Borrower from time to time on any Business Day during the period from the
Effective Date until the Termination Date in an amount not to exceed such
Lender’s Unused Commitment. Each Revolving Credit Borrowing shall be in an
aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof and shall consist of Revolving Credit Advances of the same Type made on
the same day by the Lenders ratably according to their respective Revolving
Credit Commitments. Within the limits of each Lender’s Revolving Credit
Commitment, the Borrower may borrow under this Section 2.01(a), prepay pursuant
to Section 2.11 and reborrow under this Section 2.01(a).

               (b) Letters of Credit. Each Issuing Bank agrees, on the terms and
conditions hereinafter set forth, in reliance upon the agreements of the other
Lenders set forth in this Agreement, to issue letters of credit (each, a
“Letter of Credit”) for the account of the Borrower and its specified
Subsidiaries from time to time on any Business Day during the period from the
Effective Date until 30 days before the Termination Date in an aggregate
Available Amount (i) for all Letters of Credit issued by each Issuing Bank not
to exceed at any time the lesser of (x) the Letter of Credit Facility at such
time and (y) such Issuing Bank’s Letter of Credit Commitment at such time and
(ii) for each such Letter of Credit not to exceed an amount equal to the Unused
Commitments of the Lenders at such time. No Letter of Credit shall have an
expiration date (including all rights of the Borrower or the beneficiary to
require renewal) later than 10 Business Days before the Termination Date.
Within the limits referred to above, the Borrower may from time to time request
the issuance of Letters of Credit under this Section 2.01(b). Each letter of
credit listed on Schedule 2.01(b) shall be deemed to constitute a Letter of
Credit issued hereunder, and each Lender that is an issuer of such a Letter of
Credit shall, for purposes of Section 2.04, be deemed to be an Issuing Bank for
each such letter of credit, provided than any renewal or replacement of any
such letter of credit shall be issued by an Issuing Bank pursuant to the terms
of this Agreement. The terms “issue”, “issued”, “issuance” and all similar
terms, when applied to a Letter of Credit, shall include any renewal, extension
or amendment thereof.

               SECTION 2.02 Making the Revolving Credit Advances. (a) Except as
otherwise provided in Section 2.04(c), each Revolving Credit Borrowing shall be
made on notice, given not later than (x) 2:00 P.M. (New York City time) on the
third Business Day prior to the date of the proposed Revolving Credit Borrowing
in the case of a Revolving Credit Borrowing consisting of Eurodollar Rate
Advances or (y) 11:00 A.M. (New York City time) on the date of the proposed
Revolving Credit Borrowing in the case of a Revolving Credit Borrowing
consisting of Base Rate Advances, by the Borrower to the Agent, which shall
give to each Lender prompt notice thereof by telecopier or telex. Each such
notice of a Revolving Credit Borrowing (a “Notice of Revolving Credit
Borrowing”) shall be by telephone, confirmed immediately in writing, or
telecopier or telex in substantially the form of Exhibit B-1 hereto, specifying
therein the requested (i) date of such Revolving Credit Borrowing, (ii) Type of
Advances comprising such Revolving Credit Borrowing, (iii) aggregate amount of
such Revolving Credit Borrowing, and (iv) in the case of a Revolving Credit
Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for
each such Revolving Credit Advance. Each Lender shall, before 1:00 P.M. (New
York City time) on the date of such Revolving Credit Borrowing make available
for the account of its Applicable Lending Office to the Agent at the Agent’s
Account, in same day funds, such Lender’s ratable portion of such Revolving
Credit Borrowing. After the Agent’s receipt of such funds and upon fulfillment
of the applicable conditions set forth in Article III, the Agent will make such
funds available to the Borrower at the Agent’s address referred to in Section
8.02.

 

 

15

               (b) Anything in subsection (a) above to the contrary notwithstanding, (i)
the Borrower may not select Eurodollar Rate Advances for any Revolving Credit
Borrowing if the aggregate amount of such Revolving Credit Borrowing is less
than $5,000,000 or if the obligation of the Lenders to make Eurodollar Rate
Advances shall then be suspended pursuant to Section 2.09 or 2.13 and (ii) the
Eurodollar Rate Advances may not be outstanding as part of more than ten
separate Revolving Credit Borrowings.

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

               (d) Unless the Agent shall have received notice from a Lender prior to the
date of any Revolving Credit Borrowing that such Lender will not make available
to the Agent such Lender’s ratable portion of such Revolving Credit Borrowing,
the Agent may assume that such Lender has made such portion available to the
Agent on the date of such Revolving Credit Borrowing in accordance with
subsection (a) of this Section 2.02 and the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent that such Lender shall not have so made such ratable
portion available to the Agent, such Lender and the Borrower severally agree to
repay to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Agent, at (i) in the
case of the Borrower, the interest rate applicable at the time to Revolving
Credit Advances comprising such Revolving Credit Borrowing and (ii) in the case
of such Lender, the Federal Funds Rate. If such Lender shall repay to the Agent
such corresponding amount, such amount so repaid shall constitute such Lender’s
Revolving Credit Advance as part of such Revolving Credit Borrowing for
purposes of this Agreement.

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

               SECTION 2.03 The Competitive Bid Advances. (a) Each Lender severally
agrees that the Borrower may make Competitive Bid Borrowings under this Section
2.03 from time to time on any Business Day during the period from the date
hereof until the date occurring 30 days prior to the Termination Date in the
manner set forth below; provided that, following the making of each Competitive
Bid Borrowing, the aggregate amount of the Advances plus the Available Amount
of Letters of Credit then outstanding shall not exceed the aggregate amount of
the Revolving Credit Commitments of the Lenders.

          (i) The Borrower may request a Competitive Bid Borrowing under this
Section 2.03 by delivering to the Agent, by telecopier or telex, a notice
of a Competitive Bid Borrowing (a “Notice of Competitive Bid Borrowing”),
in substantially the form of Exhibit B-2 hereto, specifying therein the
requested (v) date of such proposed Competitive Bid Borrowing, (w)
aggregate amount of such proposed Competitive Bid Borrowing, (x) in the
case of a Competitive Bid Borrowing consisting of LIBO Rate Advances,
Interest Period, or in the case of a Competitive Bid Borrowing consisting
of Fixed Rate Advances, maturity date for repayment of each Fixed Rate
Advance to be made as part of such Competitive Bid Borrowing (which
maturity date may not be earlier than the date occurring 7 days after
the date of such Competitive Bid Borrowing or later than the
Termination Date), (y) interest

 

 

16

payment date or dates relating thereto,
and (z) other terms (if any) to be applicable to such Competitive Bid
Borrowing, not later than 2:00 P.M. (New York City time) (A) at least one
Business Day prior to the date of the proposed Competitive Bid Borrowing,
if the Borrower shall specify in the Notice of Competitive Bid Borrowing
that the rates of interest to be offered by the Lenders shall be fixed
rates per annum (the Advances comprising any such Competitive Bid
Borrowing being referred to herein as “Fixed Rate Advances”) and (B) at
least four Business Days prior to the date of the proposed Competitive
Bid Borrowing, if the Borrower shall instead specify in the Notice of
Competitive Bid Borrowing that the Advances comprising such Competitive
Bid Borrowing shall be LIBO Rate Advances. Each Notice of Competitive
Bid Borrowing shall be irrevocable and binding on the Borrower. The
Agent shall in turn promptly notify each Lender of each request for a
Competitive Bid Borrowing received by it from the Borrower by sending
such Lender a copy of the related Notice of Competitive Bid Borrowing.

          (ii) Each Lender may, if, in its sole discretion, it elects to do
so, irrevocably offer to make one or more Competitive Bid Advances to the
Borrower as part of such proposed Competitive Bid Borrowing at a rate or
rates of interest specified by such Lender in its sole discretion, by
notifying the Agent (which shall give prompt notice thereof to the
Borrower), (A) before 9:30 A.M. (New York City time) on the date of such
proposed Competitive Bid Borrowing, in the case of a Competitive Bid
Borrowing consisting of Fixed Rate Advances and (B) before 10:00 A.M.
(New York City time) three Business Days before the date of such proposed
Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing
consisting of LIBO Rate Advances of the minimum amount and maximum amount
of each Competitive Bid Advance which such Lender would be willing to
make as part of such proposed Competitive Bid Borrowing (which amounts of
such proposed Competitive Bid 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 Competitive Bid Advance; provided
that if the Agent in its capacity as a Lender shall, in its sole
discretion, elect to make any such offer, it shall notify the Borrower of
such offer at least 30 minutes before the time and on the date on which
notice of such election is to be given to the Agent, by the other
Lenders. If any Lender shall elect not to make such an offer, such
Lender shall so notify the Agent before 10:00 A.M. (New York City time),
and such Lender shall not be obligated to, and shall not, make any
Competitive Bid Advance as part of such Competitive Bid Borrowing;
provided that the failure by any Lender to give such notice shall be
deemed a refusal by such Lender to make any Competitive Bid Advance as
part of such proposed Competitive Bid Borrowing.

          (iii) The Borrower shall, in turn, (A) before 11:00 A.M. (New York
City time) on the date of such proposed Competitive Bid Borrowing, in the
case of a Competitive Bid Borrowing consisting of Fixed Rate Advances and
(B) before 2:00 P.M. (New York City time) three Business Days before the
date of such proposed Competitive Bid Borrowing, in the case of a
Competitive Bid Borrowing consisting of LIBO Rate Advances, either:

          (A) cancel such Competitive Bid Borrowing by giving the Agent
notice to that effect, or

          (B) accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (ii) above, in its sole discretion,
by giving notice to the Agent of the amount of each Competitive Bid
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 Borrower by the Agent on behalf of such Lender for such
Competitive Bid Advance pursuant to paragraph (ii) above) to be
made by each Lender as part of such Competitive Bid Borrowing, and
reject any remaining offers made by Lenders pursuant to paragraph
(ii) above by giving the Agent notice to that effect. The Borrower
shall accept the offers made by any Lender or Lenders to make
Competitive Bid
Advances in order of the lowest to the highest rates of
interest offered by

 

 

17

such Lenders. If two or more Lenders have
offered the same interest rate, the amount to be borrowed at such
interest rate will be allocated among such Lenders in proportion to
the largest amount that each such Lender offered at such interest
rate.

          (iv) If the Borrower notifies the Agent that such Competitive Bid
Borrowing is cancelled pursuant to paragraph (iii)(x) above, the Agent
shall give prompt notice thereof to the Lenders and such Competitive Bid
Borrowing shall not be made.

          (v) If the Borrower accepts one or more of the offers made by any
Lender or Lenders pursuant to paragraph (iii)(y) above, the 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 Competitive Bid Borrowing and whether or not any offer or offers
made by such Lender pursuant to paragraph (ii) above have been accepted
by the Borrower, (B) each Lender that is to make a Competitive Bid
Advance as part of such Competitive Bid Borrowing, of the amount of each
Competitive Bid Advance to be made by such Lender as part of such
Competitive Bid Borrowing, and (C) each Lender that is to make a
Competitive Bid Advance as part of such Competitive Bid Borrowing, upon
receipt, that the Agent has received forms of documents appearing to
fulfill the applicable conditions set forth in Article III. Each Lender
that is to make a Competitive Bid Advance as part of such Competitive Bid
Borrowing shall, before 12:00 noon (New York City time) on the date of
such Competitive Bid Borrowing specified in the notice received from the
Agent pursuant to clause (A) of the preceding sentence or any later time
when such Lender shall have received notice from the Agent pursuant to
clause (C) of the preceding sentence, make available for the account of
its Applicable Lending Office to the Agent at its address referred to in
Section 8.02, in same day funds, such Lender’s portion of such
Competitive Bid Borrowing. Upon fulfillment of the applicable conditions
set forth in Article III and after receipt by the Agent of such funds,
the Agent will make such funds available to the Borrower at the location
specified by the Borrower in its Notice of Competitive Bid Borrowing.
Promptly after each Competitive Bid Borrowing the Agent will notify each
Lender of the amount and tenor of the Competitive Bid Borrowing.

          (vi) If the Borrower notifies the Agent that it accepts one or more
of the offers made by any Lender or Lenders pursuant to paragraph
(iii)(y) above, such notice of acceptance shall be irrevocable and
binding on the Borrower. The Borrower shall indemnify each Lender
against any loss, cost or expense actually incurred by such Lender as a
result of any failure to fulfill on or before the date specified in the
related Notice of Competitive Bid Borrowing for such Competitive Bid
Borrowing the applicable conditions set forth in Article III, including,
without limitation, any loss (excluding loss of anticipated profits),
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Competitive
Bid Advance to be made by such Lender as part of such Competitive Bid
Borrowing when such Competitive Bid Advance, as a result of such failure,
is not made on such date.

               (b) Each Competitive Bid Borrowing shall be in an aggregate amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof and,
following the making of each Competitive Bid Borrowing, the Borrower shall be
in compliance with the limitation 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 Borrower may from time to time borrow under this Section 2.03, repay
or prepay pursuant to subsection (d) below, and reborrow under this Section
2.03, provided that a Competitive Bid Borrowing shall not be made within three
Business Days of the date of any other Competitive Bid Borrowing.

               (d) The Borrower shall repay to the Agent for the account of each Lender
that has made a Competitive Bid Advance, on the maturity date of each
Competitive Bid Advance (such maturity date being that
specified by the Borrower for repayment of such Competitive Bid Advance in
the related Notice of

 

 

18

Competitive Bid Borrowing delivered pursuant to
subsection (a)(i) above and provided in the Competitive Bid Note evidencing
such Competitive Bid Advance), the then unpaid principal amount of such
Competitive Bid Advance. The Borrower shall have no right to prepay any
principal amount of any Competitive Bid Advance unless, and then only on the
terms, specified by the Borrower for such Competitive Bid Advance in the
related Notice of Competitive Bid Borrowing delivered pursuant to subsection
(a)(i) above and set forth in the Competitive Bid Note evidencing such
Competitive Bid Advance.

               (e) The Borrower shall pay interest on the unpaid principal amount of each
Competitive Bid Advance from the date of such Competitive Bid Advance to the
date the principal amount of such Competitive Bid Advance is repaid in full, at
the rate of interest for such Competitive Bid Advance specified by the Lender
making such Competitive Bid Advance in its notice with respect thereto
delivered pursuant to subsection (a)(ii) above, payable on the interest payment
date or dates specified by the Borrower for such Competitive Bid Advance in the
related Notice of Competitive Bid Borrowing delivered pursuant to subsection
(a)(i) above, as provided in the Competitive Bid Note evidencing such
Competitive Bid Advance. Upon the occurrence and during the continuance of an
Event of Default under Section 6.01(a), the Borrower shall pay interest on the
amount of unpaid principal of and interest on each Competitive Bid Advance
owing to a Lender that is not paid when due, 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 Competitive Bid
Advance under the terms of the Competitive Bid Note evidencing such Competitive
Bid Advance unless otherwise agreed in such Competitive Bid Note.

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

               SECTION 2.04 Issuance of and Drawings and Reimbursement Under Letters of
Credit. (a) Request for Issuance. (i) Each Letter of Credit shall be issued
upon notice, given not later than 11:00 A.M. (New York City time) on the fifth
Business Day prior to the date of the proposed issuance of such Letter of
Credit (or on such shorter notice as the applicable Issuing Bank may agree), by
the Borrower to any Issuing Bank, and such Issuing Bank shall give the Agent,
prompt notice thereof. Each such notice by the Borrower of issuance of a
Letter of Credit (a “Notice of Issuance”) shall be by telecopier or telephone,
confirmed immediately in writing, specifying therein the requested (A) date of
such issuance (which shall be a Business Day), (B) Available Amount of such
Letter of Credit, (C) expiration date of such Letter of Credit (which shall not
be later than 10 Business Days before the Termination Date), (D) name and
address of the beneficiary of such Letter of Credit and (E) form of such Letter
of Credit, such Letter of Credit shall be issued pursuant to such application
and agreement for letter of credit as such Issuing Bank may specify to the
Borrower for use in connection with such requested Letter of Credit (a “Letter
of Credit Agreement”). If the requested form of such Letter of Credit is
acceptable to such Issuing Bank in its sole discretion, such Issuing Bank will,
upon fulfillment of the applicable conditions set forth in Article III, make

such Letter of Credit available to the Borrower at its office referred to in
Section 8.02 or as otherwise agreed with the Borrower in connection with such
issuance. In the event and to the extent that the provisions of any Letter of
Credit Agreement shall conflict with this Agreement, the provisions of this
Agreement shall govern.

               (b) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing or decreasing the amount thereof)
and without any further action on the part of the applicable Issuing Bank or
the Lenders, such Issuing Bank hereby grants to each Lender, and each Lender
hereby acquires from such Issuing Bank, a participation in such Letter of
Credit equal to such Lender’s Ratable Share of the Available Amount of such
Letter of Credit. The Borrower hereby agrees to each such participation. In
consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Agent, for the account of
such Issuing Bank, such Lender’s Ratable Share of each drawing made under
a Letter of Credit funded by such Issuing Bank and not reimbursed by the
Borrower on the date made, or of any reimbursement payment required to be
refunded to the Borrower for any reason, which amount will be

 

19

advanced, and
deemed to be a Revolving Credit Advance to the Borrower hereunder, regardless
of the satisfaction of the conditions set forth in Section 3.02. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Revolving Credit
Commitments, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever. Each Lender further
acknowledges and agrees that its participation in each Letter of Credit will be
automatically adjusted to reflect such Lender’s Ratable Share of the Available
Amount of such Letter of Credit at each time such Lender’s Revolving Credit
Commitment is amended pursuant to an assignment in accordance with Section 8.07
or otherwise pursuant to this Agreement.

               (c) Drawing and Reimbursement. The payment by an Issuing Bank of a draft
drawn under any Letter of Credit which is not reimbursed by the Borrower on the
date made shall constitute for all purposes of this Agreement the making by any
such Issuing Bank of a Revolving Credit Advance, which shall be a Base Rate
Advance, in the amount of such draft, without regard to whether the making of
such a Revolving Credit Advance would exceed such Issuing Bank’s Unused
Commitment. Each Issuing Bank shall give prompt notice of each drawing under
any Letter of Credit issued by it to the Borrower and the Agent. Upon written
demand by such Issuing Bank, with a copy of such demand to the Agent and the
Borrower, each Lender shall pay to the Agent such Lender’s Ratable Share of
such outstanding Revolving Credit Advance pursuant to Section 2.04(b). Each
Lender acknowledges and agrees that its obligation to make Revolving Credit
Advances pursuant to this paragraph in respect of Letters of Credit is absolute
and unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Letter of Credit or the
occurrence and continuance of a Default or reduction or termination of the
Revolving Credit Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever. Promptly after
receipt thereof, the Agent shall transfer such funds to such Issuing Bank.
Each Lender agrees to fund its Ratable Share of an outstanding Revolving Credit
Advance on (i) the Business Day on which demand therefor is made by such
Issuing Bank, provided that notice of such demand is given not later than 11:00
A.M. (New York City time) on such Business Day, or (ii) the first Business Day
next succeeding such demand if notice of such demand is given after such time.
If and to the extent that any Lender shall not have so made the amount of such
Revolving Credit Advance available to the Agent, such Lender agrees to pay to
the Agent forthwith on demand such amount together with interest thereon, for
each day from the date of demand by any such Issuing Bank until the date such
amount is paid to the Agent, at the Federal Funds Rate for its account or the
account of such Issuing Bank, as applicable. If such Lender shall pay to the
Agent such amount for the account of any such Issuing Bank on any Business Day,
such amount so paid in respect of principal shall constitute a Revolving Credit
Advance made by such Lender on such Business Day for purposes of this
Agreement, and the outstanding principal amount of the Revolving Credit Advance
made by such Issuing Bank shall be reduced by such amount on such Business Day.

               (d) Letter of Credit Reports. Each Issuing Bank shall furnish (A) to the
Agent and each Lender on the first Business Day of each month a written report
summarizing issuance and expiration dates of Letters of Credit during the
preceding month and drawings during such month under all Letters of Credit and
(B) to the Agent and each Lender on the first Business Day of each calendar
quarter a written report setting forth the average daily aggregate Available
Amount during the preceding calendar quarter of all Letters of Credit.

               (e) Failure to Make Advances. The failure of any Lender to make the
Revolving Credit Advance to be made by it on the date specified in Section
2.04(c) shall not relieve any other Lender of its obligation hereunder to make
its Revolving Credit Advance on such date, but no Lender shall be responsible
for
the failure of any other Lender to make the Revolving Credit Advance to be
made by such other Lender on such date.

 

 

20

               SECTION 2.05 Fees. (a) Facility Fee. The Borrower agrees to pay to the
Agent for the account of each Lender a facility fee on the aggregate amount of
such Lender’s Revolving Credit Commitment from the Effective Date in the case
of each Initial Lender and from the effective date specified in the Assignment
and Acceptance pursuant to which it became a Lender in the case of each other
Lender until the Termination Date at a rate per annum equal to the Applicable
Percentage in effect from time to time, payable in arrears quarterly on the
last day of each March, June, September and December, commencing June 30, 2004,
and on the Termination Date.

               (b) Letter of Credit Fees. (i) The Borrower shall pay to the Agent for
the account of each Lender a commission on such Lender’s Ratable Share of the
average daily aggregate Available Amount of all Letters of Credit and
outstanding from time to time at a rate per annum equal to the Applicable
Margin for Eurocurrency Rate Advances in effect from time to time plus the
Applicable Utilization Fee, if any, during such calendar quarter, payable in
arrears quarterly on the last day of each March, June, September and December,
commencing with the quarter ended June 30, 2004, and on the Termination Date;
provided that the Applicable Margin shall be 2% above the Applicable Margin in
effect upon the occurrence and during the continuation of an Event of Default
if the Borrower is required to pay default interest pursuant to Section
2.08(b).

          (ii) The Borrower shall pay to each Issuing Bank, for its own
account, a fronting fee of 0.125% of the Available Amount of each Letter
of Credit issued by such Issuing Bank, on the date of such issuance, and
such other commissions, issuance fees, transfer fees and other fees and
charges in connection with the issuance or administration of each Letter
of Credit as the Borrower and such Issuing Bank shall agree.

               (c) Agent’s Fees. The Borrower shall pay to the Agent for its own account
such fees as may from time to time be agreed between the Borrower and the
Agent.

               SECTION 2.06 Optional Termination or Reduction of the Commitments. The
Borrower shall have the right, upon at least one Business Day’s notice to the
Agent, to permanently terminate in whole or reduce ratably in part the Unused
Commitments or the Unissued Letter of Credit Commitments of the Lenders,
provided that each partial reduction shall be in the aggregate amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof.

               SECTION 2.07 Repayment of Revolving Credit Advances and Letter of Credit
Drawings. (a) The Borrower shall repay to the Agent for the ratable account
of the Lenders on the Termination Date the aggregate principal amount of the
Revolving Credit Advances then outstanding.

               (b) The obligations of the Borrower under any Letter of Credit Agreement
and any other agreement or instrument relating to any Letter of Credit shall be
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement, such Letter of Credit Agreement and such other
agreement or instrument under all circumstances, including, without limitation,
the following circumstances (it being understood that any such payment by the
Borrower is without prejudice to, and does not constitute a waiver of, any
rights the Borrower might have or might acquire as a result of the payment by
any Lender of any draft or the reimbursement by the Borrower thereof):

          (i) any lack of validity or enforceability of this Agreement, any
Note, any Letter of Credit Agreement, any Letter of Credit or any other
agreement or instrument relating thereto (all of the foregoing being,
collectively, the “L/C Related Documents”);

          (ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations of the Borrower in
respect of any L/C Related Document or any other amendment or waiver of
or any consent to departure from all or any of the L/C Related Documents;

 

 

21

          (iii) the existence of any claim, set-off, defense or other right
that the Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Persons for which any such
beneficiary or any such transferee may be acting), any Issuing Bank, any
Agent, any Lender or any other Person, whether in connection with the
transactions contemplated by the L/C Related Documents or any unrelated
transaction;

          (iv) any statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;

          (v) payment by any Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not strictly comply with
the terms of such Letter of Credit;

          (vi) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any
guarantee, for all or any of the obligations of the Borrower in respect
of the L/C Related Documents; or

          (vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower or a guarantor.

Notwithstanding the foregoing, any Issuing Bank paying any draft under a Letter
of Credit shall remain responsible to the Borrower for its own gross negligence
or willful misconduct.

               SECTION 2.08 Interest on Revolving Credit Advances. (a) Scheduled
Interest. The Borrower shall pay interest on the unpaid principal amount of
each Revolving Credit Advance owing to each Lender from the date of such
Revolving Credit 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 Revolving
Credit Advance is a Base Rate Advance, a rate per annum equal at all
times to the sum of (x) the Base Rate in effect from time to time plus
(y) the Applicable Margin in effect from time to time plus (z) the
Applicable Utilization Fee, if any, 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) Eurodollar Rate Advances. During such periods as such
Revolving Credit Advance is a Eurodollar Rate Advance, a rate per annum
equal at all times during each Interest Period for such Revolving Credit
Advance to the sum of (x) the Eurodollar Rate for such Interest Period
for such Revolving Credit Advance plus (y) the Applicable Margin in
effect from time to time plus (z) the Applicable Utilization Fee, if any,
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 Eurodollar Rate Advance shall be Converted or paid in full.

               (b) Default Interest. Upon the occurrence and during the continuance of
an Event of Default under Section 6.01(a), the Borrower shall pay interest on
(i) the unpaid principal amount of each Revolving Credit Advance owing to each
Lender that is not paid when due, 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 Revolving
Credit Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the
fullest extent permitted by law, the amount of any interest, fee or other
amount payable hereunder that is not paid when due, from the date such amount
shall be due until such amount shall be paid in

 

 

22

full, payable in arrears on the
date such amount shall be paid in full and on demand, at a rate per annum equal
at all times to 2% per annum above the rate per annum required to be paid on
Base Rate Advances pursuant to clause (a)(i) above.

               SECTION 2.09 Interest Rate Determination. (a) Each Reference Bank agrees
to furnish to the Agent timely information for the purpose of determining each
Eurodollar Rate and each LIBO Rate. If any one or more of the Reference Banks
shall not furnish such timely information to the Agent for the purpose of
determining any such interest rate, the Agent shall determine such interest
rate on the basis of timely information furnished by the remaining Reference
Banks. The Agent shall give prompt notice to the Borrower and the Lenders of
the applicable interest rate determined by the Agent for purposes of Section
2.08(a)(i) or (ii), and the rate, if any, furnished by each Reference Bank for
the purpose of determining the interest rate under Section 2.08(a)(ii).

               (b) If, with respect to any Eurodollar Rate Advances, the Required Lenders
notify the Agent that the Eurodollar Rate for any Interest Period for such
Advances will not adequately reflect the cost to such Required Lenders of
making, funding or maintaining their respective Eurodollar Rate Advances for
such Interest Period, the Agent shall forthwith so notify the Borrower and the
Lenders, whereupon (i) each Eurodollar Rate Advance 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
Revolving Credit Advances into, Eurodollar Rate Advances shall be suspended
until the Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist.

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

               (d) On the date on which the aggregate unpaid principal amount of
Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment or otherwise, to less than $5,000,000, such Advances shall
automatically Convert into Base Rate Advances.

               (e) Upon the occurrence and during the continuance of any Event of Default
under Section 6.01(a), (i) each Eurodollar Rate Advance 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
Advances into, Eurodollar Rate Advances shall be suspended.

               (f) If Moneyline Telerate Markets Page 3750 is unavailable and fewer than
two Reference Banks furnish timely information to the Agent for determining the
Eurodollar Rate or LIBO Rate for any Eurodollar Rate Advances or LIBO Rate
Advances, as the case may be,

          (i) the Agent shall forthwith notify the Borrower and the Lenders
that the interest rate cannot be determined for such Eurodollar Rate
Advances or LIBO Rate Advances, as the case may be,

          (ii) with respect to Eurodollar Rate Advances, each such Advance
will automatically, on the last day of the then existing Interest Period
therefor, be prepaid by the Borrower or be automatically Converted 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 Eurodollar Rate Advances
or LIBO Rate Advances or to Convert Revolving Credit Advances into
Eurodollar Rate Advances shall be suspended
until the Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist.

 

 

23

               SECTION 2.10 Optional Conversion of Revolving Credit Advances. The
Borrower may on any Business Day, upon notice given to the Agent not later than
2:00 P.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 2.09 and
2.13, Convert all Revolving Credit Advances of one Type comprising the same
Borrowing into Revolving Credit Advances of the other Type; provided, however,
that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall
be made only on the last day of an Interest Period for such Eurodollar Rate
Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances
shall be in an amount not less than the minimum amount specified in Section
2.02(b) and no Conversion of any Revolving Credit Advances shall result in more
separate Revolving Credit Borrowings than permitted under Section 2.02(b).
Each such notice of a Conversion shall, within the restrictions specified
above, specify (i) the date of such Conversion, (ii) the Revolving Credit
Advances to be Converted, and (iii) if such Conversion is into Eurodollar Rate
Advances, the duration of the initial Interest Period for each such Advance.
Each notice of Conversion shall be irrevocable and binding on the Borrower.

     SECTION 2.11 Prepayments of Revolving Credit Advances. The Borrower may,
upon notice at least two Business Days’ prior to the date of such prepayment,
in the case of Eurodollar Rate Advances, and not later than 2:00 P.M. (New York
City time) on the date of such prepayment, in the case of Base Rate Advances,
to the Agent stating the proposed date and aggregate principal amount of the
prepayment, and if such notice is given the Borrower shall, prepay the
outstanding principal amount of the Revolving Credit Advances comprising part
of the same Revolving Credit Borrowing in whole or ratably in part, together
with accrued interest to the date of such prepayment on the principal amount
prepaid; provided, however, that (x) each partial prepayment shall be in an
aggregate principal amount of $5,000,000 or an integral multiple of $1,000,000
in excess thereof and (y) in the event of any such prepayment of a Eurodollar
Rate Advance, the Borrower shall be obligated to reimburse the Lenders in
respect thereof pursuant to Section 8.04(c).

     SECTION 2.12 Requirements of Law. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:

          (i) shall subject any Lender to any tax of any kind whatsoever
with respect to any Eurodollar Rate Advance made by it, or change
the basis of taxation of payments to such Lender of principal,
interest, fees or any other amount payable in respect thereof
(except for Non-Excluded Taxes covered by Section 2.15 and changes
in taxes imposed on or measured by the overall net income of such
Lender or its lending office for such Advance);

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

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

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Rate Advances or
agreeing to issue or of issuing or maintaining or participating in Letters of
Credit or to reduce any amount receivable hereunder in respect thereof, then,
in any such case, the Borrower shall promptly pay such Lender, upon its demand,
any additional amounts necessary to compensate such Lender for such increased
cost or reduced amount receivable. If any Lender becomes entitled to claim any
additional amounts pursuant to this subsection, it shall promptly notify the
Borrower in writing, through the Agent, of the event by reason of which

 

 

24

it has
become so entitled; provided, that the Borrower shall not be required to
compensate a Lender for costs in respect of any period beginning before the
date which is 120 days prior to the date on which the Borrower receives notice
that such costs have been imposed, or if such costs have been imposed
retroactively, the period beginning on such earlier date on which such costs
shall have become effective (excluding, however, any portion of such period
which is after the date of adoption of or change in the relevant Requirement of
Law and more than 120 days prior to the date on which the Borrower had received
notice that such costs had been imposed). A certificate as to any additional
amounts payable pursuant to this subsection submitted by such Lender, through
the Agent, to the Borrower shall be conclusive in the absence of manifest
error.

          (b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from
any Governmental Authority made subsequent to the date hereof does or
shall have the effect of reducing the rate of return on such Lender’s or
such corporation’s capital as a consequence of its obligations hereunder
to a level below that which such Lender or such corporation could have
achieved but for such change or compliance (taking into consideration
such Lender’s or such corporation’s policies with respect to capital
adequacy) by an amount deemed by such Lender to be material, then from
time to time, after submission by such Lender to the Borrower (with a
copy to the Agent) of a written request therefor, the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such
Lender for such reduction.

               SECTION 2.13 Illegality. Notwithstanding any other provision herein, if
the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Rate Advances as contemplated by this Agreement,
(a) the commitment of such Lender hereunder to make Eurodollar Rate Advances,
continue Eurodollar Rate Advances as such and convert Base Rate Advances to
Eurodollar Rate Advances shall forthwith be canceled and (b) such Lender’s
Revolving Credit Advances then outstanding as Eurodollar Rate Advances, if any,
shall be converted automatically to Base Rate Advances on the respective last
days of the then current Interest Periods with respect to such Revolving Credit
Advances or within such earlier period as required by law. If any such
conversion of a Eurodollar Rate Advance occurs on a day which is not the last
day of the then current Interest Period with respect thereto, the Borrower
shall pay to such Lender such amounts, if any, as may be required pursuant to
Section 8.04(c).

               SECTION 2.14 Payments and Computations. (a) The Borrower shall make each
payment hereunder, without counterclaim or set-off, not later than 2:00 P.M.
(New York City time) on the day when due to the Agent at the Agent’s Account in
same day funds. The Agent will promptly thereafter cause to be distributed
like funds relating to the payment of principal, interest, fees or commissions
ratably (other than amounts payable pursuant to Section 2.03, 2.05(b)(ii),
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 Register pursuant to Section
8.07(c), from and after the effective date specified in such Assignment and
Acceptance, the Agent shall make all payments hereunder and under the Notes in
respect of the interest assigned thereby to the Lender
assignee thereunder, and the parties to such Assignment and Acceptance
shall make all appropriate adjustments in such payments for periods prior to
such effective date directly between themselves.

               (b) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder or under the Note
held by such Lender, to charge from time to time against any or all of the
Borrower’s accounts with such Lender any amount so due.

 

 

25

               (c) All computations of interest based on the Base Rate shall be made by
the 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 Eurodollar Rate, the LIBO Rate or the
Federal Funds Rate or in respect of Fixed Rate Advances and of fees and Letter
of Credit commissions shall be made by the 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, fees
or commissions are payable. Each determination by the Agent of an interest
rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.

               (d) 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, fee or commission, as the
case may be; provided, however, that, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances or LIBO Rate Advances to
be made in the next following calendar month, such payment shall be made on the
next preceding Business Day.

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

               SECTION 2.15 Taxes. (a) All payments made by the Borrower under this
Agreement and the Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority (“Taxes”), excluding (i) Taxes
imposed on the Agent or any Lender as a result of a present or former
connection between the Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such Tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely
from the Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or the
Notes) and (ii) Taxes imposed by the United States (or any state or local or
political subdivision or taxing authority thereof or therein) on any Lender
other than as a result of a Change in Law relating to such Lender (any such
non-excluded Taxes, “Non-Excluded Taxes”). If any Taxes are required to be
withheld from any amounts payable to the Agent or any Lender hereunder or under
the Notes, (A) the Borrower or the Agent shall withhold and deduct any such
Taxes from such amounts, (B) the Borrower or the Agent shall pay to or deposit
with the appropriate taxing authority in a timely manner the full amount of
Taxes so withheld or deducted, (C) the Borrower or the Agent shall reasonably
promptly send to the Agent or such Lender a certified copy of an original
official receipt received by the Borrower (or other documentation reasonably
acceptable to the Agent or such Lender) showing payment thereof, and (D) if
such Taxes are Non-Excluded Taxes, the amounts so payable to the Agent or such
Lender shall be increased to the extent necessary to yield to the Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the Notes, provided, however, that the Borrower shall not be
required to increase any such
amounts payable to any Lender that is not organized under the laws of the
United States of America or a state thereof if such Lender fails to comply with
the requirements of paragraph (b) of this subsection. If the Borrower fails to
pay any Non-Excluded Taxes when due to the appropriate taxing authority or
fails to remit to the Agent the required documentary evidence set forth in
clause (C) above, the Borrower shall indemnify the Agent and the Lenders for
any incremental Taxes, interest or penalties that may become payable by the
Agent or any Lender as a result of any such failure. The agreements in this
subsection shall survive the termination of this Agreement and the payment of
the Notes and all other amounts payable hereunder.

 

 

26

               (b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:

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

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

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

unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the Agent.
Such Lender shall make the certifications set forth in Form W-8BEN or W-8ECI,
as the case may be, in order to establish that it is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes and that it is entitled to an exemption from United
States backup withholding tax. As provided in subsection 8.07, each Person
that shall become a Lender pursuant to Section 8.07 and that is not
incorporated under the laws of the United States of America or any state
thereof shall, upon the effectiveness of the related transfer, be required to
provide all of the forms and statements required pursuant to this subsection.
In addition, each Lender shall, upon the written request of the Borrower,
provide the Borrower with such other forms, certificates or documentation as
may be reasonably necessary to claim any exemption from, or reduced rate of,
Taxes for which the Borrower is liable under this Section 2.15; provided that
such action shall not cause the imposition on such Lender of any material
additional costs or legal, regulatory or administrative burdens. If an event
occurs after the date on which any form, certificate or documentation is
submitted by a Lender that renders such item or the information set forth
therein incorrect, such Lender shall promptly notify the Borrower and the Agent
in writing of such incorrectness.

               (c) For purposes of this Section 2.15, “Change in Law” shall mean, with
respect to any Lender, a change in the Code, the Treasury Regulations
thereunder or any official interpretation thereof (or any officially proposed
changes in the interpretation thereof) or an amendment or revocation of an
applicable United States income tax treaty after (i) the date hereof, in the
case of each initial Lender or (ii) after the date of the Assignment and
Acceptance pursuant to which it became a Lender in the case of each other
Lender.

               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 Revolving Credit Advances owing to it
(other than as payment of a Revolving Credit Advance made by an Issuing Bank
pursuant to the first sentence of Section 2.04(c) or pursuant to Section 2.12,
2.15 or 8.04(c)) in excess of its Ratable Share of payments on account of the
Revolving Credit Advances obtained by all the Lenders, such Lender shall
forthwith purchase from the other Lenders such participations in the Revolving
Credit Advances owing to them as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each
Lender shall be rescinded and such Lender shall repay to the purchasing Lender
the purchase price to the extent of such recovery together with an amount equal
to such Lender’s ratable share (according to the proportion of (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. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.16 may, to the fullest extent

 

 

27

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 the Borrower in the amount of such participation.

               SECTION 2.17 Evidence of Debt. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Revolving
Credit Advance owing to such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder in respect of Revolving Credit Advances. The Borrower agrees that
upon notice by any Lender to the Borrower (with a copy of such notice to the
Agent) to the effect that a Revolving Credit Note is required or appropriate in
order for such Lender to evidence (whether for purposes of pledge, enforcement
or otherwise) the Revolving Credit Advances owing to, or to be made by, such
Lender, the Borrower shall promptly execute and deliver to such Lender a
Revolving Credit Note payable to the order of such Lender in a principal amount
up to the Revolving Credit Commitment of such Lender.

               (b) The Register maintained by the Agent pursuant to Section 8.07(d) shall
include a control account, and a subsidiary account for each Lender, in which
accounts (taken together) shall be recorded (i) the date and amount of each
Borrowing made hereunder, the Type of Advances comprising such Borrowing and,
if appropriate, the Interest Period applicable thereto, (ii) the terms of each
Assignment and Acceptance delivered to and accepted by it, (iii) the amount of
any principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iv) the amount of any sum received by
the Agent from the Borrower hereunder and each Lender’s share thereof.

               (c) Entries made in good faith by the Agent in the Register pursuant to
subsection (b) above, and by each Lender in its account or accounts pursuant to
subsection (a) above, shall be prima facie evidence of the amount of principal
and interest due and payable or to become due and payable from the Borrower to,
in the case of the Register, each Lender and, in the case of such account or
accounts, such Lender, under this Agreement, absent manifest error; provided,
however, that the failure of the Agent or such Lender to make an entry, or any
finding that an entry is incorrect, in the Register or such account or accounts
shall not limit or otherwise affect the obligations of the Borrower under this
Agreement.

ARTICLE III

CONDITIONS TO EFFECTIVENESS AND LENDING

               SECTION 3.01 Conditions Precedent to Effectiveness of Sections 2.01 and
2.03. Sections 2.01 and 2.03 of this Agreement shall become effective on and
as of the first date (the “Effective Date”) on which the following conditions
precedent have been satisfied:

          (a) There shall have occurred no Material Adverse Change since
December 31, 2003.

          (b) Except as set forth on Schedule IV, there shall exist no action,
suit, investigation, litigation or proceeding affecting the Borrower or
any of its Subsidiaries pending or threatened before any court,
governmental agency or arbitrator that could reasonably be expected to
result in a Material Adverse Change.

          (c) Nothing shall have come to the attention of the Lenders during
the course of their due diligence investigation to lead them to believe
that the Information Memorandum was or has become misleading, incorrect
or incomplete in any material respect; without limiting the generality of
the foregoing, the Lenders shall have been given such access to the
management, records, books of account, contracts and properties of the
Borrower and its Subsidiaries as they shall have reasonably requested.

          (d) All governmental and material third-party consents and approvals
necessary in connection with the transactions contemplated hereby shall
have been obtained (without the imposition of any

 

 

28

conditions that are not
reasonably acceptable to the Lenders) and shall remain in effect, and no
law or regulation shall be applicable in the reasonable judgment of the
Lenders that restrains, prevents or imposes materially adverse conditions
upon the transactions contemplated hereby.

          (e) The Borrower shall have notified each Lender and the Agent in
writing as to the proposed Effective Date.

          (f) The Borrower shall have paid all accrued fees and expenses of
the Agent and the Lenders (including the reasonable fees and expenses of
a single firm of counsel to the Agent) to the extent invoiced to the
Borrower at least one Business Day prior to the Effective Date.

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

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

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

          (h) The Agent shall have received on or before the Effective Date
the following, each dated such day, in form and substance satisfactory to
the Agent and (except for the Revolving Credit Notes) in sufficient
copies for each Lender:

          (i) The Revolving Credit Notes to the order of the Lenders to
the extent requested by any Lender pursuant to Section 2.17.

          (ii) Certified copies of the resolutions of the Board of
Directors of the Borrower approving this Agreement and the Notes,
and of all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to this Agreement
and the Notes.

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

          (iv) Favorable opinions of (A) Assistant General Counsel and
Assistant Secretary to the Borrower substantially in the form of
Exhibit D-1 hereto and (B) Debevoise and Plimpton LLP, counsel to
the Borrower, substantially in the form of Exhibit D-2 hereto, and
as to such other matters as any Lender through the Agent may
reasonably request.

          (v) A favorable opinion of Shearman & Sterling LLP, counsel
for the Agent, in form and substance satisfactory to the Agent.

          (i) The Borrower shall have terminated the commitments of the
lenders and repaid or prepaid all of the Indebtedness under, the Credit
Agreement dated as of May 10, 2000 among the Borrower, the lenders
parties thereto and Citibank, as administrative agent, and each of the
Lenders that is a party to
such credit facility hereby waives, upon execution of this
Agreement, any notice required by said Credit Agreement relating to the
termination of commitments thereunder.

               SECTION 3.02 Conditions Precedent to Each Revolving Credit Borrowing and
Issuance. The obligation of each Lender to make a Revolving Credit Advance
(other than a Revolving Credit Advance made by any Issuing Bank or any Lender
pursuant to Section 2.04(c)) on the occasion of each Revolving Credit Borrowing
and the obligation of each Issuing Bank to issue a Letter of Credit shall be
subject to the conditions precedent that the Effective Date shall have occurred
and on the date of such Revolving Credit Borrowing or such issuance (as the
case may be) (a) the following statements shall be true (and each of the giving
of the applicable Notice of Revolving Credit Borrowing or Notice of Issuance,
and the acceptance by the Borrower of

 

 

29

the proceeds of such Revolving Credit
Borrowing shall constitute a representation and warranty by the Borrower that
on the date of such Borrowing or date of such issuance such statements are
true):

          (i) the representations and warranties contained in Section
4.01 (except the representations set forth in subsection (b) or
(f)(ii) thereof) are correct on and as of such date, before and
after giving effect to such Revolving Credit Borrowing or such
issuance 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 Revolving Credit Borrowing or such issuance (as the case
may be) or from the application of the proceeds therefrom, that
constitutes a Default;

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

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

          (a) the representations and warranties contained in Section 4.01
(except the representations set forth in subsection (b) or (f)(ii)
thereof) are correct on and as of the date of such Competitive Bid
Borrowing, before and after giving effect to such Competitive Bid
Borrowing and to the application of the proceeds therefrom, as though
made on and as of such date and

          (b) no event has occurred and is continuing, or would result from
such Competitive Bid 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 Agent responsible for the transactions contemplated by
this Agreement shall have received notice from such Lender prior to the date
that the Borrower, by notice to the Lenders, designates as the proposed
Effective Date, specifying its objection thereto. The Agent shall promptly
notify the Lenders of the occurrence of the Effective Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

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

          (a) Financial Condition. The Consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as at December 31, 2003 and
the related Consolidated Statements of income

 

 

30

and of cash flows for the
fiscal year ended on such date, reported on by PricewaterhouseCoopers
LLP, copies of which have heretofore been furnished to each Lender, are
complete and correct and present fairly the Consolidated financial
condition of the Borrower and its Consolidated Subsidiaries as at such
date, and the Consolidated results of their operations and their
Consolidated cash flows for the fiscal years then ended. All such
financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants
or Responsible Officer, as the case may be, and as disclosed therein).

          (b) No Change. No event or circumstance since December 31, 2003 has
occurred or is existing which has resulted in, or after giving effect to
the reasonably projected outcome or effect thereof will result in, a
Material Adverse Change.

          (c) Corporate Existence. The Borrower (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
State of New York, (ii) has the corporate power and authority, and the
legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently
engaged and (iii) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct of its business requires such
qualification except to the extent that the failure to be so qualified
would not reasonably be expected to result in a Material Adverse Change.

          (d) Corporate Power; Authorization; Enforceable Obligations. The
Borrower has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents and to borrow hereunder and
has taken all necessary corporate action to authorize the Borrowings on
the terms and conditions of this Agreement and the Notes and to authorize
the execution, delivery and performance of the Loan Documents. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the Borrowings hereunder or the transactions contemplated
hereby or with the execution, delivery, performance, validity or
enforceability of the Loan Documents except such as have been obtained or
made and are in full force and effect. This Agreement has been, and each
Note will be, duly executed and delivered on behalf of the Borrower.
This Agreement constitutes, and each Note when executed and delivered
will constitute, a legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

          (e) No Legal Bar. The execution, delivery and performance of the
Loan Documents, the borrowings hereunder and the use of the proceeds
thereof will not violate the certificate of incorporation, charter or
by-laws of the Borrower or any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Principal Domestic
Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of its or their respective properties
or revenues pursuant to any provision of its certificate of
incorporation, charter or by-laws or any such Requirement of Law or
Contractual Obligation.

          (f) No Material Litigation. No litigation, investigation or
proceeding (including any Environmental Action) of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of
the Borrower, overtly threatened by or against the Borrower or any of its
Principal Domestic Subsidiaries or against any of its or their respective
properties or revenues (i) with respect to any of the Loan Documents or
any of the transactions contemplated hereby or thereby, or (ii) except as
set forth on Schedule IV, which after giving effect to the reasonably
projected outcome or effect thereof, will result in a Material Adverse
Change.

 

 

31

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

          (h) Ownership of Property; Liens. Each of the Borrower and its
Principal Domestic Subsidiaries has good record and marketable title in
fee simple to, or a valid leasehold interest in, all its real property,
and good title to, or a valid leasehold interest in, all its other
property, and none of such property is subject to any Lien except as
permitted by Section 5.02(b) except to the extent that the absence of
such title or leasehold interest has not resulted in, and after giving
effect to the reasonably projected outcome or effect thereof, will not
result in, a Material Adverse Change.

          (i) Compliance with Law. The Borrower and each of its Principal
Domestic Subsidiaries is in compliance with all Requirements of Law and
Contractual Obligations except to the extent that the failure to comply
therewith has not resulted in, and, after giving effect to the reasonably
projected outcome or effect thereof, will not result in, a Material
Adverse Change.

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

          (k) Federal Regulations. The Borrower is not engaged in the
business of extending credit for the purpose of “purchasing” or
“carrying” any “margin stock” within the respective meanings of each of
the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect
and no proceeds of an Advance have been or will be used for any purpose
which violates the provisions of the Regulations of such Board of
Governors. At no time would the obligations of the Borrower hereunder or
under the Notes be directly or “indirectly secured” by assets of the
Borrower and its Consolidated Subsidiaries that are “margin stock”
(pursuant to, and as such captioned terms are defined in, Section
221.2(g) of Regulation U), provided that in any event not more than 25%
of the value of the assets of the Borrower and its Consolidated
Subsidiaries subject to such arrangements shall be represented by such
margin stock. If requested by any Lender or the Agent, the Borrower will
furnish to the Agent and each Lender a statement to the foregoing effect
in conformity with the requirements of FR Form U-1 referred to in said
Regulation U.

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

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

 

 

32

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

          (o) Purpose of Advances. The proceeds of the Advances shall be used
by the Borrower for its general corporate purposes, including, without
limitation, working capital and acquisitions.

          (p) Environmental Matters. Except as disclosed in the Borrower’s
Annual Report on Form 10-K for fiscal year 2003, to the best knowledge of
the Borrower, the Borrower and each Principal Domestic Subsidiary has
complied with all applicable Environmental Laws, except for failures to
comply which have not resulted in, and after giving effect to the
reasonably projected outcome or effect thereof will not result in, a
Material Adverse Change. Except as disclosed in the Borrower’s Annual
Report on Form 10-K for fiscal year 2003 or on Schedule III, to the best
knowledge of the Borrower, there are no events, conditions or
circumstances involving the Borrower, any of its Principal Domestic
Subsidiaries or any Subsidiaries of such Principal Domestic Subsidiaries
with respect to management of any Hazardous Materials, environmental
pollution or contamination or employee health or safety which have
resulted in, or after giving effect to the reasonably projected outcome
or effect thereof will result in, a Material Adverse Change.

          (q) Information. All written information provided by the Borrower
to the Agent or any Lender in connection with this Agreement or the Loan
Documents and the transactions contemplated hereby and thereby, at the
date hereof or (if provided after the date hereof) at the date it was
provided (i) in the case of any factual matter (excluding any such
information referred to in paragraph (ii)), is true and accurate in all
material respects and (ii) in the case of financial and business
projections, budgets, pro forma data and forecasts (all of the foregoing
being, together, “Projections”), contained therein, were prepared in good
faith and on reasonable grounds (it being understood by the parties
hereto that such Projections are subject to significant uncertainties and
contingencies, many of which are beyond the control of the Borrower and
that no assurance can be given (without limiting any other provision of
this Agreement or the Loan Documents) that any such Projections will be
realized).

ARTICLE V

COVENANTS OF THE BORROWER

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

(a) Financial Statements. Furnish to each Lender:

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

 

 

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

all such financial statements shall be complete and correct in all
material respects and shall be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods (except as approved by
such accountants or officer, as the case may be, and disclosed
therein).

(b) Certificates; Other Information. Furnish to each Lender:

          (i) concurrently with the delivery of the financial statements
referred to in Section 5.01(a)(i), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no
knowledge was obtained of any Default relating to any accounting
matter (including calculations demonstrating compliance with
Section 5.02), except as specified in such certificate;

          (ii) concurrently with the delivery of the financial
statements referred to in Sections 5.01(a)(i) and (ii), a
certificate of a Responsible Officer stating that, to the best of
such Officer’s knowledge, the Borrower during such period has
observed or performed all of its covenants and other agreements,
and satisfied every condition, contained in this Agreement and in
the Notes to be observed, performed or satisfied by it (including
calculations demonstrating compliance with Section 5.02), and that
such Officer has obtained no knowledge of any Default except as
specified in such certificate;

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

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

          (c) Payment of Taxes and Other Obligations. Pay, discharge or
otherwise satisfy, in all material respects, and cause its Principal
Domestic Subsidiaries to pay, discharge or otherwise satisfy, in all
material respects (i) all material taxes, assessments and
governmental charges or levies imposed on its property when due by it and
(ii) at or before maturity or otherwise in accordance with reasonable
business practices, all its material obligations of whatever nature;
provided, that the Borrower or its Principal Domestic Subsidiaries, as
the case may be, may contest its obligations in good faith by appropriate
proceedings if it maintains reserves in conformity with GAAP with respect
thereto.

          (d) Conduct of Business and Maintenance of Existence. Continue to
engage in businesses of the same general types as now conducted by it and
preserve, renew and keep in full force and effect its corporate existence
and take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business
except that nothing in this Section 5.01(d) shall prevent (i) the
Borrower from discontinuing any business if such discontinuance is, in
the opinion of its Board of Directors, in the best interests of the
Borrower and is not disadvantageous in

 

 

34

any material respect to any Lender
or the holder of any Note or (ii) the abandonment, modification or
termination of rights, privileges and franchises of the Borrower, if such
abandonment, modification or termination is, in the opinion of the Board
of Directors, in the best interests of the Borrower and is not
disadvantageous in any material respect to any Lender or the holder of
any Note.

          (e) Compliance With Laws, etc. Use commercially reasonable efforts
to comply, and to cause each Principal Domestic Subsidiary to comply, in
all material respects with all Requirements of Law and Contractual
Obligations except to the extent that failure to so comply would not, in
the reasonable judgment of the Borrower, be expected to result in a
Material Adverse Change, provided, however, that neither the Borrower nor
any Principal Domestic Subsidiary shall be required to comply with any
Requirements of Law or Contractual Obligations if the applicability or
validity thereof shall currently be contested in good faith by
appropriate proceedings.

          (f) Maintenance of Property; Insurance. Keep all Principal
Properties in good working order and condition except that nothing in
this Section 5.01(f) shall prevent the Borrower or any of its Principal
Domestic Subsidiaries from discontinuing the operation and maintenance of
any of its Principal Properties if such discontinuance is, in the opinion
of the Board of Directors of the Borrower, in the best interest of the
Borrower and is not disadvantageous in any material respect to any Lender
or the holder of any Note; maintain, and cause each Principal Domestic
Subsidiary to maintain, with financially sound and reputable insurance
companies insurance on all its property of a character usually insured by
companies similarly situated and operating like properties in at least
such amounts and against at least such risks as are usually insured
against in the same general area by companies engaged in the same or a
similar business; and furnish to each Lender, upon written request, full
information as to the insurance carried. The Borrower and any Principal
Domestic Subsidiary may self-insure (which term shall include insurance
by an affiliated insurance company) against any of the risks required to
be insured against pursuant to this Section 5.01(f) so long as such
self-insurance is not excessive in the light of self-insurance by
companies similarly situated and operating like properties, provided, in
the case of any insurance required by law, that such risk is permitted to
be self-insured under applicable law and such self-insurance complies
with applicable law.

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

          (h) Notices. Promptly give notice to the Agent and each Lender of:

          (i) the occurrence of any Default;

          (ii) any (A) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (B)
litigation, investigation or proceeding which may exist at any time
between the Borrower or any of its Subsidiaries and any
Governmental Authority, unless in either case, the Borrower has
determined that such event has not resulted in, or after giving
effect to the reasonably projected outcome or effect thereof will
not result in, a Material Adverse Change; and

 

 

35

          (iii) the following events, as soon as possible and in any
event within 30 days after the Borrower knows or has reason to know
thereof: (A) the occurrence or reasonably expected occurrence of
any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer
Plan or (B) the institution of proceedings or the taking of any
other action by the PBGC or the Borrower or any Commonly Controlled
Entity or any Multiemployer Plan with respect to the withdrawal
from, or the terminating, Reorganization or Insolvency of, any Plan
which with respect to the events in clause (A) or (B), individually
or in the aggregate, could reasonably be expected to involve an
amount of $15,000,000 or more.

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

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

(a) Financial Condition Covenants.

          (i) EBITDA to Interest. Permit the ratio of Consolidated
EBITDA to Consolidated interest expense of the Borrower and its
Consolidated Subsidiaries during each period of four consecutive
fiscal quarters to be less than 2.25:1.

          (ii) Indebtedness for Money Borrowed to Total Capitalization.
Permit the ratio of Indebtedness for Money Borrowed of the Borrower
and its Consolidated Subsidiaries (determined on a Consolidated
basis in accordance with GAAP) to Total Capitalization at any time
to be greater than 0.55:1.

(b) Limitation on Mortgages, Sale and Leaseback, etc.

          (i) The Borrower will not, nor will it permit any Principal
Domestic Subsidiary to, (i) issue, assume or guarantee any
Indebtedness for Money Borrowed, if such Indebtedness for Money
Borrowed is secured by a Mortgage upon, or (ii) directly or
indirectly secure any outstanding Indebtedness for Money Borrowed
by a Mortgage upon, any Principal Property now owned or hereinafter
acquired; provided, however, that the foregoing restriction shall
not apply to the following:

          (A) Mortgages on any Principal Property acquired,
constructed or improved by the Borrower or any Principal
Domestic Subsidiary after the date of this Agreement which
are created or assumed contemporaneously with, or within 90
days after, such acquisition, construction or improvement to
secure or provide for the payment of any part of the purchase
price of such property or the cost of such
construction or improvement incurred after the date of
this Agreement, or, in addition to Mortgages contemplated by
clause (ii) below, Mortgages on any Principal Property
existing at the time of acquisition thereof, provided, that
in the case of any such acquisition, construction or
improvement the Mortgage shall not apply to any property
theretofore owned by the Borrower or any Principal Domestic
Subsidiary, other than in the case of any such construction
or improvement, any theretofore unimproved real property on
which the property so constructed, or the improvement, is
located;

          (B) Mortgages on any Principal Property owned by a
Person which is merged with or into, or otherwise acquired
by, the Borrower or a Principal Domestic Subsidiary;

 

 

36

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

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

          (E) the issuance, assumption or guarantee of secured
Indebtedness for Money Borrowed which would otherwise be
subject to the foregoing restrictions of this subsection
5.02(b) in an aggregate amount which, together with all other
such Indebtedness for Money Borrowed of the Borrower and its
Principal Domestic Subsidiaries and the Attributable Debt in
respect of Sale and Lease-Back Transactions (other than Sale
and Lease-Back Transactions permitted because the Borrower
would be entitled to incur Indebtedness for Money Borrowed
secured by a Mortgage on the property to be leased pursuant
to the provisions of this Section 5.02(b) and other than Sale
and Lease-Back Transactions the proceeds of which have been
applied in accordance with the limitations on Sale and
Lease-Back Transactions set forth in Section 5.02(b)(ii)
below) does not at the time exceed 10% of Consolidated
Tangible Net Worth.

For the purposes of this Section 5.02(b), the following types of
transactions, among others, shall not be deemed to create
Indebtedness for Money Borrowed secured by a Mortgage:

          (A) Production Payments; and

          (B) Mortgages in favor of the United States of America,
any of its territories or possessions, or any State thereof,
or any department, agency, instrumentality or political
subdivision of any thereof, or any department, agency or
instrumentality of any such political subdivision, to secure
partial progress, advance or other payments or obligations
pursuant to any contract, statute or regulation or to secure
any indebtedness incurred for the purpose of financing all or
any part of the purchase price or the cost of constructing or
improving the property subject to such Mortgages.

          (ii) The Borrower will not, nor will it permit any Principal
Domestic Subsidiary to, enter into any Sale and Lease-Back
Transaction, unless the proceeds of such sale or transfer are at
least equal to the fair value (as determined by the Board of
Directors) of such property and
either (A) the Borrower or such Principal Domestic Subsidiary
would be entitled to incur Indebtedness for Money Borrowed secured
by a Mortgage on the property to be leased pursuant to this Section
5.02(b) or (B) the Borrower, in the event that on the effective
date of such Sale and Lease-Back Transaction there is any
Indebtedness for Money Borrowed of the Borrower or such Principal
Domestic Subsidiary which by its terms matures at, or is extendible
or renewable at the option of the obligor to, a date more than
twelve months after the date of the creation of such Indebtedness
for Money Borrowed and which ranks prior to or on a parity with the
Advances, covenants that it will apply an amount equal to the fair
value (as determined by the Board of Directors) of the property so
leased to the retirement, within 90 days of the effective date of
any such Sale and Lease-Back Transaction, of such

 

 

37

Indebtedness for
Money Borrowed; provided, however that the Borrower or any
Principal Domestic Subsidiary may enter into any Sale and
Lease-Back Transaction which would otherwise be subject to the
foregoing restrictions of this Section 5.02(b)(ii) if the amount of
the Attributable Debt in respect of such Sale and Lease-Back
Transactions for such transaction, together with all Indebtedness
for Money Borrowed of the Borrower and its Principal Domestic
Subsidiaries secured by Mortgages upon Principal Properties and all
other Attributable Debt in respect of Sale and Lease-Back
Transactions existing at such time (other than Sale and Lease-Back
Transactions permitted because the Borrower would be entitled to
incur Indebtedness for Money Borrowed secured by a Mortgage on the
property to be leased and other than Sale and Lease-Back
Transactions the proceeds of which have been applied in accordance
with the clause (B) of this subsection), does not at the time
exceed 10% of Consolidated Tangible Net Worth.

          (c) Mergers, Etc. Merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in
a series of transactions) all or substantially all of the assets (whether
now owned or thereafter acquired) of the Borrower and its Subsidiaries,
taken as a whole, to, any Person, or permit any of its Subsidiaries to do
so, except that (i) any Subsidiary of the Borrower may merge or
consolidate with or into, or dispose of substantially all of its assets
to, one or more other Subsidiaries of the Borrower, and any Subsidiary of
the Borrower may merge into or dispose of substantially all or
substantially all of its assets to the Borrower and one or more other
Subsidiaries, (ii) the Borrower may merge with any other Person so long
as the Borrower is the surviving corporation and (iii) any Subsidiary of
the Borrower may merge or consolidate with or into, or dispose of all or
substantially all of its assets to, any Person so long as such merger or
disposition does not (whether in one transaction or in a series of
transactions) constitute a disposition of all or substantially all of the
assets of the Borrower and its Subsidiaries, taken as a whole, provided,
that, in the case of any merger or consolidation in accordance with
clause (i) above in which a Principal Domestic Subsidiary merges or
consolidates with any Subsidiary (other than another Principal Domestic
Subsidiary) of the Borrower, such Principal Domestic Subsidiary is the
surviving Person, and provided, further, in each case, that no Default
shall have occurred and be continuing at the time of such proposed
transaction or would result therefrom.

ARTICLE VI

EVENTS OF DEFAULT

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

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

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

          (c) The Borrower shall default in the observance or performance of
any agreement contained in Section 5.02 (a) through (c) or (unless such
default is capable of remedy and is remedied to the reasonable
satisfaction of the Required Lenders with 30 days of such default)
Section 5.01(d); or

          (d) The Borrower shall default in the observance or performance of
any other agreement contained in this Agreement (other than as provided
in paragraphs (a) through (c) of this Section), and

 

 

38

such default
shall
continue unremedied for a period of 30 days after notice thereof has been
given to the Borrower in accordance with this Agreement; or

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

          (f) (i) The Borrower or any of its Principal Domestic Subsidiaries
shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating
to bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its
assets, or the Borrower or any of its Principal Domestic Subsidiaries
shall make a general assignment for the benefit of its creditors; or (ii)
there shall be commenced against the Borrower or any of its Principal
Domestic Subsidiaries any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against the Borrower or any of its Principal
Domestic Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results
in the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Borrower or any of its Principal
Domestic Subsidiaries shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower
or any of its Principal Domestic Subsidiaries shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or

          (g) (i) Any Person shall engage in any “prohibited transaction” (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving
any Plan, (ii) any “accumulated funding deficiency” (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to
any Plan or any Lien in favor of the PBGC or a Plan shall arise on the
assets of the Borrower or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for purposes of
Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability in connection with a withdrawal
from, or the Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or

 

 

39

conditions, if any, has
resulted in, or after giving effect to the reasonably projected outcome
or effect thereof will result in, a Material Adverse Change; or

          (h) One or more judgments or decrees shall be entered against the
Borrower or any of its Principal Domestic Subsidiaries involving in the
aggregate a liability (not paid or fully covered by insurance) of
$30,000,000 or more, and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 60 days
from the entry thereof; or

          (i) This Agreement or any of the Notes shall, at any time while any
Advance shall remain unpaid or any Lender shall have any Commitment
hereunder, cease to be in full force and effect or shall be declared to
be null and void, or the validity or enforceability thereof shall be
contested by the Borrower, or the Borrower shall deny that it has any or
further liability or obligation under this Agreement or any of the Notes;
or

          (j) (i) any Person or group (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of
1934) shall have acquired beneficial ownership, directly or indirectly,
of Voting Stock of the Borrower (or other securities convertible into
such Voting Stock) representing 35% or more of the combined voting power
of all Voting Stock of the Borrower; or (ii) during any period of up to
12 consecutive months, commencing before or after the date of this
Agreement, individuals who at the beginning of such 12 month period were
directors of the Borrower shall cease for any reason (other than death or
disability) to constitute a majority of the Board of Directors of the
Borrower (except to the extent that individuals who at the beginning of
such 12 month period were replaced by individuals (x) elected by the
remaining Board of Directors of the Borrower, or (y) nominated for
election by the remaining members of the Board of Directors of the
Borrower and thereafter elected as directors by shareholders of the
Borrower), or (iii) any Person or group (as so defined) shall have
acquired by contract or otherwise, or shall have entered into a contract
or arrangement that, upon consummation, will result in a Change of
Control under clause (i) or (ii) above;

then, and in any such event, the Agent (i) shall at the request, or may
with the consent, of the Required Lenders, by notice to the Borrower,
declare the obligation of each Lender to make Advances (other than
Revolving Credit Advances by an Issuing Bank or a Lender pursuant to
Section 2.04(c)) and of the Issuing Banks to issue Letters of Credit to
be terminated, whereupon the same shall forthwith terminate, and (ii)
shall at the request, or may with the consent, of the Required Lenders,
by notice to the Borrower, declare the Advances, all interest thereon and
all other amounts payable under this Agreement to be forthwith due and
payable, whereupon the Advances, all such interest and all such amounts
shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by the Borrower; provided, however, that in the event of
an actual or deemed entry of an order for relief with respect to the
Borrower under the Federal Bankruptcy Code, (A) the obligation of each
Lender to make Advances (other than Revolving Credit Advances by an
Issuing Bank or a Lender pursuant to Section 2.04(c)) and of the Issuing
Banks to issue Letters of Credit shall automatically be terminated and
(B) the Advances, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly
waived by the Borrower.

               SECTION 6.02 Actions in Respect of the Letters of Credit upon Default. If
any Event of Default shall have occurred and be continuing, the Agent may with
the consent, or shall at the request, of the Required Lenders, irrespective of
whether it is taking any of the actions described in Section 6.01 or otherwise,
make demand upon the Borrower to, and forthwith upon such demand the Borrower
will, (a) pay to the Agent for the benefit of the Lenders in same day funds at
the Agent’s office designated in such demand, for deposit in the L/C Cash
Deposit Account, an amount equal to the aggregate Available Amount of all
Letters of Credit

 

 

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then outstanding or (b) make such other arrangements in
respect of the outstanding Letters of Credit as shall be acceptable to the
Required Lenders. If at any time the Agent determines that any funds held in
the L/C Cash Deposit Account are subject to any right or interest of any Person
other than the Agent and the Lenders or that the total amount of such funds is
less than the aggregate Available Amount of all Letters of Credit, the Borrower
will, forthwith upon demand by the Agent, pay to the Agent, as additional funds
to be deposited and held in the L/C Cash Deposit Account, an amount equal to
the excess of (a) such aggregate Available Amount over (b) the total amount of
funds, if any, then held in the L/C Cash Deposit Account that are free and
clear of any such right and interest. Upon the drawing of any Letter of
Credit, to the extent funds are on deposit in the L/C Cash Deposit Account,
such funds shall be applied to reimburse the Issuing Banks to the extent
permitted by applicable law, and if so applied, then such reimbursement shall
be deemed a repayment of the corresponding Advance in respect of such Letter of
Credit. After all such Letters of Credit shall have expired or been fully
drawn upon and all other obligations of the Borrower hereunder and under the
Notes shall have been paid in full, the balance, if any, in such L/C Cash
Deposit Account shall be promptly returned to the Borrower.

ARTICLE VII

THE AGENT

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

               SECTION 7.02 Agent’s Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken
or omitted to be taken by it or them under or in connection with this
Agreement, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (i) may
treat the Lender that made any Advance as the holder of the Indebtedness
resulting therefrom until the Agent receives and accepts an Assignment and
Acceptance entered into by such Lender, as assignor, and an Eligible Assignee,
as assignee, as provided in Section 8.07; (ii) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (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
Borrower or to inspect the property (including the books and records) of the
Borrower; (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, 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.

 

 

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               SECTION 7.03 Citibank and Affiliates. With respect to its Commitments,
the Advances made by it and the Note 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 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 Borrower, any of its
Subsidiaries and any Person who may do business with or own securities of the
Borrower or any such Subsidiary, all as if Citibank were not the 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 Agent or any other Lender and
based on the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.

               SECTION 7.05 Indemnification. (a) Each Lender severally agrees to
indemnify the Agent (to the extent not promptly reimbursed by the Borrower and
without limiting the Borrower’s reimbursement obligations hereunder) from and
against such Lender’s Ratable Share of any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent under this Agreement
(collectively, the “Indemnified Costs”), provided that no Lender shall be
liable for any portion of the Indemnified Costs resulting from the Agent’s
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender agrees to reimburse the Agent promptly upon demand for its Ratable
Share of any out-of-pocket expenses (including reasonable counsel fees)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, to the extent that the Agent
is not reimbursed for such expenses by the Borrower. In the case of any
investigation, litigation or proceeding giving rise to any Indemnified Costs,
this Section 7.05 applies whether any such investigation, litigation or
proceeding is brought by the Agent, any Lender or a third party.

               (b) Each Lender severally agrees to indemnify the Issuing Banks (to the
extent not promptly reimbursed by the Borrower) from and against such Lender’s
Ratable Share of 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 any such Issuing Bank in any way relating to or arising out of this
Agreement or any action taken or omitted by such Issuing Bank hereunder or in
connection herewith; provided, however, 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 Issuing
Bank’s gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse any such Issuing Bank promptly upon
demand for its Ratable Share of any costs and expenses (including, without
limitation, fees and expenses of counsel) payable by the Borrower under Section
8.04, to the extent that such Issuing Bank is not promptly reimbursed for such
costs and expenses by the Borrower.

               (c) The failure of any Lender to reimburse the Agent or any Issuing Bank
promptly upon demand for its Ratable Share of any amount required to be paid by
the Lenders to the Agent as provided herein shall not relieve any other Lender
of its obligation hereunder to reimburse the Agent or any Issuing Bank for its
Ratable Share of such amount, but no Lender shall be responsible for the
failure of any other Lender to reimburse the Agent or any Issuing Bank for such
other Lender’s Ratable Share of such amount. Without

 

 

42

prejudice to the survival
of any other agreement of any Lender hereunder, the agreement and obligations
of each Lender contained in this Section 7.05 shall survive the payment in full
of principal, interest and all other amounts payable hereunder and under the
Notes. Each of the Agent and each Issuing Bank agrees to return to the Lenders
their respective Ratable Shares of any amounts paid under this Section 7.05
that are subsequently reimbursed by the Borrower.

               SECTION 7.06 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and may be removed at
any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days
after the retiring Agent’s giving of notice of resignation or the Required
Lenders’ removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $500,000,000.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent’s resignation or removal hereunder as
Agent, the provisions of this Article VII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.

               SECTION 7.07 Other Agents. Each Lender hereby acknowledges that neither
the documentation agent nor any other Lender designated as any “Agent” (other
than Citibank, as Agent) on the signature pages hereof has any liability
hereunder other than in its capacity as a Lender.

ARTICLE VIII

MISCELLANEOUS

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

               SECTION 8.02 Notices, Etc.. (a) All notices and other communications
provided for hereunder shall be either (x) in writing (including telecopier,
telegraphic or telex communication) and mailed, telecopied, telegraphed,
telexed or delivered or (y) as and to the extent set forth in Section 8.02(b)
and in the proviso to this Section 8.02(a), if to the Borrower, at its address
at One North Central Avenue, Phoenix, Arizona 85004 , Attention: Treasurer; if
to any Initial Lender, at its Domestic Lending Office specified

 

 

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opposite its
name on Schedule I hereto; if to any other Lender, at its Domestic Lending
Office specified in the Assignment and Acceptance pursuant to which it became
a Lender; and if to the Agent, at its address at Two Penns Way, New Castle,
Delaware 19720, Attention: Bank Loan Syndications Department; or, as to the
Borrower or the 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 Borrower and the Agent, provided that materials required to be delivered
pursuant to Section 5.01(a) and (b)(i), (ii) or (iii) shall be delivered to the
Agent as specified in Section 8.02(b). All such notices and communications
shall, when mailed, telecopied, telegraphed or e-mailed, be effective when
deposited in the mails, telecopied, delivered to the telegraph company or
confirmed by e-mail, respectively, except that notices and communications to
the Agent pursuant to Article II, III or VII shall not be effective until
received by the Agent. Delivery by telecopier of an executed counterpart of
any amendment or waiver of any provision of this Agreement or the Notes or of
any Exhibit hereto to be executed and delivered hereunder shall be effective as
delivery of a manually executed counterpart thereof.

               (b) So long as Citibank or any of its Affiliates is the Agent, materials
required to be delivered pursuant to Section 5.01(a) and (b)(i), (ii) or (iii)
shall be delivered to the Agent in an electronic medium in a legible format by
e-mail at oploanswebadmin@citigroup.com. The Borrower agrees that the Agent
may make such materials (collectively, the “Communications”) available to the
Lenders by posting such notices on Intralinks, “e-Disclosure”, the Agent’s
internet delivery system that is part of Fixed Income Direct, Global Fixed
Income’s primary web portal, or a substantially similar electronic system (the
“Platform”). The Borrower acknowledges that (i) the distribution of material
through an electronic medium is not necessarily secure and that there are
confidentiality and other risks associated with such distribution, (ii) the
Platform is provided “as is” and
“as available” and (iii) neither the Agent nor any of its Affiliates
warrants the accuracy, adequacy or completeness of the Communications or the
Platform and each expressly disclaims liability for errors or omissions (other
than those that are attributable to the gross negligence or willful misconduct
of the Agent or such Affiliate) in the Communications or the Platform. No
warranty of any kind, express, implied or statutory, including, without
limitation, any warranty of merchantability, fitness for a particular purpose,
non-infringement of third party rights or freedom from viruses or other code
defects, is made by the Agent or any of its Affiliates in connection with the
Platform.

               (c) Each Lender agrees that (i) delivery by the Borrower of the
Communications as provided in Section 8.02(b) shall constitute effective
delivery by the Borrower of the materials required to be delivered pursuant to
Section 5.01(a) and (b)(i), (ii) and (iii) and (ii) notice to such Lender (as
provided in the next sentence) (a “Notice”) specifying that any Communications
have been posted to the Platform shall constitute effective delivery by the
Agent of such Communications to such Lender for purposes of this Agreement;
provided that if requested by any Lender the Agent shall deliver a copy of the
Communications to such Lender by email or telecopier. Each Lender agrees (i)
to notify the Agent in writing of such Lender’s e-mail address to which a
Notice may be sent by electronic transmission (including by electronic
communication) on or before the date such Lender becomes a party to this
Agreement (and from time to time thereafter to ensure that the Agent has on
record an effective e-mail address for such Lender) and (ii) that any Notice
may be sent to such e-mail address.

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

               SECTION 8.04 Costs and Expenses. (a) The Borrower agrees to pay on
demand all costs and expenses of the Agent in connection with the preparation,
execution, delivery, administration, modification and amendment of this
Agreement, the Notes and the other documents to be delivered hereunder,
including,

 

 

44

without limitation, (A) all due diligence, syndication (including
out-of-pocket printing, distribution and bank meetings), transportation,
computer and duplication expenses and (B) the reasonable fees and expenses of
counsel for the Agent with respect thereto and with respect to advising the
Agent as to its rights and responsibilities under this Agreement. The Borrower
further agrees to pay on demand all costs and expenses of the Agent and the
Lenders, if any (including, without limitation, reasonable counsel fees and
expenses), in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of this Agreement, the Notes and the other
documents to be delivered hereunder, including, without limitation, reasonable
fees and expenses of counsel for the Agent and each Lender in connection with
the enforcement of rights under this Section 8.04(a).

               (b) The Borrower agrees to indemnify and hold harmless the Agent and each
Lender and each of their Affiliates and their officers, directors, employees,
agents and advisors (each, an “Indemnified Party”) from and against any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and expenses of counsel) incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation or proceeding or preparation of a defense in
connection therewith) (i) the Notes, this Agreement, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the
Advances or (ii) the actual or alleged presence of Hazardous Materials on any
property of the Borrower or any of its Subsidiaries or any Environmental Action
relating in any way to the Borrower or any of its Subsidiaries, except to the
extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party’s gross negligence or willful misconduct. In the
case of an investigation, litigation or other proceeding to which the indemnity
in this Section
8.04(b) applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Borrower, its
directors, shareholders or creditors or an Indemnified Party or any other
Person or any Indemnified Party is otherwise a party thereto and whether or not
the transactions contemplated hereby are consummated. The Borrower also agrees
not to assert any claim for special, indirect, consequential or punitive
damages against the Agent, any Lender, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys and agents, on any theory
of liability, arising out of or otherwise relating to the Notes, this
Agreement, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Advances.

               (c) If any payment of principal of, or Conversion of, any Eurodollar Rate
Advance or LIBO Rate Advance is made by the Borrower to or for the account of a
Lender other than on the last day of the Interest Period for such Advance, as a
result of a payment or Conversion pursuant to Section 2.09(d) or (e), 2.11 or
2.13, acceleration of the maturity of the Notes pursuant to Section 6.01 or for
any other reason, or by an Eligible Assignee to a Lender other than on the last
day of the Interest Period for such Advance upon an assignment of rights and
obligations under this Agreement pursuant to Section 8.07 as a result of a
demand by the Borrower pursuant to Section 8.07(a), the Borrower shall, upon
demand by such Lender (with a copy of such demand to the Agent), pay to the
Agent for the account of such Lender any amounts required to compensate such
Lender for any additional losses, costs or expenses that it shall actually
incur as a result of such payment or Conversion, including, without limitation,
any loss (excluding loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by any Lender to fund or maintain such Advance.

               (d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
Sections 2.12, 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. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 6.01,
each Lender and each of its Affiliates is hereby authorized at any time and
from time to time, to the fullest extent

 

 

45

permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender or
such Affiliate to or for the credit or the account of the Borrower against any
and all of the obligations of the Borrower now or hereafter existing under this
Agreement and the Note held by such Lender, whether or not such Lender shall
have made any demand under this Agreement or such Note and although such
obligations may be unmatured. Each Lender agrees promptly to notify the
Borrower after any such set-off and application, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of each Lender and its Affiliates under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Lender and its Affiliates may have.

               SECTION 8.06 Binding Effect. This Agreement shall become effective (other
than Sections 2.01 and 2.03, which shall only become effective upon
satisfaction of the conditions precedent set forth in Section 3.01) when it
shall have been executed by the Borrower and the Agent and when the 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
Borrower, the Agent and each Lender and their respective successors and
assigns, except that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Lenders.

               SECTION 8.07 Assignments and Participations
        . (a) Each Lender may with the consent of the Borrower, the Agent and
each Issuing Bank (which consent shall not be unreasonably withheld or delayed)
and, if demanded by the Borrower (following a demand by such Lender pursuant to
Section 2.12 or 2.15 and only so long as no Default has occurred and is
continuing) upon at least 5 Business Days’ notice to such Lender and the Agent,
will 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 Revolving Credit Commitment, its Unissued Letter of Credit
Commitment, the Revolving Credit Advances owing to it, its participations in
Letters of Credit and the Revolving Credit Note or Notes held by it); provided,
however, that (i) each such assignment shall be of a constant, and not a
varying, percentage of all rights and obligations under this Agreement (other
than any right to make Competitive Bid Advances, Competitive Bid Advances owing
to it and Competitive Bid Notes), (ii) except in the case of an assignment to a
Person that, immediately prior to such assignment, was a Lender or an
assignment of all of a Lender’s rights and obligations under this Agreement,
the amount of (x) the Revolving Credit 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 $15,000,000 or an integral multiple of $5,000,000 in excess thereof
and (y) the Unissued Letter of Credit 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 $5,000,000 or an integral multiple of $1,000,000 in excess thereof,
(iii) each such assignment shall be to an Eligible Assignee, (iv) each such
assignment made as a result of a demand by the Borrower pursuant to this
Section 8.07(a) shall be arranged by the Borrower after consultation with the
Agent and 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 other
such assignments that together cover all of the rights and obligations of the
assigning Lender under this Agreement, (v) no Lender shall be obligated to make
any such assignment as a result of a demand by the Borrower pursuant to this
Section 8.07(a) unless and until such Lender shall have received one or more
payments from either the Borrower or one or more Eligible Assignees in an
aggregate amount at least equal to the aggregate outstanding principal amount
of the Advances owing to such Lender, together with accrued interest thereon to
the date of payment of such principal amount and all other amounts payable to
such Lender under this Agreement, and (vi) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with any Revolving Credit Note
subject to such assignment and a processing and recordation fee of $3,500
payable by the parties to each such assignment, provided, however, that in the
case of each assignment made as a result of a demand by the Borrower, such
recordation fee shall be payable by the Borrower except that no such
recordation fee shall be

 

 

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payable in the case of an assignment made at the
request of the Borrower to an Eligible Assignee that is an existing Lender, and
(vii) any Lender may, without the approval of the Borrower and the Agent,
assign all or a portion of its rights to any of its Affiliates or any other
Lender or its Affiliates. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, (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 (other than its rights under
Section 2.12, 2.15 and 8.04 to the extent any claim thereunder relates to an
event arising prior such assignment) and be released from its obligations
(other than its obligations under Section 7.05 to the extent any claim
thereunder relates to an event arising prior such assignment) under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).

               (b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or
representations made in or in connection with this Agreement or the
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; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under 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 Agent, such
assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers and discretion as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations that by the terms
of this Agreement are required to be performed by it as a Lender.

               (c) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Revolving Credit Note or Notes subject to such assignment,
the Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower.

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

 

 

47

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

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

          (g) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Advances owing
to it and any Note or 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.

          SECTION 8.08 Confidentiality. Neither the Agent nor any Lender shall
disclose any Confidential Information to any other Person without the consent
of the Borrower, other than (a) to the Agent’s or such Lender’s Affiliates and
their officers, directors, employees, agents and advisors and, as contemplated
by Section 8.07(f), to actual or prospective assignees and participants, and
then only on a confidential basis, (b) as required by any law, rule or
regulation or judicial process and (c) as requested or required by any state,
federal or foreign authority or examiner regulating banks or banking and having
jurisdiction over such Lender.

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

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

          SECTION 8.11 Jurisdiction, Etc. (a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or
proceeding arising out of or relating to this Agreement or the Notes, or
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York
State court or, to the extent permitted by law, in such federal court. The
Borrower hereby further irrevocably consents to the service of process in any
action or proceeding in such courts by the mailing thereof by any parties
hereto by registered or certified mail, postage prepaid, to the Borrower at its

 

48

address specified pursuant to Section 8.02. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that
any party may otherwise have to bring any action or proceeding relating to this
Agreement or the Notes in the courts of any jurisdiction.

               Each of the parties hereto irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the Notes in any New York State
or federal court.

          SECTION 8.12 No Liability of the Issuing Banks. The Borrower assumes all
risks of the acts or omissions of any beneficiary or transferee of any Letter
of Credit with respect to its use of such Letter of Credit. Neither an Issuing
Bank nor any of its officers or directors shall be liable or responsible for:
(a) the use that may be made of any Letter of Credit or any acts or omissions
of any beneficiary or transferee in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsement thereon, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by such Issuing Bank against presentation of
documents that do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or
failing to make payment under any Letter of Credit, except that the Borrower
shall have a claim against such Issuing Bank, and such Issuing Bank shall be
liable to the Borrower, to the extent of any direct, but not consequential,
damages suffered by the Borrower that the Borrower proves were caused by such
Issuing Bank’s willful misconduct or gross negligence as determined in a final,
non-appealable judgment by a court of competent jurisdiction. In furtherance
and not in limitation of the foregoing, such Issuing Bank may accept documents
that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary;
provided that nothing herein shall be deemed to excuse such Issuing Bank if it
acts with gross negligence or willful misconduct in accepting such documents.

          SECTION 8.13 Patriot Act. Each Lender and the Agent (for itself and not
on behalf of any Lender) hereby notifies the Borrower that pursuant to the
requirements of the USA Patriot Act (Title III of Pub.L. 107-56 (signed into
law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify
and record information that identifies the Borrower, which information includes
the name and address of the Borrower and other information that will allow such
Lender or the Agent, as applicable, to identify the Borrower in accordance with
the Patriot Act. The Borrower, to the extent commercially reasonable, shall
provide such information and take such actions as are reasonably requested by
the Agent or any Lenders in order to assist the Agent and the Lenders in
maintaining compliance with the Patriot Act.

 

49

          SECTION 8.14 Waiver of Jury Trial. Each of the Borrower, the Agent and
the Lenders hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or the Notes or the actions of the
Agent or any Lender in the negotiation, administration, performance or
enforcement thereof.

          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.

	 	 	 	 	 
	 	 	PHELPS DODGE CORPORATION
	 
	 	 	 	 
	 

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	 	 	CITIBANK, N.A.,

   as Agent
	 
	 	 	 	 
	 

	 	By
	

	

	 	 	Title:

Initial Issuing Banks

Letter of Credit Commitment

	 	 	 	 	 
	$75,000,000	 	CITIBANK, N.A.
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	$75,000,000	 	JPMORGAN CHASE BANK
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	$150,000,000	 	THE BANK OF NOVA SCOTIA
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	$300,000,000          Total of the Letter of Credit Commitments	 

 

Revolving Credit Commitment

	 	 	 	 	 
	$125,000,000	 	CITIBANK, N.A.
	 
	

	 	By
	

	

	 	 	Title:

Co-Syndication Agents

	 	 	 	 	 
	$85,000,000	 	THE BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	$85,000,000	 	JPMORGAN CHASE BANK
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	$85,000,000	 	THE BANK OF NOVA SCOTIA
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	$85,000,000	 	WACHOVIA BANK, NATIONAL
ASSOCIATION
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	$85,000,000	 	THE ROYAL BANK OF SCOTLAND PLC
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	$85,000,000	 	ABN AMRO BANK, N.V.
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:

 

 

51

	 	 	 	 	 
	$85,000,000	 	MORGAN STANLEY BANK
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	

	Senior Managing Agents
	 
	 	 	 	 
	$60,000,000	 	AUSTRALIA AND NEW ZEALAND

BANKING GROUP LIMITED
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	$60,000,000	 	KBC BANK, N.V.
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	$60,000,000	 	ROYAL BANK OF CANADA
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	$60,000,000	 	WELLS FARGO BANK NATIONAL

ASSOCIATION
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	

	Lenders	 	 	 
	 
	 	 	 	 
	$35,000,000	 	BANK OF AMERICA, N.A.
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	$35,000,000	 	CREDIT LYONNAIS NEW YORK BRANCH
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	$35,000,000	 	MIZUHO CORPORATE BANK, LTD.
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:

 

52

	 	 	 	 	 
	$35,000,000	 	THE NORTHERN TRUST COMPANY
	 
	 	 	 	 
	

	 	By
	

	

	 	 	Title:
	 
	 	 	 	 
	$1,100,000,000           Total of the Revolving Credit Commitments

	 	 
	 	 

 

SCHEDULE I

PHELPS DODGE CORPORATION

CREDIT AGREEMENT

APPLICABLE LENDING OFFICES

	 	 	 	 	 
	Name of Initial Lender
	 	Domestic Lending Office
	 	Eurodollar Lending Office

	ABN AMRO BANK, N.V.

	 	208 South LaSalle Street
	 	208 South LaSalle Street
	

	 	Suite 1500
	 	Suite 1500
	

	 	Chicago, IL 60604
	 	Chicago, IL 60604
	

	 	Attn: Kenneth Keck
	 	Attn: Kenneth Keck
	

	 	F: 312 992-5111
	 	F: 312 992-5111
	 
	 	 	 	 
	AUSTRALIA AND NEW

	 	1177 Avenue of the Americas
	 	1177 Avenue of the Americas
	ZEALAND BANKING

	 	6th Floor
	 	6th Floor
	GROUP LIMITED

	 	New York, NY 10036
	 	New York, NY 10036
	

	 	Attn: Doreen Klingenbeck
	 	Attn: Doreen Klingenbeck
	

	 	T: 212 801-9726
	 	T: 212 801-9726
	

	 	F: 212 556-4839
	 	F: 212 556-4839
	 
	 	 	 	 
	BANK OF AMERICA, N.A.

	 	1850 Gateway Blvd.
	 	1850 Gateway Blvd.
	

	 	Mail Code CA4-706-05-11
	 	Mail Code CA4-706-05-11
	

	 	Concord, CA 94520
	 	Concord, CA 94520
	

	 	Attn: Cricket Kanouff
	 	Attn: Cricket Kanouff
	

	 	T: 925 675-7845
	 	T: 925 675-7845
	

	 	F: 925 969-2859
	 	F: 925 969-2859
	 
	 	 	 	 
	THE BANK OF NOVA

	 	600 Peachtree Street N.E.
	 	600 Peachtree Street N.E.
	SCOTIA

	 	Suite 2700
	 	Suite 2700
	

	 	Atlanta, GA 30308
	 	Atlanta, GA 30308
	

	 	Attn: E.S. Howard
	 	Attn: E.S. Howard
	

	 	T: 404 877-1525
	 	T: 404 877-1525
	

	 	F: 404 888-8998
	 	F: 404 888-8998
	 
	 	 	 	 
	BANK OF TOKYO-

	 	c/o BTM Operations Office
	 	c/o BTM Operations Office
	MITSUBISHI TRUST

	 	for the Americas
	 	for the Americas
	COMPANY

	 	1251 Avenue of the Americas
	 	1251 Avenue of the Americas
	

	 	12th Floor
	 	12th Floor
	

	 	New York, NY 10020
	 	New York, NY 10020
	

	 	Attn: Rolando Uy
	 	Attn: Rolando Uy
	

	 	T: 201 413-8570
	 	T: 201 413-8570
	

	 	F: 201 521-2305
	 	F: 201 521-2305
	 
	 	 	 	 
	CITIBANK, N.A.

	 	Two Penns Way
	 	Two Penns Way
	

	 	New Castle, DE 19720
	 	New Castle, DE 19720
	

	 	Attn: Robert Partee
	 	Attn: Robert Partee
	

	 	T: 302 894-6017
	 	T: 302 894-6017
	

	 	F: 302 894-6120
	 	F: 302 894-6120

 

 

2

	 	 	 	 	 
	Name of Initial Lender
	 	Domestic Lending Office
	 	Eurodollar Lending Office

	CREDIT LYONNAIS NEW

	 	1301 Avenue of the Americas
	 	1301 Avenue of the Americas
	YORK BRANCH

	 	New York, NY 10019
	 	New York, NY 10019
	

	 	Attn: Dawn Evans
	 	Attn: Dawn Evans
	

	 	T: 212 261-7339
	 	T: 212 261-7339
	

	 	F: 917 849-5467
	 	F: 917 849-5467
	 
	 	 	 	 
	JPMORGAN CHASE BANK

	 	1111 Fannin Street, 10th Floor
	 	1111 Fannin Street, 10th Floor
	

	 	Houston, TX 77002
	 	Houston, TX 77002
	

	 	Attn: Andrew Perkins
	 	Attn: Andrew Perkins
	

	 	T: 713 750-3510
	 	T: 713 750-3510
	

	 	F: 713 750-2223
	 	F: 713 750-2223
	 
	 	 	 	 
	KBC BANK, N.V.

	 	125 West 55th Street, 10th Floor
	 	125 West 55th Street, 10th Floor
	

	 	New York, NY 10019
	 	New York, NY 10019
	

	 	Attn: Rose Pagan/Robert Pacifici
	 	Attn: Rose Pagan/Robert Pacifici
	

	 	T: 212 541-0657/0671
	 	T: 212 541-0657/0671
	

	 	F: 212 956-5580/5581
	 	F: 212 956-5580/5581
	 
	 	 	 	 
	MIZUHO CORPORATE

	 	Attn: Xujian Susan Huang
	 	Attn: Xujian Susan Huang
	BANK, LTD.

	 	T: 201 626-9311
	 	T: 201 626-9311
	

	 	F: 201 626-9935
	 	F: 201 626-9935
	 
	 	 	 	 
	MORGAN STANLEY BANK

	 	2500 Lake Park Blvd., Suite 300C
	 	2500 Lake Park Blvd., Suite 300C
	

	 	West Valley City, UT 84120
	 	West Valley City, UT 84120
	

	 	Attn: Larry Benison/Min Jo
	 	Attn: Larry Benison/Min Jo
	

	 	T: 212 537-1439/1382
	 	T: 212 537-1439/1382
	

	 	F: 212 537-1867/1866
	 	F: 212 537-1867/1866
	 
	 	 	 	 
	THE NORTHERN TRUST

	 	50 S. LaSalle
	 	50 S. LaSalle
	COMPANY

	 	Chicago, IL 60675
	 	Chicago, IL 60675
	

	 	Attn: Linda Honda
	 	Attn: Linda Honda
	

	 	T: 312 444-3532
	 	T: 312 444-3532
	

	 	F: 312 630-1566
	 	F: 312 630-1566
	 
	 	 	 	 
	ROYAL BANK OF CANADA

	 	One Liberty Plaza
	 	One Liberty Plaza
	

	 	4th Floor
	 	4th Floor
	

	 	New York, NY 10006
	 	New York, NY 10006
	

	 	Attn: Loans Administration
	 	Attn: Loans Administration
	

	 	T: 212 428-6369
	 	T: 212 428-6369
	

	 	F: 212 428-2372
	 	F: 212 428-2372
	 
	 	 	 	 
	THE ROYAL BANK OF

	 	101 Park Avenue, 12th Floor
	 	101 Park Avenue, 12th Floor
	SCOTLAND PLC

	 	New York, NY 10178
	 	New York, NY 10178
	

	 	Attn: Punam Gambhir
	 	Attn: Punam Gambhir
	

	 	T: 212 401-34
	 	T: 212 401-34
	

	 	F: 212 401-13
	 	F: 212 401-13

 

3

	 	 	 	 	 
	Name of Initial Lender
	 	Domestic Lending Office
	 	Eurodollar Lending Office

	WACHOVIA BANK,

	 	191 Peachtree Street
	 	191 Peachtree Street
	NATIONAL ASSOCIATION

	 	Atlanta, GA 30303
	 	Atlanta, GA 30303
	

	 	Attn: Fareed Ajani
	 	Attn: Fareed Ajani
	

	 	T: 404 332-1157
	 	T: 404 332-1157
	

	 	F: 404 332-4136
	 	F: 404 332-4136
	 
	 	 	 	 
	WELLS FARGO BANK

	 	707 Wilshire Blvd., 16th Floor
	 	707 Wilshire Blvd., 16th Floor
	NATIONAL ASSOCIATION

	 	MAC E2818-165
	 	MAC E2818-165
	

	 	Los Angeles, CA 90017
	 	Los Angeles, CA 90017
	

	 	Attn: Catherine M. Wallace
	 	Attn: Catherine M. Wallace
	

	 	T: 213 614-4763
	 	T: 213 614-4763
	

	 	F: 213 614-2569
	 	F: 213 614-2569

 

SCHEDULE II

BORROWER AND ITS SUBSIDIARIES

PRINCIPAL DOMESTIC SUBSIDIARIES

	 	 	 	 	 	 	 	 	 
	 	 	Percentage of Voting	 	 
	 	 	Stock held by	 	 
	 	 	Borrower and its	 	Jurisdiction of
	Name	 	Associated Companies	 	Incorporation
	Chino Mines Company
	 	 	100	%	 	Delaware
	Climax Molybdenum Company
	 	 	100	%	 	Delaware
	Columbian Chemicals Company
	 	 	100	%	 	Delaware
	Phelps Dodge Industries, Inc.
	 	 	100	%	 	Delaware
	Phelps Dodge Miami, Inc.
	 	 	100	%	 	Delaware
	Phelps Dodge Morenci, Inc.
	 	 	100	%	 	Delaware
	Phelps Dodge Refining Corporation
	 	 	100	%	 	New York
	Phelps Dodge Sierrita, Inc.
	 	 	100	%	 	Delaware

SUBSIDIARIES

(OTHER THAN PRINCIPAL DOMESTIC SUBSIDIARIES)

	 	 	 	 	 
	 	 	Percentage of Voting
	 	 	Stock held by
	 	 	Borrower and its
	 Name	 	Associated Companies
	AAV Corporation
	 	 	100	%
	Ajo Improvement Company
	 	 	100	%
	Alambres y Cables de Panama, S.A.
	 	 	78.08	%
	Alambres y Cables Venezolanos, C.A.
	 	 	100	%
	ALCAP Commercial, S.A.
	 	 	73.42	%
	Amax Arizona, Inc.
	 	 	100	%
	Amax de Chile, Inc.
	 	 	100	%
	Amax Energy Inc.
	 	 	100	%
	Amax Exploration (Ireland), Inc.
	 	 	100	%
	Amax Exploration, Inc.
	 	 	100	%
	Amax Metals Recovery, Inc.
	 	 	100	%
	Amax Nickel Overseas Ventures, Inc.
	 	 	100	%

 

 

2

	 	 	 	 	 
	 	 	Percentage of Voting
	 	 	Stock held by
	 	 	Borrower and its
	 Name	 	Associated Companies
	Amax Realty Development, Inc.
	 	 	100	%
	Amax Research & Development, Inc.
	 	 	100	%
	Amax Specialty Coppers Corporation
	 	 	100	%
	Amax Specialty Metals (Driver), Inc.
	 	 	100	%
	Amax Zinc (Newfoundland) Limited
	 	 	100	%
	American Metal Climax, Inc.
	 	 	100	%
	Ametalco, Inc.
	 	 	100	%
	Ametalco Limited
	 	 	100	%
	Arizona Community Investment Corporation
	 	 	100	%
	Bisbee Queen Mining Company
	 	 	65.90	%
	Blackwell Zinc Company, Inc.
	 	 	100	%
	Byner Cattle Company
	 	 	100	%
	Cables Electricos Ecuatorianos, C.A.
	 	 	67.10	%
	Cahosa, S.A.
	 	 	78.08	%
	Capital Gestao de Negocios Ltda.
	 	 	100	%
	Cates Douglas Corporation
	 	 	100	%
	Chino Acquisition Inc.
	 	 	100	%
	CIS Venture Kazakstan, L.L.C.
	 	 	100	%
	Climax Canada Ltd.
	 	 	100	%
	Climax Engineered Materials, LLC
	 	 	100	%
	Climax Molybdenum Asia Corporation
	 	 	100	%
	Climax Molybdenum B.V.
	 	 	100	%
	Climax Molybdenum GmbH
	 	 	100	%
	Climax Molybdenum Marketing Corporation
	 	 	100	%
	Climax Molybdenum U.K. Limited
	 	 	100	%
	Cobre Cerrillos S.A.
	 	 	100	%
	Cobre Mining Company
	 	 	100	%
	Columbian Carbon Deutschland G.M.B.H.
	 	 	100	%
	Columbian Carbon Europa S.R.L.
	 	 	100	%
	Columbian Carbon International (France) S.A.
	 	 	100	%
	Columbian Carbon Japan Ltd.
	 	 	68	%
	Columbian Carbon Spain, S.A.
	 	 	100	%
	Columbian Chemicals Brasil, S.A.
	 	 	100	%

 

3

	 	 	 	 	 
	 	 	Percentage of Voting
	 	 	Stock held by
	 	 	Borrower and its
	 Name	 	Associated Companies
	Columbian Chemicals Canada, Ltd.
	 	 	100	%
	Columbian Chemicals Europa, GmbH
	 	 	100	%
	Columbian Chemicals Korea Co., Ltd.
	 	 	85	%
	Columbian Holding Company
	 	 	100	%
	Columbian International Chemicals Corporation
	 	 	100	%
	Columbian International Trading Company
	 	 	100	%
	Columbian Technology Company
	 	 	100	%
	Columbian Tiszai Carbon Ltd.
	 	 	100	%
	Columbian (U.K.) Limited (CUKL)
	 	 	100	%
	Compania Contractual Minera Candelaria
	 	 	80	%
	Compania Contractual Minera Ojos del Salado
	 	 	100	%
	Conducen Phelps Dodge Centro America El Salvador, S.A. de C.V.
	 	 	73.42	%
	CONDUCEN, S.A.
	 	 	73.42	%
	Copper Market, Inc.
	 	 	100	%
	Cyprus Amax Australia Corporation
	 	 	100	%
	Cyprus Amax Chile Holdings, Inc.
	 	 	100	%
	Cyprus Amax Finance Chile Corporation
	 	 	100	%
	Cyprus Amax Finance Corporation
	 	 	100	%
	Cyprus Amax Indonesia Corporation
	 	 	100	%
	Cyprus Amax Leasing Corporation
	 	 	100	%
	Cyprus Amax Minerals Company
	 	 	100	%
	Cyprus Canada Inc.
	 	 	100	%
	Cyprus Climax Metals Company
	 	 	100	%
	Cyprus Copper Marketing Corporation
	 	 	100	%
	Cyprus Copperstone Gold Corporation
	 	 	100	%
	Cyprus El Abra Corporation
	 	 	100	%
	Cyprus Exploration and Development Corporation
	 	 	100	%
	Cyprus Gold Company
	 	 	100	%
	Cyprus Gold Exploration Corporation
	 	 	100	%
	Cyprus Metals Company
	 	 	100	%
	Cyprus Metals Exploration Corporation
	 	 	100	%
	Cyprus Mexico Corporation
	 	 	100	%
	Cyprus Mines Corporation
	 	 	100	%

 

4

	 	 	 	 	 
	 	 	Percentage of Voting
	 	 	Stock held by
	 	 	Borrower and its
	 Name	 	Associated Companies
	Cyprus Pima Mining Company
	 	 	75.01	%
	Cyprus Pinos Altos Corporation
	 	 	100	%
	Cyprus Speciality Metals Company
	 	 	100	%
	Cyprus Tohono Corporation
	 	 	100	%
	Cyprus Zinc Corporation
	 	 	100	%
	Dodge & James Insurance Company, Ltd.
	 	 	100	%
	Electroconductores de Honduras, S.A. de C.V.
	 	 	59.39	%
	Exploration Enterprise India Private Limited
	 	 	100	%
	Geomining L.L.P.
	 	 	100	%
	Habirshaw Cable and Wire Corporation
	 	 	100	%
	Inversiones de Cobre Chile Co., S.A.
	 	 	100	%
	James Douglas Insurance Company, Ltd.
	 	 	100	%
	Kumakata Mining Co., Inc.
	 	 	100	%
	Lambunao Mining Co., Inc.
	 	 	100	%
	Las Quintas Serenas Water Co.
	 	 	59	%
	Macote Mining Co., Inc.
	 	 	100	%
	Madagascar Mineral Investments Ltd.
	 	 	100	%
	Makilala Mining Co., Inc.
	 	 	100	%
	Malampay Mining Co., Inc.
	 	 	100	%
	Malibato Mining Co., Inc.
	 	 	100	%
	Mambusao Mining Co., Inc.
	 	 	100	%
	Metal Fabricators of Zambia Limited
	 	 	51	%
	Minera Aurex (Chile) Limitada
	 	 	100	%
	Mineracao Floresta Doeste Ltda.
	 	 	100	%
	Minera Cobre Chile Limitada
	 	 	100	%
	Minera Cuicuilco S.A. de C.V.
	 	 	100	%
	Minera Cyprus Amax Chile Limitada
	 	 	100	%
	Minera Cyprus Antacori Corporation
	 	 	100	%
	Minera Cyprus Chile Limitada
	 	 	100	%
	Minera Las Clauditas, S.A.
	 	 	85	%
	Minera Phelps Dodge del Peru S.A.
	 	 	100	%
	Minera Phelps Dodge Mexico, S de RL de CV
	 	 	100	%
	Mining Development Investments Ltd.
	 	 	100	%

 

5

	 	 	 	 	 
	 	 	Percentage of Voting
	 	 	Stock held by
	 	 	Borrower and its
	 Name	 	Associated Companies
	Missouri Lead Smelting Company
	 	 	100	%
	Mt. Emmons Mining Company
	 	 	100	%
	North-West Minerals (Zambia) Ltd.
	 	 	100	%
	Pacific Western Land Company
	 	 	100	%
	PD Candelaria, Inc.
	 	 	100	%
	PD Cobre, Inc.
	 	 	100	%
	PD Colombia S.A.
	 	 	73.42	%
	PDEP Inc.
	 	 	100	%
	PD Indonesia Corporation
	 	 	100	%
	PD Las Bambas Corporation
	 	 	100	%
	PDM Energy, L.L.C.
	 	 	100	%
	PD Ojos del Salado, Inc.
	 	 	100	%
	PD Peru, Inc.
	 	 	100	%
	PD Receivables LLC
	 	 	100	%
	PD Rus LLC
	 	 	100	%
	PD Russia, Inc.
	 	 	100	%
	PD-Siam Rod Company Ltd.
	 	 	65	%
	PDSMM Holding Ltd.
	 	 	55	%
	PDSMM Sichuan L.P.
	 	 	55	%
	PDTL Trading Company Limited
	 	 	49	%
	PD Wire & Cable Sales Corporation
	 	 	100	%
	Phelps Dodge Africa Cable Corporation
	 	 	100	%
	Phelps Dodge Ajo, Inc.
	 	 	100	%
	Phelps Dodge Australasia, Inc.
	 	 	100	%
	Phelps Dodge Bagdad, Inc.
	 	 	100	%
	Phelps Dodge Brasil Ltda.
	 	 	100	%
	Phelps Dodge Centro America Honduras, S.A. de C.V.
	 	 	73.42	%
	Phelps Dodge Chicago Rod, Inc.
	 	 	100	%
	Phelps Dodge Chino, Inc.
	 	 	100	%
	Phelps Dodge Chita, LLC
	 	 	100	%
	Phelps Dodge Corporation of Canada, Limited
	 	 	100	%
	Phelps Dodge Development Corporation
	 	 	100	%
	Phelps Dodge do Brasil Mineracao Ltda
	 	 	100	%

 

6

	 	 	 	 	 
	 	 	Percentage of Voting
	 	 	Stock held by
	 	 	Borrower and its
	 Name	 	Associated Companies
	Phelps Dodge Dublin
	 	 	100	%
	Phelps Dodge Energy Services, LLC
	 	 	100	%
	Phelps Dodge Enfield Corporation
	 	 	100	%
	Phelps Dodge Exploracion Mexico, S.A. de C.V.
	 	 	100	%
	Phelps Dodge Exploration Corporation
	 	 	100	%
	Phelps Dodge Exploration Sweden AB
	 	 	100	%
	Phelps Dodge Hidalgo, Inc.
	 	 	100	%
	Phelps Dodge High Performance Conductors Japan Co., Ltd.
	 	 	100	%
	Phelps Dodge High Performance Conductors of NJ, Inc.
	 	 	100	%
	Phelps Dodge High Performance Conductors of SC & GA, Inc.
	 	 	100	%
	Phelps Dodge Holdings Mexico, S.A. de C.V.
	 	 	100	%
	Phelps Dodge International Corporation
	 	 	100	%
	Phelps Dodge Madagascar S.A.R.L.
	 	 	100	%
	Phelps Dodge Kamchatka, LLC
	 	 	100	%
	Phelps Dodge Magnet Wire (Austria) GmbH
	 	 	100	%
	Phelps Dodge Magnet Wire de Mexico, SA de CV
	 	 	100	%
	Phelps Dodge Magnet Wire (Suzhou) Company, Ltd.
	 	 	100	%
	Phelps Dodge Mercantile Company
	 	 	100	%
	Phelps Dodge Mining Services, Inc.
	 	 	100	%
	Phelps Dodge Mining (Zambia) Limited
	 	 	100	%
	Phelps Dodge Molybdenum Corporation
	 	 	100	%
	Phelps Dodge of Africa, Ltd.
	 	 	100	%
	Phelps Dodge Overseas Capital Corporation
	 	 	100	%
	Phelps Dodge Safford, Inc.
	 	 	100	%
	Phelps Dodge Sales Company, Incorporated
	 	 	100	%
	Phelps Dodge Suzhou Holdings, Inc.
	 	 	100	%
	Phelps Dodge Thailand Limited
	 	 	75.47	%
	Phelps Dodge Tyrone, Inc.
	 	 	100	%
	Phelps Dodge Wire and Cable Holding de Mexico SA de CV
	 	 	100	%
	Phelps Dodge Wire & Cable Trading Company de Mexico, SA de CV
	 	 	100	%
	Phelps Dodge Yantai Cable Company
	 	 	60	%
	Phelps Dodge Yantai China Holdings Inc.
	 	 	66.67	%
	Proveedora de Cables y Alambres PDCA Guatemala, S.A.
	 	 	73.42	%

 

7

	 	 	 	 	 
	 	 	Percentage of Voting
	 	 	Stock held by
	 	 	Borrower and its
	 Name	 	Associated Companies
	Pt Cyprus Amax Indonesia
	 	 	100	%
	PT Kutaraja Tembaga Raya
	 	 	56	%
	Savanna Development Co., Ltd.
	 	 	100	%
	Servicios Especiales Nacionales, S.A. de C.V.
	 	 	100	%
	Servicios Phelps Dodge Mexico, S.A. de C.V.
	 	 	100	%
	Sevalco Limited
	 	 	100	%
	Silver Springs Ranch, Inc.
	 	 	100	%
	Sociedad Contractual Minera El Abra
	 	 	51	%
	Sociedad Minera Cerro Verde S.A.
	 	 	82.49	%
	Soner, Inc.
	 	 	100	%
	South Danube Metals D.O.O.
	 	 	100	%
	Tambuli Mining Co., Inc.
	 	 	100	%
	The Morenci Water & Electric Company
	 	 	100	%
	Tucson, Cornelia and Gila Bend Railroad Co.
	 	 	100	%
	Tyrone Mining, LLC
	 	 	100	%
	United States Metals Refining Company
	 	 	100	%
	Warren Company
	 	 	100	%
	Western Nuclear Australia Limited
	 	 	100	%
	Western Nuclear, Inc.
	 	 	100	%

 

Schedule III – Environmental Representation

None

 

 

Schedule IV - Litigation

     I. We are a member of several trade associations that, from time to
time, initiate legal proceedings challenging administrative regulations
or court decisions that the membership considers to be improper and
potentially adverse to their business interests. These legal proceedings
are conducted in the name of the trade associations, and the members of
the trade association are not parties, named or otherwise.

     II. Arizona water regulations, water rights adjudications and other
related water cases.

     A. General Background. Arizona surface water law is based on the
doctrine of prior appropriation (first in time, first in right). Surface
water rights in Arizona are usufructuary rights, and as such the water
right holder is granted only the right to use public waters for a
statutorily defined beneficial use, at a designated location.
Groundwater in Arizona is governed by the doctrine of reasonable use.
Arizona has initiated two water rights adjudications in order to quantify
and prioritize all of the surface water rights and water right claims to
two of the state’s river systems and sources. Groundwater is not subject
to the adjudication; however, wells may be adjudicated to the extent that
they are found to produce or impact appropriable surface water. The two
adjudication cases that could potentially impact Phelps Dodge’s surface
water rights and claims (including some wells) are entitled “In Re The
General Adjudication of All Rights to Use Water in the Little Colorado
Water System and Source, Superior Court Case No. 6417 (Superior Court of
Arizona, Apache County; petition filed on or about February 17, 1978),”
and “In Re The General Adjudication of All Rights to Use Water in the
Gila River System and Source, Superior Court, Case Nos. W-1 (Salt), W-2
(Verde), W-3 (Upper Gila); W-4 (San Pedro); Consolidated (Superior Court
of Arizona, Maricopa County; petition filed on February 17, 1978).” The
major parties in addition to Phelps Dodge in the Gila River Adjudication
are: Gila Valley Irrigation District, the San Carlos Irrigation and
Drainage District, the state of Arizona, the San Carlos Apache Tribe, the
Gila River Indian Community, and the United States on behalf of those
Tribes, on its own behalf and on the behalf of the White Mountain Apache
Tribe, Ft. McDowell Mohave-Apache Indian Community, Salt River
Pima-Maricopa Indian Community and the Payson Community of Yavapai Apache
Indians. The major parties in addition to Phelps Dodge in the Little
Colorado Adjudication are: the state of Arizona, the Salt River Project,
Arizona Public Service Company, the Navajo Nation, the Hopi Indian Tribe,
the San Juan Southern Paiute Tribe and the United States on behalf of
those Indian Tribes, on its own behalf and on behalf of the White
Mountain Apache Tribe.

     Phelps Dodge has four active operations in the state of Arizona:
Morenci, Miami, Sierrita and Bagdad. Each operation requires water for
mining and all related support facilities. With the exception of Bagdad,
each operation is located in a watershed within an ongoing surface water
adjudication. Each operation has sufficient water claims to cover its
operational demands. In many instances, the water supply may come from a
variety of possible sources. The potential impact of the surface water
adjudications on each active operation is discussed below.

     B. Operations.

     Morenci. The Morenci operation is located in eastern Arizona.
Morenci water is supplied by a combination of sources, including decreed
surface water rights in the San Francisco River, Chase Creek and Eagle
Creek drainages, groundwater from the Upper Eagle Creek wellfield, and
Central Arizona Project (CAP) water leased from the San Carlos Apache
Tribe and delivered to Morenci via exchange through the Black River Pump
Station. Phelps Dodge has filed Statements of Claimants in the
adjudication for each of its water sources for Morenci except the CAP
water.

     Phelps Dodge’s decreed water rights are subject to the Gila River
Adjudication and potentially could be impacted. Although the purpose of
the adjudication is to determine only surface water rights, wells such as
those in the Eagle Creek wellfield may be subject to the Gila River
Adjudication, but only to

 

2

the extent those wells may be determined to capture or impact
appropriable surface water. The CAP water provided via exchange is not
subject to any state adjudication process. The CAP lease became
effective as of January 1, 1999, and has a 50-year term.

     Miami. The Miami operation obtains water from a number of sources
in the Salt River watershed. Statements of Claimants have been filed in
connection with these water sources, each of which is subject to the
adjudication and could be potentially impacted. Miami currently holds a
CAP subcontract, although CAP water is not currently used at the
operation. CAP water is not subject to adjudication; however, an
exchange agreement will need to be negotiated in order to deliver this
water to Miami.

     Sierrita. The Sierrita operation is located in the Santa Cruz River
watershed. The water for the operation is groundwater. The wells that
supply the water may be subject to the Gila River Adjudication only to
the extent that such wells are determined to be pumping or impacting
appropriable surface water. Phelps Dodge has filed Statements of
Claimants in the adjudication for these water sources in case any are
later determined to produce or impact appropriable surface water. In
1980, the Arizona legislature enacted the Arizona Groundwater Code
(Code). The Code established Active Management Areas (AMA’s) in several
groundwater basins, including the Santa Cruz Groundwater Basin. The
groundwater at this operation is subject to regulation under the Tucson
AMA.

     Bagdad. The Bagdad operation is located in the Bill Williams River
watershed. The water supply includes claims to both surface water and
groundwater. There is not an active adjudication proceeding in this
watershed; however, the legal precedent set in the active adjudications
regarding the determination of whether water pumped from wells is treated
as surface water or groundwater may impact the use of water from some
wells.

     C. Other Arizona Mining Properties. The potential impact of the
ongoing adjudication on other mining properties is discussed below.

     Safford. Water for the planned future operation at Safford may come
from a combination of sources. Wells that supply groundwater may be used
and those wells will be subject to the adjudication only to the extent
that such wells are determined to be pumping or impacting appropriable
surface water. CAP water may also be considered for use at the operation
some time in the future. CAP water is not subject to adjudication;
however, an exchange agreement will need to be negotiated in order to
deliver the water. The implementation of such an exchange will require
approval of the Globe Equity Court as well as environmental reviews and
related agency approvals.

     Ajo. The potential water supply for Ajo is groundwater. The wells
that supply the water may be subject to the Gila River Adjudication to
the extent that such wells are determined to be pumping or impacting
appropriable surface water. Phelps Dodge has filed a Statement of
Claimant in the adjudication for these water sources in case any are
later determined to produce or impact appropriable surface water.

     Bisbee. The potential water supply for Bisbee is groundwater. The
wells that supply the water may be subject to the Gila River Adjudication
to the extent that such wells are determined to be pumping or impacting
appropriable surface water. Phelps Dodge has filed a Statement of
Claimant in the adjudication for these water sources in case any are
later determined to produce or impact appropriable surface water.

     D. Water Settlements.

     1. Gila River Indian Community Water Settlement.

     On May 4, 1998, Phelps Dodge executed a settlement agreement
with the Gila River Indian Community (the Community) that resolves
the issues between Phelps Dodge and the Community pertinent to the
Gila River Adjudication. Since that time, comprehensive settlement
negotiations with users all along the Gila River have been
initiated. Phelps Dodge’s settlement

 

3

with the Community is now included in the comprehensive
settlement. This settlement is subject to the approval of the
Secretary of the Interior and the passage of federal legislation.

     2. San Carlos Apache Tribe.

     In 1997, issues of dispute arose between Phelps Dodge and the
San Carlos Apache Tribe (the Tribe) regarding Phelps Dodge’s use
and occupancy of the Black River Pump Station, which delivers water
to the Morenci operation. In May 1997, Phelps Dodge reached an
agreement with the Tribe, and subsequently federal legislation
(Pub. L. No. 105-18, 5003, 111 stat. 158, 181-87) was adopted.
The legislation prescribes arrangements intended to ensure a future
supply of water for the Morenci mining complex in exchange for
certain payments by Phelps Dodge. The legislation does not address
any potential claims by the Tribe relating to Phelps Dodge’s
historical occupancy and operation of Phelps Dodge facilities on
the Tribe’s Reservation, but does require that any such claims be
brought, if at all, exclusively in federal district court. As of
this writing, no such claims have been filed.

     The 1997 legislation required that the Company and the Tribe
enter a lease for the delivery of CAP water through the Black River
Pump Station to Morenci on or before December 31, 1998. In the
event a lease was not signed, the legislation expressly provided
that the legislation would become the lease. On January 24, 2002,
a lease between the San Carlos Apache Tribe, Phelps Dodge and the
United States was executed (effective as of January 1, 1999) in
accordance with that legislation. On the same date, and in
accordance with the legislation, an Exchange Agreement between the
San Carlos Apache Tribe, the United States and the Salt River
Project Water User’s Association was executed and subsequently
approved by Phelps Dodge. Since that date, CAP water has been
delivered to Morenci. Phelps Dodge has not reached a settlement
with the Tribe on general water issues and Phelps Dodge water
claims within the Gila River Adjudication are still subject to
litigation with the Tribe and other parties.

     3. Salt River Pima-Maricopa Indian Community.

     The Salt River Pima-Maricopa Indian Community, Salt River
Valley Water Users’ Association, the principal Salt River Valley
Cities, the state of Arizona and others have negotiated a
settlement among themselves for the Verde and Salt River system.
The settlement has been approved by Congress, the President and the
Arizona Superior Court. Under the settlement, the Salt River
Pima-Maricopa Indian Community waived all water claims it has
against all other water claimants (including Phelps Dodge) in
Arizona.

     4. Fort McDowell Mohave-Apache Indian Community.

     The Fort McDowell Mohave-Apache Indian Community, Salt River
Valley Water Users’ Association, the principal Salt River Valley
Cities, the state of Arizona and others have negotiated a
settlement as among themselves for the Verde River system. This
settlement has been approved by Congress, the President and the
Arizona Superior Court. Under this settlement, the Fort McDowell
Mohave-Apache Indian Community waived all water claims it has
against all other water claimants (including Phelps Dodge) in
Arizona.

     E. Other Related Cases. The following proceedings involving water
rights adjudications are pending in the U.S. District Court of Arizona:

     (i) On June 29, 1988, the Gila River Indian Community filed a
complaint-in-intervention in United States v. Gila Valley
Irrigation District, et al., and Globe Equity No. 59 (D. Ariz.).
The underlying action was initiated by the United States in 1925 to
determine conflicting claims to water rights in certain portions of
the Gila River watershed. Although Phelps Dodge was named and
served as a defendant in that action, Phelps Dodge was dismissed
without prejudice as

 

4

a defendant in March 1935. In June 1935, the Court entered a
decree setting forth the water rights of numerous parties, but not
Phelps Dodge’s. The Court retained, and still has, jurisdiction of
the case. The complaint-in-intervention does not name Phelps Dodge
as a defendant; however, it does name the Gila Valley Irrigation
District as a defendant. Therefore, the complaint-in-intervention
could affect the approximately 3,000 acre-feet of water that Phelps
Dodge has the right to divert annually from Eagle Creek, Chase
Creek or the San Francisco River pursuant to Phelps Dodge’s decreed
rights and an agreement between Phelps Dodge and the Gila Valley
Irrigation District.

     During 1998, Phelps Dodge purchased farmlands with associated
water rights that are the subject of this litigation. As a result,
Phelps Dodge has been named and served as a party in this case.
The lands and associated water rights are not currently used in
connection with any Phelps Dodge mining operation.

     Phelps Dodge’s Miami operation (formerly named Cyprus Miami
Mining Corporation) was named and served as a defendant in this
action in 1989. These proceedings may affect water rights
associated with former Cyprus Miami lands in the Gila River
watershed.

     (ii) Prior to January 1, 1983, various Indian tribes filed
several suits in the U.S. District Court for the District of
Arizona claiming prior and paramount rights to use waters, which at
present are being used by many water users, including Phelps Dodge,
and claiming damages for prior use in derogation of their allegedly
paramount rights. These federal proceedings have been stayed
pending state court adjudication.

     (iii) Cyprus Sierrita Corporation’s predecessor in interest
was a defendant in United States, et al. v. City of Tucson, et
al., No. CIV 75-39 (D. Ariz.). This is a consolidation of several
actions seeking a declaration of the rights of the United States,
the Papago Indian Tribe (now known as the Tohono O’odham Nation),
and individual allottees of the Tohono O’odham Nation, to surface
water and groundwater in the Santa Cruz River watershed; damages
from the defendants’ use of surface water and groundwater from the
watershed in derogation of those rights; and injunctive relief.
Congress in 1982 enacted the Southern Arizona Water Rights
Settlement Act, which was intended to resolve the water right
claims of the Tohono O’odham Nation and its member allottees
relating to the San Xavier Reservation and the Schuk Toak District
of the Sells Papago Reservation. The allottees contested the
validity of the Act and contended that the Court could not dismiss
the litigation without their consent. This prompted additional
litigation, and eventually culminated in settlement negotiations.
The Court suspended most aspects of the litigation to enable the
parties to negotiate a settlement with the allottees. The Court’s
recent attention has been devoted to the composition of appropriate
classes of allottees and identification of class representatives,
so that any settlement that is reached would bind the allottees.
It is anticipated that a settlement and authorizing legislation
would conclude all litigation on behalf of the Tohono O’odham
Nation, its allottee members, and the United States as Trustee for
the nation and its allottee members, relating to water rights. As
of this writing, however, a settlement has not been reached. The
outcome of this dispute could impact water right claims associated
with the acquired Cyprus operations at Sierrita, and miscellaneous
former Cyprus land holdings in the Santa Cruz River watershed.

     III. The Company entered into a Consent Decree in December 2000 with
the Connecticut Department of Environmental Protection (CDEP) regarding
purported violations of state air emissions limitations associated with
the Phelps Dodge Norwich rod mill in Norwich, Connecticut. Under the
terms of the Consent Decree, the Company agreed to pay a penalty of $0.5
million, fund a supplemental environmental project to be administered by
CDEP, test the rod mill’s newly installed state-of-the-art air pollution
control equipment, and perform a study on environmental impacts near the
rod mill and whether they may require remediation. CDEP has accepted the
completion of the first three requirements identified above. The Company
submitted the required environmental study to CDEP on July 2, 2002.

 

5

     IV. On October 1, 1997, the U.S. Environmental Protection Agency
(EPA) issued a Notice of Violation (NOV) to Cyprus Amax’s (now the
Company’s) Sierrita operations in southeastern Arizona. The NOV alleged
certain emission standards and permitting violations associated with the
molybdenum roasting facility at Sierrita. On September 6, 2000, EPA also
issued an NOV to Phelps Dodge Sierrita for alleged violations of
Prevention of Significant Deterioration permitting requirements, and New
Source Performance Standards under the federal Clean Air Act. No action
has been filed at this time, and the Company has asserted defenses to the
NOVs in its response to EPA. EPA and the Company have entered into a
series of agreements tolling the running of the statute of limitations on
certain of the alleged violations while the parties attempt to negotiate
a settlement of the issues raised in the NOVs.

     V. The Pinal Creek site was listed under the Arizona Department of
Environmental Quality’s Water Quality Assurance Revolving Fund program in
1989 for contamination in the shallow alluvial aquifers within the Pinal
Creek drainage near Miami, Arizona. Since that time, environmental
remediation has been performed by members of the Pinal Creek Group (PCG),
comprising Phelps Dodge Miami, Inc. (a wholly owned subsidiary of the
Company) and two other companies. In 1998, the District Court approved a
Consent Decree between the PCG members and the state of Arizona resolving
all matters related to an enforcement action contemplated by the state of
Arizona against the PCG members with respect to the groundwater matter.
The Consent Decree committed Phelps Dodge Miami, Inc. and the other PCG
members to complete the remediation work outlined in the Consent Decree.
That work continues at this time pursuant to the Consent Decree and
consistent with the National Contingency Plan prepared by EPA under the
Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA).

     Phelps Dodge Miami, Inc. and the other members of the PCG are
pursuing contribution litigation against three other parties involved
with the site. At least two of the three defendants now have admitted
direct liability as responsible parties. The first phase of the case has
been assigned a trial date in August 2004. Phelps Dodge Miami, Inc. also
asserted claims against certain past insurance carriers. As of November
2002, all of the carriers have settled or had their liability
adjudicated. One carrier has appealed the judgment against it.

     In addition, a dispute between one dissenting PCG member and Phelps
Dodge Miami, Inc. and the other PCG member was filed in Superior Court in
2002. The litigation seeks a declaratory judgment on the dissenting
member’s contract liability under the PCG agreement. Trial for this
matter is scheduled for mid-2004.

     Approximately $113 million remained in the Company’s Pinal Creek
remediation reserve at December 31, 2003. While significant recoveries
may be achieved in the contribution litigation, the Company cannot
reasonably estimate the amount and, therefore, has not taken potential
recoveries into consideration in the recorded reserve.

     VI. The Company’s wholly owned subsidiary, Cyprus Amax Minerals
Company (Cyprus), is the plaintiff in an action entitled Cyprus Amax
Minerals Company v. Asarco Incorporated, 99 Civ. 11198 (LMM), which was
filed on November 9, 1999, in the U.S. District Court for the Southern
District of New York. The action arises out of the merger agreement
between Cyprus and Asarco dated as of July 15, 1999 (the merger
agreement). The complaint alleges, among other things, that Asarco
breached the merger agreement and a subsequent agreement by soliciting an
alternative takeover proposal for Asarco from another company. Cyprus
seeks, among other things, compensatory damages of not less than $90
million. Asarco filed an answer to the complaint on November 30, 1999.
On April 10, 2001, Asarco filed an amended answer and counterclaims
against Cyprus and the Company for recovery of a $30 million termination
fee paid to the Company in October 1999 and for other unspecified damages
related to the bidding process for Asarco.

     Discovery in this action concluded in July 2003. On September 12,
2003, in accordance with an Order of the Court, Cyprus served Asarco with
a First Amended Complaint that, among other things, incorporates
additional factual allegations based on information learned during
discovery and asserts new

 

6

causes of action against Asarco. On September 26, 2003, Asarco
served Cyprus with an answer to the First Amended Complaint that, among
other things, omits all of the counterclaims previously asserted by
Asarco against Cyprus and the Company. On October 10, 2003, the parties
entered into a Stipulation in which Asarco formally dismissed with
prejudice all counterclaims previously asserted against Cyprus and the
Company, and on October 17, 2003, that Stipulation was so ordered by the
Court. Asarco moved for summary judgment with respect to the First
Amended Complaint on November 10, 2003, and that motion is currently
pending. The Court has not yet set a date for the trial of this action.

     VII. On May 30, 2001, the U.S. Department of Justice (DOJ) notified
the Company of alleged violations of the Clean Water Act at the United
Verde Mine. A Consent Decree was entered in the U.S. District Court for
the District of Arizona on November 20, 2003, resolving these
allegations. The Consent Decree specifies the terms for settlement of
the Clean Water Act claims, under which the Company will undertake
certain improvement and reclamation projects. The Company also paid a
civil penalty of $220,142.

     VIII. On October 18, 2002, the Mining and Minerals Division (MMD) of
the New Mexico Energy, Minerals and Natural Resources Department issued
NOVs under the New Mexico Mining Act Rules (NMMAR) to Chino Mines Company
(Chino), Phelps Dodge Tyrone, Inc. (Tyrone) and Cobre Mining Company
(Cobre). The NOVs allege that Chino, Tyrone and Cobre failed to obtain
approval of closeout plans as required by NMMAR by October 1, 2002. A
closeout plan under NMMAR consists of a plan for reclamation of a mining
operation following cessation of operations and financial assurance
sufficient for MMD to complete the closeout plan if the operator
defaults. The NOVs would have established schedules requiring that the
alleged violations be abated by April 20, 2003, for Chino, June 30, 2003,
for Cobre and September 30, 2003, for Tyrone. The NOVs did not assess
civil penalties, but reserved the right to assess penalties in the future
in accordance with the penalty assessment procedures in NMMAR. The NOVs
further stated that if the alleged violations were not abated by the
dates set in the NOVs, MMD would issue “cessation orders” in accordance
with NMMAR requiring that mining operations cease until the alleged
violation is abated. On November 1, 2002, Chino, Tyrone and Cobre each
filed Petitions for Review (Petitions) of the NOVs with the New Mexico
Mining Commission (Commission). The Petitions contended that closeout
plan approval was not possible by October 1, 2002, because of delays by
the New Mexico Environment Department (NMED) in issuing discharge permits
for closure and issuing determinations that the closeout plans for Chino,
Tyrone and Cobre are expected to achieve compliance with environmental
standards, including compliance with water quality standards. The
Petitions requested that the NOVs be vacated or, in the alternative, that
different dates be set for abatement of the alleged violations which
allow a reasonable period of time after NMED issues its discharge permits
to obtain approval of the closeout plans. The Commission held a public
hearing on December 13-14, 2002, on the Petitions. The Commission upheld
the NOVs but modified the period for abatement for each mine to run from
the dates when NMED issues the discharge permits for closure for the
mines. Under the modified NOVs, Chino, Cobre and Tyrone will have seven,
nine and 12 months, respectively, after NMED issues their closure permits
to obtain approval of their closeout plans.

     NMED issued Chino’s closure permit on February 24, 2003. Since the
closure permit was issued, Chino has engaged in discussions to resolve
the amount and form of financial assurance required by NMED and MMD and
the details of the closeout plan approval by MMD. To allow additional
time to finalize applicable documentation and to hold a public hearing as
required under the Mining Act, MMD issued orders extending the deadline
for Chino’s closeout plan approval to December 19, 2003. MMD approved
Chino’s closeout plan on December 18, 2003. Chino’s closure permit has
been appealed by third parties to the Water Quality Control Commission
(WQCC). Chino filed a motion to dismiss the appeal due to the failure to
follow required procedures, which was granted by the WQCC. The WQCC’s
decision has been appealed to the New Mexico Court of Appeals.

     NMED issued Tyrone’s closure permit on April 8, 2003, and Tyrone’s
deadline for closeout plan approval is April 8, 2004. As a result of
agreements on financial assurance announced in May and October 2003, a
framework for financial assurance for Tyrone has been established. This
arrangement is subject to public comment. Tyrone and one other party
have appealed certain portions of the closure permit and a

 

7

hearing before the WQCC on those appeals was completed on November
13, 2003. A decision by the WQCC is not expected until mid-April 2004.

     On April 12, 2004, MMD approved a closeout plan for Tyron, and MMD
and NMED approved Tyrone’s financial assurance agreement.

     Cobre has not yet received its NMED closure permit. Its deadline
for closeout plan approval will be nine months from the date the NMED
permit is issued.

     IX. Since approximately 1990, Phelps Dodge or its subsidiaries have
been named as a defendant in a number of product liability or premises
lawsuits brought by electricians and other skilled tradesmen or
contractors claiming injury from exposure to asbestos found in limited
lines of electrical wire products produced or marketed many years ago, or
from asbestos at certain Phelps Dodge properties. Phelps Dodge presently
believes its liability, if any, in these matters will not have a material
adverse effect, either individually or in the aggregate, upon its
business, financial condition, liquidity, results of operations or cash
flow. There can be no assurance, however, that future developments will
not alter this conclusion.

     X. On September 30, 2002, Columbian Chemicals Company, a subsidiary
of the Company, received an administrative complaint from EPA for alleged
violations of the Clean Air Act at its El Dorado, Arkansas, carbon black
plant. Columbian Chemicals Company and EPA are conducting settlement
discussions in an effort to resolve the matter informally.

     XI. On November 7, 2002, the United Kingdom Environment Agency
(Agency) issued an enforcement notice to Columbian Chemicals Company’s
Sevalco plant in the United Kingdom. This notice followed Sevalco’s
disclosure to the Agency in October 2002 that Sevalco had discovered
irregularities in its effluent discharge reports, and requires the plant
to implement procedures to ensure that discharges satisfy permit limits
and are properly reported. Columbian Chemicals Company is cooperating
with the Agency while the Agency continues its investigation of this
matter.

     XII. In November 2002, Columbian Chemicals Company was contacted by
U.S. and European antitrust authorities regarding a joint investigation
they initiated into alleged price fixing in the carbon black industry.
European antitrust authorities reviewed documents at three of Columbian
Chemicals’ facilities in Europe, and U.S. authorities contacted Columbian
Chemicals’ headquarters in Marietta, Georgia.

     XIII. The Company and Columbian Chemicals Company, together with
several other companies, were named as defendants in an action entitled
Technical Industries, Inc. v. Cabot Corporation, et al., filed on January
30, 2003, in the U.S. District Court in Boston, Massachusetts, and 14
other actions filed in four U.S. district courts, on behalf of a
purported class of all individuals or entities who purchased carbon black
directly from the defendants since January 1999. The Judicial Panel on
Multidistrict Litigation, consolidated all of these actions in the U.S.
District Court for the District of Massachusetts under the caption In re
Carbon Black Antitrust Litigation. The consolidated complaint filed in
these actions by the plaintiffs has dropped the Company as a defendant.
The consolidated complaint, which alleges that the defendants fixed the
prices of carbon black and engaged in other unlawful activities in
violation of the U.S. antitrust laws, seeks treble damages in an
unspecified amount and attorneys’ fees. The Company and Columbian
Chemicals Company, together with several other companies, have also been
named as defendants in an action entitled Level Construction, Inc. v.
Cabot Corporation, et al., filed in Superior Court of the state of
California for the County of San Francisco and eight other actions filed
in California Superior Courts on behalf of a purported class of indirect
purchasers of carbon black in the state of California from as early as
November 1998 to the present. The complaints allege similar claims by
indirect purchasers under California state law and seek treble damages in
an unspecified amount and attorneys’ fees. These complaints have been
consolidated in the Superior Court of the State of California for the
County of San Francisco under the caption Carbon Black Cases. The
consolidated complaint filed in three actions by the plaintiffs has
dropped the Company as a defendant. Similar class actions have been
filed in state courts in North Carolina, Florida, Kansas, New Jersey,
South Dakota and Tennessee on behalf of indirect purchases

 

8

of carbon black in those and six other states alleging violations of
state antitrust and deceptive trade practices laws. Columbian has also
received a demand for relief on behalf of indirect purchasers in
Massachusetts, but no lawsuit has been filed. The Company believes the
claims are without merit and intends to defend the lawsuits vigorously.

     XIV. In November 2002, EPA issued a unilateral administrative order
(UAO) under CERCLA to the Company’s wholly owned subsidiary, Western
Nuclear, Inc., and two other companies, Kerr McGee Corporation and
Fremont Lumber Company (collectively, the PRPs) requiring the companies
to perform certain remedial DESIGN (RD) AND REMEDIAL ACTION (RA) WORK AT
THE WHITE KING/LUCKY LAss Uranium Mines site near Lakeview, Oregon. The
PRPs do not believe the UAO was lawfully issued because EPA failed to
recognize the joint responsibility of the U.S. government under
applicable laws and to perform non-discretionary duties to ensure federal
government responsibility for remediating the site prior to issuance of
the UAO. The PRPs notified the EPA of their intent to sue and obtain,
among other things, a judicial determination of the illegality of the
UAO.

     The PRPs voluntarily commenced and undertook the RD work (but not RA
work) required by the UAO, and advised the EPA of their position and
progress. From January 2003 through July 2003, the PRPs and EPA
exchanged letters expressing their respective positions concerning the
validity of the UAO. On July 31, 2003, the EPA rejected the PRPs’
position, notifying them that penalties are accruing for the alleged
violations of the UAO and that the purported penalties through the end of
July 2003 total approximately $5.2 million.

     On September 19, 2003, the PRPs served a complaint on the Acting
Administrator of the EPA, which seeks to have the federal district court
of Oregon declare the UAO unlawful for failure to comply with the
requirement under CERCLA to ensure federal government participation in
remedying the site. Fremont Lumber Company, et al. v. Horinko, No.
03-CV-1073-AS (D. Ore). On December 15, 2003, EPA answered the
complaint and denied the PRPs’ allegations of non-compliance with CERCLA.
On January 12, 2004, EPA filed a complaint against the PRPs seeking to
enforce the PRPs’ compliance with the UAO and to recover administrative
penalties and response costs incurred at the site. On February 26, 2004,
an order was entered staying the cases of the PRPs and EPA pending the
outcome of mediation intended to settle all outstanding issues.

 

EXHIBIT A-1 — FORM OF

REVOLVING CREDIT

PROMISSORY NOTE

	 	 	 
	U.S.$__________________

	 	Dated:_____________, 200_

      FOR VALUE RECEIVED, the undersigned, Phelps Dodge Corporation, a New York
corporation (the “Borrower”), HEREBY PROMISES TO PAY to the order of             
(the “Lender”) for the account of its Applicable
Lending Office on the Termination Date (each as defined in the Credit Agreement
referred to below) the principal sum of U.S.$[amount of the Lender’s Commitment
in figures] or, if less, the aggregate principal amount of the Revolving Credit
Advances made by the Lender to the Borrower pursuant to the Credit Agreement
dated as of April 20, 2004 among the Borrower, the Lender and certain other
lenders parties thereto, Citigroup Global Markets Inc., as sole arranger and
book manager, JPMorgan Chase Bank, The Bank of Nova Scotia, The Bank of
Tokyo-Mitsubishi, Ltd., Wachovia Bank, National Association, The Royal Bank of
Scotland plc, ABN AMRO Bank, N.V. and Morgan Stanley Bank, as co-syndication
agents, and Citibank, N.A. as Agent for the Lender and such other lenders (as
amended or modified from time to time, the “Credit Agreement”; the terms
defined therein being used herein as therein defined) outstanding on the
Termination Date.

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

      Both principal and interest are payable in lawful money of the United
States of America to Citibank, as Agent, at 399 Park Avenue, New York, New York
10043, in same day funds. Each Revolving Credit Advance owing to the Lender by
the Borrower pursuant to the Credit Agreement, and all payments made on account
of principal thereof, shall be recorded by the Lender and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
Promissory Note.

      This Promissory Note is one of the Revolving Credit Notes referred to in,
and is entitled to the benefits of, the Credit Agreement. The Credit
Agreement, among other things, (i) provides for the making of Revolving Credit
Advances by the Lender to the Borrower from time to time in an aggregate amount
not to exceed at any time outstanding the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from each such Revolving
Credit Advance being evidenced by this Promissory Note and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of
certain stated events upon the terms and conditions therein specified.

	 	 	 	 	 
	 	 	PHELPS DODGE CORPORATION
	 
	 	 	 	 
	

	 	By	 	 
	

	 	 	 	

	

	 	 	 	Title:
	 
	 	 	 	 
	

	 	By	 	 
	

	 	 	 	

	

	 	 	 	Title:

 

 

2

ADVANCES AND PAYMENTS OF PRINCIPAL

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Amount of	 	 	 	 
	 	 	Amount of	 	Principal Paid	 	Unpaid Principal	 	Notation
	Date
	 	Advance
	 	or Prepaid
	 	Balance
	 	Made By

	 

 

EXHIBIT A-2 - FORM OF

COMPETITIVE BID

PROMISSORY NOTE

	 	 	 	 	 
	U.S.$                   

	 	Dated:
	 	         , 200    

                    FOR VALUE RECEIVED, the undersigned, Phelps Dodge Corporation, a New York
corporation (the “Borrower”), HEREBY PROMISES TO PAY to the order of
            (the “Lender”) for the account of its Applicable
Lending Office (as defined in the Credit Agreement dated as of April 20, 2004
among the Borrower, the Lender and certain other lenders parties thereto,
Citigroup Global Markets Inc., as sole arranger and book manager, JPMorgan
Chase Bank, The Bank of Nova Scotia, The Bank of Tokyo-Mitsubishi, Ltd.,
Wachovia Bank, National Association and The Royal Bank of Scotland plc, ABN
AMRO Bank, N.V. and Morgan Stanley Bank, as co-syndication agents, and
Citibank, N.A., as Agent for the Lender and such other lenders (as amended or
modified from time to time, the “Credit Agreement”; the terms defined therein
being used herein as therein defined)), on             , 200      , the principal
amount of U.S.$            ].

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

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

                    Both principal and interest are payable in lawful money of
            to Citibank, as agent, for the account of the Lender at the
office of             , at             in same day
funds.

                    This Promissory Note is one of the Competitive Bid Notes referred to in,
and is entitled to the benefits of, the Credit Agreement. The Credit
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events.

                    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.

                    This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of New York.

	 	 	 	 	 
	 	 	PHELPS DODGE CORPORATION
	 
	 	 	 	 
	

	 	By
	 	

	

	 	 	 	Title:
	 
	 	 	 	 
	

	 	By
	 	

	

	 	 	 	Title:

 

 

EXHIBIT B-1 - FORM OF NOTICE OF

REVOLVING CREDIT BORROWING

Citibank, N.A., as Agent

  for the Lenders parties

  to the Credit Agreement

  referred to below

  Two Penns Way

  New Castle, Delaware 19720

         [Date]

                    Attention: Bank Loan Syndications Department

Ladies and Gentlemen:

                    The undersigned, Phelps Dodge Corporation, refers to the Credit Agreement,
dated as of April 20, 2004 (as amended or modified from time to time, the
“Credit Agreement”, the terms defined therein being used herein as therein
defined), among the undersigned, certain Lenders parties thereto, Citigroup
Global Markets Inc., as sole arranger and book manager, JPMorgan Chase Bank,
The Bank of Nova Scotia, The Bank of Tokyo-Mitsubishi, Ltd., Wachovia Bank,
National Association and The Royal Bank of Scotland plc, ABN AMRO Bank, N.V.
and Morgan Stanley Bank, as co-syndication agents, and Citibank, N.A., as Agent
for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section
2.02 of the Credit Agreement that the undersigned hereby requests a Revolving
Credit Borrowing under the Credit Agreement, and in that connection sets forth
below the information relating to such Revolving Credit Borrowing (the
“Proposed Revolving Credit Borrowing”) as required by Section 2.02(a) of the
Credit Agreement:

          (i) The Business Day of the Proposed Revolving Credit Borrowing
is             , 200      .

          (ii) The Type of Advances comprising the Proposed Revolving
Credit Borrowing is [Base Rate Advances] [Eurodollar Rate Advances].

          (iii) The aggregate amount of the Proposed Revolving Credit
Borrowing is $            .

          [(iv) The initial Interest Period for each Eurodollar Rate
Advance made as part of the Proposed Revolving Credit Borrowing is
            month[s].]

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

          (A) the representations and warranties contained in Section 4.01
of the Credit Agreement (except the representations set forth in
subsection (b) or (f)(ii) thereof) are correct, before and after
giving effect to the Proposed Revolving Credit Borrowing and to the
application of the proceeds therefrom, as though made on and as of
such date; and

 

 

2

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

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	PHELPS DODGE CORPORATION
	 
	 	 	 	 
	

	 	By
	 	

	

	 	 	 	Title:

 

EXHIBIT B-2 - FORM OF NOTICE OF

COMPETITIVE BID BORROWING

Citibank, N.A., as Agent

  for the Lenders parties

  to the Credit Agreement

  referred to below

  Two Penns Way

  New Castle, Delaware 19720

         [Date]

                    Attention: Bank Loan Syndications Department

Ladies and Gentlemen:

                    The undersigned, Phelps Dodge Corporation, refers to the Credit Agreement,
dated as of April 20, 2004 (as amended or modified from time to time, the
“Credit Agreement”, the terms defined therein being used herein as therein
defined), among the undersigned, certain Lenders parties thereto, Citigroup
Global Markets Inc., as sole arranger and book manager, JPMorgan Chase Bank,
The Bank of Nova Scotia, The Bank of Tokyo-Mitsubishi, Ltd., Wachovia Bank,
National Association and The Royal Bank of Scotland plc, ABN AMRO Bank, N.V.
and Morgan Stanley Bank, as co-syndication agents, and Citibank, N.A., as 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 Competitive
Bid Borrowing under the Credit Agreement, and in that connection sets forth the
terms on which such Competitive Bid Borrowing (the “Proposed Competitive Bid
Borrowing”) is requested to be made:

	 	 	 	 	 
	(A)

	 	Date of Competitive Bid Borrowing
	 	

	 
	 	 	 	 
	(B)

	 	Amount of Competitive Bid Borrowing
	 	

	 
	 	 	 	 
	(C)

	 	[Maturity Date] [Interest Period]
	 	

	 
	 	 	 	 
	(D)

	 	Interest Rate Basis
	 	

	 
	 	 	 	 
	(E)

	 	Interest Payment Date(s)
	 	

	 
	 	 	 	 
	(F)

	 	

	 	

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

          (a) the representations and warranties contained in Section 4.01
of the Credit Agreement (except the representations set forth in
subsection (b) or (f)(ii) thereof) are correct, before and after
giving effect to the Proposed Competitive Bid 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 Competitive Bid Borrowing or from the application of the
proceeds therefrom, that constitutes a Default; and

          (c) the aggregate amount of the Proposed Competitive Bid
Borrowing 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.

 

 

2

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

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	PHELPS DODGE CORPORATION
	 
	 	 	 	 
	

	 	By
	 	

	

	 	 	 	Title:

 

EXHIBIT C - FORM OF

ASSIGNMENT AND ACCEPTANCE

                    Reference is made to the Credit Agreement dated as of April 20, 2004 (as
amended or modified from time to time, the “Credit Agreement”) among Phelps
Dodge Corporation, a New York corporation (the “Borrower”), the Lenders (as
defined in the Credit Agreement), Citigroup Global Markets Inc., as sole
arranger and book manager, JPMorgan Chase Bank, The Bank of Nova Scotia, The
Bank of Tokyo-Mitsubishi, Ltd., Wachovia Bank, National Association and The
Royal Bank of Scotland plc, ABN AMRO Bank, N.V. and Morgan Stanley Bank, as
co-syndication agents, and Citibank, N.A., as agent for the Lenders (the
“Agent”). Terms defined in the Credit Agreement are used herein with the same
meaning.

                    The “Assignor” and the “Assignee” referred to on Schedule I 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 Competitive Bid Advances and Competitive Bid
Notes)] [the Letter of Credit Facility] equal to the percentage interest
specified on Schedule 1 hereto of [all outstanding rights and obligations under
the Credit Agreement together with participations in Letters of Credit held by
the Assignor on the date hereof (other than in respect of Competitive Bid
Advances and Competitive Bid Notes)] [such Assignor’s Unissued Letter of Credit
Commitment]. After giving effect to such sale and assignment, the Assignee’s
[Revolving Credit Commitment and the amount of the Revolving Credit Advances],
Letter of Credit Commitment] 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, or the perfection or priority of any lien or security
interest created or purported to be created under or in connection with, 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 Borrower or the
performance or observance by the Borrower of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant
thereto; and (iv) attaches the Revolving Credit Note, if any, held by the
Assignor [and requests that the Agent exchange such Revolving Credit Note for a
new Revolving Credit Note payable to the order of [the Assignee in an amount
equal to the Revolving Credit Commitment assumed by the Assignee pursuant
hereto or new Revolving Credit Notes payable to the order of the Assignee in an
amount equal to the Revolving Credit Commitment assumed by the Assignee
pursuant hereto and] the Assignor in an amount equal to the Revolving Credit
Commitment retained by the Assignor under the Credit Agreement, [respectively,]
as specified on Schedule 1 hereto.

                    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 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 Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement as are delegated to the
Agent by the terms thereof, together with such powers and discretion as are
reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations that by the terms of the

 

 

2

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.

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

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

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

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

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

 

3

Schedule 1

to

Assignment and Acceptance

	 	 	 	 	 
	

	 	Percentage interest assigned:
	 	            %
	 
	 	 	 	 
	

	 	[Assignee’s Revolving Credit Commitment:
	 	$            
	 
	 	 	 	 
	

	 	Aggregate outstanding principal amount of	 	 
	

	 	Revolving Credit Advances assigned:
	 	$            
	 
	 	 	 	 
	

	 	Principal amount of Revolving Credit Note payable to Assignee:
	 	$            
	 
	 	 	 	 
	

	 	Principal amount of Revolving Credit Note payable to Assignor:
	 	$            ]
	 
	 	 	 	 
	

	 	[Assignee’s Letter of Credit Commitment:
	 	$            ]
	 
	 	 	 	 
	

	 	Effective Date*:
	 	     , 200_

	*	 	This date should be no earlier than five Business Days after the delivery of
this Assignment and Acceptance to the Agent.

 

4

	 	 	 	 	 
	 	 	[NAME OF ASSIGNOR], as Assignor
	 
	 	 	 	 
	

	 	By
	 	

Title:
	 	 	Dated: _______________, 200_
	 
	 	 	 	 
	

	 	[NAME OF ASSIGNEE], as Assignee

	 
	 	 	 	 
	

	 	By
	 	

Title:
	 	 	Dated: _______________, 200_
	 
	 	 	 	 
	 	 	Domestic Lending
Office:

             [Address]
	 
	 	 	 	 
	 	 	Eurodollar Lending Office:

             [Address]

	 	 	 	 
	Accepted and Approved this
	__________ day of _______________, 200_
	 
	 	 
	CITIBANK, N.A., as Agent
	 
	 	 
	By

	 	

	

	 	Title:
	 
	 	 
	Approved this __________ day
	of _______________, 200_
	 
	 	 
	PHELPS DODGE CORPORATION
	 
	 	 
	By

	 	

	

	 	Title:

 

5

EXHIBIT D - FORM OF

OPINION OF COUNSEL

FOR THE BORROWER

 

April __, 2004

To Citibank, N.A., as Agent, and each of

the Lenders Listed on Schedule A Hereto

Ladies and Gentlemen:

                    We have acted as counsel to Phelps Dodge Corporation, a New York
corporation (the “Borrower”), in connection with the preparation, execution and
delivery of the Credit Agreement, dated as of April    , 2004 (the “Credit
Agreement”), among the Borrower, the Lenders parties thereto, the arranger, the
book manager and the syndication agents named therein and Citibank, N.A., as
administrative agent for the Lenders (the “Agent”).

                    This opinion is delivered to you pursuant to subsection 3.01(h)(iv)(B) of
the Credit Agreement. Terms used herein which are defined in the Credit
Agreement shall have the respective meanings set forth in the Credit Agreement,
unless otherwise defined herein.

                    In connection with this opinion, we have examined (i) executed copies of
the Revolving Credit Notes and the Credit Agreement and (ii) all other
certificates, instruments or documents that have been executed and delivered to
you by the Borrower in connection therewith. We have also examined and relied
upon originals or copies, certified or otherwise authenticated to our
satisfaction, of such records of the Borrower and its Subsidiaries,
certificates of officers of the Borrower and its Subsidiaries, certificates and
letters of public officials, and other agreements, instruments and documents as
we have deemed necessary to require as a basis for the opinion hereinafter
expressed.

                    In rendering the opinions expressed below, we have assumed, with your
permission, without independent investigation or inquiry, (a) the authenticity
of all documents submitted to us as originals, (b) the genuineness of all
signatures, (c) the conformity to authentic originals of documents submitted to
us as certified, conformed or photostatic copies, and (d) the due
authorization, execution and delivery of the Revolving Credit Notes by the
Borrower and the Credit Agreement by the Borrower, the Agent and the Lenders.

                         Based upon the foregoing, we are of the opinion that:

                    1. No consent, approval or authorization of, filing with, notice to or
other act by or in respect of, any Governmental Authority of the United States
or the State of New York is required for the due execution, delivery or
performance by the Borrower of the Credit Agreement and the Revolving Credit
Notes, except consents, authorizations, filings, notices and other acts which
have been obtained or made.

                    2. Each of the Credit Agreement and the Revolving Credit Notes constitutes
a legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization,

 

 

moratorium or similar laws affecting the
enforcement of creditors’ rights generally and subject to general principles of
equity including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity) and except that (A) rights to indemnification and contribution
thereunder may be limited by federal or state securities laws or public policy
relating thereto and (B) no opinion is expressed with respect to Section 2.16
(Sharing of Payments) of the Credit Agreement insofar as such section provides
that any Lender purchasing a participation from another Lender pursuant thereto
may exercise set-off or similar rights with respect to such participation.

                         3. The execution, delivery and performance by the Borrower of the Credit
Agreement and the Revolving Credit Notes and compliance by it with the terms
and provisions thereof, will not violate any United States Federal or New York
State law known to us to be applicable to the Borrower (including, without
limitation, Regulations U and X of the Board of Governors of the Federal
Reserve System).

                         No person other than you is entitled to rely on this opinion without our
express written consent, provided that you may provide a copy of this opinion
to bank regulatory agencies and permitted assigns of your Commitments and
Revolving Credit Notes. The opinions expressed herein are limited to the laws
of the State of New York and the Federal laws of the United States which, in
our experience, are generally applicable to transactions of this type. In
giving the foregoing opinion, we express no opinion as to the effect (if any)
of any law of any jurisdiction (except the State of New York) in which any
Lender is located which limits the rate of interest that such Lender may charge
or collect.

           Very truly yours,

2

 

Schedule A

Citibank, N.A.

Bank of Tokyo-Mitsubishi, Ltd.

JPMorgan Chase Bank

The Bank of Nova Scotia

Wachovia Bank, N.A.

The Royal Bank of Scotland Plc

ABN Amro Bank, N.V.

Morgan Stanley Bank

Australia and New Zealand Banking Group Limited

KBC Bank, N.V.

Royal Bank of Canada

Wells Fargo Bank, National Association

Bank of America, N.A.

Credit Lyonnais, New York Branch

Mizuho Corporate Bank, Ltd.

The Northern Trust Company

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Exhibit 4.1    
    

	NUMBER	 	

 	 	SHARES
	

COMMON STOCK	
 	

 	
 	

COMMON STOCK
	 

INCORPORATED UNDER THE LAWS

OF THE STATE OF DELAWARE	 	 	 	SEE REVERSE FOR CERTAIN DEFINITIONS
	

 	
 	

 	
 	
CUSIP 59101M 10 5
	
THIS CERTIFIES THAT	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	IS THE RECORD HOLDER OF	 	 	 	 
	
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK, $.001 PAR VALUE, OF
	
Metabasis Therapeutics, Inc.
	

transferable on the books of the Corporation by the holder hereof in person or by a duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate is not valid unless countersigned and registered by the Transfer Agent
and Registrar.
	

        WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
	

Dated:	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	

    	
 	

 	
 	

 
	  

  

 

 

/s/ Paul K. Laikind	 	[SEAL]

METABASIS THERAPEUTICS, INC.

INCORPORATED

APRIL 14, 1997

DELAWARE	 	  

  

  

  

/s/ Paul K. Laikind
	

SECRETARY	
 	

 	
 	

PRESIDENT

	

 	
 	

 	
 	

COUNTERSIGNED AND REGISTERED:	
 	

 
	 	 	 	 	AMERICAN STOCK TRANSFER AND TRUST COMPANY
	 	 	 	 	 	 	TRANSFER AGENT	 	 
	 	 	 	 	 	 	AND REGISTRAR	 	 
	 	 	 	 	 	 	BY	 	 
	 	 	 	 	 	 	AUTHORIZED SIGNATURE

	 	 

        The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written
out in full according to applicable laws or regulations:  

	TEN COM	—	 	as tenants in common	 	 	 	UNIF GIFT MIN ACT	—	 	
	 	Custodian	 	

	TEN ENT	—	 	as tenants by the entireties	 	 	 	 	 	 	(Cust)	 	 	 	(Minor)
	JT TEN	—	 	as joint tenants with right of survivorship and not as tenants in common	 	 	 	 	 	 	under Uniform Gifts to Minors Act

    
 (State)
	

 	

 	
 	

 	
 	

 	
 	

UNIF TRF MIN ACT	

—	
 	

	
 	

Custodian (until age       )	
 	

	 	 	 	 	 	 	 	 	 	 	(Cust)	 	 	 	(Minor)
	 	 	 	 	 	 	 	 	 	 	under Uniform Transfers to Minors Act

    
 (State)

Additional abbreviations may also be used though not in the above list. 

        FOR VALUE RECEIVED,
                                         
                                          
                                 hereby sell, assign and transfer unto
 

	PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

    
	 	 	 	 	 
	

    
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
	    

	

    

	

    
	

Shares
	of stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
	    
	 	Attorney
	to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises.

	

Dated	
 	

    
	
 	

 
	

 	
 	
X	
 	

    

	 	 	X	 	    

	 	 	NOTICE:	 	THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
	
Signature(s) Guaranteed	
 	

 

	

    
 THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.	
 	

 
	    	 	 

QuickLinks

Exhibit 4.1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}]]