Document:

THE SECURITY  REPRESENTED BY THIS  CERTIFICATE  HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION  MAY BE EFFECTED  WITHOUT AN EFFECTIVE  REGISTRATION
STATEMENT  RELATED THERETO OR AN OPINION OF COUNSEL  SATISFACTORY TO THE COMPANY
THAT SUCH  REGISTRATION  IS NOT REQUIRED  UNDER THE  SECURITIES  ACT OF 1933, AS
AMENDED.

                             STOCK OPTION AGREEMENT

         THIS STOCK OPTION  AGREEMENT  ("Agreement") is made effective as of the
date of grant set forth below  ("Date of Grant") by and between  XSUNX,  INC., a
Colorado corporation  ("Company"),  and the optionee named below ("Optionee") as
contemplated in the Company's 2007 Option Plan ("Plan").  Capitalized  terms not
defined herein shall have the meaning ascribed to them in the Plan.

Optionee:         Dr. Richard K Ahrenkiel, DBA Ahrenkiel Consulting

Social Security Number: XXX-XX-XXXX

Address:          XXXXX  XXXX XXXXX

Total Option Shares:       100,000

Exercise Price Per Share: $0.45

Date of Grant:    April 23, 2007

First Vesting Date:  July 23, 2007

Expiration Date for Exercise of Options:   April 22, 2012

Stock Option Number: 07-020

Type of Stock Option:
(Check one)         [  ] Incentive Stock Option     [ X ] Statutory Stock Option

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1.  Conditional  Grant of Option.  The Company  hereby  conditionally  grants to
Optionee an option  ("Option")  to purchase the total number of shares of Common
Stock of the Company set forth above  ("Shares") at the Exercise Price Per Share
set forth above ("Exercise  Price"),  subject to all of the terms and conditions
of this  Agreement  and the Plan.  If  designated  as an Incentive  Stock Option
above,  the Option is intended to qualify as an "incentive stock option" ("ISO")
within the  meaning of Section  422 of the  Internal  Revenue  Code of 1986,  as
amended  ("Code").  Subject to the Plan,  only  Employees  of the Company  shall
receive ISOs. This Agreement shall be deemed a Stock Option Agreement as defined
in the Plan.  The terms and  conditions of the Plan are  incorporated  herein by
this reference.  All specific terms and references,  including capitalized terms
and references,  which are undefined in this Agreement shall have the definition
and meaning ascribed to them in the Plan,  including,  without  limitation,  the
definition of the terms Employee and Consultant.

2. Exercise  Price.  The Exercise  Price, is not less than the fair market value
per share of Common  Stock on the date of grant,  as  determined  by the  Board;
provided,  however,  in  the  event  Optionee  is an  Employee  and  owns  stock
representing  more than ten percent (10%) of the total combined  voting power of
all classes of stock of the Company or of its Parent or Subsidiary  corporations
immediately  before the Option is granted,  said exercise price is not less than
one  hundred ten  percent  (110%) of the fair  market  value per share of Common
Stock on the date of grant as determined by the Board.

3. Exercise of Option.  Subject to the vesting schedule contained herein and the
other  conditions set forth in this Agreement,  all or part of the Option may be
exercised  prior to its  expiration  from the first vesting date set forth above
("First  Vesting Date") up to and including 5:00 p.m.  Pacific  Standard Time on
the expiration date set forth above ("Expiration Date") at the time or times set
forth herein in accordance with the provisions of the Plan as follows:

        (i)  Vesting:

             (a)      The  Option  shall  become  exercisable  in the  amount of
                      12,500 shares upon the First Vesting Date. Thereafter, the
                      Option shall vest become exercisable at the rate of 12,500
                      Shares per calendar  quarter,  or any  apportioned  amount
                      thereof,  during the term of engagement by XsunX,  Inc. of
                      the Optionee.

             (b)      This  Option  may  not  be  exercised for  a fraction of a
                      Share.

             (c)      In the  event of  Optionee's  death,  disability  or other
                      termination  of  employment,  the  exercisability  of  the
                      Option is governed  by Sections 7, 8 and 9 below,  subject
                      to the limitations contained in subsection 3(i) (d) below.

             (d)      In no event may the Option be exercised  after the date of
                      expiration  of the  term of the  Option  as set  forth  in
                      Section 11 below.

        (ii)(ii)  Method  of  Exercise.  The  Option  shall  be  exercisable  by
                  written  notice which shall state the election to exercise the
                  Option, the number of Shares in respect of which the Option is
                  being exercised, and such other representations and agreements

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                  as to the  holder's  investment  intent  with  respect to such
                  shares  of  Common  Stock as may be  required  by the  Company
                  pursuant to the  provisions of the Plan.  Such written  notice
                  shall be signed by Optionee  and shall be  delivered in person
                  or by  certified  mail to the  President,  Secretary  or Chief
                  Financial Officer of the Company.  The written notice shall be
                  accompanied by payment of the exercise price.

        (iii)     Compliance  with Law. No Shares will be issued pursuant to the
                  exercise of an Option  unless such  issuance and such exercise
                  shall  comply  with  all  relevant  provisions  of law and the
                  requirements  of any stock  exchange or quotation  medium upon
                  which the Shares may then be listed or quoted.  Assuming  such
                  compliance,  for  income  tax  purposes  the  Shares  shall be
                  considered  transferred  to the  Optionee on the date on which
                  the Option is exercised with respect to such Shares.

        (iv)        Adjustments, Merger, etc. The number and class of the Shares
                    and/or the  exercise  price  specified  above are subject to
                    appropriate  adjustment  in  the  event  of  changes  in the
                    capital  stock of the Company by reason of stock  dividends,
                    stock  splits,   combination  or  recombination  of  shares,
                    reclassifications, mergers, consolidations,  reorganizations
                    or  liquidations.  Subject  to any  required  action  of the
                    stockholders  of the  Company,  if the Company  shall be the
                    surviving  corporation in any merger or  consolidation,  the
                    Option (to the extent  that it is still  outstanding)  shall
                    pertain to and apply to the  securities to which a holder of
                    the same  number of shares  of  Common  Stock  that are then
                    subject  to  the  Option   would  have  been   entitled.   A
                    dissolution or  liquidation  of the Company,  or a merger or
                    consolidation  in which  the  Company  is not the  surviving
                    corporation,  will cause the Option to terminate, unless the
                    agreement  or  merger  or   consolidation   shall  otherwise
                    provide,  provided  that the  Optionee  shall,  if the Board
                    expressly   authorizes,   in  such   event  have  the  right
                    immediately  prior to such  dissolution or  liquidation,  or
                    merger or consolidation,  to exercise the Option in whole or
                    part. To the extent that the foregoing adjustments relate to
                    stock or securities of the Company,  such adjustments  shall
                    be made by the Board,  whose  determination  in that respect
                    shall be final, binding and conclusive.

4. Optionee's  Representations.  By receipt of the Option, by its execution, and
by its  exercise in whole or in part,  Optionee  represents  to the Company that
Optionee understands that:

        (i)       Both the Option and any Shares purchased upon its exercise are
                  securities,  the  issuance  by the  Company of which  requires
                  compliance with federal and state securities laws;

        (ii)      These  securities  are made  available to Optionee only on the
                  condition that Optionee makes the representations contained in
                  this Section 4 to the Company;

        (iii)     Optionee has made a  reasonable  investigation  of the affairs
                  of the Company sufficient to be well informed as to the rights
                  and the value of these securities;

        (iv)      Optionee  understands  that  the   securities  have   not been
                  registered under the  Securities Act  of 1933, as amended (the
                  "Act")  in  reliance  upon  one  or more  specific  exemptions

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                  contained in the Act, which  may include  reliance on Rule 701
                  promulgated under the Act,  if available,  or which may depend
                  upon:  (a)  Optionee's  bona  fide  investment  intention   in
                  acquiring these securities; (b)  Optionee's intention  to hold
                  these  securities   in  compliance  with  federal   and  state
                  securities laws;  (c) Optionee  having no present intention of
                  selling or transferring  any part  thereof  (recognizing  that
                  the Option  is not  transferable)  in violation  of applicable
                  federal  and   state  securities  laws;  and (d)  there  being
                  certain restrictions  on transfer of the Shares subject to the
                  Option;

        (v)         Optionee  understands that the Shares subject to the Option,
                    in addition to other restrictions on transfer,  must be held
                    indefinitely unless  subsequently  registered under the Act,
                    or unless an exemption from registration is available;  that
                    Rule 144, the usual  exemption  from  registration,  is only
                    available after the  satisfaction of certain holding periods
                    and in the presence of a public market for the Shares;  that
                    there is no  certainty  that a public  market for the Shares
                    will exist, and that otherwise it will be necessary that the
                    Shares  be  sold   pursuant   to  another   exemption   from
                    registration which may be difficult to satisfy; and,

        (vi)        Optionee  understands that the certificate  representing the
                    Shares will bear a legend  prohibiting their transfer in the
                    absence of their  registration or the opinion of counsel for
                    the Company that registration is not required,  and a legend
                    prohibiting  their  transfer in compliance  with  applicable
                    state securities laws unless otherwise exempted.

5. Method of Payment.  Payment of the purchase  price may be made subject to the
terms of Section 14 herein,  or by cash, check or, in the sole discretion of the
Board at the time of exercise,  promissory notes or other Shares of Common Stock
having  a fair  market  value on the date of  surrender  equal to the  aggregate
purchase price of the Shares being purchased.

6. Restrictions on Exercise.  The Option may not be exercised if the issuance of
such Shares upon such  exercise  or the method of payment of  consideration  for
such Shares  would  constitute a violation  of any  applicable  federal or state
securities  or other law or  regulation.  As a condition  to the exercise of the
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.

7.  Termination  of  Status  as an  Employee  or  Consultant.  In the  event  of
termination of Optionee's  continuous  status as an Employee or  Consultant,  as
such  status  may be  determined  and  construed  by  the  Company  in its  sole
discretion ("Continuous Status"), for any reason other than death or disability,
Optionee  may,  but  only  within  thirty  (30)  days  after  the  date  of such
termination  (but in no event later than the date of  expiration  of the term of
the Option as set forth in Section 11 below),  exercise the Option to the extent
that  Optionee was entitled to exercise it at the date of such  termination.  To
the extent that  Optionee was not entitled to exercise the Option at the date of
such  termination,  or if Optionee  does not exercise the Option within the time
specified herein, the Option shall terminate.

8. Disability of Optionee.  In the event of termination of Optionee's Continuous
Status  as an  Employee  or  Consultant  as a result of  Optionee's  disability,

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Optionee  may,  but only within six (6) months from the date of  termination  of
employment  or consulting  relationship  (but in no event later than the date of
expiration of the term of the Option as set forth in Section 11 below), exercise
the Option to the extent  Optionee  was  entitled  to exercise it at the date of
such  termination;  provided,  however that if the  disability  is not total and
permanent  (as  defined  in  Section  22(e)(3)  of the  Code)  and the  Optionee
exercises the option within the period provided above but more than three months
after the date of termination,  the Option shall automatically be deemed to be a
Nonstatutory  Stock  Option and not an Incentive  Stock  Option;  and  provided,
further,  that if the  disability  is total and permanent (as defined in Section
22(e)(3) of the Code),  then the Optionee may, but only within one (1) year from
the date of  termination  of employment or  consulting  relationship  (but in no
event later than the date of  expiration  of the term of the Option as set forth
in Section 11 below), exercise the Option to the extent Optionee was entitled to
exercise it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of termination,  or if Optionee does
not exercise  such Option (which  Optionee was entitled to exercise)  within the
time periods specified herein, the Option shall terminate.

9. Death of Optionee. In the event of the death of Optionee:

        (i)    During the term of the Option while an Employee or  Consultant of
               the Company and having been in  Continuous  Status as an Employee
               or Consultant  since the date of grant of the Option,  the Option
               may be exercised,  at any time within one (1) year  following the
               date of death (but, in the case of an Incentive Stock Option,  in
               no event  later  than the date of  expiration  of the term of the
               Option as set forth in Section 11 below), by Optionee's estate or
               by a person  who  acquired  the right to  exercise  the Option by
               bequest  or  inheritance,  but only to the extent of the right to
               exercise  that had accrued at the time of death of the  Optionee.
               To the extent that such Employee or  Consultant  was not entitled
               to exercise the Option at the date of death, or if such Employee,
               Consultant,  estate or other person does not exercise such Option
               (which such Employee,  Consultant,  estate or person was entitled
               to  exercise)  within  the one (1)  year  time  period  specified
               herein, the Option shall terminate; or,

        (ii)   During the thirty (30) day period  specified  in Section 7 or the
               one (1) year period specified in Section 8, after the termination
               of Optionee's Continuous Status as an Employee or Consultant, the
               Option  may be  exercised,  at  any  time  within  one  (1)  year
               following  the date of death  (but,  in the case of an  Incentive
               Stock  Option,  in no event later than the date of  expiration of
               the term of the  Option as set forth in  Section  11  below),  by
               Optionee's  estate  or by a  person  who  acquired  the  right to
               exercise  the Option by bequest or  inheritance,  but only to the
               extent of the right to  exercise  that had accrued at the date of
               termination.  To the extent that such Employee or Consultant  was
               not entitled to exercise  the Option at the date of death,  or if
               such  Employee,  Consultant,  estate  or  other  person  does not
               exercise such Option (which such Employee,  Consultant, estate or
               person was  entitled  to  exercise)  within the one (1) year time
               period specified herein, the Option shall terminate.

10.  Non-Transferability  of Option.  The Option may not be  transferred  in any
manner  otherwise than by will or by the laws of descent or distribution and may

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be exercised during the lifetime of Optionee, only by Optionee. The terms of the
Option shall be binding upon the executors,  administrators,  heirs,  successors
and assigns of Optionee.

11.  Term of Option.  The Option may not be  exercised  more than five (5) years
from the date of grant of the Option, and may be exercised during such term only
in accordance with the Plan and terms of the Option; provided, however, that the
term of this option, if it is a Nonstatutory  Stock Option,  may be extended for
the period set forth in Section 9(i) or Section 9(ii) in the  circumstances  set
forth in such Sections.

12. Early Disposition of Stock; Taxation Upon Exercise of Option. If Optionee is
an Employee and the Option qualifies as an ISO,  Optionee  understands  that, if
Optionee  disposes of any Shares  received under the Option within two (2) years
after the date of this  Agreement  or within one (1) year after such Shares were
transferred to Optionee, Optionee may be treated for federal income tax purposes
as having received ordinary income at the time of such disposition in any amount
generally  measured as the difference  between the price paid for the Shares and
the lower of the fair market  value of the Shares at the date of exercise or the
fair market value of the Shares at the of  disposition.  Any gain  recognized on
such  premature  sale of the Shares in excess of the amount  treated as ordinary
income may be  characterized  as capital gain.  Optionee hereby agrees to notify
the  Company  in  writing  within  thirty  (30) days  after the date of any such
disposition.  Optionee  understands that if Optionee  disposes of such Shares at
any time after the expiration of such two-year and one-year holding periods, any
gain on such sale may be  treated  as  long-term  capital  gain laws  subject to
meeting  various  qualifications.  If  Optionee  is a  Consultant  or  this is a
Nonstatutory  Stock  Option,  Optionee  understands  that,  upon exercise of the
Option, Optionee may recognize income for tax purposes in an amount equal to the
excess of the then fair market value of the Shares over the exercise price. Upon
a resale of such shares by the Optionee,  any difference  between the sale price
and the fair  market  value of the Shares on the date of  exercise of the Option
may be treated as capital gain or loss.  Optionee  understands  that the Company
may be required to withhold tax from Optionee's current  compensation in some of
the  circumstances  described  above  (and  Optionee  hereby so  authorizes  the
Company);  to the extent that Optionee's current compensation is insufficient to
satisfy the withholding  tax liability,  the Company may require the Optionee to
make a cash  payment to cover such  liability  as a condition to exercise of the
Option.

13.  Tax  Consequences.  The  Optionee  understands  that  any of the  foregoing
references to taxation are based on federal income tax laws and  regulations now
in  effect,   and  may  not  be  applicable   to  the  Optionee   under  certain
circumstances.  The Optionee may also have adverse tax consequences  under state
or local law. The Optionee has reviewed with the Optionee's own tax advisors the
federal,   state,  local  and  foreign  tax  consequences  of  the  transactions
contemplated by this Agreement.  The Optionee is relying solely on such advisors
and  not on any  statements  or  representations  of the  Company  or any of its
agents.  The Optionee  understands that the Optionee (and not the Company) shall
be  responsible  for the Optionee's own tax liability that may arise as a result
of the transactions contemplated by this Agreement.

14. Net Issue Exercise.  Notwithstanding  any provisions herein to the contrary,
if the fair market value of one share of the  Company's  Common Stock is greater
than the Per  Share  Exercise  Price  (at the date of  calculation  as set forth
below),  in lieu of  exercising  the Option for cash,  the Optionee may elect to

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receive  shares equal to the value (as  determined  below) of the Option (or the
portion  thereof  being  canceled) by  surrender of the Option at the  principal
office of the Company together with the properly endorsed Notice of Exercise and
Subscription  Form and notice of such election,  in which event the Company will
issue to the  Optionee  a number of shares of Common  Stock  computed  using the
following formula:

                  X = Y (A-B)
                      -------
                         A

         Where X = the number of shares of Common Stock to be issued to the
         Optionee

                           Y = the number of shares of  Common Stock purchasable
         under  the  Option  or,  if  only a  portion  of the  Option  is  being
         exercised,  the portion of the Option  being  canceled  (at the date of
         such calculation)

                           A = the  fair  market  value  of  one  share  of  the
         Company's Common Stock (at the date of such calculation)

                           B = Per Share Exercise Price (as adjusted to the date
of such calculation)

         For purposes of the above  calculation,  fair market value of one share
of the  Company's  Stock  will  be the  average  of the  closing  prices  of the
Company's  shares of  Common  Stock as quoted  on the OTC  Bulletin  Board  (the
"OTCBB") (or on such other United States stock exchange or public trading market
or quotation medium on or by which the shares of the Company trade or are quoted
if, at the time of the  election,  they are not  trading or being  quoted on the
OTCBB), for the five (5) consecutive trading days immediately preceding the date
of the date the completed,  executed Notice of Exercise and Subscription Form is
received.

15.  Damages.  The parties  agree that any violation of the Option (other than a
default in the payment of money) cannot be compensated  for by damages,  and any
aggrieved  party shall have the right,  and is hereby granted the privilege,  of
obtaining  specific  performance  of  the  Option  in  any  court  of  competent
jurisdiction in the event of any breach hereunder.

16. Delay. No delay or failure on the part of the Company or the Optionee in the
exercise of any right,  power or remedy shall operate as a waiver  thereof,  nor
shall any  single or  partial  exercise  by any of them of any  right,  power or
remedy preclude other or further exercise thereof,  or the exercise of any other
right, power or remedy.

17.  Restrictions.  Notwithstanding  anything  herein to the contrary,  Optionee
understands  and agrees  that  Optionee  shall not dispose of any of the Shares,
whether  by  sale,  exchange,  assignment,   transfer,  gift,  devise,  bequest,
mortgage, pledge, encumbrance or otherwise,  except in accordance with the terms
and conditions of this Agreement, and Optionee shall not take or omit any action
which will impair the absolute and  unrestricted  right,  power,  authority  and
capacity of Optionee to sell Shares in accordance  with the terms and conditions
hereof.

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Any purported transfer of Shares by Optionee that violates any provision of this
Section 17 shall be wholly void and ineffectual and shall give to the Company or
its  designee the right to purchase  from  Optionee all but not less than all of
the Shares then owned by Optionee for a period of ninety (90) days from the date
the Company first learns of the purported transfer at the Agreement Price and on
the Agreement  Terms (as those terms are defined in subsections  (vi) and (vii),
respectively,  of this  Section  17).  If the  Shares are not  purchased  by the
Company or its designee,  the purported  transfer  thereof shall remain void and
ineffectual and they shall continue to be subject to this Agreement.

The Company  shall not cause or permit the  transfer of any Shares to be made on
its books except in accordance with the terms hereof.

         (i)      Permitted Transfers.

                  (a)      Optionee may sell, assign or transfer any Shares held
                           by the  Optionee  but  only  by  complying  with  the
                           provisions of subsection (iv) of this Section 17.

                  (b)      Optionee may sell, assign or transfer any Shares held
                           by the Optionee without complying with the provisions
                           of subsection (iv) by obtaining  the  prior   written
                           consent  of the  Company's shareholders owning 50% of
                           the   then  issued  and  outstanding shares  of   the
                           Company's Common Stock (determined  on a fully dilut-
                           ed basis) or  a majority of  the members of the Board
                           of  Directors of the Company, provided that the tran-
                           sferee agrees  in writing  to be  bound by the provi-
                           sions  of  the  Option and  the transfer is  made  in
                           accordance with  any other restrictions or conditions
                           contained in  the written  consent  and in accordance
                           with applicable federal and state securities laws.

                  (c)      Upon  the  death  of  Optionee,  Shares  held  by the
                           Optionee   may  be   transferred   to  the   personal
                           representative   of  the  Optionee's  estate  without
                           complying  with the  provisions of  subsection  (iv).
                           Shares so  transferred  shall be subject to the other
                           provisions  of the Option,  including in  particular,
                           and without limitation, subsection (v).

         (ii)     No Pledge.  Unless a majority  of the  members of the Board of
                  Directors  consent,  Shares may not be pledged,  mortgaged  or
                  otherwise encumbered to secure indebtedness for money borrowed
                  or any other obligation for which the Optionee is primarily or
                  secondarily liable.

         (iii)    Stock  Certificate  Legend.  Each stock certificate for Shares
                  issued  to the  Optionee  shall  have  conspicuously  written,
                  printed,  typed or stamped upon the face thereof,  or upon the
                  reverse  thereof  with a  conspicuous  reference  on the  face
                  thereof, one or both of the following legends:

                  THE SHARES  REPRESENTED BY THIS  CERTIFICATE  HAVE BEEN ISSUED
                  WITHOUT  REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS
                  AMENDED,  AND  MAY  NOT  BE  TRANSFERRED  IN  THE  ABSENCE  OF
                  REGISTRATION  THEREUNDER OR AN APPLICABLE  EXEMPTION  FROM THE
                  REGISTRATION  REQUIREMENTS OF SUCH ACT. SUCH SHARES MAY NOT BE

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                  SOLD, ASSIGNED,  TRANSFERRED,  OR OTHERWISE DISPOSED OF IN ANY
                  MANNER EXCEPT IN  ACCORDANCE  WITH AND SUBJECT TO THE TERMS OF
                  THE STOCK OPTION AGREEMENT,  A COPY OF WHICH IS ON FILE AT THE
                  PRINCIPAL  OFFICE OF THE  COMPANY.  UNLESS A  MAJORITY  OF THE
                  MEMBERS OF THE BOARD OF DIRECTORS  CONSENT,  SUCH STOCK OPTION
                  AGREEMENT PROHIBITS ANY PLEDGE,  MORTGAGE OR OTHER ENCUMBRANCE
                  OF SUCH SHARES TO SECURE ANY  OBLIGATION OF THE HOLDER HEREOF.
                  EVERY  CREDITOR OF THE HOLDER HEREOF AND ANY PERSON  ACQUIRING
                  OR PURPORTING TO ACQUIRE THIS CERTIFICATE OR THE SHARES HEREBY
                  EVIDENCED  OR ANY INTEREST  THEREIN IS HEREBY  NOTIFIED OF THE
                  EXISTENCE OF SUCH STOCK OPTION AGREEMENT,  AND ANY ACQUISITION
                  OR PURPORTED  ACQUISITION  OF THIS  CERTIFICATE  OR THE SHARES
                  HEREBY  EVIDENCED OR ANY INTEREST  THEREIN SHALL BE SUBJECT TO
                  ALL RIGHTS AND OBLIGATIONS OF THE PARTIES TO SUCH STOCK OPTION
                  AGREEMENT AS THEREIN SET FORTH.

                  IT IS  UNLAWFUL  TO  CONSUMMATE  A SALE  OR  TRANSFER  OF THIS
                  SECURITY,   OR  ANY  INTEREST  THEREIN,   OR  TO  RECEIVE  ANY
                  CONSIDERATION  THEREFOR,  WITHOUT THE PRIOR WRITTEN CONSENT OF
                  THE  COMMISSIONER  OF CORPORATIONS OF THE STATE OF CALIFORNIA,
                  EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.

         (iv)     Sales of Shares.

                  (a)      Company's  Right of First Refusal.  In the event that
                           the Optionee shall desire to sell, assign or transfer
                           any Shares held by the  Optionee to any other  person
                           (the  "Offered  Shares") and shall be in receipt of a
                           bona  fide  offer  to  purchase  the  Offered  Shares
                           ("Offer"),  the following  procedure shall apply. The
                           Optionee  shall give to the  Company  written  notice
                           containing  the terms and  conditions  of the  Offer,
                           including,  but  not  limited  to (a) the  number  of
                           Offered  Shares;  (b) the  price per  Share;  (c) the
                           method  of  payment;  and  (d)  the  name(s)  of  the
                           proposed purchaser(s).

                  (b)      An offer  shall not be deemed  bona fide  unless  the
                           Optionee has informed  the  prospective  purchaser of
                           the  Optionee's  obligation  under the Option and the
                           prospective  purchaser  has  agreed to become a party
                           hereunder  and to be bound  hereby.  The  Company  is
                           entitled to take such steps as it reasonably may deem
                           necessary  to  determine  the  validity and bona fide
                           nature of the Offer.

                  (c)      Until  thirty  (30) days after such  notice is given,
                           the Company or its  designee  shall have the right to

                                     9 of 17
<PAGE>

                           purchase  all  of the  Offered  Shares  at the  price
                           offered by the prospective purchaser and specified in
                           such notice.  Such purchase shall be on the Agreement
                           Terms, as defined in subsection (vi).

                  (d)      Failure of Company or its Designee to Purchase Offer-
                           ed Shares.  If all of the Offered Shares are not pur-
                           chased by the Company and/or its designee  within the
                           thirty (30) day period  granted  for such  purchases,
                           then any remaining Offered Shares may be sold, assign
                           -ed or transferred  pursuant to the Offer;  provided,
                           that the Offered Shares are so transferred  within 30
                           days of the  expiration of the thirty (30) day period
                           to the  person or  persons named  in,  and  under the
                           terms and conditions of, the bona fide Offer describ-
                           ed  in  the  notice  to  the  Company;  and  provided
                           further, that such persons agree to execute and deliv
                           -er to the  Company a  written agreement, in form and
                           content satisfactory  to the Company,  agreeing to be
                           bound by the terms and conditions of the Option.

         (v)      Manner of Exercise.  Any right to purchase  hereunder shall be
                  exercised  by  giving   written  notice  of  election  to  the
                  Optionee, the Optionee's personal  representative or any other
                  selling person, as the case may be, prior to the expiration of
                  such right to purchase.

         (vi)     Agreement Price. The "Agreement  Price" shall be the higher of
                  (a) the  fair  market  value  of the  Shares  to be  purchased
                  determined  in good  faith by the  Board of  Directors  of the
                  Company and (b) the original  exercise  price of the Shares to
                  be purchased.

         (vii)    Agreement Terms.  "Agreement Terms" shall mean and include the
                  following:

                  (a)  Delivery of Shares and Closing Date. At the closing,  the
                       Optionee, the Optionee's personal representative  or such
                       other selling  person, as the case may be, shall  deliver
                       certificates  representing the Shares,  properly endorsed
                       for transfer,  and with  the  necessary  documentary  and
                       transfer tax stamps, if any, affixed, to the purchaser of
                       such Shares.  Payment of  the  purchase  price  therefore
                       shall  concurrently   be  made  to   the  Optionee,   the
                       Optionee's personal representative  or such other selling
                       person, as provided in subsection (b) of this  subsection
                       (vii).  Such  delivery and  payment shall  be made at the
                       principal office of the Company or at such other place as
                       the parties mutually agree.

                  (b)  Payment of Purchase Price. The Company shall pay the pur-
                       chase price to the Optionee at the closing.

         (viii)   Right to Purchase Upon Certain  Other  Events.  The Company or
                  its  designee  shall have the right to purchase  all,  but not
                  less than  all,  of the  Shares  held by the  Optionee  at the
                  Agreement  Price  and on the  Agreement  Terms for a period of
                  ninety (90) days after any of the following events:

                                    10 of 17
<PAGE>

                  (a)  An attempt by a creditor to levy upon or sell any of  the
                       Optionee's Shares;

                  (b)  The filing of a petition  by the Optionee under the  U.S.
                       Bankruptcy Code or any insolvency laws;

                  (c)  The filing  of  a petition  against  Optionee  under  any
                       insolvency or  bankruptcy  laws  by any  creditor  of the
                       Optionee if such petition is not dismissed within  thirty
                       (30) days of filing;

                  (d)  The entry of a decree of divorce between the Optionee and
                       the Optionee's spouse; or,

                  (e)  The termination of Optionee's  services as an employee or
                       consultant with the Company.

                  The Optionee  shall provide the Company  written notice of the
                  occurrence of any such event within 30 days of such event.

        (ix)      Termination. The provisions of this Section 17 shall terminate
                  and all rights of each such party hereunder shall cease except
                  for  those  which  shall  have  theretofore  accrued  upon the
                  occurrence of any of the following events:

                  (a)  Cessation of the Company's business;

                  (b)  Bankruptcy, receivership or dissolution of the Company;

                  (c)  Ownership of all of the issued and outstanding  shares of
                       the Company by a single shareholder of the Company;

                  (d)  Written consent or agreement of the  shareholders  of the
                       Company  holding  Fifty Percent (50%) of  the then issued
                       and  outstanding  shares of the  Company (determined on a
                       fully diluted basis);

                  (e)  Consent or agreement of a  majority of the members of the
                       Board of Directors of the Company; or,

                  (f)  Registration of any class  of  equity  securities  of the
                       Company pursuant to Section 12 of the Securities Exchange
                       Act of 1934, as amended.

         (x)      Amendment. This Section 17 may be modified or amended in whole
                  or in part by a written  instrument  signed by shareholders of
                  the Company  holding 50% of the  outstanding  shares of Common
                  Stock  (determined  on a fully diluted basis) or a majority of
                  the members of the Board of Directors of the Company.

                                    11 of 17
<PAGE>

18. Market Standoff. Unless the Board of Directors otherwise consents,  Optionee
agrees hereby not to sell or otherwise  transfer any Shares or other  securities
of the Company  during the 180-day  period  following  the  effective  date of a
registration  statement of the Company filed under the Act;  provided,  however,
that such restriction shall apply only to the first two registration  statements
of the Company to become effective under the Act which includes securities to be
sold on behalf of the Company to the public in an  underwritten  public offering
under the Act. The Company may impose stop-transfer instructions with respect to
securities  subject to the foregoing  restrictions until the end of such 180-day
period.

19.  Rule 144.  Optionee  acknowledges  and  understands  that the Shares may be
subject to transfer and sale  restrictions  imposed  pursuant to SEC Rule 144 of
the  Rules  promulgated  under  the  Securities  Act of  1933  ("Act")  and  the
regulations promulgated thereunder. Optionee shall comply with Rule 144 and with
all policies and  procedures  established by the Company with regard to Rule 144
matters.  Optionee  acknowledged  that the Company or its  attorneys or transfer
agent  may  require a  restrictive  legend on the  certificate  or  certificates
representing  the Shares pursuant to the  restrictions on transfer of the Shares
imposed by Rule 144.

20. No Distribution. Notwithstanding anything in this Agreement to the contrary,
Optionee acknowledges that: (i) the Option, and the Shares upon exercise, is and
are being acquired in a private  transaction which is not part of a distribution
of the Option or Shares; (ii) the Optionee intends to hold the Option and Shares
for the account of the Optionee and does not intend to sell the Option or Shares
as a part of a distribution or otherwise; and (iii) neither the Optionee nor the
Company is an  underwriter  with regard to the Option or the Shares for purposes
of Rule 144.

21. Securities  Compliance.  Optionee understands that the Option and the Shares
may be  offered  and  sold  in  reliance  on one or  more  exemptions  from  the
registration requirements of federal and state securities laws, which exemptions
may include,  without limitation,  Regulation D promulgated under the Securities
Act,  and that the  Company  is  relying  upon the  truth  and  accuracy  of the
representations,  warranties, agreements,  acknowledgments and understandings of
Optionee  set  forth  herein in order to  determine  the  applicability  of such
exemptions and the suitability of Optionee to acquire the Option and the Shares.
The  representations,  warranties and agreements  contained  herein are true and
correct as of the date hereof and may be relied upon by the Company and Optionee
will  notify  the  Company  immediately  of  any  adverse  change  in  any  such
representations  and warranties which may occur prior to the issuance of Shares.
The  representations,  warranties  and agreements of Optionee  contained  herein
shall survive the  execution and delivery of this  Agreement and the exercise of
the Option and the issuance of the Shares.

22. Complete Agreement.  This Agreement constitutes the entire agreement between
the parties with respect to its subject  matter,  and supersedes all other prior
or contemporaneous  agreements and understandings both oral or written; subject,
however,  that in the event of any conflict between this Agreement and the Plan,
the Plan shall govern. This Agreement may only be amended in a writing signed by
the Company and the Optionee.

23. Privileges of Stock Ownership.  Optionee shall not have any of the rights of
a shareholder with respect to any Shares until Optionee exercises the Option and
pays the  Exercise  Price,  Shares are issued and  delivered  to  Optionee,  and

                                    12 of 17
<PAGE>

Optionee  is shown as a  shareholder  of record on the books and  records of the
Company.

24. Further Acts. The parties hereto shall cooperate with each other and execute
such additional documents or instruments and perform such further acts as may be
reasonably necessary to affect the purpose and intent of the Agreement.

25. Effect of Headings. The subject headings of the paragraphs and subparagraphs
of this Agreement are included for purposes of  convenience  only, and shall not
affect the construction or interpretation of any of its provisions.

26.  Notices.  Any notice required to be given or delivered to the Company under
the terms of this  Agreement  shall be in writing and addressed to the Corporate
Secretary of the Company at its principal corporate offices. Any notice required
to be given or  delivered  to  Optionee  shall be in writing  and  addressed  to
Optionee at the address  indicated herein or to such other address as such party
may designate in writing from time to time to the Company.  All notices shall be
deemed to have been given or delivered upon actual personal delivery;  three (3)
days after  deposit in the United  States mail by certified or  registered  mail
(return receipt  requested);  one (1) business day after deposit with any return
receipt express courier (prepaid); or one (1) business day after transmission by
facsimile with a corresponding facsimile transmission confirmation sheet.

27. Counterparts.  This Agreement may be executed  simultaneously in one or more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall  constitute one and the same  instrument.  The exhibits  attached
hereto and  initialed  by the parties  are made a part  hereof and  incorporated
herein by this reference.

28. Parties in Interest. Nothing in this Agreement,  whether express or implied,
is  intended  to  confer  any  rights  or  remedies  under or by  reason of this
Agreement  on any  persons  other than the  parties  to it and their  respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third party to this Agreement,  nor
shall any  provision  give any third person any right of  subrogation  or action
over against any party to this Agreement.

29.  Recovery of Litigation  Costs.  If any legal action or any  arbitration  or
other proceeding is brought for the enforcement of this Agreement, or because of
an alleged dispute,  breach, default or misrepresentation in connection with any
of the  provisions of this  Agreement,  the  successful  or prevailing  party or
parties shall be entitled to recover as an element of their damages,  reasonable
attorneys'  fees and other  costs  incurred  in that  action or  proceeding,  in
addition to any other relief to which they may be entitled.

30.  Severability;  Construction.  In the  event  that  any  provision  in  this
Agreement shall be invalid or  unenforceable,  such provision shall be severable
from, and such invalidity or unenforceability shall not be construed to have any
effect on, the remaining  provisions of this Agreement.  This Agreement shall be
construed as to its fair meaning and not for or against either party.

                                    13 of 17
<PAGE>

31. Survival of Representations and Obligations. All representations, warranties
and agreements of the parties contained in this Agreement, or in any instrument,
certificate,  opinion or other  writing  provided for in it,  shall  survive the
exercise of the Option and the issuance of the Shares.

32.  Specific  Performance.  Each party's  obligations  under this Agreement are
unique. If any party should default in its obligations under this Agreement, the
parties each acknowledge that it would be extremely impracticable to measure the
resulting  damages;  accordingly,  the  nondefaulting  party, in addition to any
other available rights or remedies,  may sue in equity for specific  performance
without the necessity of posting a bond or other security,  and the parties each
expressly waive the defense that a remedy in damages will be adequate.

33.  Gender;  Number.  Whenever  the  context of this  Agreement  requires,  the
masculine gender includes the feminine or neuter gender, and the singular number
includes the plural.

34.  Governing Law and Venue.  This  Agreement will be construed and enforced in
accordance  with, and the rights of the parties will be governed by, the laws of
the State of California without regard to conflict of laws principles.  Venue in
any action arising by reason of this Agreement  shall lie  exclusively in Orange
County, California.

35. Consultancy,  Advisory and Technology Sharing and License  Agreements.  This
Option is issued  pursuant to that certain  Consultancy  and Advisory  Agreement
effective April 23, 2007. The terms of the  Consultancy  and Advisory  Agreement
shall control over any  conflicting  terms in this Option.  Any breach under the
Consultancy and Advisory  Agreement shall  constitute a breach under this Option
and allows the Company to terminate this Option in whole or in part.

IN WITNESS WHEREOF, this Agreement is made effective on the date first set forth
above at Orange County, California.

                                    Company:

                                    XSUNX, INC, a Colorado Corporation

                                    By:      ________________________________
                                             Name: Tom M. Djokovich
                                             Title:    CEO

                                    14 of 17
<PAGE>

OPTIONEE  ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO SECTION
3 HEREOF IS EARNED ONLY BY  CONTINUING  SERVICE AS AN EMPLOYEE OR  CONSULTANT AT
THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED,  BEING GRANTED THIS
OPTION OR ACQUIRING SHARES HEREUNDER).  OPTIONEE FURTHER ACKNOWLEDGES AND AGREES
THAT THIS OPTION, THE COMPANY'S PLAN WHICH IS INCORPORATED  HEREIN BY REFERENCE,
THE  TRANSACTIONS  CONTEMPLATED  HEREUNDER  AND THE VESTING  SCHEDULE  SET FORTH
HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED  PROMISE OF CONTINUED  ENGAGEMENT
AS AN EMPLOYEE OR CONSULTANT FOR THE VESTING PERIOD,  FOR ANY PERIOD, OR AT ALL,
AND  SHALL  NOT  INTERFERE  WITH  OPTIONEE'S  RIGHT  OR THE  COMPANY'S  RIGHT TO
TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTING  RELATIONSHIP AT ANY TIME, WITH OR
WITHOUT CAUSE.

Optionee acknowledges receipt of a copy of the Plan, represents that Optionee is
familiar with the terms and  provisions  thereof,  and hereby accepts the Option
subject to all of the terms and  provisions  thereof.  Optionee has reviewed the
Plan and this Agreement in their entirety,  has had an opportunity to obtain the
advice of counsel prior to executing  this Agreement and fully  understands  all
provisions of the Plan and this  Agreement.  Optionee hereby agrees to accept as
binding,  conclusive and final all decisions or  interpretations of the Board or
of the Committee upon any questions arising under the Plan.

         IN WITNESS WHEREOF,  this  acknowledgment is made effective on the date
first set forth in the Agreement at Orange County, California.

                                    OPTIONEE

                                     ------------------------------
                                     Name:

                                    15 of 17
<PAGE>

CONSENT OF SPOUSE

The undersigned  spouse of the Optionee to the foregoing Stock Option  Agreement
acknowledges  on his or her own behalf  that:  I have read the  foregoing  Stock
Option Agreement and I know its contents. I hereby consent to and approve of the
provisions of the Stock Option Agreement,  and agree that the Shares issued upon
exercise of the Option covered  thereby and my interest in them shall be subject
to the  provisions of the Stock Option  Agreement and that I will take no action
at any time to hinder  operation of the Stock Option  Agreement as to the Shares
or my interest in the Shares.

 IN WITNESS WHEREOF, this acknowledgment is made effective on the date first set
forth in the Agreement at Orange County, California.

                                      ---------------------------------
                                      Name:

                                    16 of 17
<PAGE>

                                EXHIBIT TO OPTION

                    SUBSCRIPTION FORM AND NOTICE OF EXERCISE

XsunX, Inc.                                                    Date:
Attn: President
65 Enterprise
Aliso Viejo, CA 92656

Ladies and Gentlemen:

                  The  undersigned,  the holder of the enclosed  Option,  hereby
irrevocably elects to exercise the purchase rights represented by the Option and
to purchase there under  __________  shares of Common Stock of XSUNX,  INC. (the
"Company"),  and herewith  encloses payment of $___________  and/or  ___________
shares of the Company's common stock,  (the "Purchase Price") in full payment of
the Purchase Price of such shares being purchased.

Exercise of the Option shall not be deemed  effective  unless and until good and
immediately  available  funds in the full amount of the Purchase Price have been
confirmed in the account of the Company.  The original Option shall be presented
with this Subscription Form and Notice of Exercise.

         The Company may, in its  discretion,  withhold a portion of some or all
of the  exercised  shares or other  amounts  for the  payment  of taxes or other
items.  Holder  represents that Holder is not subject to any backup  withholding
requirements. Holder acknowledges that the shares of stock of the Company issued
upon  exercise  will not be entitled to any  dividend  declared  upon such stock
prior to the effective date of exercise of the Option.

         Holder hereby constitutes this Subscription Form and Notice of Exercise
as an  assignment,  deposit  tender,  and transfer in blank of the Option as set
forth therein.  Holder hereby irrevocably constitutes and appoints the secretary
of the Company as Holder's attorney in fact to issue shares upon the exercise of
the Option and reflect the same on the books and records of the Company,  cancel
the Option, issue a new Option, if applicable,  and perform any necessary act on
behalf of Holder, with full power substitution.

                                         Very truly yours,

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

                                         By: __________________________________

                                         Title: _______________________________

                                    17 of 17Exhibit
10.1

EXECUTION
COPY

$400,000,000

CREDIT AGREEMENT

dated as of

March 6, 2007

among

The Estée Lauder
Companies Inc.,

Estee Lauder Inc.,

The Eligible Subsidiaries Referred to Herein,

The Lenders Listed Herein,

JPMorgan Chase Bank, N.A.,

as Administrative Agent,

Bank of America N.A.,

as Syndication
Agent,

and

Citibank, N.A.,

as Documentation Agent

 

JPMorgan Chase Bank, N.A.
and Citigroup Global Markets Inc.,

as Joint
Bookrunners

 

TABLE OF
CONTENTS

	
  

  	
  PAGE

  
	
   

  
	
  Article 1

  
	
  DEFINITIONS

  
	
  Section 1.01. Definitions

  	
  1

  
	
  Section 1.02. Accounting Terms and
  Determinations

  	
  16

  
	
  Section 1.03. Types of Borrowing

  	
  16

  
	
   

  	
   

  
	
  Article 2

  
	
  THE CREDITS

  
	
   

  	
   

  
	
  Section 2.01. Commitments To Lend

  	
  17

  
	
  Section 2.02. Notice of Committed
  Borrowing

  	
  17

  
	
  Section 2.03. Competitive Bid
  Borrowings

  	
  17

  
	
  Section 2.04. Notice To Lenders;
  Funding of Loans

  	
  21

  
	
  Section 2.05. Evidence Of Debt

  	
  22

  
	
  Section 2.06. Maturity of Loans

  	
  23

  
	
  Section 2.07. Interest Rates

  	
  23

  
	
  Section 2.08. Fees

  	
  25

  
	
  Section 2.09. Optional Termination or
  Reduction of Commitments

  	
  25

  
	
  Section 2.10. Method of Electing
  Interest Rates

  	
  25

  
	
  Section 2.11. Mandatory Termination
  of Commitments

  	
  27

  
	
  Section 2.12. Optional Prepayments

  	
  27

  
	
  Section 2.13. General Provisions as
  to Payments

  	
  28

  
	
  Section 2.14. Funding Losses

  	
  28

  
	
  Section 2.15. Computation of Interest
  and Fees

  	
  29

  
	
  Section 2.16. [Intentionally Omitted]

  	
  29

  
	
  Section 2.17. Regulation D
  Compensation

  	
  29

  
	
   

  	
   

  
	
  Article 3

  
	
  CONDITIONS

  
	
   

  	
   

  
	
  Section 3.01. Closing

  	
  29

  
	
  Section 3.02. Borrowings

  	
  30

  
	
  Section 3.03. First Borrowing by Each
  Eligible Subsidiary

  	
  31

  
	
   

  	
   

  
	
  Article 4

  
	
  REPRESENTATIONS
  AND WARRANTIES

  
	
   

  	
   

  
	
  Section 4.01. Corporate Existence and
  Power

  	
  31

  
	
  Section 4.02. Corporate and
  Governmental Authorization; No Contravention

  	
  31

  

 

 

	
  Section 4.03. Binding
  Effect

  	
  32

  
	
  Section 4.04. Financial Information

  	
  32

  
	
  Section 4.05. Litigation

  	
  32

  
	
  Section 4.06. Compliance with ERISA

  	
  32

  
	
  Section 4.07. Environmental Matters

  	
  33

  
	
  Section 4.08. Taxes

  	
  33

  
	
  Section 4.09. Subsidiaries

  	
  33

  
	
  Section 4.10. Regulatory Restrictions
  on Borrowing

  	
  34

  
	
  Section 4.11. Full Disclosure

  	
  34

  
	
   

  	
   

  
	
  Article 5

  
	
  COVENANTS

  
	
   

  	
   

  
	
  Section 5.01. Information

  	
  34

  
	
  Section 5.02. Payment of Obligations

  	
  36

  
	
  Section 5.03. Insurance

  	
  36

  
	
  Section 5.04. Conduct of Business and
  Maintenance of Existence

  	
  36

  
	
  Section 5.05. Compliance with Laws

  	
  37

  
	
  Section 5.06. Inspection of Property,
  Books and Records

  	
  37

  
	
  Section 5.07. Mergers and Sales of
  Assets

  	
  37

  
	
  Section 5.08. Use of Proceeds

  	
  38

  
	
  Section 5.09. Negative Pledge

  	
  38

  
	
  Section 5.10. Debt to Total Capital

  	
  39

  
	
  Section 5.11. Debt of Subsidiaries

  	
  39

  
	
  Section 5.12. Transactions with
  Affiliates

  	
  39

  
	
   

  	
   

  
	
  Article 6

  
	
  DEFAULTS

  
	
   

  	
   

  
	
  Section 6.01. Events of Default

  	
  40

  
	
  Section 6.02. Notice of Default

  	
  42

  
	
   

  	
   

  
	
  Article 7

  
	
  THE
  ADMINISTRATIVE AGENT

  
	
   

  	
   

  
	
  Section 7.01. Appointment and
  Authorizations

  	
  42

  
	
  Section 7.02. Agents and Affiliates

  	
  42

  
	
  Section 7.03. Action by Agents

  	
  42

  
	
  Section 7.04. Consultation with
  Experts

  	
  43

  
	
  Section 7.05. Liability of Agents

  	
  43

  
	
  Section 7.06. Indemnification

  	
  43

  
	
  Section 7.07. Credit Decision

  	
  43

  
	
  Section 7.08. Successor Agents

  	
  44

  
	
  Section 7.09. Administrative Agent’s
  Fees

  	
  44

  

 

 ii
 

 

	
  Article 8

  
	
  CHANGE IN
  CIRCUMSTANCES

  
	
   

  	
   

  
	
  Section 8.01. Basis for Determining
  Interest Rate Inadequate or Unfair

  	
  44

  
	
  Section 8.02. Illegality

  	
  45

  
	
  Section 8.03. Increased Cost and
  Reduced Return

  	
  46

  
	
  Section 8.04. Taxes

  	
  47

  
	
  Section 8.05. Base Rate Loans
  Substituted for Affected Fixed Rate Loans

  	
  49

  
	
  Section 8.06. Substitution of Lenders

  	
  49

  
	
   

  	
   

  
	
  Article 9

  
	
  REPRESENTATIONS
  AND WARRANTIES OF ELIGIBLE SUBSIDIARIES

  
	
   

  	
   

  
	
  Section 9.01. Corporate Existence and
  Power

  	
  50

  
	
  Section 9.02. Corporate Governmental
  Authorization; No Contravention

  	
  50

  
	
  Section 9.03. Binding Effect

  	
  50

  
	
  Section 9.04. Taxes

  	
  50

  
	
   

  	
   

  
	
  Article 10

  
	
  MISCELLANEOUS

  
	
   

  	
   

  
	
  Section 10.01. Notices

  	
  50

  
	
  Section 10.02. No Waivers

  	
  51

  
	
  Section 10.03. Expenses;
  Indemnification

  	
  51

  
	
  Section 10.04. Sharing of Set-Offs

  	
  52

  
	
  Section 10.05. Amendments and Waivers

  	
  53

  
	
  Section 10.06. Successors and Assigns

  	
  53

  
	
  Section 10.07. Collateral

  	
  56

  
	
  Section 10.08. Governing Law,
  Submission to Jurisdiction

  	
  56

  
	
  Section 10.09. Counterparts;
  Integration; Effectiveness

  	
  56

  
	
  Section 10.10. WAIVER OF JURY TRIAL

  	
  56

  
	
  Section 10.11. Confidentiality

  	
  57

  
	
  Section 10.12. USA Patriot Act

  	
  57

  
	
   

  	
   

  
	
  Article 11

  
	
  GUARANTY

  
	
   

  	
   

  
	
  Section 11.01. The Guaranty

  	
  58

  
	
  Section 11.02. Guaranty Unconditional

  	
  58

  
	
  Section 11.03. Discharge Only upon
  Payment in Full; Reinstatement in Certain Circumstances

  	
  59

  
	
  Section 11.04. Waiver by the Guarantor

  	
  59

  
	
  Section 11.05. Subrogation

  	
  59

  
	
  Section 11.06. Stay of Acceleration

  	
  59

  
	
  Section 11.07. Limitation of Liability

  	
  60

  

 

 iii
 

 

	
  Commitment Schedule

  
	
  Pricing Schedule

  
	
  Schedule 4.05 - Litigation

  
	
   

  	
   

  
	
  EXHIBIT A -

  	
  Note

  
	
  EXHIBIT B -

  	
  Competitive Bid Quote Request

  
	
  EXHIBIT C -

  	
  Invitation for Competitive Bid Quotes

  
	
  EXHIBIT D -

  	
  Competitive Bid Quote

  
	
  EXHIBIT E -

  	
  Opinion of Counsel for the Obligors

  
	
  EXHIBIT F -

  	
  Reserved

  
	
  EXHIBIT G -

  	
  Assignment and Assumption Agreement

  
	
  EXHIBIT H -

  	
  Reserved

  
	
  EXHIBIT I -

  	
  Election to Participate

  
	
  EXHIBIT J -

  	
  Election to Terminate

  

 

 iv

AGREEMENT
dated as of March 6, 2007 among THE ESTÉE LAUDER COMPANIES INC., ESTEE LAUDER
INC., the ELIGIBLE SUBSIDIARIES referred to herein, the LENDERS listed on the
signature pages hereof, and JPMORGAN CHASE BANK, N.A., as Administrative Agent,
BANK OF AMERICA N.A., as Syndication Agent, CITIBANK, N.A., as Documentation
Agent and CITIGROUP GLOBAL MARKETS INC., as Joint Bookrunner with JPMORGAN
CHASE BANK, N.A.

The
parties hereto agree as follows:

ARTICLE
1

DEFINITIONS

Section 1.01.  Definitions.  The following terms, as used
herein, have the following meanings:

“Absolute Rate Auction” means a solicitation of Competitive
Bid Quotes setting forth Competitive Bid Absolute Rates pursuant to Section
2.03.

“Administrative Agent” means JPMorgan Chase Bank, N.A. in its
capacity as Administrative Agent for the Lenders hereunder, and its successors
in such capacity.

“Administrative Questionnaire” means, with respect to each
Lender, an administrative questionnaire in the form prepared by the
Administrative Agent and submitted to the Administrative Agent (with a copy to
the Company) duly completed by such Lender.

“Affiliate” means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Company (a “Controlling Person”) or (ii) any Person (other than the
Company or a Subsidiary) which is controlled by or is under common control with
a Controlling Person.  As used herein,
the term “control” means possession, directly or indirectly, of the power to vote
securities constituting 10% or more of the voting power represented by all of
the outstanding voting securities of a Person or to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

“Affiliate Transaction” has the meaning set forth in Section
5.12.

“Applicable Lending Office” means, with respect to any
Lender, (i) in the case of its Base Rate Loans, its Domestic Lending Office,
(ii) in the case of its Euro-Dollar Loans, its 

Euro-Dollar Lending Office and (iii) in the case of
its Competitive Bid Loans, its Competitive Bid Lending Office.

“Approved Fund” means any Fund that is administered or
managed by (i) a Lender, (ii) an affiliate of a Lender or (iii) an entity or an
affiliate of an entity that administers or manages a Lender.

“Assignee” has the meaning set forth in Section 10.06(c).

“Available Commitment” means, with respect to any Lender at
any time, an amount equal to such Lender’s Commitment at such time minus such
Lender’s Outstanding Committed Amount at such time.

“Base Rate” means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1⁄2 of 1% plus the
Federal Funds Rate for such day.

“Base Rate Loan” means (i) a Committed Dollar Loan which
bears interest at the Base Rate pursuant to the applicable Notice of Committed
Borrowing or Notice of Interest Rate Election, (ii) a Committed Loan which
bears interest at the Base Rate pursuant to the provisions of Article 8 or
(iii) an overdue amount which was a Base Rate Loan immediately before it became
overdue.

“Benefit Arrangement” means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.

“Borrower” means the Company or any Eligible Subsidiary, as
the context may require, and their respective successors, and “Borrowers” means all of the foregoing.  When used in relation to any Loan, references
to “the Borrower” are to the
particular Borrower to which such Loan is or is to be made.

“Borrowing” has the meaning set forth in Section 1.03.

“Change of Control” means (i) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person or group (within the meaning of the Securities Exchange Act of 1934
and the rules of the Securities and Exchange Commission thereunder as in effect
on the date hereof) other than the Lauder Family Members, of equity interests
representing more than 30% of the aggregate ordinary voting power represented
by the issued and outstanding equity interests of the Company; (ii) occupation
of a majority of the seats (other than vacant seats) on the board of directors
of the Company by persons who were neither (x) nominated by the board of
directors of the Company nor (y) appointed by directors so nominated; (iii) the
acquisition of direct or indirect control of the Company by any person or group
other than the Lauder Family Members; or (iv) 

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the Company shall cease at any time to own, directly
or indirectly, 100% of the outstanding capital stock of the Company Guarantor.

“Closing Date” means March 6, 2007 or such later date on
which the Administrative Agent shall have received the documents specified in or
pursuant to Section 3.01.

“Commitment” means (i) with respect to each Lender, the
amount of such Lender’s Commitment, as such amount is set forth opposite the
name of such Lender on the Commitment Schedule and (ii) with respect to any
Assignee, the amount of the transferor Lender’s Commitment assigned to it
pursuant to Section 10.06, in each case as such amount may be reduced from time
to time pursuant to Section 2.09 and Section 2.20 or Section 10.06; provided that, if the context so requires,
the term “Commitment” means the obligation of a Lender to extend credit up to
such amount to the Borrowers hereunder.

“Committed Loan” means a Loan made pursuant to Section 2.01; provided that, if any such loan or loans
(or portions thereof) are combined or subdivided pursuant to a Notice of
Interest Rate Election, the term “Committed Loan” shall refer to the combined
principal amount resulting from such combination or to each of the separate
principal amounts resulting from such subdivision, as the case may be.

“Company” means The Estée Lauder Companies
Inc., a Delaware corporation, and its successors.

“Company Guarantor” means Estee Lauder Inc.,
a Delaware corporation, and its successors.

“Competitive Bid Absolute Rate” has the meaning set forth in
Section 2.03(d).

“Competitive Bid Absolute Rate Loan” means a loan to be made
by a Lender pursuant to an Absolute Rate Auction.

“Competitive Bid Lending Office” means, as to each Lender,
its Domestic Lending Office or such other office, branch or affiliate of such
Lender as it may hereafter designate as its Competitive Bid Lending Office by
notice to the Company and the Administrative Agent; provided that any Lender may from time to time by notice to
the Company and the Administrative Agent designate separate Competitive Bid
Lending Offices for its Competitive Bid LIBOR Loans, on the one hand, and its
Competitive Bid Absolute Rate Loans, on the other hand, in which case all
references herein to the Competitive Bid Lending Office of such Lender will be
deemed to refer to either or both of such offices, as the context may require.

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“Competitive Bid LIBOR Loan” means a loan to be made by a
Lender pursuant to a LIBOR Auction (including such a loan bearing interest at
the Base Rate pursuant to Section 8.01).

“Competitive Bid Loan” means a Competitive Bid LIBOR Loan or
a Competitive Bid Absolute Rate Loan.

“Competitive Bid Margin” has the meaning set forth in Section
2.03(d)(ii)(C).

“Competitive Bid Quote” means an offer by a Lender to make a
Competitive Bid Loan in accordance with Section 2.03.

“Consolidated Debt” means at any date the average of the Debt
of the Company and its Consolidated Subsidiaries, determined on a consolidated
basis, at the last day of each of the four consecutive fiscal quarters of the
Company ended on or most recently prior to such date.

“Consolidated Subsidiary” means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Company in its consolidated financial statements if such statements were
prepared as of such date.

“Consolidated Tangible Net Worth” means at any date the
consolidated stockholders’ equity of the Company and its Consolidated
Subsidiaries (excluding for this purpose any amount attributable to stock which
is required to be redeemed, or is redeemable at the option of the holder, if
certain events or conditions occur or exist or otherwise, other than shares of
the Company’s Series A cumulative redeemable preferred stock, par value $.01
per share, due June 2015 outstanding on the date of this Agreement) less their
consolidated Intangible Assets, all determined as of such date.  For purposes of this definition, “Intangible
Assets” means the amount (to the extent reflected in determining such
consolidated stockholders’ equity) of (i) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of assets of a going
concern business made within twelve months after the acquisition of such
business) subsequent to June 30, 2006 in the book value of any asset owned by
the Company or a Consolidated Subsidiary, (ii) all investments in
unconsolidated Subsidiaries and all equity investments in Persons which are not
Subsidiaries and (iii) all unamortized debt discount and expense, unamortized
deferred charges, goodwill, patents, trademarks, service marks, trade names,
anticipated future benefit of tax loss carry-forwards, copyrights, organization
or developmental expenses and other intangible assets.

“Debt” of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all 

 4
 

obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable arising
in the ordinary course of business, (iv) all obligations of such Person as
lessee which are capitalized in accordance with generally accepted accounting
principles, (v) all non-contingent obligations (and, for purposes of Section
5.10 and the definitions of Material Debt and Material Financial Obligations,
all contingent obligations) of such Person to reimburse any bank or other
Person in respect of amounts paid under a letter of credit or similar
instrument, (vi) all Debt secured by a Lien on any asset of such Person,
whether or not such Debt is otherwise an obligation of such Person and (vii)
all Debt of others Guaranteed by such Person.

“Debt to Capital Ratio” means at any date the ratio of (i)
Consolidated Debt to (ii) Total Capital, in each case determined at such date.

“Default” means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.

“Derivatives Obligations” of any Person means all obligations
of such Person in respect of any rate swap transaction, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity index
swap, equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect to
any of the foregoing transactions) or any combination of the foregoing
transactions.

“dollars”, “Dollars”
and the sign “$” mean lawful
currency of the United States.

“Domestic Business Day” means any day except a Saturday,
Sunday or other day on which commercial banks in New York City are authorized
by law to close.

“Domestic Lending Office” means, as to each Lender, its
office located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Lender may hereafter designate as its Domestic
Lending Office by notice to the Company and the Administrative Agent.

“Effective Date” means the date this Agreement becomes
effective in accordance with Section 10.09.

“Election to Participate” means an Election to Participate
substantially in the form of Exhibit I hereto.

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“Election to Terminate” means an Election to Terminate
substantially in the form of Exhibit J hereto.

“Eligible Subsidiary” means any Wholly-Owned Consolidated
Subsidiary reasonably acceptable to the Administrative Agent, as to which an
Election to Participate shall have been delivered to the Administrative Agent
and as to which an Election to Terminate with respect to such Election to
Participate shall not have been delivered to the Administrative Agent.  Each such Election to Participate and
Election to Terminate shall be duly executed on behalf of such Wholly-Owned
Consolidated Subsidiary and the Company in such number of copies as the
Administrative Agent may request.  If at
any time a Subsidiary theretofore designated as an Eligible Subsidiary no
longer qualifies as a Wholly-Owned Consolidated Subsidiary, the Company shall
cause to be delivered to the Administrative Agent an Election to Terminate terminating
the status of such Subsidiary as an Eligible Subsidiary.  The delivery of an Election to Terminate
shall not affect any obligation of an Eligible Subsidiary theretofore incurred
or the guaranty thereof by the Company and the Company Guarantor.  The Administrative Agent shall promptly give
notice to the Lenders of the receipt of any Election to Participate or Election
to Terminate.

“Environmental Laws” means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.

“ERISA” means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.

“ERISA Group” means the Company, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Company or any Subsidiary, are treated as a single employer under Section 414
of the Internal Revenue Code.

“Euro-Dollar Lending Office” means as to each Lender, its
office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative Questionnaire
as its Euro Dollar Lending Office) or such other office, branch or affiliate of
such Lender as it may hereafter designate as its Euro-Dollar Lending Office by
notice to the Company and the Administrative Agent.

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“Euro-Dollar Margin” has the meaning set forth in the Pricing
Schedule.

“Euro-Dollar Rate” means the rate of interest determined
pursuant to Section 2.07 on the basis of a London Interbank Offered Rate.

“Euro-Dollar Reserve Percentage” means, for any day, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in New York City with deposits exceeding five
billion dollars in respect of “Eurocurrency liabilities” (or in respect of any
other category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
any Lender to the United States residents).

“Euro-Dollar Business Day” means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.

“Euro-Dollar Loan” means (i) a Committed Loan which bears
interest at the Euro-Dollar Rate pursuant to the applicable Notice of Committed
Borrowing or Notice of Interest Rate Election or (ii) an overdue amount which
was a Euro-Dollar Loan immediately before it became overdue.

“Event of Default” has the meaning set forth in Section 6.01.

“Facility Fee” has the meaning set forth in Section 2.08.

“Facility Fee Rate” has the meaning set forth in the Pricing
Schedule.

“Federal Funds Rate” means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided
that (i) if such day is not a Domestic Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day, and
(ii) if no such rate is so published on such next succeeding Domestic Business
Day, the Federal Funds Rate for such day shall be the average rate quoted to
JPMorgan Chase Bank, N.A. on such day on such transactions as determined by the
Administrative Agent.

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“Fixed Rate Loans” means Euro-Dollar Loans or Competitive Bid
Loans (excluding Competitive Bid LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01) or any combination of the foregoing.

“Fund” means any Person (other than a natural Person) that is
(or will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
business.

“Granting Lender” has the meaning specified
in Section 10.06(f).

“Group of Loans” means at any time a group of Loans
consisting of (i) all Committed Loans to the same Borrower which are Base Rate
Loans at such time or (ii) all Euro-Dollar Loans to the same Borrower which
have the same Interest Period at such time; provided
that, if a Committed Loan of any particular Lender is converted to or made as a
Base Rate Loan pursuant to Article 8, such Loan shall be included in the same
Group or Groups of Loans from time to time as it would have been if it had not
been so converted or made.

“Guarantee” by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt (whether arising by virtue of partnership arrangements, by agreement
to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or
(ii) entered into for the purpose of assuring in any other manner the holder of
such Debt of the payment thereof or to protect such holder against loss in
respect thereof (in whole or in part); provided
that the term Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business. 
The term “Guarantee” used
as a verb has a corresponding meaning.

“Guarantor” means, with respect to the obligations of the
Borrowers hereunder, the Company Guarantor and, with respect to the obligations
of Borrowers hereunder other than the Company, the Company, and “Guarantors” means all of the foregoing.

“Guaranty” means the obligations of the Guarantors set forth
in Article 11.

“Hazardous Substances” means any toxic, radioactive, caustic
or otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.

“Increased Cost” has the meaning set forth
in Section 10.06(f).

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“Indemnitee” has the meaning set forth in Section 10.03(b).

“Interest Period” means:

(1)
                               with
respect to each Euro-Dollar Loan, the period commencing on the date of
borrowing specified in the applicable Notice of Borrowing or on the date
specified in the applicable Notice of Interest Rate Election and ending one,
two, three or six months thereafter, as a Borrower may elect in the applicable
notice; provided that:

(a)                                  any
Interest Period (except an Interest Period determined pursuant to clause (c)
below) which would otherwise end on a day which is not a Euro-Dollar Business
Day shall be extended to the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Euro-Dollar Business Day;

(b)                                 any
Interest Period which begins on the last Euro-Dollar Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall, subject to clause (c)
below, end on the last Euro-Dollar Business Day of a calendar month; and

(c)                                  any
Interest Period which would otherwise end after the Termination Date shall end
on the Termination Date (or, if the Termination Date is not a Euro-Dollar Business
Day, on the next preceding Euro-Dollar Business Day);

(2)                                  with
respect to each Competitive Bid LIBOR Loan, the period commencing on the date
of borrowing specified in the applicable Notice of Borrowing and ending such
whole number of months thereafter as a Borrower may elect in accordance with
Section 2.03; provided that:

(a)                                  any
Interest Period (except an Interest Period determined pursuant to clause (c)
below) which would otherwise end on a day which is not a Euro-Dollar Business
Day shall be extended to the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Euro-Dollar Business Day;

(b)                                 any
Interest Period which begins on the last Euro-Dollar Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall, subject to clause (c)
below, end on the last Euro-Dollar Business Day of a calendar month; and

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(c)                                  any
Interest Period which would otherwise end after the Termination Date shall end
on the Termination Date (or, if the Termination Date is not a Euro-Dollar
Business Day, the next preceding Euro-Dollar Business Day); and

(3)                                  with
respect to each Competitive Bid Absolute Rate Loan, the period commencing on
the date of borrowing specified in the applicable Notice of Borrowing and
ending such number of days thereafter (but not less than 7 days) as a Borrower
may elect in accordance with Section 2.03; provided
that:

(a)                                  any
Interest Period (except an Interest Period determined pursuant to clause (b)
below) which would otherwise end on a day which is not a Euro-Dollar Business
Day shall be extended to the next succeeding Euro-Dollar Business Day; and

(b)                                 any
Interest Period which would otherwise end after the Termination Date shall end
on the Termination Date (or, if the Termination Date is not a Euro-Dollar
Business Day, on the next preceding Euro-Dollar Business Day).

“Internal Revenue Code” means the Internal Revenue Code of
1986, as amended, or any successor statute.

“Lauder Family Member” means (i) the estate of Mrs. Estée
Lauder, (ii) each descendant of Mrs. Estée Lauder (each such Person, a “Lauder Descendant”) and their respective estates,
guardians, conservators or committees, (iii) each Family Controlled Entity,
(iv) each Current Spouse of Lauder Descendants and (v) the trustees, in their
respective capacities as such, of each Family Controlled Trust.  As used herein, “Family Controlled Entity” means (w) any not-for-profit
corporation if at least a majority of its board of directors is composed of
Lauder Descendants and/or Current Spouses of Lauder Descendants, (x) any other
corporation if (i) both (aa) Lauder Descendants and/or Current Spouses of
Lauder Descendants (or in the case of subclause (i)(aa)(xx), their respective
estates, guardians, conservators or committees) (xx) hold in the aggregate,
directly or indirectly through one or more 

 10
 

wholly owned Persons, securities having ordinary
voting power to elect a majority of the board of directors of such corporation
or (yy) constitute a majority of the board of directors of such corporation and
(bb) at least a majority of the value of the outstanding equity of such
corporation is owned by Lauder Family Members or (ii) at least 80% of the value
of the outstanding equity of such corporation is owned by Lauder Family
Members, (y) any partnership if at least a majority of the value of its
partnership interests (both general and limited) are owned by Lauder Family
Members, and (z) any limited liability or similar company if (i) both (aa)
Lauder Descendants and/or Current Spouses of Lauder Descendants (or, in the
case of subclause (i)(aa)(xx), their respective estates, guardians, conservators
or committees) (xx) hold in the aggregate, directly or indirectly through one
or more wholly owned Persons, securities or other equity interests having
ordinary voting power to elect or appoint at least a majority of the managing
members of such company or (yy) constitute a majority of the managing members
of such company and (bb) a majority of the value of such company is owned by
Lauder Family Members or (ii) at least 80% of the value of such company is
owned by Lauder Family Members. As used herein, “Family Controlled Trust” shall mean any trust the primary
beneficiaries of which are Lauder Descendants, Spouses of Lauder Descendants
and/or charitable organizations (collectively, “Lauder
Beneficiaries”); provided,
that, if the trust is a wholly charitable trust, at least a majority of the
trustees of such trust consist of Lauder Descendants and/or Current Spouses of
Lauder Descendants.  For purposes of the
definition of “Family Controlled Trust”, the primary beneficiaries of a trust
will be deemed to be Lauder Beneficiaries if, under the maximum exercise of
discretion by the trustee in favor of persons who are neither Lauder
Beneficiaries nor Family Controlled Trusts, the value of the interests of such
persons in such trust, computed actuarially, is less than 50%.  In determining the primary beneficiaries of a
trust for purposes of the definition of “Family Controlled Trust”, (A) the
factors and methods prescribed in section 7520 of the Internal Revenue Code of
1986, as amended, for use in ascertaining the value of certain interests shall
be used in determining a beneficiary’s actuarial interest in a trust, (B) the
actuarial value of the interest in a trust of any person in whose favor a
testamentary power of appointment may be exercised shall be deemed to be zero
and (C) in the case of a trust created by one or more of Mrs. Estée Lauder,
Joseph H. Lauder or Lauder Descendants, the actuarial value of the interest in
such trust of any person who may receive trust property only at the termination
of the trust and then only in the event that, at the termination of the trust,
there are no living issue of one or more of Mrs. Estée Lauder, Joseph H. Lauder
or Lauder Descendants shall be deemed to be zero.  For purposes hereof, (1) “Spouses of Lauder Descendants” means those
individuals who at any time were married to any Lauder Descendant whether or
not such marriage is subsequently dissolved by death, divorce, or by any other
means, (2) “Current Spouse of Lauder
Descendants” means an individual who is married to a Lauder
Descendant, but only so long as such marriage has not been dissolved by death,
divorce or by any other means, (3) the relationship of any person that is
derived by or through legal adoption shall be considered a natural
relationship, (4) a minor who is a descendant of Mrs. Estée Lauder and for whom
equity interests are held pursuant to a Uniform Gifts to Minors Act or similar
law shall be considered the holder of such equity interests and the custodian
who is the record holder of such equity interests shall not be considered the
holder thereof, (5) an incompetent stockholder of any equity interests whose
equity interests are owned or held by a guardian or conservator shall be
considered the holder of such equity interest and such guardian or conservator
who is the holder of such equity interests shall not be considered the holder
thereof, (6) any equity interests pledged by a holder thereof as security for
any obligation shall be deemed to be held by such holder unless and until the
pledgee of such equity interests has declared a default with respect to such 

 11
 

obligation and has the right (whether or not being
presently exercised) to vote or direct the voting of such equity interests and
(7) except as provided in clauses (4), (5) and (6) above, the holder of any
equity interests shall mean the record holder of such equity interests; provided, however, that if such record
holder of such equity interests is a nominee, the holder of such equity
interests shall be the first person in the chain of ownership of such equity
interests who is not holder thereof solely as a nominee.

“Lender” means (i) each bank or other institution listed on
the signature pages hereof, (ii) each Assignee which becomes a Lender pursuant
to Section 10.06(c) and (iii) their respective successors.

“LIBOR Auction” means a solicitation of Competitive Bid
Quotes setting forth Competitive Bid Margins based on the London Interbank
Offered Rate pursuant to Section 2.03.

“Lien” means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other type
of preferential arrangement that has the practical effect of creating a
security interest, in respect of such asset. 
For the purposes of this Agreement, the Company or any Subsidiary shall
be deemed to own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.

“Loan” means a Base Rate Loan, a Euro-Dollar Loan or a
Competitive Bid Loan and “Loans”
means Base Rate Loans, Euro-Dollar Loans or Competitive Bid Loans or any
combination of the foregoing.

“London Interbank Offered Rate” has the meaning set forth in
Section 2.07(b).

“Material Adverse Effect” means a material adverse effect on
the business, financial position or results of operations of the Company and
its Consolidated Subsidiaries, taken as a whole.

“Material Debt” means Debt (other than the Loans) of the
Company and/or one or more of its Subsidiaries, arising in one or more related
or unrelated transactions, in an aggregate principal or face amount exceeding
$50,000,000.

“Material Financial Obligations” means a principal or face
amount of Debt and/or payment or collateralization obligations in respect of
Derivatives Obligations of the Company and/or one or more of its Subsidiaries,
arising in one or more related or unrelated transactions, exceeding in the
aggregate $50,000,000.

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“Material Plan” means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $50,000,000.

“Multiemployer Plan” means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the
ERISA Group during such five year period.

“Notes” means promissory notes of a Borrower, substantially
in the form of Exhibit A hereto, evidencing the obligation of such Borrower to
repay the Loans made to it, and “Note”
means any one of such promissory notes issued hereunder.

“Notice of Borrowing” means a Notice of Committed Borrowing
(as defined in Section 2.02) or a Notice of Competitive Bid Borrowing (as
defined in Section 2.03(f)).

“Notice of Interest Rate Election” has the meaning set forth
in Section 2.10.

“Obligors” means the Borrowers and the Guarantors, and “Obligor” means any one of the Borrowers and
the Guarantors.

“Outstanding Committed Amount” means, as to any Lender at any
time, the sum at such time, the aggregate principal amount of the outstanding
Committed Loans of such Lender at such time.

“Parent” means, with respect to any Lender, any Person
controlling such Lender.

“Participant” has the meaning set forth in Section 10.06(b).

“Participating Member State” means those members of the
European Union from time to time which shall have adopted a single, shared
currency.

“PBGC” means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.

“Person” means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any other entity
or organization, including a government or political subdivision or an agency
or instrumentality thereof.

“Plan” means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and 

 13
 

either (i) is maintained, or contributed to, by any
member of the ERISA Group for employees of any member of the ERISA Group or
(ii) has at any time within the preceding five years been maintained, or
contributed to, by any Person which was at such time a member of the ERISA
Group for employees of any Person which was at such time a member of the ERISA
Group.

“Pricing Schedule” means the Pricing Schedule attached
hereto.

“Prime Rate” means the rate of interest publicly announced by
JPMorgan Chase Bank, N.A. at its Principal Office from time to time as its
prime rate.  Each change in the Prime
Rate shall be effective from and including the date such change is publicly
announced as being effective.

“Principal Office” shall mean the principal office of
JPMorgan Chase Bank, N.A., presently located at 270 Park Avenue, New York, New
York 10017.

“Proxy Statement” means the Proxy Statement of the Company
for the Annual Meeting of Stockholders dated as of September 29, 2006.

“Quarterly Date” means each March 31, June 30, September 30
and December 31.

“Rate Fixing Date” means, with respect to any Interest
Period, the day on which quotes for deposits in the relevant currency for such
Interest Period are customarily taken in the London interbank market for
delivery on the first day of such Interest Period.

“Reference Banks” means the principal London offices of
JPMorgan Chase Bank, N.A. and one or more Lenders selected by the
Administrative Agent from time to time.

“Regulation U” means Regulation U of the Board of Governors
of the Federal Reserve System, as in effect from time to time.

“Required Lenders” means at any time Lenders having in excess
of 50% of the aggregate amount of the Commitments or, if the Commitments shall
have been terminated, holding more than 50% of the Total Outstanding Amount.

“Revolving Credit Period” means the period from and including
the Effective Date to but not including the earlier of the Termination Date and
the date of termination of the Commitments.

“Senior Officer” means, with respect to any Person, the chief
executive officer, the chief operating officer, the president, the chief
financial officer, the general counsel, the chief accounting officer or the
treasurer of such Person (or in any case persons having substantially similar
responsibilities regardless of title).

 14
 

“Significant Subsidiary” means at any time a Subsidiary that
as at that time would be a “significant subsidiary” as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange Commission as in
effect on the date hereof; provided
that the Company Guarantor and each Eligible Subsidiary shall always be deemed
to be a Significant Subsidiary.

“SPC” has the meaning specified in Section
10.06(f).

“Subsidiary” means, as to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person; unless otherwise specified, “Subsidiary” means a Subsidiary of the
Company.

“Termination Date” means March 4, 2008, or, if such day is
not a Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.

“Total Capital” means, at any date, the sum of (x)
Consolidated Debt plus (y) consolidated stockholders’ equity of the Company and
its Consolidated Subsidiaries (excluding for this purpose any amount
attributable to stock which is required to be redeemed, or is redeemable at the
option of the holder, if certain events or conditions occur or exist or
otherwise) plus (z) (a) shares of the Company’s Series A cumulative redeemable
preferred stock, par value $.01 per share, due June 2015 outstanding on the date
of this Agreement (the “Existing Preferred
Stock”) and (b) any shares of preferred stock of the Company (i)
that are issued in exchange for the Existing Preferred Stock or the proceeds
from the issuance of which have been used to redeem or repurchase the Existing
Preferred Stock, (ii) which is not required to be redeemed, nor is redeemable
at the option of the holder, if certain events or conditions occur or exist or
otherwise, on or prior to the Termination Date, except for those events or
conditions contained in the Existing Preferred Stock, and (iii) the other terms
of which are no less favorable to the Borrowers or the Lenders than those of
the Existing Preferred Stock, in each case determined at such date.

“Total Outstanding Amount” means, at any time, the aggregate
principal amount of all Loans outstanding at such time.

“Unfunded Liabilities” means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA
Group to the PBGC or any other Person under Title IV of ERISA.

 15
 

“United States” means the United States of America, including
the States and the District of Columbia, but excluding its territories and
possessions.

“Wholly-Owned Consolidated Subsidiary” means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests of
which (except for qualifying shares held by directors or foreign nationals in
accordance with applicable law) are at the time directly or indirectly owned by
the Company or one or more other Wholly-Owned Consolidated Subsidiaries.

Section 1.02.  Accounting Terms and
Determinations.  Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes concurred in by the
Company’s independent public accountants) with the most recent audited
consolidated financial statements of the Company and its Consolidated
Subsidiaries delivered to the Lenders; provided
that, if the Company notifies the Administrative Agent that the Company wishes
to amend any covenant in Article 5 to eliminate the effect of any change in
generally accepted accounting principles on the operation of such covenant (or
if the Administrative Agent notifies the Company that the Required Lenders wish
to amend Article 5 for such purpose), then the Company’s compliance with such
covenant shall be determined on the basis of generally accepted accounting
principles in effect immediately before the relevant change in generally
accepted accounting principles became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Company
and the Required Lenders.

Section 1.03.  Types of Borrowing.  The term “Borrowing”
denotes the aggregation of Loans of one or more Lenders to be made to a single
Borrower pursuant to Article 2 on the same date, all of which Loans are of the
same type and currency (subject to Article 8) and, except in the case of Base
Rate Loans, have the same initial Interest Period.  Borrowings are classified for purposes of
this Agreement either (a) by reference to the pricing of Loans comprising such
Borrowing (e.g., a “Fixed Rate Borrowing” is a Euro-Dollar Borrowing or a
Competitive Bid Borrowing (excluding any such Borrowing consisting of
Competitive Bid LIBOR Loans bearing interest at the Base Rate pursuant to
Section 8.01), and a “Euro-Dollar Borrowing” is a Borrowing comprised of
Euro-Dollar Loans), or (b) by reference to the provisions of Article 2 under
which participation therein is determined (i.e.,
a “Committed Borrowing” is a
Borrowing under Section 2.01 in which all Lenders participate in proportion to
their Commitments, while a “Competitive
Bid Borrowing” is a Borrowing under Section 2.03 in which the Lender
participants are determined on the basis of their bids in accordance
therewith).

 16
 

ARTICLE 2

THE CREDITS

Section 2.01.  Commitments To Lend.  (a) During the Revolving Credit
Period, each Lender severally agrees, on the terms and conditions set forth in
this Agreement, to make Loans denominated in Dollars to any Borrower pursuant
to this Section 2.01(a) from time to time in amounts such that (i) such
Lender’s Outstanding Committed Amount shall not exceed the amount of its
Commitment and (ii) the Total Outstanding Amount shall not exceed the aggregate
amount of the Commitments.  Each Borrowing
under this Section 2.01(a) shall be in a minimum aggregate amount of
$20,000,000 and any larger multiple of $1,000,000 (except that any such
Borrowing may be in the aggregate amount available in accordance with this
Section 2.01(a) and Section 3.02) and shall be made from the several Lenders ratably
in proportion to their respective Available Commitments.

(b)         Within the foregoing
limits, any Borrower may borrow under this Section, repay, or to the extent
permitted by Section 2.12, prepay Loans and reborrow at any time during the
Revolving Credit Period under this Section.

Section 2.02.  Notice of Committed Borrowing.
 A Borrower shall give the
Administrative Agent notice (a “Notice of Committed
Borrowing”) not later than 10:30 A.M. (New York City time) on (x)
the date of each Base Rate Borrowing, and (y) the third Euro-Dollar Business
Day before each Euro-Dollar Borrowing:

(i)             the date of such
Borrowing, which shall be a Domestic Business Day in the case of a Base Rate
Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing;

(ii)          the currency and the
aggregate amount of such Borrowing;

(iii)       in the case of Committed
Loans, whether the Loans comprising such Borrowing are to bear interest
initially at the Base Rate or a Euro-Dollar Rate; and

(iv)      in the case of a Euro-Dollar
Borrowing, the duration of the initial Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period.

Section 2.03.  Competitive Bid
Borrowings.  (a) The
Competitive Bid Option.  In addition
to Committed Borrowings pursuant to Section 2.01, any Borrower may, as set
forth in this Section, request the Lenders during the Revolving Credit Period
to make offers to make Competitive Bid Loans to such Borrower.  The Lenders may, but shall have no obligation
to, make such offers and a Borrower may, but shall have no obligation to,
accept any such offers in the manner set forth in this Section.

 17
 

(b)         Competitive Bid Quote
Request.  When a Borrower wishes to
request offers to make Competitive Bid Loans under this Section, it shall transmit
to the Administrative Agent by telex or facsimile transmission a Competitive
Bid Quote Request substantially in the form of Exhibit B hereto so as to be
received not later than 10:30 A.M. (New York City time) on (x) the fourth
Euro-Dollar Business Day prior to the date of Borrowing proposed therein, in
the case of a LIBOR Auction or (y) the Business Day prior to the date of
Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as such Borrower and the Administrative
Agent shall have mutually agreed and shall have notified to the Lenders not
later than the date of the Competitive Bid Quote Request for the first LIBOR
Auction or Absolute Rate Auction for which such change is to be effective) specifying:

(i)             the proposed date of
Borrowing, which shall be a Euro-Dollar Business Day in the case of a LIBOR
Auction or a Domestic Business Day in the case of an Absolute Rate Auction,

(ii)          the aggregate amount of
such Borrowing, which shall be, in a minimum aggregate amount of $20,000,000
and any larger multiple of $1,000,000,

(iii)       the duration of the
Interest Period applicable thereto, subject to the provisions of the definition
of Interest Period, and

(iv)      whether the Competitive Bid
Quotes requested are to set forth a Competitive Bid Margin or a Competitive Bid
Absolute Rate.

A Borrower may request offers to make Competitive Bid
Loans for more than one Interest Period in a single Competitive Bid Quote
Request.  No Competitive Bid Quote
Request shall be given within four Euro-Dollar Business Days (or such other
number of days as the applicable Borrower and the Administrative Agent may
agree) of any other Competitive Bid Quote Request.

(c)          Invitation for
Competitive Bid Quotes.  Promptly
upon receipt of a Competitive Bid Quote Request, the Administrative Agent shall
send to the Lenders by telex or facsimile transmission an Invitation for
Competitive Bid Quotes substantially in the form of Exhibit C hereto, which
shall constitute an invitation by the applicable Borrower to each Lender to
submit Competitive Bid Quotes offering to make the Competitive Bid Loans to
which such Competitive Bid Quote Request relates in accordance with this
Section.

(d)         Submission and
Contents of Competitive Bid Quotes. 
(i) Each Lender may submit a Competitive Bid Quote containing an offer
or offers to make Competitive Bid Loans in response to any Invitation for
Competitive Bid Quotes.  Each Competitive
Bid Quote must comply with the requirements of this subsection (d) and must be submitted
to the Administrative Agent by telex or 

 18
 

facsimile transmission at its offices specified in or
pursuant to Section 10.01 not later than (x) 9:30 A.M. (New York City time) on
the third Euro-Dollar Business Day prior to the proposed date of Borrowing, in
the case of a LIBOR Auction or (y) 9:30 A.M. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the applicable Borrower and the
Administrative Agent shall have mutually agreed and shall have notified to the
Lenders not later than the date of the Competitive Bid Quote Request for the
first LIBOR Auction or Absolute Rate Auction for which such change is to be
effective); provided that
Competitive Bid Quotes submitted by the Administrative Agent (or any affiliate
of the Administrative Agent) in the capacity of a Lender may be submitted, and
may only be submitted, if the Administrative Agent or such affiliate notifies
the Borrower of the terms of the offer or offers contained therein not later
than (x) one hour prior to the deadline for the other Lenders, in the case of a
LIBOR Auction or (y) 15 minutes prior to the deadline for the other Lenders, in
the case of an Absolute Rate Auction. 
Subject to Articles 3 and 6, any Competitive Bid Quote so made shall be
irrevocable except with the written consent of the Administrative Agent given
on the instructions of the applicable Borrower.

(ii)          Each Competitive Bid
Quote shall be substantially in the form of Exhibit D hereto and shall in any
case specify:

(A)      the proposed date of
Borrowing,

(B)        the principal amount of
the Competitive Bid Loan for which each such offer is being made, which
principal amount (w) may be greater than or less than the Commitment of the
quoting Lender, (x) must be $5,000,000 or a larger multiple of $1,000,000, (y)
may not exceed the principal amount of Competitive Bid Loans for which offers
were requested and (z) may be subject to an aggregate limitation as to the
principal amount of Competitive Bid Loans for which offers being made by such
quoting Lender may be accepted,

(C)        in the case of a LIBOR
Auction, the margin above or below the applicable London Interbank Offered Rate
(the “Competitive Bid Margin”)
offered for each such Competitive Bid Loan, expressed as a percentage
(specified to the nearest 1/10,000th of 1%) to be added to or subtracted from
such base rate,

(D)       in the case of an Absolute
Rate Auction, the rate of interest per annum (specified to the nearest
1/10,000th of 1%) (the “Competitive Bid
Absolute Rate”) offered for each such Competitive Bid Loan, and

 19
 

(E)         the identity of the
quoting Lender.

A Competitive Bid Quote may set forth up to five
separate offers by the quoting Lender with respect to each Interest Period
specified in the related Invitation for Competitive Bid Quotes.

(iii)       Any Competitive Bid Quote
shall be disregarded if it:

(A)      is not substantially in
conformity with Exhibit D hereto or does not specify all of the information
required by subsection (d)(ii) above;

(B)        contains qualifying,
conditional or similar language;

(C)        proposes terms other than
or in addition to those set forth in the applicable Invitation for Competitive
Bid Quotes; or

(D)       arrives after the time set
forth in subsection (d)(i).

(e)          Notice to Borrower.  The Administrative Agent shall promptly
notify the applicable Borrower of the terms (x) of any Competitive Bid Quote
submitted by a Lender that is in accordance with subsection (d) and (y) of any
Competitive Bid Quote that amends, modifies or is otherwise inconsistent with a
previous Competitive Bid Quote submitted by such Lender with respect to the
same Competitive Bid Quote Request.  Any
such subsequent Competitive Bid Quote shall be disregarded by the Administrative
Agent unless such subsequent Competitive Bid Quote is submitted solely to
correct a manifest error in such former Competitive Bid Quote.  The Administrative Agent’s notice to the
applicable Borrower shall specify (A) the aggregate principal amount of Competitive
Bid Loans for which offers have been received for each Interest Period
specified in the related Competitive Bid Quote Request, (B) the respective
principal amounts and Competitive Bid Margins or Competitive Bid Absolute
Rates, as the case may be, so offered and (C) if applicable, limitations on the
aggregate principal amount of Competitive Bid Loans for which offers in any
single Competitive Bid Quote may be accepted.

(f)            Acceptance and
Notice by Borrower.  Not later than
10:30 A.M. (New York City time) on (x) the third Euro-Dollar Business Day prior
to the proposed date of Borrowing, in the case of a LIBOR Auction or (y) the
proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Borrower and the Administrative
Agent shall have mutually agreed and shall have notified to the Lenders not
later than the date of the Competitive Bid Quote Request for the first LIBOR
Auction or Absolute Rate Auction for which such change is to be effective), the
applicable Borrower shall 

 20
 

notify the Administrative Agent of its acceptance or
non-acceptance of the offers so notified to it pursuant to subsection (e).  In the case of acceptance, such notice (a “Notice of Competitive Bid Borrowing”) shall
specify the aggregate principal amount of offers for each Interest Period that
are accepted.  The applicable Borrower
may accept any Competitive Bid Quote in whole or in part; provided that:

(i)             the aggregate
principal amount of each Competitive Bid Borrowing may not exceed the
applicable amount set forth in the related Competitive Bid Quote Request;

(ii)          the principal amount of
each Competitive Bid Borrowing must be in a minimum aggregate amount of
$20,000,000 and any larger multiple of $1,000,000;

(iii)       acceptance of offers may
only be made on the basis of ascending Competitive Bid Margins or Competitive
Bid Absolute Rates, as the case may be; and

(iv)      the applicable Borrower may
not accept any offer that is described in subsection (d)(iii) or that otherwise
fails to comply with the requirements of this Agreement.

(g)         Allocation by
Administrative Agent.  If offers are
made by two or more Lenders with the same Competitive Bid Margins or
Competitive Bid Absolute Rates, as the case may be, for a greater aggregate
principal amount than the amount in respect of which such offers are accepted
for the related Interest Period, the principal amount of Competitive Bid Loans
in respect of which such offers are accepted shall be allocated by the
Administrative Agent among such Lenders as nearly as possible (as the Administrative
Agent may deem appropriate) in proportion to the aggregate principal amounts of
such offers.  Determinations by the
Administrative Agent of the amounts of Competitive Bid Loans shall be
conclusive in the absence of manifest error.

Section 2.04.  Notice To Lenders; Funding of
Loans.  (a) Upon receipt of a
Notice of Borrowing, the Administrative Agent shall promptly notify each Lender
of the contents thereof and of such Lender’s share (if any) of such Borrowing
and such Notice of Borrowing shall not thereafter be revocable by the
applicable Borrower.

(b)         On the date of each
Borrowing, each Lender participating therein shall (except as provided in
subsection (c) of this Section) make available its share of such Borrowing in
dollars not later than 12:00 Noon (New York City time), in Federal or other
funds immediately available in New York City, to the Administrative Agent at
its office specified in or pursuant to Section 10.01.

 21
 

(c)          Unless the
Administrative Agent shall have received notice from a Lender prior to the date
of any Borrowing that such Lender will not make available to the Administrative
Agent such Lender’s share of such Borrowing, the Administrative Agent may
assume that such Lender has made such share available to the Administrative Agent
on the date of such Borrowing in accordance with subsection (b) of this Section
and the Administrative Agent may, in reliance upon such assumption, make
available to the applicable Borrower on such date a corresponding amount.  If and to the extent that such Lender shall
not have so made such share available to the Administrative Agent, such Lender
and the applicable Borrower severally agree to repay to the Administrative
Agent forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the applicable
Borrower until the date such amount is repaid to the Administrative Agent, at
(i) in the case of the applicable Borrower, a rate per annum equal to the
higher of the Federal Funds Rate and the interest rate applicable thereto
pursuant to Section 2.07 and (ii) in the case of such Lender, the Federal Funds
Rate.  If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Lender’s Loan included in such Borrowing for purposes of this
Agreement.

Section 2.05.  Evidence Of Debt.  (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of each Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid
to such Lender by such Borrower from time to time hereunder.

(b)         The Administrative Agent
shall maintain accounts in which it shall record (i) the amount of each Loan
made to a Borrower hereunder, the class, type and the Interest Period (if any)
applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from each Borrower to each Lender hereunder
and (iii) the amount of any sum received by the Administrative Agent hereunder
for the account of the Lenders and each Lender’s share thereof.

(c)          The entries made in the
accounts maintained pursuant to paragraph (a) or (b) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided
that the failure of any Lender or the Administrative Agent to maintain such
accounts or any error therein shall not in any manner affect the obligation of
each Borrower to repay the Lenders in accordance with the terms of this
Agreement.

(d)         Any Lender may request
that Loans made by it be evidenced by a promissory note.  In such event, the applicable Borrower shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) substantially in the form of Exhibit A hereto.  Thereafter, the Loans evidenced by 

 22
 

each such promissory note and interest thereon shall
at all times (including after assignment pursuant to Section 10.06) be
represented by one or more promissory notes in such form payable to the order
of the payee named therein (or, if such promissory note is a registered note,
to such payee and its registered assigns). 
Each reference in this Agreement to the “Note” of such Lender shall be deemed to refer to and include
any or all of such Notes.

Section 2.06.  Maturity of Loans.  (a) Each Committed Loan shall
mature, and the principal amount thereof shall be due and payable, together
with accrued interest thereon, on the Termination Date.

(b)         Each Competitive Bid Loan
shall mature, and the principal amount thereof shall be due and payable,
together with accrued interest thereon, on the last day of the Interest Period
applicable to such Loan.

Section 2.07.  Interest Rates.  (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the
date such Loan is made until it becomes due, at a rate per annum equal to the
Base Rate for such day.  Such interest
shall be payable quarterly in arrears on each Quarterly Date and, with respect
to the principal amount of any Base Rate Loan converted to a Euro-Dollar Loan,
on each date a Base Rate Loan is so converted. Any overdue principal of or
interest on any Base Rate Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the sum of 2% plus the rate
otherwise applicable to Base Rate Loans for such day.

(b)         Each Euro-Dollar Loan
shall bear interest on the outstanding principal amount thereof, for each day
during the Interest Period applicable thereto, at a rate per annum equal to the
sum of the Euro-Dollar Margin plus the London Interbank Offered Rate applicable
to such Interest Period.  Such interest
shall be payable for each Interest Period on the last day thereof and, if such
Interest Period is longer than three months, at intervals of three months after
the first day of such Interest Period.

The
“London Interbank Offered Rate”
applicable to any Interest Period means the rate appearing on “Page BBAM 1” on the Bloomberg Service (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
deposits in Dollars in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days before the beginning of such Interest Period, as
the rate for deposits in Dollars with a maturity comparable to such Interest
Period.  If such rate is not available at
such time for any reason, then the “London Interbank Offered
Rate” with respect to such Interest Period shall be the average
(rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective
rates per annum at which deposits in Dollars 

 23
 

are offered to each of the Reference Banks in the
London interbank market at approximately 11:00 A.M. (London time) on the Rate
Fixing Date in an amount approximately equal to the principal amount of the
Euro-Dollar Loan of such Reference Bank to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.

(c)          Any overdue principal of
or interest on any Euro-Dollar Loan shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to the higher of (i) the sum of
2% plus the Euro-Dollar Margin plus the London Interbank Offered Rate
applicable to the Interest Period for such Loan and (ii) the sum of 2% plus the
Euro-Dollar Margin plus the average (rounded upward, if necessary, to the next
higher 1/16 of 1%) of the respective rates per annum at which one day (or, if
such amount due remains unpaid more than three Euro-Dollar Business Days, then
for such other period of time not longer than three months as the
Administrative Agent may select) deposits in Dollars in an amount approximately
equal to such overdue payment due to each of the Reference Banks are offered to
such Reference Bank in the London interbank market for the applicable period
determined as provided above (or, if the circumstances described in clause (a)
or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of 2%
plus the rate applicable to Base Rate Loans for such day).

(d)         Subject to Section 8.01,
each Competitive Bid LIBOR Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of the London Interbank Offered Rate for such
Interest Period (determined in accordance with Section 2.07(b) as if the
related Competitive Bid LIBOR Borrowing were a Committed Euro-Dollar Borrowing)
plus (or minus) the Competitive Bid Margin quoted by the Lender making such
Loan in accordance with Section 2.03. 
Each Competitive Bid Absolute Rate Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable thereto,
at a rate per annum equal to the Competitive Bid Absolute Rate quoted by the
Lender making such Loan in accordance with Section 2.03.  Such interest shall be payable for each
Interest Period on the last day thereof and, if such Interest Period is longer
than three months, at intervals of three months after the first day thereof.

(e)          Any overdue principal of
or interest on any Competitive Bid Loan shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to the sum of 2% plus the
Base Rate for such day.

(f)            The Administrative
Agent shall determine each interest rate applicable to the Loans
hereunder.  The Administrative Agent
shall give prompt notice to the applicable Borrower and the participating
Lenders of each rate of interest so determined, and its determination thereof
shall be conclusive in the absence of manifest error.

 24
 

(g)         Each Reference Bank
agrees to use its best efforts to furnish quotations to the Administrative
Agent as contemplated by this Section. 
If any Reference Bank does not furnish a timely quotation, the
Administrative Agent shall determine the relevant interest rate on the basis of
the quotation or quotations furnished by the remaining Reference Bank or Banks
or, if none of such quotations is available on a timely basis, the provisions
of Section 8.01 shall apply.

Section 2.08.  Fees.  (a) The Company shall pay to the
Administrative Agent for the account of the Lenders ratably a facility fee (the
“Facility Fee”), which shall accrue at
the Facility Fee Rate (i) from and including the Effective Date to but
excluding the date of termination of the Commitments in their entirety, on the
average daily aggregate amount of the Commitments (whether used or unused) and
(ii) from and including such date of termination to but excluding the date the
Loans shall be repaid in their entirety, on the average daily aggregate
outstanding principal amount of the Loans.

(b)         Accrued fees under this
Section shall be payable quarterly in arrears on each Quarterly Date and on the
date of termination of the Commitments in their entirety and, if later, the
date the Loans shall be repaid in their entirety.

Section 2.09.  Optional Termination or
Reduction of Commitments.  During
the Revolving Credit Period, the Company may, upon at least three Domestic
Business Days’ notice to the Administrative Agent, (i) terminate the
Commitments at any time, if no Loans are outstanding at such time or (ii)
ratably reduce from time to time by an aggregate amount of $20,000,000 or a
larger multiple of $1,000,000, the aggregate amount of the Commitments in
excess of the Total Outstanding Amount.

Section 2.10.  Method of Electing Interest
Rates.  (a) The Committed
Loans included in each Committed Borrowing shall bear interest initially at the
type of rate specified by the applicable Borrower in the applicable Notice of
Committed Dollar Borrowing.  Thereafter,
the applicable Borrower may from time to time elect to change or continue the
type of interest rate borne by each Group of Committed Loans (subject in each
case to Section 2.07(c) and the provisions of Article 8 and the last sentence
of this subsection (a)), as follows:

(i)             if such Loans are
Base Rate Loans, the applicable Borrower may elect to convert such Loans to
Euro-Dollar Loans as of any Euro-Dollar Business Day; and

(ii)          if such Loans are
Euro-Dollar Loans, the applicable Borrower may elect to convert such Loans to
Base Rate Loans as of any Domestic Business Day, or elect to continue such
Loans as Euro-Dollar Loans for an additional Interest Period as of any
Euro-Dollar Business Day, subject to Section 2.15 in the case of any such
conversion or 

 25
 

continuation effective on
any day other than the last day of the then current Interest Period applicable
to such Loans.

Each
such election shall be made by delivering a notice (a “Notice of
Interest Rate Election”) to the Administrative Agent not later than
10:00 A.M. (New York City time) on the third Euro-Dollar Business Day before
the conversion or continuation selected in such notice is to be effective.  A Notice of Interest Rate Election may, if it
so specifies, apply to only a portion of the aggregate principal amount of the
relevant Group of Loans; provided
that (i) such portion is allocated ratably among the Loans comprising such
Group and (ii) the portion to which such Notice applies, and the remaining
portion to which it does not apply, are each $20,000,000 or any larger multiple
of $1,000,000.  If no Notice of Interest
Rate Election is timely delivered prior to the end of an Interest Period for any
Euro-Dollar Loan, the Borrower shall be deemed to have elected that all Loans
having such Interest Period shall be converted to Base Rate Loans effective as
of the last day of such Interest Period.

(b)         Each Notice of Interest
Rate Election shall specify:

(i)             the Group of Loans
(or portion thereof) to which such notice applies;

(ii)          the date on which the
conversion or continuation selected in such notice is to be effective, which
shall comply with the applicable clause of subsection (a) above;

(iii)       if the Loans comprising
such Group are to be converted, the new type of Loans and, if the Loans being
converted are to be Euro-Dollar Loans, the duration of the next succeeding
Interest Period applicable thereto; provided
that, if at the time such notice is delivered an Event of Default has occurred
and is continuing, the duration of the Interest Period with respect to any
Euro-Dollar Loans to which such notice applies shall be one month; and

(iv)      if such Loans are to be
continued as Euro-Dollar Loans for an additional Interest Period, the duration
of such additional Interest Period; provided
that, if at the time such notice is delivered an Event of Default has occurred
and is continuing, the duration of the Interest Period with respect to any
Euro-Dollar Loans to which such notice applies shall be one month.

Each Interest Period specified in a Notice of Interest
Rate Election shall comply with the provisions of the definition of Interest
Period.

(c)          Upon receipt of a Notice
of Interest Rate Election from the applicable Borrower pursuant to subsection
(a) above, the Administrative Agent 

 26
 

shall promptly notify each Lender of the contents
thereof and such notice shall not thereafter be revocable by such Borrower.

(d)         A Borrower shall not be
entitled to elect to convert any Committed Loans to, or continue any Committed
Loans for an additional Interest Period as, Euro-Dollar Loans, in each case
made to it, if a Default shall have occurred and be continuing when such
Borrower delivers notice of such election to the Administrative Agent.

(e)          An election by any
Borrower to change or continue the rate of interest applicable to any Group of
Loans pursuant to this Section shall not constitute a “Borrowing”
subject to the provisions of Section 3.02.

Section 2.11.  Mandatory Termination of
Commitments.  Unless
previously terminated, the Commitments shall terminate on the Termination Date
and any Loans then outstanding (together with accrued interest thereon) shall
be due and payable on such date.

Section 2.12.  Optional Prepayments.  (a)  Subject in the case of any Fixed Rate
Borrowing to Section 2.15, each Borrower may, upon at least one Domestic
Business Day’s notice to the Administrative Agent, prepay any Base Rate
Borrowing (or any Competitive Bid Borrowing bearing interest at the Base Rate
pursuant to Section 8.01) made to it or upon at least three Euro-Dollar
Business Days’ notice to the Administrative Agent, prepay any Euro-Dollar
Borrowing made to it, in each case in whole at any time, or from time to time
in part in an aggregate amount not less than $20,000,000 or any larger multiple
of $1,000,000.  Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Lenders
included in such Borrowing.

(b)         A Borrower may not prepay
all or any portion of the principal amount of any Competitive Bid Loan made to
it prior to the maturity thereof except (i) as provided in subsection (a) above
or (ii) with respect to any particular Competitive Bid Loan, as agreed upon
between the Lender making such Loan and such Borrower so long as at the time
such Borrower makes such prepayment no Default has occurred and is continuing.

(c)          Upon receipt of a notice
of prepayment pursuant to this Section, the Administrative Agent shall promptly
notify each Lender of the contents thereof and of such Lender’s ratable share
(if any) of such prepayment and such notice shall not thereafter be revocable
by the applicable Borrower.

Section 2.13.  General Provisions as to
Payments.  (a)  Each Borrower shall make each payment of
principal of, and interest on, the Loans and of fees hereunder, not later than
12:00 Noon (New York City time) on the date when due, in Federal or other funds
immediately available in New York City, without defense, set-off or
counterclaim and free of any restriction or condition, to the 

 27
 

Administrative Agent at its address referred to in
Section 10.01.  The Administrative Agent
will promptly distribute to each Lender its ratable share of each such payment
received by the Administrative Agent for the account of the Lenders.  Whenever any payment of principal of, or
interest on, the Base Rate Loans or of fees shall be due on a day which is not
a Domestic Business Day, the date for payment thereof shall be extended to the
next succeeding Domestic Business Day. 
Whenever any payment of principal of, or interest on, the Euro-Dollar
Loans shall be due on a day which is not a Euro-Dollar Business Day, the date
for payment thereof shall be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in another calendar
month, in which case the date for payment thereof shall be the next preceding
Euro-Dollar Business Day.  Whenever any
payment of principal of, or interest on, the Competitive Bid Loans shall be due
on a day which is not a Euro-Dollar Business Day, the date for payment thereof
shall be extended to the next succeeding Euro-Dollar Business Day.  If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall be payable
for such extended time.

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

Section 2.14.  Funding Losses.  If a Borrower makes any payment of
principal with respect to any Fixed Rate Loan, any Fixed Rate Loan is converted
(pursuant to Article 2, 6 or 8 or otherwise) or continued on any day other than
the last day of an Interest Period applicable thereto, or the last day of an
applicable period fixed pursuant to Section 2.07(c), or if a Borrower fails to
borrow, prepay, convert or continue any Fixed Rate Loans after notice has been
given to any Lender in accordance with Section 2.04(a), 2.12(a) or Section
2.10, respectively, such Borrower shall reimburse each Lender within 15 days
after demand for any resulting loss or expense incurred by it (or by an
existing or prospective Participant in the related Loan), including (without
limitation) any loss incurred in obtaining, liquidating or employing deposits
from third parties, but excluding loss of margin for the period after any such
prepayment or conversion or continuation or failure to borrow, prepay, convert
or continue; provided that such
Lender shall have delivered to such Borrower and the Administrative Agent a
certificate as to 

 28
 

the amount of such loss or expense and setting forth
the calculation thereof in reasonable detail, which certificate shall be
conclusive in the absence of manifest error.

Section 2.15.  Computation of Interest and
Fees.  Interest based on the
Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in
a leap year) and paid for the actual number of days elapsed (including the
first day but excluding the last day). 
All other interest and fees shall be computed on the basis of a year of
360 days and paid for the actual number of days elapsed (including the first
day but excluding the last day).

Section 2.16.  [Intentionally
Omitted]

Section 2.17.  Regulation D
Compensation.  (a)  Each Lender may require each Borrower to pay,
contemporaneously with each payment of interest on the Euro-Dollar Loans,
additional interest on the related Euro-Dollar Loan of such Lender at a rate
per annum determined by such Lender up to but not exceeding the excess of (i)
(A) the applicable London Interbank Offered Rate divided by (B) one minus the
Euro-Dollar Reserve Percentage over (ii) the applicable London Interbank
Offered Rate.  Any Lender wishing to
require payment of such additional interest (x) shall so notify such Borrower
and the Administrative Agent, in which case such additional interest on the
Euro-Dollar Loans of such Lender shall be payable to such Lender at the place
indicated in such notice with respect to each Interest Period commencing at
least three Euro-Dollar Business Days after the giving of such notice and (y)
shall notify such Borrower at least five Euro-Dollar Business Days prior to
each date on which interest is payable on the Euro-Dollar Loans of the amount
then due it under this Section.

(b)         Any additional interest
owed pursuant to subsection (a) above shall be determined by the relevant
Lender, which determination shall be conclusive and binding for all purposes
except in the case of manifest error, and notified to each Borrower (with a
copy to the Administrative Agent) at least five Euro-Dollar Business Days
before each date on which interest is payable for the relevant Loan, and such
additional interest so notified to such Borrower by such Lender shall be
payable to the Administrative Agent for the account of such Lender on each date
on which interest is payable for such Loan.

ARTICLE
3

CONDITIONS

Section 3.01.  Closing.  The closing hereunder shall occur
upon receipt by the Administrative Agent of the following documents, each dated
the Closing Date unless otherwise indicated:

 29

(a)                        an opinion
of Weil, Gotshal & Manges, LLP, counsel for the Obligors, substantially in
the form of Exhibit E hereto and covering such additional matters relating to
the transactions contemplated hereby as the Required Lenders may reasonably
request;

(b)                       an advice
from the Administrative Agent that it has received all fees and other amounts
due and payable on or prior to the Closing Date, including reimbursement or
payment of all reasonable out-of-pocket expenses to be reimbursed or paid by
the Company; and

(c)                        all
documents the Administrative Agent may reasonably request relating to the
existence of each of the Company and the Company Guarantor, the corporate
authority for and the validity of this Agreement and the Notes, and any other
matters relevant hereto, all in form and substance satisfactory to the
Administrative Agent.

The Administrative Agent shall promptly notify the
Company and the Lenders of the Closing Date, and such notice shall be
conclusive and binding on all parties hereto.

Section 3.02.  Borrowings.  The obligation of any Lender to
make a Loan on the occasion of any Borrowing is subject to the satisfaction of
the following conditions:

(a)                        receipt by
the Administrative Agent of a Notice of Borrowing as required by Section 2.02
or Section 2.03;

(b)                       the fact
that, immediately after such Borrowing the Total Outstanding Amount will not
exceed the aggregate amount of the Commitments;

(c)                        the fact
that, immediately before and after such Borrowing, no Default shall have
occurred and be continuing;

(d)                       the fact
that the representations and warranties of the Company and the Company
Guarantor (and, in the case of a Borrowing by an Eligible Subsidiary, of such
Eligible Subsidiary) contained in this Agreement shall be true on and as of the
date of such Borrowing; and

(e)                        the
closing shall have occurred in accordance with Section 3.01.

Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Company and the Company Guarantor (and, in
the case of a Borrowing by an Eligible Subsidiary, of such Eligible Subsidiary)
on the date of such Borrowing as to the facts specified in clauses (b), (c) and
(d) of this Section.

Section 3.03.  First Borrowing by Each
Eligible Subsidiary.  The
obligation of each Lender to make a Loan, on the occasion of the first
Borrowing 

 30
 

by each Eligible Subsidiary is subject to the
satisfaction of the following further conditions:

(a)                        receipt by
the Administrative Agent of an opinion of counsel for such Eligible Subsidiary
reasonably acceptable to the Administrative Agent covering such matters
relating to the transactions contemplated hereby as the Required Lenders may
reasonably request; and

(b)                       receipt by
the Administrative Agent of all documents which it may reasonably request
relating to the existence of such Eligible Subsidiary, the corporate authority
of and the validity of the Election to Participate of such Eligible Subsidiary,
this Agreement and the Notes (if any) of such Eligible Subsidiary, and any
other matters relevant thereto, all in form and substance reasonably
satisfactory to the Administrative Agent.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

Each
of the Company and the Company Guarantor jointly and severally represents and
warrants that:

Section 4.01.  Corporate Existence and
Power.  Each Obligor is an
organization duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, and has all requisite powers and
all governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted, except to the extent that the failure
to have such licenses, authorizations, consents and approvals could not
reasonably be expected to have a Material Adverse Effect.

Section 4.02.  Corporate and Governmental
Authorization; No Contravention.  The
execution, delivery and performance by each of the Company and the Company
Guarantor (and, as applicable, each Eligible Subsidiary) of this Agreement and
by the Company (and, as applicable, each Eligible Subsidiary) of the Notes (if
any) are within the corporate powers of the Company and the Company Guarantor,
as applicable (and, as applicable, each Eligible Subsidiary), have been duly
authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official and do
not contravene, or constitute a default under, any provision of applicable law
or regulation or of the certificate of incorporation, organizational documents
or by-laws of the Company or the Company Guarantor, as applicable (and, as
applicable, each Eligible Subsidiary), or of any agreement evidencing or
governing Debt or of any other material agreement, or of any judgment,
injunction, order, decree or other material instrument binding upon the Company
or any of its Subsidiaries or result in the creation or imposition of any Lien
on any asset of the Company or any of its Subsidiaries.

 31
 

Section 4.03.  Binding Effect.  This Agreement constitutes a valid
and binding agreement of each Obligor and each Note (if any), when executed and
delivered by the Company (and, as applicable, any Eligible Subsidiary) in
accordance with this Agreement, will constitute a valid and binding obligation
of the Company (and, as applicable, such Eligible Subsidiary), in each case
enforceable in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency or similar laws affecting creditors’ rights generally
and by general principles of equity.

Section 4.04.  Financial Information.  (a)  The consolidated balance sheet of the Company
and its Consolidated Subsidiaries as of June 30, 2006 and the related
consolidated statements of earnings and cash flows for the fiscal year then
ended, reported on by KPMG LLP, a copy of which has been delivered to each of
the Lenders, fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of the Company and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such fiscal year.

(b)                       The
unaudited consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of December 31, 2006 and the related unaudited consolidated
statements of earnings and cash flows for the six months then ended, a copy of
which has been delivered to each of the Lenders, fairly present, in conformity
with generally accepted accounting principles applied on a basis consistent
with the financial statements referred to in subsection (a) of this Section,
the consolidated financial position of the Company and its Consolidated
Subsidiaries as of such date and their consolidated results of operations and
cash flows for such six-month period.

(c)                        On the
Closing Date, there has been no material adverse change in the business,
financial position or results of operations of the Company and its Consolidated
Subsidiaries, considered as a whole, since December 31, 2006.

Section 4.05.  Litigation.  Except as described in Schedule
4.05, there is no action, suit or proceeding pending against, or to the
knowledge of any Obligor, overtly threatened against or affecting, the Company
or any of its Subsidiaries before any court or arbitrator or any governmental
body, agency or official in which there is a reasonable possibility of an
adverse decision which could have a Material Adverse Effect, or which in any
manner draws into question the validity or enforceability of this Agreement or
the Notes (if any).

Section 4.06.  Compliance with ERISA.  Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan.  No member of the ERISA Group has (i) sought a
waiver of the minimum funding standard under 

 32
 

Section 412 of the Internal Revenue Code in respect of
any Plan, (ii) failed to make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement, or made any
amendment to any Plan or Benefit Arrangement, which has resulted or could
result in the imposition of a Lien or the posting of a bond or other security
under ERISA or the Internal Revenue Code or (iii) incurred any liability under
Title IV of ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA.

Section 4.07.  Environmental Matters.  In the ordinary course of its
business, the Company conducts an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Company and its
Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or
as a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site
disposal of wastes or Hazardous Substances, and any actual or potential
liabilities to third parties, including employees, and any related costs and
expenses).  On the basis of this review,
the Company has reasonably concluded that such associated liabilities and
costs, including the costs of compliance with Environmental Laws, are unlikely
to have a Material Adverse Effect.

Section 4.08.  Taxes.  The Company and its Subsidiaries
have filed all United States Federal income tax returns and all other material
tax returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Company
or any Subsidiary, other than taxes due pursuant to any such assessment which
are being contested in good faith by appropriate proceedings.  The charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Company, adequate.

Section 4.09.  Subsidiaries.  (a)  Each of the Company’s corporate Significant
Subsidiaries (other than the Company Guarantor or the Eligible Subsidiaries,
with respect to which representations and warranties comparable to those set
forth in this Section are being made in Section 4.01) is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted, except to the extent that the failure to be
or have any of the foregoing could not reasonably be expected to have a
Material Adverse Effect.

 33
 

(b)                       The Company
owns, directly or indirectly, 100% of the outstanding capital stock of the
Company Guarantor.

Section 4.10.  Regulatory Restrictions on
Borrowing.  No Obligor is an “investment company” within the meaning of the Investment
Company Act of 1940, as amended, or otherwise subject to any regulatory scheme
which restricts its ability to incur debt.

Section 4.11.  Full Disclosure.  All information heretofore
furnished by each Obligor to the Administrative Agent or any Lender for
purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all such information hereafter furnished by each
Obligor to the Administrative Agent or any Lender will be, true and accurate in
all material respects on the date as of which such information is stated or
certified.

ARTICLE 5

COVENANTS

The
Company agrees that, so long as any Lender has any Commitment hereunder or any
amount payable in respect of any Loan remains unpaid:

Section 5.01.  Information.  The Company will furnish to each
of the Lenders:

(a)                        as soon as
available and in any event within 75 days after the end of each fiscal year of
the Company, a consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of the end of such fiscal year and the related consolidated
statements of earnings and cash flows for such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal year, all
reported on by KPMG LLP or other independent public accountants of nationally
recognized standing without any qualification or exception which (i) is of a “going concern” or similar nature, (ii) relates to the limited
scope of examination of matters relevant to such financial statements or (iii)
relates to the treatment or classification of any item in such financial
statements and which, as a condition to its removal, would require an
adjustment to such item the effect of which would be to cause an Event of
Default under Sections 5.09(k), 5.10 or 5.11;

(b)                       as soon as
available and in any event within 40 days after the end of each of the first
three quarters of each fiscal year of the Company, a consolidated balance sheet
of the Company and its Consolidated Subsidiaries as of the end of such quarter,
the related consolidated statements of earnings for such quarter and the
related consolidated statements of earnings and cash flows for the portion of
the Company’s fiscal year ended at the end of such quarter, setting forth in
the case of such statements of earnings and cash flows, in comparative form the
figures for the corresponding quarter (with respect to the statement of
earnings 

 34
 

only) and the corresponding portion of the Company’s
previous fiscal year, all certified (subject to normal year-end adjustments) as
to fairness of presentation, generally accepted accounting principles and
consistency by the chief financial officer or the chief accounting officer of
the Company;

(c)                        simultaneously
with the delivery of each set of financial statements referred to in clauses
(a) and (b) above, a certificate of the chief financial officer, the chief
accounting officer or the treasurer of the Company (i) setting forth in
reasonable detail the calculations required to establish whether the Company
was in compliance with the requirements of Sections 5.09 through 5.11,
inclusive, on the date of such financial statements and (ii) stating whether
any Default exists on the date of such certificate and, if any Default then
exists, setting forth the details thereof and the action which the Company is
taking or proposes to take with respect thereto;

(d)                       within ten
days after any Senior Officer of any Obligor obtains knowledge of any Default,
if such Default is then continuing, a certificate of the chief financial
officer, the chief accounting officer or the treasurer of the Company setting
forth the details thereof and the action which each Obligor is taking or
proposes to take with respect thereto;

(e)                        within ten
days after the mailing thereof to the stockholders of the Company generally,
copies of all financial statements, reports and proxy statements so mailed;

(f)                          within
ten days after the filing thereof, copies of all registration statements (other
than the exhibits thereto and any registration statements on Form S-8 or its
equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents)
which the Company shall have filed with the Securities and Exchange Commission;

(g)                       if and when
any member of the ERISA Group (i) gives or is required to give notice to the
PBGC of any “reportable event” (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability (other than for premiums under Section
4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a
copy of such notice; (iv) applies for a waiver of the minimum funding standard
under Section 412 of the Internal Revenue Code, a copy of such application; (v)
gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a
copy of such notice and 

 35
 

other information filed with the PBGC; (vi) gives
notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of
such notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer, the chief accounting officer or the
treasurer of the Company setting forth details as to such occurrence and
action, if any, which the Company or applicable member of the ERISA Group is
required or proposes to take; and

(h)                       from time
to time such additional information regarding the financial position or
business of the Company and its Subsidiaries as the Administrative Agent, at
the request of any Lender, may reasonably request.

For purposes of this Section, the Company’s obligation
to deliver the items referred to in Sections 5.01(a), (b), (e) and (f) will be
deemed satisfied by the electronic delivery to the Administrative Agent of such
items and posting of such items on a website to which the Lenders have access,
and which shall have been designated in a notice delivered to the Lenders and
the Administrative Agent.

Section 5.02.  Payment of Obligations.  The Company will pay and
discharge, and will cause each Significant Subsidiary to pay and discharge, at
or before maturity, all their respective material obligations and liabilities
(including, without limitation, tax liabilities and claims of materialmen,
warehousemen and the like which if unpaid might by law give rise to a Lien),
except where the same may be contested in good faith by appropriate proceedings
or to the extent that failure to do so could not reasonably be expected to have
a Material Adverse Effect, and will maintain, and will cause each Significant
Subsidiary to maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.

Section 5.03.  Insurance.  The Company will, and will cause
each of its Significant Subsidiaries to, maintain (either in the name of the
Company or in such Significant Subsidiary’s own name), with financially sound
and responsible insurance companies or pursuant to a self-insurance program,
insurance on all their respective properties in at least such amounts, against
at least such risks and with such risk retention as are usually maintained,
insured against or retained, as the case may be, in the same general area by
companies of established repute engaged in the same or a similar business; and
will furnish to the Lenders, upon request from the Administrative Agent,
information presented in reasonable detail as to the insurance so carried.

Section 5.04.  Conduct of Business and
Maintenance of Existence.  The
Company will preserve, renew and keep in full force and effect, and will cause
each Guarantor and each other Significant Subsidiary to preserve, renew and
keep in full force and effect its corporate existence and rights, privileges
and franchises 

 36
 

necessary or desirable in the normal conduct of business
(except, solely with respect to any Significant Subsidiary that is not an
Obligor, to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect); provided
that nothing in this Section 5.04 shall prohibit (i) the merger of a
Significant Subsidiary into the Company or the merger or consolidation of a
Significant Subsidiary with or into another Person if the corporation surviving
such consolidation or merger is a Subsidiary (provided
that in the case of any such merger or consolidation involving a Guarantor, it
or the Company must be the surviving corporation) and if, in each case, after
giving effect thereto, no Default shall have occurred and be continuing or (ii)
the termination of the corporate existence of any Significant Subsidiary (other
than any Guarantor) if the Company in good faith determines that such
termination is in the best interest of the Company and is not materially
disadvantageous to the Lenders.

Section 5.05.  Compliance with Laws.  The Company will comply, and cause
the Company Guarantor and each other Significant Subsidiary to comply, in all
material respects with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities (including, without limitation, Environmental
Laws and ERISA and the rules and regulations thereunder) except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings or to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect.

Section 5.06.  Inspection of Property, Books
and Records.  The Company will
keep, and will cause the Company Guarantor and each other Significant
Subsidiary to keep, proper books of record and account in which full, true and
correct entries shall be made in all material respects of all dealings and
transactions in relation to its business and activities; and will permit, and
will cause the Company Guarantor and each other Subsidiary to permit,
representatives of any Lender at such Lender’s expense to visit and inspect any
of its properties, to examine and make abstracts from any of its books and
records and to discuss its affairs, finances and accounts with its officers,
employees and independent public accountants, all at such reasonable times and
as often as may reasonably be desired.

Section 5.07.  Mergers and Sales of
Assets.  The Company will not,
and will not permit any Guarantor to, (i) consolidate or merge with or into any
other Person or (ii) sell, lease or otherwise transfer, directly or indirectly,
all or substantially all of the assets of the Company and its Subsidiaries,
taken as a whole, to any other Person; provided
that (a) the Company may merge with another Person if (x) the Company is the
corporation surviving such merger and (y) after giving effect to such merger,
no Default shall have occurred and be continuing and (b) any Guarantor may be a
party to any merger or consolidation permitted by Section 5.04.

 37
 

Section 5.08.  Use of Proceeds.  The proceeds of the Loans made under
this Agreement will be used by each Borrower to provide credit support for such
Borrower’s commercial paper program, to fund the Company’s share repurchase
program and for such general corporate purposes in the ordinary course of
business of the Company and its Subsidiaries as shall be determined by the
Company from time to time.  None of such
proceeds will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any “margin stock”
within the meaning of Regulation U.

Section 5.09.  Negative Pledge.  The Company will not, and will not
permit any Subsidiary to, create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except:

(a)                        Liens
existing on the date of this Agreement securing Debt outstanding on the date of
this Agreement in an aggregate principal or face amount not exceeding
$50,000,000;

(b)                       any Lien
existing on any asset of any Person at the time such Person becomes a
Subsidiary and not created in contemplation of such event;

(c)                        any Lien
on any asset securing Debt incurred or assumed for the purpose of financing all
or any part of the cost of acquiring or constructing such asset, provided that such Lien attaches to such
asset concurrently with or within 90 days after the acquisition or substantial
completion of construction thereof, as the case may be;

(d)                       any Lien on
any asset of any Person existing at the time such Person is merged or
consolidated with or into the Company or a Subsidiary and not created in
contemplation of such event;

(e)                        any Lien
existing on any asset prior to the acquisition thereof by the Company or a
Subsidiary and not created in contemplation of such acquisition;

(f)                          any Lien
arising out of the refinancing, extension, renewal or refunding of any Debt
secured by any Lien permitted by any of the foregoing clauses of this Section, provided that such Debt is not increased
and is not secured by any additional assets;

(g)                       Liens
imposed by any governmental authority for taxes, assessments, governmental
charges, duties or levies not yet due or which are being contested in good
faith and by appropriate proceedings; provided
adequate reserves with respect thereto are maintained on the books of the
Company and its Consolidated Subsidiaries in accordance with generally accepted
accounting principles;

 38
 

(h)                       carriers’,
warehousemen’s, mechanics’, transporters, materialmen’s, repairmen’s or other
like Liens arising in the ordinary course of business; provided any such Lien is either (x)
discharged within five days of the date when payment of the obligation secured
by such Lien is due or (y) is being contested in good faith by appropriate
proceedings diligently conducted;

(i)                           Liens
(other than Liens described in clauses (g) or (h)) arising in the ordinary
course of its business which (i) do not secure Debt or Derivatives Obligations,
(ii) do not secure any obligation in an amount exceeding $50,000,000 and (iii)
do not in the aggregate materially detract from the value of its assets or
materially impair the use thereof in the operation of its business;

(j)                           Liens
on cash and cash equivalents securing Derivatives Obligations, provided that the aggregate amount of cash
and cash equivalents subject to such Liens may at no time exceed $50,000,000;
and

(k)                        Liens not
otherwise permitted by the foregoing clauses of this Section securing Debt in
an aggregate principal or face amount at any date not to exceed the greater of
(i) $150,000,000 and (ii) 15% of Consolidated Tangible Net Worth at the last
day of the most recently ended fiscal quarter.

Section 5.10.  Debt to Total Capital.  The Debt to Capital Ratio at the
last day of each fiscal quarter shall be less than 0.65:1.

Section 5.11.  Debt of Subsidiaries.  The Company will not permit any of
its Subsidiaries (other than the Company Guarantor) to incur or at any time be
liable with respect to any Debt other than (i) Debt owing to the Company or a
wholly owned Subsidiary, (ii) Debt created under this Agreement, (iii) any
commercial paper issued by an Eligible Subsidiary the credit support for which
is provided by this Agreement, and (iv) other Debt in an aggregate principal
amount outstanding not exceeding $300,000,000. 
For purposes of this Section any preferred stock of a Subsidiary held by
a Person other than the Company or a Wholly-Owned Subsidiary shall be included,
at the higher of its voluntary or involuntary liquidation value, in the “Debt” of such Subsidiary.

Section 5.12.  Transactions with
Affiliates.  The Company will
not, and will not permit any Subsidiary to, directly or indirectly, pay any
funds to or for the account of, make any investment (whether by acquisition of
stock or indebtedness, by loan, advance, transfer of property, guarantee or
other agreement to pay, purchase or service, directly or indirectly, any Debt,
or otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect, any transaction with,
any Affiliate (any such payment, investment, lease, sale, transfer, other
disposition or transaction, an “Affiliate Transaction”)
except on an arms-length basis on terms at least as favorable to the Company or
such Subsidiary as terms that could have been obtained from a third party who
was not an Affiliate; provided
that the foregoing provisions of this 

 39
 

Section shall not prohibit (i) any such Person from
declaring or paying any lawful dividend or other payment ratably in respect of
all of its capital stock of the relevant class so long as, after giving effect
thereto, no Default shall have occurred and be continuing, (ii) any Affiliate
Transaction disclosed in the Proxy Statement under the heading “Certain
Relationships and Related Transactions” or (iii) any Affiliate Transaction
(other than any Affiliate Transaction described in clauses (i) or (ii)) in
which the amount involved does not exceed $500,000. The approval by the
independent directors (or any committee thereof) of the board of directors of
the Company or a Subsidiary of any Affiliate Transaction to which the Company
or such Subsidiary is a party shall create a rebuttable presumption that such
Affiliate Transaction is on an arms-length basis on terms at least as favorable
to the Borrower or such Subsidiary as terms that could have been obtained from
a third party who was not an Affiliate.

ARTICLE 6

DEFAULTS

Section 6.01.  Events of Default.  If one or more of the following
events (“Events of Default”) shall have occurred
and be continuing:

(a)                        any
Borrower shall fail to pay when due any principal of any Loan or shall fail to
pay any interest or fees payable hereunder within five Domestic Business Days
of the due date thereof;

(b)                       the Company
shall fail to observe or perform any covenant contained in Article 5, other
than those contained in Sections 5.01 through 5.06 and 5.12;

(c)                        any
Obligor shall fail to observe or perform any covenant or agreement contained in
this Agreement (other than those covered by clause (a) or (b) above) for 30
days after notice thereof has been given to the Company by the Administrative
Agent at the request of any Lender;

(d)                       any
representation, warranty, certification or statement made by any Obligor in
this Agreement or in any certificate, financial statement or other document
delivered pursuant to this Agreement shall prove to have been incorrect in any material
respect when made (or deemed made);

(e)                        the
Company or any Subsidiary shall fail to make any payment in respect of any
Material Financial Obligations when due or within any applicable grace period;

(f)                          any
event or condition shall occur which results in the acceleration of the
maturity of any Material Debt or enables the holder of such Debt or any Person
acting on such holder’s behalf to accelerate the maturity thereof;

 40
 

(g)                       the Company
or any Significant Subsidiary shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part
of its property, or shall consent to any such relief or to the appointment of
or taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize any of the foregoing;

(h)                       an
involuntary case or other proceeding shall be commenced against the Company or
any Significant Subsidiary seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 90 days; or an order for
relief shall be entered against the Company or any Significant Subsidiary under
the federal bankruptcy laws as now or hereafter in effect;

(i)                           any
member of the ERISA Group shall fail to pay when due an amount or amounts
aggregating in excess of $50,000,000 which it shall have become liable to pay
under Title IV of ERISA; or notice of intent to terminate a Material Plan shall
be filed under Title IV of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate, to impose liability (other
than for premiums under Section 4007 of ERISA) in respect of, or to cause a
trustee to be appointed to administer any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated; or there shall occur a
complete or partial withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group to incur a current
payment obligation in excess of $50,000,000;

(j)                           judgments
or orders for the payment of money in excess of $50,000,000 (net of any
insurance with respect to which the carrier has acknowledged coverage) shall be
rendered against the Company or any Subsidiary and such judgments or orders
shall continue unsatisfied and unstayed for a period of 30 days;

(k)                        there
occurs a Change of Control; or

 41
 

(l)                           the
Guaranty or any provision thereof shall be found or held invalid or
unenforceable by a court of competent jurisdiction or either Guarantor shall
have repudiated its obligations under the Guaranty;

then, following the occurrence and during the
continuance of every such event, the Administrative Agent shall (i) if
requested by Required Lenders, by notice to the Company terminate the
Commitments and they shall thereupon terminate, and (ii) if requested by
Lenders holding more than 50% of the aggregate principal amount of the Loans, by
notice to the Company declare the Loans (together with accrued interest
thereon) to be, and the Loans shall thereupon become, immediately due and
payable without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by each Obligor; provided
that in the case of any of the Events of Default specified in clause 6.01(g) or
6.01(h) above with respect to the Company, without any notice to any Obligor or
any other act by the Administrative Agent or the Lenders, the Commitments shall
thereupon terminate and the Loans (together with accrued interest thereon)
shall become immediately due and payable without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by each Obligor.

Section 6.02.  Notice of Default.  The Administrative Agent shall
give notice to the Company under Section 6.01(c) promptly upon being requested
to do so by any Lender and shall thereupon notify all the Lenders thereof.

ARTICLE 7

THE ADMINISTRATIVE AGENT

Section 7.01.  Appointment and
Authorizations.  Each Lender
irrevocably appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
and the Notes (if any) as are delegated to the Administrative Agent by the
terms hereof or thereof, together with all such powers as are reasonably
incidental thereto.

Section 7.02.  Agents and Affiliates.  JPMorgan Chase Bank, N.A. shall
have the same rights and powers under this Agreement as any other Lender and
may exercise or refrain from exercising the same as though it were not the
Administrative Agent, and JPMorgan Chase Bank, N.A. and its affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Company or any Subsidiary or affiliate of the Company as if
it were not the Administrative Agent.

Section 7.03.  Action by Agents.  The obligations of Administrative
Agent hereunder are only those expressly set forth herein.  Without limiting the generality of the
foregoing, the Administrative Agent shall not be required to take any action
with respect to any Default, except as expressly provided in Article 6, and except as expressly set forth herein
and in other Financing Documents, the 

 42
 

Administrative Agent shall
not have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Company or any of its Subsidiaries
that is communicated to or obtained by the bank serving as Administrative Agent
or any of its Affiliate in any capacity.

Section 7.04.  Consultation with
Experts.  The Administrative
Agent may consult with legal counsel (who may be counsel for any Obligor),
independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.

Section 7.05.  Liability of Agents.  Neither the Administrative Agent
nor any of its affiliates nor any of their respective directors, officers,
agents or employees shall be liable for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the Required
Lenders or (ii) in the absence of its own gross negligence or willful
misconduct.  Neither the Administrative
Agent nor any of its affiliates nor any of their respective directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or representation
made in connection with this Agreement or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of any Obligor;
(iii) the satisfaction of any condition specified in Article 3, except receipt
of items required to be delivered to the Administrative Agent; or (iv) the
validity, effectiveness or genuineness of this Agreement, the Notes or any
other instrument or writing furnished in connection herewith.  The Administrative Agent shall not incur any liability
by acting in reliance upon any notice, consent, certificate, statement, or
other writing (which may be a bank wire, telex, facsimile transmission or
similar writing) believed by it to be genuine or to be signed by the proper
party or parties.

Section 7.06.  Indemnification.  Each Lender shall, ratably in
accordance with its Commitment (or, if at any time the Commitments shall have
been terminated, ratably in accordance with the aggregate outstanding principal
amount of Loans of such Lender), indemnify the Administrative Agent, its affiliates
and their respective directors, officers, agents and employees (to the extent
not reimbursed by any Obligor) against any cost, expense (including counsel
fees and disbursements), claim, demand, action, loss or liability (except such
as result from such indemnitees’ gross negligence or willful misconduct) that
such indemnitees may suffer or incur in connection with this Agreement or any
action taken or omitted by such indemnitees hereunder.

Section 7.07.  Credit Decision.  Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.  Each Lender also acknowledges
that it will, independently and 

 43
 

without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.

Section 7.08.  Successor Agents.  The Administrative Agent may
resign at any time by giving notice thereof to the Lenders and each Obligor and
shall resign if requested by the Required Lenders. Upon any such resignation,
the Required Lenders shall have the right (after consulting with the Company)
to appoint a successor to the Administrative Agent.  If no successor to the Administrative Agent
shall have been so appointed by the Required Lenders, and shall have accepted
such appointment, within 30 days after the retiring Administrative Agent gives
notice of resignation, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, which shall be a
commercial bank organized or licensed under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $500,000,000.  Upon the acceptance
of its appointment as the Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations hereunder.  After
the retiring Administrative Agent’s resignation hereunder, the provisions of
this Article shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was the Administrative Agent.

Section 7.09.  Administrative Agent’s
Fees.  The Company shall pay
to the Administrative Agent for its own account fees in the amounts and at the
times previously agreed upon between the Company and the Administrative Agent.

Section
7.10.  Other Agents
Not Liable.  Nothing in this
Agreement shall impose upon Bank of America, N.A., in its capacity as
Syndication Agent, any duties or responsibilities whatsoever.

ARTICLE 8

CHANGE IN CIRCUMSTANCES

Section 8.01.  Basis for Determining Interest
Rate Inadequate or Unfair. If on or prior to the first day of any
Interest Period for any Euro-Dollar Loan or Competitive Bid LIBOR Loan:

(a)                        the
Administrative Agent is advised by the Reference Banks that deposits in the
relevant currency (in the applicable amounts) are not being offered to the Reference
Banks in the relevant market for such Interest Period, or

 44
 

(b)                       in the case
of Euro-Dollar Loans, Lenders having 50% or more of the aggregate amount of the
Commitments advise the Administrative Agent that the London Interbank Offered
Rate as determined by the Administrative Agent will not adequately and fairly
reflect the cost to such Lenders of funding their Euro-Dollar Loans for such
Interest Period,

the Administrative Agent shall forthwith give notice
thereof to the Borrower and the Lenders, whereupon until the Administrative
Agent notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, (i) the obligations of the Lenders to make
Euro-Dollar Loans or to continue or convert outstanding Loans as or into
Euro-Dollar Loans, as the case may be, shall be suspended, (ii) each
outstanding Euro-Dollar Loan shall be prepaid (or in the case of an affected
Loan denominated in dollars, converted into a Base Rate Loan) on the last day
of the then current Interest Period applicable thereto, and (iii) unless the
Borrower notifies the Administrative Agent at least two Domestic Business Days
before the date of any Fixed Rate Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such date, (x) if such
Fixed Rate Borrowing is a Committed Borrowing, such Borrowing shall instead be
made as a Base Rate Borrowing and (y) if such Fixed Rate Borrowing is a
Competitive Bid LIBOR Borrowing, the Competitive Bid LIBOR Loans comprising
such Borrowing shall bear interest for each day from and including the first
day to but excluding the last day of the Interest Period applicable thereto at
the Base Rate for such day.

Section 8.02.  Illegality.  If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Euro-Dollar Lending Office) with
any request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or impossible
for any Lender (or its Euro-Dollar Lending Office) to make, maintain or fund
any of its Euro-Dollar Loans and such Lender shall so notify the Administrative
Agent, the Administrative Agent shall forthwith give notice thereof to the
other Lenders and the Company, whereupon until such Lender notifies the Company
and the Administrative Agent that the circumstances giving rise to such
suspension no longer exist, the obligation of such Lender to make Euro-Dollar
Loans, or to convert or continue outstanding Loans into Euro-Dollar Loans,
shall be suspended.  Before giving any
notice to the Administrative Agent pursuant to this Section, such Lender shall
designate a different Euro-Dollar Lending Office if such designation will avoid
the need for giving such notice and will not, in the sole judgment of such
Lender, be otherwise disadvantageous to such Lender.  If such notice is given, each Euro-Dollar
Loan of such Lender then outstanding shall be converted to a Base Rate Loan either
(a) on the last day of the then current Interest Period applicable to such
Euro-Dollar 

 45
 

Loan if such Lender may lawfully continue to maintain
and fund such Loan to such day or (b) immediately if such Lender shall
determine that it may not lawfully continue to maintain and fund such Loan to
such day.

Section 8.03.  Increased Cost and Reduced
Return.  (a)  If on or after (x) the date hereof, in the
case of any Committed Loan or any obligation to make Committed Loans or (y) the
date of any related Competitive Bid Quote, in the case of any Competitive Bid
Loan, the adoption of any applicable law, rule or regulation, or any change in
any applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its Applicable Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall impose, modify or deem applicable any
reserve (including, without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System, but excluding with respect to
any Euro-Dollar Loan any such requirement with respect to which such Lender is
entitled to compensation during the relevant interest period under Section
2.20), special deposit, insurance assessment or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any
Lender (or its Applicable Lending Office) or shall impose on any Lender (or its
Applicable Lending Office) or on the London interbank market any other
condition affecting its Fixed Rate Loans, its Note (if any) or its obligation
to make Fixed Rate Loans and the result of any of the foregoing is to increase
the cost to such Lender (or its Applicable Lending Office) of making or
maintaining any Fixed Rate Loan, or to reduce the amount of any sum received or
receivable by such Lender (or its Applicable Lending Office) under this
Agreement or under its Note (if any) with respect thereto, by an amount deemed
by such Lender to be material, then, within 15 days after demand by such Lender
(with a copy to the Administrative Agent), the Company shall pay, or shall
cause another Borrower to pay, to such Lender such additional amount or amounts
as will compensate such Lender for such increased cost or reduction.

(b)                       If any
Lender shall have determined that, after the date hereof, the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any change in
any such law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on capital of such Lender (or
its Parent) as a consequence of such Lender’s obligations hereunder to a level
below that which such Lender (or its Parent) could have achieved but for such
adoption, change, request or directive (taking into consideration its policies
with respect to capital adequacy) by an amount deemed by such Lender to be
material, 

 46
 

then from time to time, within 15 days after demand by
such Lender (with a copy to the Administrative Agent), the Company shall pay to
such Lender such additional amount or amounts as will compensate such Lender
(or its Parent) for such reduction.

(c)                        Each
Lender will promptly notify the Company and the Administrative Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section and will designate
a different Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the sole
judgment of such Lender, be otherwise disadvantageous to such Lender.  A certificate of any Lender claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder and the calculation thereof in reasonable
detail shall be conclusive in the absence of manifest error.  In determining such amount, such Lender may
use any reasonable averaging and attribution methods.

Section 8.04.  Taxes.  (a)  For the purposes of this Section 8.04, the
following terms have the following meanings:

“Taxes” means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings with respect to any
payment by any Obligor pursuant to this Agreement or under any Note, and all
liabilities with respect thereto, excluding (i) in the case of each Lender and
the Administrative Agent, taxes imposed on its income, and franchise or similar
taxes imposed on it, by a jurisdiction under the laws of which such Lender or
the Administrative Agent (as the case may be) is organized or in which its
principal executive office is located or, in the case of each Lender, in which
its Applicable Lending Office is located and (ii) in the case of each Lender,
any United States withholding tax imposed on such payments but only to the
extent that such Lender is subject to United States withholding tax that is not
creditable against such Lender’s tax liability in the jurisdiction under the
laws of which such Lender is organized or in which its principal executive
office is located or in which its Applicable Lending Office is located at the
time such Lender first becomes a party to this Agreement.

“Other Taxes” means any present or future stamp or
documentary taxes and any other excise or property taxes, or similar charges or
levies, which arise from any payment made pursuant to this Agreement or under
any Note or from the execution or delivery of, or otherwise with respect to,
this Agreement or any Note.

(b)                       Any and all
payments by any Obligor to or for the account of any Lender or the
Administrative Agent hereunder or under any Note shall be made without
deduction for any Taxes or Other Taxes; provided
that, if an Obligor shall be required by law to deduct any Taxes or Other Taxes
from any such payments, (i) the sum payable shall be increased as necessary so
that after making all 

 47
 

required deductions (including deductions applicable
to additional sums payable under this Section) such Lender or the
Administrative Agent (as the case may be) receives an amount equal to the sum
it would have received had no such deductions been made, (ii) such Obligor
shall make such deductions, (iii) such Obligor shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law and (iv) such Obligor shall furnish to the Administrative
Agent, at its address referred to in Section 10.01, the original or a certified
copy of a receipt evidencing payment thereof.

(c)                        Each
Obligor agrees to indemnify each Lender and the Administrative Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section) paid by such Lender or the Administrative Agent (as the case may
be) and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto.  This
indemnification shall be paid within 30 days after such Lender or the
Administrative Agent (as the case may be) makes demand therefor.

(d)                       Each Lender
organized under the laws of a jurisdiction outside the United States, on or
prior to the date of its execution and delivery of this Agreement in the case
of each Lender listed on the signature pages hereof and on or prior to the date
on which it becomes a Lender in the case of each other Lender, and from time to
time thereafter if requested in writing by the Company (but only so long as
such Lender remains lawfully able to do so), shall provide the Company and the
Administrative Agent with Internal Revenue Service form W-8BEN or W-8ECI, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender is entitled to benefits under an income tax treaty
to which the United States is a party which exempts the Lender from United
States withholding tax or reduces the rate of withholding tax on payments of
interest for the account of such Lender or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States.

(e)                        For any
period with respect to which a Lender has failed to provide the Company or the
Administrative Agent with the appropriate form pursuant to Section 8.04(d)
(unless such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which such form originally was required to be
provided), such Lender shall not be entitled to indemnification under Section
8.04(b) or (c) with respect to Taxes imposed by the United States; provided that if a Lender, which is
otherwise exempt from or subject to a reduced rate of withholding tax, becomes
subject to Taxes because of its failure to deliver a form required hereunder,
the Company shall take such steps as such Lender shall reasonably request to
assist such Lender to recover such Taxes.

(f)                          If any
Obligor is required to pay additional amounts to or for the account of any
Lender pursuant to this Section, then such Lender will change the 

 48
 

jurisdiction of its Applicable Lending Office if, in
the sole judgment of such Lender, such change (i) will eliminate or reduce any
such additional payment which may thereafter accrue and (ii) is not otherwise
disadvantageous to such Lender.

Section 8.05.  Base Rate Loans Substituted
for Affected Fixed Rate Loans.  If
(i) the obligation of any Lender to make, or to convert or continue outstanding
Loans to, Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii)
any Lender has demanded compensation under Section 8.03 or 8.04 with respect to
its Euro-Dollar Loans and the Company shall, by at least five Euro-Dollar
Business Days’ prior notice to such Lender through the Administrative Agent,
have elected that the provisions of this Section shall apply to such Lender,
then, unless and until such Lender notifies the Company that the circumstances
giving rise to such suspension or demand for compensation no longer exist:

(a)                        all Loans
which would otherwise be made by such Lender as (or continued as or converted
into) Euro-Dollar Loans shall be made instead as Base Rate Loans; and

(b)                       after each
of its Euro-Dollar Loans has been repaid (or converted to a Base Rate Loan),
all payments of principal which would otherwise be applied to repay such Fixed
Rate Loans shall be applied to repay its Base Rate Loans instead.

If such Lender notifies the Company that the
circumstances giving rise to such notice no longer apply, the principal amount
of each such Base Rate Loan shall be converted into a Euro-Dollar Loan, as the
case may be, on the first day of the next succeeding Interest Period applicable
to the related Euro-Dollar Loans of the other Lenders.

Section 8.06.  Substitution of Lenders.  If (i) the obligation of any
Lender to make Euro-Dollar Loans has been suspended pursuant to Section 8.02 or
(ii) any Lender has demanded compensation under Section 8.03 or 8.04, the
Company shall have the right, with the assistance of the Administrative Agent,
to seek a substitute lender or lenders (which may be one or more of the
Lenders), satisfactory to the Company and the Administrative Agent, to purchase
the Loans and assume the Commitments of such Lender, for a purchase price equal
to the aggregate outstanding principal of such Loans (together with any accrued
and unpaid interest thereon and breakage costs, if any) or such other purchase
price as such Lender and substitute lender or lenders shall agree upon.

 49
 

ARTICLE 9

REPRESENTATIONS AND WARRANTIES OF ELIGIBLE SUBSIDIARIES

Each
Eligible Subsidiary shall be deemed by the execution and delivery of its
Election to Participate to have represented and warranted as of the date
thereof that:

Section 9.01.  Corporate Existence and
Power.  It is a company duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and is a Wholly-Owned Consolidated Subsidiary.

Section 9.02.  Corporate Governmental
Authorization; No Contravention.  The
execution and delivery by it of its Election to Participate and its Notes (if
any), and the performance by it of this Agreement and its Notes (if any), are
within its corporate powers, have been duly authorized by all necessary company
action, require no action by or in respect of, or filing with, any governmental
body, agency or official (other than those already obtained or made and in full
force and effect) and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of its certificate or
incorporation, articles of incorporation (or the equivalent organizational
documents) or by-laws (or the equivalent governing documents) or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
the Company or such Eligible Subsidiary or result in the creation or imposition
of any Lien on any asset of the Company or any of its Subsidiaries.

Section 9.03.  Binding Effect.  This Agreement constitutes a valid
and binding agreement of such Eligible Subsidiary and its Notes, when and if
executed and delivered in accordance with this Agreement, will constitute valid
and binding obligations of such Eligible Subsidiary, in each case enforceable
in accordance with its terms except as the same may be limited by bankruptcy,
insolvency or similar laws affecting creditors’ rights generally and by general
principles of equity.

Section 9.04.  Taxes.  Except as disclosed in such
Election to Participate, there is no income, stamp or other tax of any country,
or any taxing authority thereof or therein, imposed by or in the nature of
withholding or otherwise, which is imposed on any payment to be made by such
Eligible Subsidiary pursuant hereto or on its Notes (if any), or is imposed on
or by virtue of the execution, delivery or enforcement of its Election to
Participate or of its Notes (if any).

ARTICLE 10

MISCELLANEOUS

Section 10.01.  Notices.  All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
facsimile 

 50
 

transmission or similar writing) and shall be given to
such party: (a) in the case of the Company, the Company Guarantor or the
Administrative Agent, at its address or facsimile number set forth on the
signature pages hereof, (b) in the case of any Lender, at its address or
facsimile number set forth in its Administrative Questionnaire, (c) in the case
of any Eligible Subsidiary, to it in care of the Company or (d) in the case of
any party, such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the Administrative Agent and the
Company.  Each such notice, request or
other communication shall be effective (i) if given by facsimile transmission,
when transmitted to the facsimile number specified in this Section and
confirmation of receipt is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided
that notices to the Administrative Agent under Article 2 or Article 8 shall not
be effective until received.

Section 10.02.  No Waivers.  No failure or delay by the
Administrative Agent or any Lender in exercising any right, power or privilege
hereunder or under any Note shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.

Section 10.03.  Expenses;
Indemnification.  (a)  The Company shall pay (i) all reasonable
out-of-pocket expenses of the Administrative Agent, including reasonable fees
and disbursements of special counsel for the Administrative Agent, in
connection with the preparation and administration of this Agreement, any
waiver or consent hereunder or any amendment hereof or any Default or alleged
Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket
expenses incurred by the Administrative Agent and each Lender, including
(without duplication) the fees and disbursements of outside counsel and the
allocated cost of inside counsel, in connection with such Event of Default and
collection, bankruptcy, insolvency and other enforcement proceedings resulting
therefrom.

(b)                       The Company
agrees to indemnify the Administrative Agent and each Lender, their respective
affiliates and the respective directors, officers, agents and employees of the
foregoing (each an “Indemnitee”)
and hold each Indemnitee harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind, including, without limitation,
the reasonable fees and disbursements of counsel, which may be incurred by such
Indemnitee in connection with any investigative, administrative or judicial
proceeding (whether or not such Indemnitee shall be designated a party thereto)
brought or overtly threatened relating to or arising out of this Agreement or
any actual or proposed use of proceeds of Loans hereunder; provided that no Indemnitee shall have the
right to be indemnified hereunder for such Indemnitee’s own gross negligence or

 51
 

willful misconduct as determined by a court of
competent jurisdiction.  Each Indemnitee
agrees to notify the Company promptly of any proceeding in respect of which it
will seek indemnification hereunder; provided,
however, that the failure of any Indemnitee so to notify the Company shall not
affect the rights of such Indemnitee hereunder; but provided, further, that the Company shall be entitled to
assert by separate action against such Indemnitee any claim for actual damages
incurred by the Company as a consequence of such failure by such Indemnitee to
give such notice.  In the event any
action, suit or proceeding is brought against any Indemnitee by any Person
other than a Lender, the Administrative Agent or any of their respective
affiliates (a “third party action”), (i) the
Company shall be entitled, upon written notice to such Indemnitee, to assume
the investigation and defense thereof with counsel reasonably satisfactory to
such Indemnitee unless (x) the employment by such Indemnitee of separate
counsel has been specifically approved by the Company in writing or (y) the
designated parties to the proceeding in which such claim, demand, action or
cause of action has been asserted include (or are reasonably likely to include)
both such Indemnitee and any of the Obligor, or any Affiliate (each, a “designated related party”) and in the opinion of counsel for
such Indemnitee there exist one or more defenses that may be available to such
Indemnitee which are in conflict with those available to any designated related
party, (ii) such Indemnitee shall be entitled to employ separate counsel and to
participate in the investigation and defense of any such third party action
(whether or not the Company has elected to assume such investigation and
defense as contemplated by clause (i) above) and (iii) the fees and expenses of
any separate counsel employed by any Indemnitee in connection with any such
third party action shall be borne by such Indemnitee except (x) under the
circumstances contemplated by subclauses (x) and (y) of clause (i) above or (y)
if such Indemnitee has reasonably concluded that the Company is failing
actively and diligently to defend such third party action (whether or not the
Company has elected to assume such investigation and defense as contemplated by
clause (i) above).  The Company shall not
settle or compromise any action or claim without the relevant Indemnitee’s
consent if the settlement or compromise involves any performance by, or adverse
admission of, such Indemnitee.

Section 10.04.  Sharing of Set-Offs.  Each Lender agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest due
with respect to any Loan held by it which is greater than the proportion
received by any other Lender in respect of the aggregate amount of principal
and interest due with respect to any Loan held by such other Lender, the Lender
receiving such proportionately greater payment shall purchase such
participations in the Loans held by the other Lenders, and such other
adjustments shall be made, as may be required so that all such payments of
principal and interest with respect to the Loans held by the Lenders shall be
shared by the Lenders pro rata; provided
that nothing in this Section shall impair the right of any Lender to exercise
any right of 

 52
 

set-off or counterclaim it may have and to apply the
amount subject to such exercise to the payment of indebtedness of the Obligors
other than its indebtedness hereunder. 
Each Obligor agrees, to the fullest extent it may effectively do so
under applicable law, that any holder of a participation in a Loan, whether or
not acquired pursuant to the foregoing arrangements, may exercise rights of
set-off or counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor of such
Obligor in the amount of such participation.

Section 10.05.  Amendments and Waivers.  Except as explicitly set forth in
Section 2.12(b), any provision of this Agreement or the Notes (if any) may be
amended or waived if, but only if, such amendment or waiver is in writing and
is signed by each Obligor and the Required Lenders (and, if the rights or
duties of the Administrative Agent are affected thereby, by the Administrative
Agent); provided that, except as
explicitly set forth in Section 2.12(b), no such amendment or waiver shall, (x)
(i) increase or decrease the Commitment of any Lender (except for a ratable
decrease in the Commitments of all Lenders) or subject any Lender to any
additional obligation unless signed by such Lender, (ii) reduce the principal
of or rate of interest on any Loan or any interest thereon or any fees
hereunder or (iii) postpone the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder or for any scheduled reduction or
termination of any Commitment unless signed by each Lender directly affected
thereby or (y) unless signed by all the Lenders (i) release any Guarantor from
any of its obligations under Article 11, (ii) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Loans, or the
number of Lenders, which shall be required for the Lenders or any of them to
take any action under this Section or any other provision of this Agreement or
(iii) amend or waive the provisions of Section 10.04, this Section 10.05,
Section 10.06(a) or the definition of Required Lenders.

Increases in Commitments and related modifications
pursuant to Section 2.20 are not amendments subject to the provisions of this
Section.

Section 10.06.  Successors and Assigns.  (a)  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that none of the Obligors
may assign or otherwise transfer any of its rights under this Agreement without
the prior written consent of all Lenders.

(b)                       Any Lender
may at any time grant to one or more banks or other institutions (each a “Participant”) participating interests in its Commitments or
any or all of its Loans.  In the event of
any such grant by a Lender of a participating interest to a Participant,
whether or not upon notice to each Obligor and the Administrative Agent, such
Lender shall remain responsible for the performance of its obligations
hereunder, and each Obligor and the 

 53
 

Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.  Any
agreement pursuant to which any Lender may grant such a participating interest
shall provide that such Lender shall retain the sole right and responsibility
to enforce the obligations of the Borrowers hereunder including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement; provided
that such participation agreement may provide that such Lender will not agree
to any modification, amendment or waiver of this Agreement described in Section
10.05 without the consent of the Participant. 
Each Obligor agrees that each Participant shall, to the extent provided
in its participation agreement, be entitled to the benefits of Section 2.18 and
Article 8 with respect to its participating interest.  An assignment or other transfer which is not
permitted by subsection (c) or (d) below shall be given effect for purposes of
this Agreement only to the extent of and as a participating interest granted in
accordance with this subsection (b).

(c)                        With the
prior written consent of the Administrative Agent and, so long as no Event of
Default has occurred and is continuing, the Company, which consent shall not be
unreasonably withheld (provided
that if an Assignee is an affiliate of such transferor Lender or was a Lender
immediately prior to such assignment or an Approved Fund, no such consent from
the Company shall be required), any Lender may at any time assign to one or
more banks or other institutions (each an “Assignee”) all,
or a proportionate part (equivalent to an initial Commitment in an amount of
not less than $10,000,000) of all, of its rights and obligations under this
Agreement and the Notes (if any), and such Assignee shall assume such rights
and obligations, pursuant to an Assignment and Assumption Agreement in
substantially the form of Exhibit G hereto; provided
that such assignment may, but need not, include rights of the transferor Lender
in respect of outstanding Competitive Bid Loans.  Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Lender of an amount
equal to the purchase price agreed between such transferor Lender and such
Assignee, such Assignee shall be a Lender party to this Agreement and shall
have all the rights and obligations of a Lender with Commitments as set forth
in such instrument of assumption, and the transferor Lender shall be released
from its obligations hereunder to a corresponding extent, and no further
consent or action by any party shall be required.  Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Lender, the Administrative
Agent and the Borrowers shall make appropriate arrangements so that, if
required, a new Note is issued to the Assignee. 
In connection with any such assignment, the transferor Lender shall pay
to the Administrative Agent an administrative fee for processing such
assignment in the amount of $3,500.  If
the Assignee is not incorporated under the laws of the United States of America
or a state thereof, it shall deliver to the Company and the Administrative Agent
certification as to exemption from deduction or withholding of any United
States federal income taxes in accordance with Section 8.04.

 54
 

(d)                       Any Lender
may at any time assign all or any portion of its rights under this Agreement
and its Note (if any) to a Federal Reserve Bank.  No such assignment shall release the
transferor Lender from its obligations hereunder.

(e)                        No
Assignee, Participant or other transferee of any Lender’s rights shall be
entitled to receive any greater payment under Section 8.03 or 8.04 than such
Lender would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Company’s prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring
such Lender to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.

(f)                          Notwithstanding
anything to the contrary contained herein, any Lender (a “Granting
Lender”) may grant to a special purpose funding vehicle (an “SPC”) sponsored by a Granting Lender and identified as such
in writing from time to time by the Granting Lender to the Administrative Agent
and the Company, the option to provide to the Company all or any part of any
Loan that such Granting Lender would otherwise be obligated to make to the
Borrower pursuant to this Agreement; provided
that (i) nothing herein shall constitute a commitment by any SPC to make any
Loan and (ii) if an SPC elects not to exercise such option or otherwise fails
to provide all or any part of such Loan, the Granting Lender shall be obligated
to make such Loan pursuant to the terms hereof. 
The making of a Loan by an SPC hereunder shall utilize the Commitments
of the Granting Lender to the same extent, and as if, such Loan were made by
such Granting Lender.  Each party hereto
hereby agrees that no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender).  In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other
senior indebtedness of any SPC, it will not institute against, or join any
other Person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the United
States or any State thereof.  In
addition, notwithstanding anything to the contrary in this Section 10.06, any
SPC may (i) with notice to, but without the prior written consent of, the
Company and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender or to any financial institution providing liquidity and/or credit
support to or for the account of such SPC to support the funding or maintenance
of Loans; provided that any such
assignment to a financial institution other than to the Granting Lender shall
require the consent of the Company and the Administrative Agent, which consent
shall be provided in the sole and absolute discretion of the Company or the
Administrative Agent, as the case may be, and (ii) disclose any non-public
information relating to its Loans to any rating agency, 

 55
 

commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC; provided that any
such Person (other than a rating agency) signs a confidentiality agreement
which contains substantially the same provisions as set forth in Section
10.11.  As this Section 10.06(f) applies
to any particular SPC, this Section 10.06(f) may not be amended without the
written consent of such SPC. 
Additionally, the Company shall not be subject to any increased costs
pursuant to Section 8.03, indemnity claims pursuant to Section 10.03(b) or
increased taxes pursuant to Section 8.04 (collectively, “Increased
Costs”) with respect to an SPC if the Company would not have been
subjected to such Increased Costs had the Loan not been funded (directly or
indirectly) by the SPC and any payment for any such Increased Costs shall be
limited to the amounts that the Company would have been required to pay to the
Granting Lender if such Loan had not been so funded by the SPC.

Section 10.07.  Collateral.  Each of the Lenders represents to
the Administrative Agent and each of the other Lenders that it in good faith is
not relying upon any “margin stock” (as defined in Regulation U) as collateral
in the extension or maintenance of the credit provided for in this Agreement.

Section 10.08.  Governing Law, Submission to
Jurisdiction.  This Agreement
and each Note (if any) shall be governed by and construed in accordance with
the laws of the State of New York.  Each
Obligor hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York State
court sitting in New York City for purposes of all legal proceedings arising
out of or relating to this Agreement or the transactions contemplated
hereby.  Each Obligor irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.

Section 10.09.  Counterparts; Integration;
Effectiveness.  This Agreement
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.  This Agreement
constitutes the entire agreement and understanding among the parties hereto and
supersedes any and all prior agreements and understandings, oral or written,
relating to the subject matter hereof. 
This Agreement shall become effective upon receipt by the Administrative
Agent of counterparts hereof signed by each of the parties hereto (or, in the
case of any party as to which an executed counterpart shall not have been
received, receipt by the Administrative Agent in form satisfactory to it of
telegraphic, telex, facsimile or other written confirmation from such party of
execution of a counterpart hereof by such party).

Section 10.10.  WAIVER OF JURY TRIAL.  EACH OBLIGOR, THE AGENTS AND THE
LENDERS HEREBY IRREVOCABLY WAIVES ANY 

 56
 

AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

Section 10.11.  Confidentiality.  Each of the Administrative Agent
and each Lender agrees to keep any information delivered or made available by
any Obligor pursuant to this Agreement confidential from anyone other than persons
employed or retained by the Administrative Agent or such Lender who are engaged
in evaluating, approving, structuring or administering the credit facility
contemplated hereby; provided that
nothing herein shall prevent the Administrative Agent or any Lender from
disclosing such information (a) to any persons employed or retained by the
Administrative Agent or any other Lender who are engaged in evaluating,
approving, structuring or administering the credit facility contemplated
hereby, (b) to any other Person if reasonably incidental to the administration
of the credit facility contemplated hereby so long as such Person agrees to
keep such information confidential in accordance with the provisions of this
Section 10.11, (c) upon the order of any court or administrative agency, (d)
upon the request or demand of any regulatory agency or authority, (e) which had
been publicly disclosed other than as a result of a disclosure by the
Administrative Agent or any Lender prohibited by this Agreement or, to the knowledge
of the Administrative Agent or such Lender, by any other Person as a result of
a disclosure by such Person in violation of an obligation of confidentiality,
(f) to the extent necessary, in connection with any litigation to which the
Administrative Agent, any Lender or its subsidiaries or Parent may be a party,
(g) to the extent necessary in connection with the exercise of any remedy
hereunder, (h) to such Lender’s or the Administrative Agent’s legal counsel and
independent auditors or (i) subject to an agreement containing provisions
substantially similar to those contained in this Section, to (i) any actual or
proposed Participant or Assignee or (ii) any actual or prospective counterparty
(or its advisors) to any swap or derivative transaction relating to any
Borrower and its obligations.  Each
Lender and the Administrative Agent shall give the Company prompt notice of any
disclosure made by such Lender or the Administrative Agent, as the case may be,
as permitted pursuant to clauses (c), (d) (other than any such disclosure made
by any Lender to bank examiners during any examination of such Lender conducted
in the ordinary course by such examiners) or (f) of this Section, but solely to
the extent permitted by law and, in the case of any disclosure permitted
pursuant to clause (f), solely to the extent that the interests of such Lender
or the Administrative Agent, as the case may be, and the applicable Obligor in
the relevant litigation are not adverse in any material respect.

Section 10.12.  USA Patriot Act.  Each Lender subject to the Act
hereby notifies the Borrowers that pursuant to the requirements of the USA
PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Act”), it is required to obtain, verify
and record information that identifies each Borrower, which information
includes the names and addresses of each Borrower and other 

 57
 

information that will allow such Lender to identify
each Borrower in accordance with the Act.

ARTICLE 11

GUARANTY

Section 11.01.  The Guaranty.  Each Guarantor hereby
unconditionally guarantees the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the principal of and interest on
each Loan made to each Borrower pursuant to this Agreement, and the full and
punctual payment of all other amounts payable by each Borrower under this
Agreement (including any interest, fees, costs, expenses and other obligations
that accrue after the commencement of any bankruptcy, insolvency,
reorganization or similar case or proceeding, or which would have accrued but
for such case, proceeding or other action and whether or not such interest,
fees, costs, expenses or other obligations are allowed or allowable as a claim
in such case, proceeding or other action). 
Upon failure by any Borrower to pay punctually any such amount, each
Guarantor (in case of the obligations of the Company, only the Company
Guarantor) shall forthwith on demand pay the amount not so paid at the place
and in the manner and currency specified in this Agreement.

Section 11.02.  Guaranty Unconditional.  The obligations of each Guarantor
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:

(i)             any extension,
renewal, settlement, compromise, waiver or release in respect of any obligation
of any Borrower under this Agreement or any Note, by operation of law or
otherwise;

(ii)          any modification or
amendment of or supplement to this Agreement or any Note;

(iii)       any release, impairment,
non-perfection or invalidity of any direct or indirect security for any
obligation of any Borrower under this Agreement or any Note;

(iv)      any change in the corporate
existence, structure or ownership of any Borrower, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting any Borrower
or its assets or any resulting release or discharge of any obligation of any
Borrower contained in this Agreement or any Note;

(v)         the existence of any
claim, set-off or other rights which either Guarantor may have at any time
against any Borrower, the 

 58
 

Administrative Agent, any
Lender or any other Person, whether in connection herewith or any unrelated
transactions, provided that nothing herein
shall prevent the assertion of any such claim by separate suit or compulsory
counterclaim;

(vi)      any invalidity or
unenforceability relating to or against any Borrower for any reason of this
Agreement or any Note, or any provision of applicable law or regulation
purporting to prohibit the payment by any Borrower of the principal of or
interest on any Note or any other amount payable by any Borrower under this
Agreement; or

(vii)   any other act or omission to
act or delay of any kind by any Borrower, the Administrative Agent, any Lender
or any other Person or any other circumstance whatsoever which might, but for
the provisions of this paragraph, constitute a legal or equitable discharge of
or defense to the Guarantor’s obligations hereunder.

Section 11.03.  Discharge Only upon Payment in
Full; Reinstatement in Certain Circumstances. 
Each Guarantor’s obligations hereunder shall remain in full
force and effect until the Commitments shall have terminated, the principal of
and interest on the Loans and all other amounts payable by the Borrowers under
this Agreement shall have been paid in full. 
If at any time any payment of the principal of or interest on any Loan,
or any other amount payable by any Borrower under this Agreement is rescinded
or must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of such Borrower or otherwise, each Guarantor’s obligations
hereunder with respect to such payment shall be reinstated as though such
payment had been due but not made at such time.

Section 11.04.  Waiver by the Guarantor.  Each Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against any Borrower or any other Person.

Section 11.05.  Subrogation.  Upon making any payment with
respect to any Borrower hereunder, each applicable Guarantor shall be
subrogated to the rights of the payee against such Borrower with respect to
such payment; provided that such
Guarantor shall not enforce any payment by way of subrogation until all amounts
of principal of and interest on the Loans and all other amounts payable by such
Borrower under this Agreement have been paid in full.

Section 11.06.  Stay of Acceleration.  If acceleration of the time for
payment of any amount payable by any Borrower under this Agreement or the Notes
(if any) is stayed upon the insolvency, bankruptcy or reorganization of such
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement shall nonetheless be payable by each applicable Guarantor 

 59
 

hereunder forthwith on demand by the Agent made at the
request of the requisite proportion of the Lenders specified in Section 6.01 of
this Agreement.

Section 11.07.  Limitation of Liability.  Notwithstanding the other
provisions of this Article 11, the obligations of each Guarantor hereunder
shall be limited to an aggregate amount equal to the largest amount that would
not render its obligations hereunder subject to avoidance under Section 548 of
the United States Bankruptcy Code or any comparable provisions of applicable
law of any State of the United States of America.

 60

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

	
  

  	
  THE ESTÉE LAUDER COMPANIES
  INC., as 

  Borrower and Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TERENCE R. STACK

  
	
   

  	
   

  	
  Title: Vice President—Corporate Treasurer

  
	
   

  	
   

  	
  Address:

  	
  7 Corporate Center Drive 

  Melville, NY 11747

  
	
   

  	
   

  	
  Facsimile:

  	
  (516) 847-6215

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ESTÉE LAUDER INC., as Company Guarantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TERENCE R. STACK

  
	
   

  	
   

  	
  Title: Vice President—Corporate Treasurer

  
	
   

  	
   

  	
  Address:

  	
  7 Corporate Center Drive 

  Melville, NY 11747

  
	
   

  	
   

  	
  Facsimile:

  	
  (516) 847-6215

  

 

 1

	
  

  	
  JPMORGAN CHASE BANK, N.A.,
  as 

  Administrative Agent and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TARA LYNNE MOORE

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
  Address:

  	
  395 N Service Road 

  Melville, NY 11747

  
	
   

  	
   

  	
  Facsimile:

  	
  (631) 755-5184

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CITIBANK, N.A.,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CHRISTOPHER L. SNIDER

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 

  	
  388 Greenwich Street

  
	
   

  	
   

  	
   

  	
  23rd Floor

  
	
   

  	
   

  	
   

  	
  New York, NY 10013

  
	
   

  	
   

  	
  Facsimile:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. CASEY COSGROVE

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
  231 LaSalle St., 10th Floor

  
	
   

  	
   

  	
   

  	
  Chicago, IL 60604

  
	
   

  	
   

  	
  Facsimile:

  	
  (415) 503-5113

  

 

COMMITMENT SCHEDULE

	
  LENDER

  	
   

  	
  COMMITMENT

  	
   

  
	
  JPMORGAN CHASE BANK,
  N.A.

  	
   

  	
  $

  	
  135,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CITIBANK, N.A.,

  	
   

  	
  $

  	
  135,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BANK OF AMERICA, N.A.

  	
   

  	
  $

  	
  130,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  400,000,000

  	
   

  

 

PRICING SCHEDULE

Each
of “Applicable Margin” and “Facility Fee Rate” means the
respective percentages set forth below in the applicable row and column based
upon the Status of the Company that exists on such date (provided that the “Applicable Margin”
shall be equal to the respective percentages so determined plus 0.05% per annum
for any day on which Utilization exceeds 50%).

	
  Status

  	
   

  	
  Level I

  	
   

  	
  Level II

  	
   

  	
  Level III

  	
   

  	
  Level IV

  	
   

  	
  Level V

  	
   

  
	
  Applicable Margin:

  	
   

  	
  0.145

  	
  %

  	
  0.165

  	
  %

  	
  0.210

  	
  %

  	
  0.275

  	
  %

  	
  0.430

  	
  %

  
	
  Facility Fee Rate:

  	
   

  	
  0.030

  	
  %

  	
  0.030

  	
  %

  	
  0.040

  	
  %

  	
  0.050

  	
  %

  	
  0.070

  	
  %

  

 

For purposes of
this Schedule, the following terms have the following meanings:

“Level I Status”
exists at any date if, at such date, the Company’s Unsecured Long-Term Debt is
rated AA- or higher by S&P or Aa3 or higher by Moody’s.

“Level II Status”
exists at any date if, at such date, (i) the Company’s Unsecured Long-Term Debt
is rated A+ or higher by S&P or A1 or higher by Moody’s, and (ii) Level I
Status does not exist.

“Level III Status”
exists at any date if, at such date, (i) 
the Company’s Unsecured Long-Term Debt is rated A or higher by S&P
or A2 or higher by Moody’s, and (ii) neither Level I Status nor Level II Status
exists.

“Level IV Status”
exists at any date if, at such date, (i) the Company’s Unsecured Long-Term Debt
is rated A- or higher by S&P or A3 or higher by Moody’s, and (ii) neither
Level I Status, Level II Status nor Level III Status exists.

“Level V Status” exists
at any date if, at such date, no other Status applies.

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

“S&P” means Standard
& Poor’s Rating Services.

“Status” refers to
the determination of which of Level I Status, Level II Status, Level III
Status, Level IV Status or Level V Status exists at any date.

“Utilization”
means, at any date, the percentage equivalent of a fraction (i) the numerator
of which is the aggregate outstanding principal amount of the loans at such
date under the Credit Facility and (ii) the denominator of which is the 

aggregate amount
of the commitments at such date under the Credit Facility, provided that if any loans remain
outstanding following the termination of the commitments under the Credit
Facility, Utilization will be deemed to be 100%.

The credit ratings
to be utilized for purposes of this Annex I are those assigned to the senior
unsecured long-term debt securities of the Company without third-party credit
enhancement (the “Company’s Unsecured Long-Term Debt”), and any ratings
assigned to any other debt security of the Company shall be disregarded.  The ratings in effect for any day are those
in effect at the close of business on such day. In the case of split ratings
from S&P and Moody’s, the rating to be used to determine the applicable
Status is the higher of the two (e.g., AA-/A1 results in Level I Status);
provided that if the split is more than one full rating category, the rating
one rating category below the highest rating shall be used (e.g., A/Baa1
results in Level IV Status and AA-/Baa1 results in Level II Status).

“LIBO
Rate” means the rate at which eurodollar deposits in the London interbank
market for one, two, three or six months (as selected by a Borrower) are quoted
on the Bloomberg Screen.  LIBO Rate
adjustments for Regulation D will be charged by Lenders individually.

SCHEDULE 4.05

On March 30, 2005, the United States District Court for the Northern District of California entered into a Final Judgment approving the settlement agreement we entered into in July 2003 with the plaintiffs, the other Manufacturer Defendants (as defined below) and the Department Store Defendants (as defined below) in a consolidated class action lawsuit that had been pending in the Superior Court of the State of California in Marin County since 1998. On April 29, 2005, notices of appeal were filed by representatives of two members of the purported class of consumers. One of those appeals has since been withdrawn. If the appeal is resolved satisfactorily, the Final Judgment will result in the plaintiffs’ claims being dismissed, with prejudice, in their entirety in both the Federal and California actions. There has been no finding or admission of any wrongdoing by us in this lawsuit. We entered into the settlement agreement solely to avoid protracted and costly litigation. In connection with the settlement agreement, the defendants, including the Company, will provide consumers with certain free products and pay the plaintiffs’ attorneys’ fees. To meet its obligations under the settlement, we took a special pre-tax charge of $22.0 million, or $13.5 million after-tax, equal to $.06 per diluted common share in the fourth quarter of fiscal 2003. At December 31, 2006, the remaining accrual balance was $16.3 million. The charge did not have a material adverse effect on our consolidated financial condition. In the Federal action, the plaintiffs, purporting to represent a class of all U.S. residents who purchased prestige cosmetics products at retail for personal use from eight department stores groups that sold such products in the United States (the “Department Store Defendants”), alleged that the Department Store Defendants, the Company and eight other manufacturers of cosmetics (the “Manufacturer Defendants”) conspired to fix and maintain retail prices and to limit the supply of prestige cosmetics products sold by the Department Store Defendants in violation of state and Federal laws.
The plaintiffs sought, among other things, treble damages, equitable relief, attorneys’ fees, interest and costs.
In 1999, the Office of the Attorney General of the State of New York (the “State”) notified the Company and ten other entities that they had been identified as potentially responsible parties (“PRPs”) with respect to the Blydenburgh landfill in Islip, New York. Each PRP may be jointly and severally liable for the costs of investigation and cleanup, which the State estimated in 2006 to be approximately $19.7 million for all PRPs. In 2001, the State sued other PRPs (including Hickey’s Carting, Inc., Dennis C. Hickey and Maria Hickey, collectively the “Hickey Parties”), in the U.S. District Court for the Eastern District of New York to recover such costs in connection with the site, and in September 2002, the Hickey Parties brought contribution actions against the Company and other Blydenburgh PRPs. These contribution actions seek to recover, among other things, any damages for which the Hickey Parties are found liable in the State’s lawsuit against them, and related costs and expenses, 

including attorneys’ fees. In June 2004, the State added the Company and other PRPs as defendants in its pending case against the Hickey Parties. In April 2006, the Company and other defendants added numerous other parties to the case as third-party defendants. The Company and certain other PRPs have engaged in settlement discussions which to date have been unsuccessful. Settlement negotiations with the new third-party defendants, the State, the Company and other defendants began in July 2006. We have accrued an amount which we believe would be necessary to resolve our share of this matter. If settlement discussions are not successful, we intend to vigorously defend the pending claims. While no assurance can be given as to the ultimate outcome, management believes that the resolution of the Blydenburgh matters will not have a material adverse effect on our consolidated financial condition.
On March 30, 2006, a purported securities class action complaint captioned Thomas S. Shin, et al. v. The Estee Lauder Companies Inc., et al., was filed against the Company and certain of our officers and directors (collectively the “Defendants”) in the United States District Court for the Southern District of New York. The complaint alleged that the Defendants made statements during the period April 28, 2005 to October 25, 2005 in press releases, the Company’s public filings and during conference calls with analysts that were materially false and misleading and that artificially inflated the price of the Company’s stock. The complaint alleged claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint also asserted that during the class period, certain executive officers and the trust for the benefit of a director sold shares of our Class A Common Stock at artificially inflated prices. Three additional purported securities class action complaints were subsequently filed in the United States District Court for the Southern District of New York containing similar allegations. On July 10, 2006, the Court consolidated these actions under the caption In re: Estee Lauder Companies Securities Litigation, appointed lead plaintiff, and approved the selection of lead counsel. A consolidated amended complaint addressing the same issues as the original complaint was filed on September 8, 2006. The Defendants filed a motion to dismiss the amended complaint on November 7, 2006 and the plaintiff responded to the motion on January 5, 2007. Defendants replied to plaintiff’s response on February 5, 2007. The Defendants believe that the claims asserted in the consolidated amended complaint are without merit and they intend to defend the consolidated action vigorously.

On
April 10, 2006, a shareholder derivative action complaint captioned Miriam
Loveman v. Leonard A. Lauder, et al., was filed against certain of our officers
and all of our directors as of that date (collectively the “Derivative Action
Defendants”) in the United States District Court for the Southern District of
New York. The complaint alleges that the Derivative Action Defendants breached
their fiduciary duties to the Company based on the same alleged course of
conduct identified in the complaint described above. On May 4, 2006, the
derivative 

action was reassigned to the judge assigned to the consolidated
securities action. On September 1, 2006, the Derivative Action Defendants filed
a motion to dismiss. The plaintiff responded to the Derivative Action
Defendants’ motion to dismiss on December 11, 2006. The Derivative Action
Defendants replied to plaintiff’s response on January 29, 2007. The defendants believe
that this complaint is without merit and intend to defend the action
vigorously.

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