Document:

rfclnagt

AMENDED AND RESTATED

RFC LOAN AGREEMENT

 

among

 

HUMANA INC.,

THE SEVERAL BANKS AND OTHER FINANCIAL INSTITUTIONS

FROM TIME TO TIME PARTIES HERETO,

RELATIONSHIP FUNDING COMPANY, LLC,

AND

JPMORGAN CHASE BANK,

AS ADMINISTRATIVE AGENT, 

BANK OF AMERICA, N.A.,

CITIBANK, N.A.,

and

WACHOVIA BANK,

and

J.P. MORGAN SECURITIES INC.

 

DATED AS OF OCTOBER 2, 2002

 

TABLE OF CONTENTS

	
 
	
 
	Page

	
SECTION 1.
	
DEFINITIONS
	*7

	
1.1
	
Defined Terms
	*7

	
1.2
	
Other Definitional Provisions
	*23

	
SECTION 2.
	
AMOUNT AND TERMS OF LOANS
	*24

	
2.1
	
RFC Loans
	*24

	
2.2
	
Repayment of RFC Loans; Evidence of Debt
	*25

	
2.3
	
Fees
	*26

	
2.4
	
Termination or Changes to Facility Amount or RFC Facility Amount
	*26

	
2.5
	
Prepayments
	*27

	
2.6
	
Conversion Options; Minimum Amount of RFC Loans.
	*28

	
2.7
	
Interest Rate and Payment Dates for RFC Loans
	*29

	
2.8
	
Computation of Interest and Fees
	*29

	
2.9
	
Inability to Determine Interest Rate
	*30

	
2.10
	
Pro Rata Borrowings and Payments
	*31

	
2.11
	
Illegality
	*32

	
2.12
	
Requirements of Law
	*32

	
2.13
	
Capital Adequacy
	*33

	
2.14
	
Taxes
	*34

	
2.15
	
Indemnity
	*35

	
2.16
	
Application of Proceeds of RFC Loans
	*35

	
2.17
	
Notice of Certain Circumstances; Assignment of Commitments Under Certain Circumstances
	*36

	
2.18
	
Regulation U
	*36

	
2.19
	
Purchase and Termination.
	*37

	
2.20
	
Additional Fee Payable to Downgraded Banks.
	*38

	
SECTION 3.
	
REPRESENTATIONS AND WARRANTIES
	*38

	
3.1
	
Corporate Existence; Compliance with Law
	*38

	
3.2
	
No Legal Obstacle to Agreement; Enforceability
	*38

	
3.3
	
Litigation
	*39

	
3.4
	
Disclosure
	*39

	
3.5
	
Defaults
	*40

	
3.6
	
Financial Condition
	*40

	
3.7
	
Changes in Condition
	*40

	
3.8
	
Assets
	*40

	
3.9
	
Tax Returns
	*41

	
3.10
	
Contracts, etc
	*41

	
3.11
	
Subsidiaries
	*41

	
3.12
	
Burdensome Obligations
	*41

	
3.13
	
Pension Plans
	*42

	
3.14
	
Environmental and Public and Employee Health and Safety Matters
	*42

	
3.15
	
Federal Regulations
	*42

	
3.16
	
Investment Company Act; Other Regulations
	*42

	
3.17
	
Solvency
	*43

	
3.18
	
Casualties
	*43

	
3.19
	
Business Activity
	*43

	
3.20
	
Purpose of RFC Loans
	*43

	
SECTION 4.
	
CONDITIONS
	*43

	
4.1
	
Conditions to the Closing Date
	*43

	
4.2
	
Conditions to Each Loan
	*45

	
SECTION 5.
	
AFFIRMATIVE COVENANTS
	*46

	
5.1
	
Taxes, Indebtedness, etc
	*46

	
5.2
	
Maintenance of Properties; Maintenance of Existence
	*47

	
5.3
	
Insurance
	*47

	
5.4
	
Financial Statements
	*47

	
5.5
	
Certificates; Other Information
	*48

	
5.6
	
Compliance with ERISA
	*49

	
5.7
	
Compliance with Laws
	*49

	
5.8
	
Inspection of Property; Books and Records; Discussions
	*49

	
5.9
	
Notices
	*50

	
5.10
	
Maintenance of Licenses, Etc
	*51

	
5.11
	
Further Assurances
	*51

	
SECTION 6.
	
NEGATIVE COVENANTS
	*51

	
6.1
	
Financial Condition Covenants.
	*51

	
6.2
	
Limitation on Subsidiary Indebtedness
	*52

	
6.3
	
Limitation on Liens
	*52

	
6.4
	
Limitations on Fundamental Changes
	*54

	
6.5
	
Limitation on Sale of Assets
	*54

	
6.6
	
Limitation on Distributions
	*55

	
6.7
	
Transactions with Affiliates
	*55

	
6.8
	
Sale and Leaseback
	*55

	
SECTION 7.
	
DEFAULTS
	*55

	
7.1
	
Events of Default
	*56

	
7.2
	
Annulment of Defaults
	*58

	
7.3
	
Waivers
	*59

	
7.4
	
Course of Dealing
	*59

	
SECTION 8.
	
THE AGENT
	*59

	
8.1
	
Appointment
	*59

	
8.2
	
Delegation of Duties
	*59

	
8.3
	
Exculpatory Provisions
	*60

	
8.4
	
Reliance by Agent
	*60

	
8.5
	
Notice of Default
	*60

	
8.6
	
Non-Reliance on Agent and Other Banks
	*61

	
8.7
	
Indemnification
	*61

	
8.8
	
Agent in Its Individual Capacity
	*61

	
8.9
	
Successor Agent
	*62

	
SECTION 9.
	
MISCELLANEOUS
	*62

	
9.1
	
Amendments and Waivers
	*62

	
9.2
	
Notices
	*62

	
9.3
	
No Waiver; Cumulative Remedies
	*63

	
9.4
	
Survival of Representations and Warranties
	*64

	
9.5
	
Payment of Expenses and Taxes; Indemnity
	*64

	
9.6
	
Successors and Assigns; Participations; Purchasing Banks
	*65

	
9.7
	
Adjustments; Set-off.
	*67

	
9.8
	
Counterparts
	*68

	
9.9
	
GOVERNING LAW
	*68

	
9.10
	
WAIVERS OF JURY TRIAL
	*68

	
9.11
	
Submission To Jurisdiction; Waivers
	*68

	
9.12
	
Confidentiality of Information
	*69

	
9.13
	
Bankruptcy Petition Against RFC.
	*69

	
9.14
	
Special RFC Indemnity.
	*69

	
9.15
	
Limited Recourse.
	*70

 

SCHEDULES

	
SCHEDULE I
	
Lending Offices; Addresses for Notice

	
SCHEDULE II
	
Pricing Grid

	
SCHEDULE III
	
Indebtedness

	
SCHEDULE IV
	
Subsidiaries of the Company

	
SCHEDULE V
	
Liens

	
SCHEDULE VI
	
Certain Acquisitions and Dispositions

	
SCHEDULE VII
	
Other Regulations

	
SCHEDULE VIII
	
Business Activities

 

EXHIBITS

	
EXHIBIT A
	
Form of Revolving Credit Note

	
EXHIBIT B
	
Form of Transfer Supplement

	
EXHIBIT C
	
Form of Closing Certificate

	
EXHIBIT D-1
	
Form of Company Counsel Opinion

	
EXHIBIT D-2
	
Form of Opinion of Fried, Frank, Harris, Shriver & Jacobson

 

 

     AMENDED AND RESTATED RFC LOAN AGREEMENT, dated as of October 2, 2002, among HUMANA INC., a Delaware corporation (the "Company"), RELATIONSHIP FUNDING COMPANY, LLC, a Delaware limited liability company ("RFC"), the institutions listed in the signature pages hereto as Liquidity Institutions (together with their successors and permitted assigns, the "Banks") and JPMORGAN CHASE BANK, a New York banking corporation, as administrative agent for RFC and the Banks (in such capacity, the "Agent").

W I T N E S S E T H:

     WHEREAS, the parties hereto are party to the RFC Loan Agreement, dated as of October 11, 2001 (the "Existing Loan Agreement"), among the Company, RFC, the Banks and the Agent, pursuant to which the Company could request from RFC, and RFC could, in its sole discretion, agree to make to the Company, revolving loans;

     WHEREAS, the Company has requested RFC and the Banks to enter into a loan agreement that amends and restates the Existing Loan Agreement; and

     WHEREAS, the Banks are willing to enter into such loan agreement upon and subject to the terms and conditions hereafter set forth;

     NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto hereby agree that, effective as of the Closing Date (as defined below), the Existing Loan Agreement shall be amended and restated in its entirety as follows: 

SECTION 1.   DEFINITIONS

1.1   Defined Terms.   As used in this Agreement, the following terms have the following meanings:

"Admitted Asset": with respect to any HMO Subsidiary or Insurance Subsidiary, any asset of such HMO subsidiary or Insurance Subsidiary which qualifies as an "admitted asset" (or any like item) under the applicable Insurance Regulations and HMO Regulations.

"Affiliate": as to any Person, any other Person (other than a Subsidiary) which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" of a Person means the power, directly or indirectly, either to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

"Aggregate Outstanding Extensions of Credit": an amount equal to the aggregate principal amount of all RFC Loans then outstanding.

"Agreement": this agreement, as the same may be amended, supplemented or otherwise modified from time to time.

"Alternate Base Rate": for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate of interest per annum publicly announced from time to time by the Agent as its prime rate in effect at its principal office in New York City (each change in the Prime Rate to be effective on the date such change is publicly announced); "Base CD Rate" shall mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is one and the denominator of which is one minus the C/D Reserve Percentage and (b) the C/D Assessment Rate; "Three-Month Secondary CD Rate" shall mean, for any day, the secondary market rate for three-month certificates of deposit reported as being in effect on such day (or, if such day shall not be a Business Day, the next preceding Business Day) by the Board of Governors of the Federal Reserve System (the "Board") through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day), or, if such rate shall not be so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 10:00 A.M., New York City time, on such day (or, if such day shall not be a Business Day, on the next preceding Business Day) by the Agent from three New York City negotiable certificate of deposit dealers of recognized standing selected by it; "C/D Reserve Percentage" shall mean, for any day, that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board (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 one billion Dollars in respect of new non-personal three-month certificates of deposit in the secondary market in Dollars in New York City and in an amount of $100,000 or more; "C/D Assessment Rate" shall mean, for any day, the net annual assessment rate (rounded upward to the nearest 1/100th of 1%) determined by JPMorgan Chase Bank to be payable on such day to the Federal Deposit Insurance Corporation or any successor ("FDIC") for FDIC's insuring time deposits made in Dollars at offices of JPMorgan Chase Bank in the United States; and "Federal Funds Effective Rate" shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Agent from three federal funds brokers of recognized standing selected by it. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be effective on the effective day of such change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively.

"Allocated Commercial Paper": has the meaning assigned to it in the definition of CP Breakage Costs.

"Alternate Base Rate Loans": RFC Loans held by the Banks hereunder at such time as they are made and/or being maintained at a rate of interest based upon the Alternate Base Rate.

"Applicable Margin": for each Type of RFC Loan (other than CP Rate Loans), the rate per annum applicable to such type determined in accordance with the Pricing Grid.

"Available Facility Amount": at a particular time, an amount equal to the difference between (a) the amount of the Facility Amount at such time and (b) the Aggregate Outstanding Extensions of Credit at such time.

"Bank Funded Loans": RFC Loans that have been made by the Banks pursuant to subsection 2.1(c) or purchased by the Banks pursuant to the Liquidity Agreement. RFC Loans purchased by the Banks pursuant to the Liquidity Agreement shall be RFC Loans until the earliest to occur of (i) such RFC Loans being repaid pursuant hereto, (ii) such RFC Loans being repurchased by RFC pursuant to subection 4.12 of the Liquidity Agreement and (iii) such RFC Loans being converted into loans under the 364 Day Facility pursuant to subsection 2.19. 

"Banks": as defined in the preamble hereto.

"Benefited Bank": as defined in subsection 9.7.

"Borrowing Date": any Business Day specified in a notice pursuant to subsection 2.1(b) or 2.1(c) as a date on which the Company requests RFC or each Bank (as the case may be) to make an RFC Loan hereunder.

"Business Day": a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close, provided, that with respect to notices and determinations in connection with, and payments of principal and interest on, Eurodollar Loans, such day is also a day for trading by and between banks in Dollar deposits in the interbank eurodollar market.

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

"Change in Control": of any corporation, shall occur where (a) any Person or "group" (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), other than the Company, shall acquire more than 30% of the Voting Stock of such corporation or (b) the Continuing Directors shall not constitute a majority of the board of directors of such corporation.

"Closing Date": the date on which all of the conditions precedent for the Closing Date set forth in Section 4 shall have been fulfilled.

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

"Commercial Paper" means any short-term promissory notes issued by the CP Issuer in the commercial paper market.

"Commitment": as to any Bank, its Commitment as defined in the Liquidity Agreement.

"Commitment Percentage": as to any Bank, the percentage of the aggregate Commitments constituted by such Bank's Commitment.

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

"Conduit Lender": any special purpose corporation organized and administered by any Bank for the purpose of making RFC Loans otherwise required to be made by such Bank and designated by such Bank in a written instrument; provided, that the designation by any Bank of a Conduit Lender shall not relieve the designating Bank of any of its obligations to fund a RFC Loan under this Agreement if, for any reason, its Conduit Lender fails to fund any such RFC Loan, and the designating Bank (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender, and provided, further, that no Conduit Lender shall (a) be entitled to receive any greater amount pursuant to subection 2.12, 2.13, 2.14, 2.15 or 9.5 than the designating Bank would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender (and each Bank which designates a Conduit Lender shall indemnify the Company against any increased taxes, costs, expenses, liabilities or losses associated with any payment thereunder to such Conduit Lender) or (b) be deemed to have any Commitment.

"Consolidated Assets": the consolidated assets of the Company and its Subsidiaries, determined in accordance with GAAP.

"Consolidated EBIT": for any period for which the amount thereof is to be determined, Consolidated Net Income for such period plus all amounts deducted in computing such Consolidated Net Income in respect of Consolidated Interest Expense and income taxes, all determined in accordance with GAAP; provided, that for purposes of calculating Consolidated EBIT for any period of four full fiscal quarters, (i) the Consolidated EBIT attributable to any Person or business unit acquired by the Company or its Subsidiaries during such period (such Consolidated EBIT to be calculated in the same manner as Consolidated EBIT for the Company and its Subsidiaries is calculated, mutatis mutandis, provided that amounts arising prior to the time such acquired Person or business unit was acquired attributable to (a) any discontinued operations or products of the acquired Person or business unit or (b) operations or products of the acquired Person or business unit which the Company expects to discontinue as disclosed in the Company's reports filed with the Securities and Exchange Commission within three months after the date of acquisition of such Person or business unit shall be excluded in such calculation) shall be included on a pro forma basis for such period of four full fiscal quarters (assuming the consummation of each such acquisition and the incurrence, assumption or repayment of any Indebtedness in connection therewith occurred on the first day of such period of four full fiscal quarters) and (ii) the Consolidated EBIT of any Person or business unit disposed of by the Company or its Subsidiaries during such period (such Consolidated EBIT to be calculated in the same manner as Consolidated EBIT for the Company and its Subsidiaries is calculated, mutatis mutandis) shall be deducted on a pro forma basis for such period of four full fiscal quarters (assuming the consummation of each such disposition and the repayment of any Indebtedness in connection therewith occurred on the first day of such period of four full fiscal quarters).

"Consolidated EBITDA": for any fiscal period for which the amount thereof is to be determined, Consolidated EBIT for such fiscal period plus, to the extent deducted from Consolidated Net Income for such fiscal period, depreciation and amortization for such fiscal period.

"Consolidated Interest Expense": for any period for which the amount thereof is to be determined, all amounts deducted in computing Consolidated Net Income for such period in respect of interest expense on Indebtedness determined in accordance with GAAP; provided, that for purposes of calculating Consolidated Interest Expense for any period of four full fiscal quarters, (i) the Consolidated Interest Expense of any Person or business unit acquired by the Company or its Subsidiaries during such period (such Consolidated Interest Expense to be calculated in the same manner as Consolidated Interest Expense for the Company and its Subsidiaries is calculated, mutatis mutandis, provided that amounts arising prior to the time such acquired Person or business unit was acquired attributable to (a) any discontinued operations or products of the acquired Person or business unit or (b) operations or products of the acquired Person or business unit which the Company expects to discontinue as disclosed in the Company's reports filed with the Securities and Exchange Commission within three months after the date of acquisition of such Person or business unit shall be excluded in such calculation) shall be included on a pro forma basis for such period of four full fiscal quarters (assuming the consummation of each such acquisition and the incurrence, assumption or repayment of any Indebtedness in connection therewith occurred on the first day of such period of four full fiscal quarters) and (ii) the Consolidated Interest Expense of any Person or business unit disposed of by the Company or its Subsidiaries during such period (such Consolidated Interest Expense to be calculated in the same manner as Consolidated Interest Expense for the Company and its Subsidiaries is calculated, mutatis mutandis) shall be deducted on a pro forma basis for such period of four full fiscal quarters (assuming the consummation of each such disposition and the repayment of any Indebtedness in connection therewith occurred on the first day of such period of four full fiscal quarters). Consolidated Interest Expense shall in any event include the Synthetic Lease Interest Component of any Synthetic Lease entered into by the Company or any of its Subsidiaries. 

"Consolidated Net Income": for any period, the consolidated net income, if any, after taxes, of the Company and its Subsidiaries for such period determined in accordance with GAAP; provided, that, for all purposes other than subsection 6.1(a), Consolidated Net Income shall not be reduced or increased by the amount of any non-cash extraordinary charges or credits that would otherwise be deducted from or added to revenue in determining such Consolidated Net Income.

"Consolidated Net Tangible Assets": at any date, the total amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (i) all current liabilities as disclosed on the consolidated balance sheet of the Company (excluding any thereof which are by their terms extendable or renewable at the option of the obligor thereon to a time more than 12 months after the time as of which the amount thereof is being computed and excluding any deferred income taxes that are included in current liabilities), and (ii) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangible assets, all as set forth on the most recent consolidated balance sheet of the Company and computed in accordance with GAAP. 

"Consolidated Net Worth": at any date, the stockholders' equity of the Company and its Subsidiaries at such date, determined in accordance with GAAP.

"Consolidated Total Debt": the aggregate of all Indebtedness (including the current portion thereof) of the Company and its Subsidiaries on a consolidated basis.

"Continuing Director": any member of the Board of Directors of the Company who is a member of such Board on the date of this Agreement, and any Person who is a member of such Board and whose nomination as a director was approved by a majority of the Continuing Directors then on such Board.

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

"Control Group Person": any Person which is a member of the controlled group or is under common control with the Company within the meaning of Section 414(b) or 414(c) of the Code or Section 4001(b)(1) of ERISA.

"CP Breakage Costs" means, with respect to any CP Excess Amount on any date (such date, the "CP Payment Date"), an amount equal to the excess, if any, of (i) the sum of (a) all interest that would have accrued (had such CP Payment Date not occurred) on such CP Excess Amount through and including the later to occur of (x) the day on which the principal component of Commercial Paper issued by the CP Issuer and allocated by the CP Issuer to fund advances under the Lexington Credit Agreement and used to fund or maintain one or more CP Rate Loans that will mature on or after the relevant CP Payment Date equals or exceeds such CP Excess Amount (such principal component, "Allocated Commercial Paper") and (y) the day on which the latest maturing rate hedge agreement entered into by the CP Issuer and relating to the Commercial Paper described in clause (x) hereof matures (such later date, the "Relevant Maturity Date"), plus (b) any amounts required to be paid to unwind any relevant rate hedge agreements, over (ii) the amount of income (less the reasonable costs and expenses of obtaining such income), if any, actually received by the CP Issuer from investing the CP Excess Amount for the period from such CP Payment Date until such Relevant Maturity Date. 

"CP Cost of Funds" means, for each Settlement Period, the sum of (i) the per annum rate equivalent to the daily weighted average of the per annum rates which may be paid or are payable by the CP Issuer from time to time as interest on or otherwise in respect of the Commercial Paper of the CP Issuer and/or rate hedges that are allocated, in whole or in part, by the CP Issuer to the CP Rate Loans during the period commencing on the immediately preceding Settlement Date and ending on (but excluding) the current Settlement Date (such period, a "Settlement Period"), which rates shall reflect and give effect to (x) the commissions of placement agents and dealers in respect of Commercial Paper of the CP Issuer allocated to such period, and (y) net payments owed or received by the CP Issuer under any rate hedges entered into by the CP Issuer in connection therewith, plus (ii) the cost of all audit, rating agency and administrative expenses related to the facility, which shall equal 0.02%; provided that if any component of such rate is a discount rate, then in calculating the "CP Cost of Funds" for such Settlement Period, the CP Issuer shall for such component use the rate resulting from converting such discount rate to an interest-bearing equivalent rate per annum.

"CP Excess Amount": as defined in subsection 2.15(d)(ii).

"CP Issuer": Lexington Parker Capital Company, LLC, a Delaware limited liability company, and each other lender under the Lexington Credit Agreement.

"CP Margin": as defined in the Program Fee Letter.

"CP Rate": for each Settlement Period, the sum of (i) the CP Cost of Funds for such Settlement Period, plus (ii) the CP Margin.

"CP Rate Loans": the RFC Loans held by RFC that bear interest at the CP Rate.

"Cross-Over Funding Date": as defined in subsection 2.3.

"Default": any of the events specified in subsection 7.1, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.

"Distribution": (a) the declaration or payment of any dividend on or in respect of any shares of any class of Capital Stock of the Company other than dividends payable solely in shares of common stock of the Company; (b) the purchase, redemption or other acquisition of any shares of any class of Capital Stock of the Company directly or indirectly through a Subsidiary or otherwise; and (c) any other distribution on or in respect of any shares of any class of Capital Stock of the Company.

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

"Domestic Lending Office": with respect to each Bank the office of such Bank located within the United States which shall be making or maintaining Alternate Base Rate Loans.

"Downgrade Deposit": as defined in Exhibit I to the Liquidity Agreement.

"Eligible Assignee": as defined in Exhibit I to the Liquidity Agreement.

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

"Eurocurrency Reserve Requirements": for any day as applied to a Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including, without limitation, basic, supplemental, marginal and emergency reserves under any regulations of the Board of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with respect thereto), dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a member bank of such System.

"Eurodollar Lending Office": with respect to each Bank, the office of such Bank which shall be making or maintaining Eurodollar Loans.

"Eurodollar Loans": RFC Loans held by the Banks hereunder at such time as they are being made and/or maintained at a rate of interest based upon the Eurodollar Rate.

"Eurodollar Rate": with respect to each day during each Interest Period pertaining to a Eurodollar Loan, the rate per annum equal to the average (rounded upwards to the nearest whole multiple of one sixteenth of one percent) of the respective rates notified to the Agent by the Reference Banks as the rate at which each of their Eurodollar Lending Offices is offered Dollar deposits two Working Days prior to the beginning of such Interest Period in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations of such Eurodollar Lending Office are then being conducted at or about 10:00 A.M., New York City time, for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to the amount of the Eurodollar Loan of such Reference Bank to be outstanding during such Interest Period.

"Eurodollar Tranche": the collective reference to Eurodollar Loans having the same Interest Period (whether or not originally made on the same day).

"Event of Default": any of the events specified in subsection 7.1, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, event or act has been satisfied.

"Excluded Day": means any of the following:

     (1)  the last 5 Business Days of a month;

     (2)  the 15th day of the month (or if the 15th is not a Business Day, the next succeeding Business Day);

     (3)  the last 10 Business Days of November; and

     (4)  the last 15 Business Days of December.

"Facility Amount": means $[265,000,000], as such amount may be reduced from time to time as provided herein.

"Facility Period": the period from and including the Closing Date to but not including the first to occur of (i) the Termination Date or such earlier date on which the Facility Amount is reduced to zero as provided herein or (ii) the Wind-Down Date.

"Financing Lease": any lease of property, real or personal, if the then present value of the minimum rental commitment thereunder should, in accordance with GAAP, be capitalized on a balance sheet of the lessee.

"GAAP": (a) with respect to determining compliance by the Company with the provisions of subsections 6.1, 6.2 and 6.5, generally accepted accounting principles in the United States of America consistent with those utilized in preparing the audited financial statements referred to in subsection 3.6 and (b) with respect to the financial statements referred to in subsection 3.6 or the furnishing of financial statements pursuant to subsection 5.4 and otherwise, generally accepted accounting principles in the United States of America from time to time in effect.

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

"Green Bay Facility": offices of the Company located at 1100 Employers Boulevard, De Pere, Wisconsin.

"Guarantee Obligation": as to any Person, any arrangement whereby credit is extended to one party on the basis of any promise of such Person, whether that promise is expressed in terms of an obligation to pay the Indebtedness of another, or to purchase an obligation owed by that other, to purchase assets or to provide funds in the form of lease or other types of payments under circumstances that would enable that other to discharge one or more of its obligations, whether or not such arrangement is listed in the balance sheet of the obligor or referred to in a footnote thereto, but shall not include endorsements of items for collection in the ordinary course of business.

"Headquarters": the principal executive offices of the Company located at 500 West Main Street, Louisville, Kentucky 40202.

"Hedge Agreement" means all interest rate swaps, caps or collar agreements or similar arrangements dealing with interest rates or currency exchange rates or the exchange of nominal interest obligations, either generally or under specific contingencies.

"HMO": a health maintenance organization doing business as such (or required to qualify or to be licensed as such) under HMO Regulations.

"HMO Regulation": all laws, regulations, directives and administrative orders applicable under federal or state law specific to health maintenance organizations and any regulations, orders and directives promulgated or issued pursuant thereto.

"HMO Regulator": any Person charged with the administration, oversight or enforcement of an HMO Regulation.

"HMO Subsidiary": any Subsidiary of the Company that is now or hereafter an HMO.

"Indebtedness": of a Person, at a particular date, the sum (without duplication) at such date of (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services or which is evidenced by a note, bond, debenture or similar instrument, (b) all obligations of such Person under Financing Leases, (c) all obligations of such Person in respect of letters of credit, acceptances, or similar obligations issued or created for the account of such Person in excess of $1,000,000, (d) all liabilities secured by any Lien on any property owned by the Company or any Subsidiary even though such Person has not assumed or otherwise become liable for the payment thereof, (e) the amount of any Synthetic Lease Obligations of such Person, (f) all Guarantee Obligations relating to any of the foregoing in excess of $1,000,000, and (g) for purposes of subsection 8.1(e) only, all obligations of such Person in respect of Interest Rate Protection Agreements. 

"Insolvency" or "Insolvent": at any particular time, a Multiemployer Plan which is insolvent within the meaning of Section 4245 of ERISA.

"Insurance Regulation": any law, regulation, rule, directive or order applicable and specific to an insurance company.

"Insurance Regulator": any Person charged with the administration, oversight or enforcement of any Insurance Regulation.

"Insurance Subsidiary": any Subsidiary of the Company that is now or hereafter doing business (or required to qualify or to be licensed) under Insurance Regulations.

"Interest Payment Date": (a) as to any Alternate Base Rate Loan, the last day of each March, June, September and December, commencing on the first of such days to occur after Alternate Base Rate Loans are made or Eurodollar Loans are converted to Alternate Base Rate Loans and the final maturity date of such RFC Loan, (b) as to any Eurodollar Loan in respect of which the Company has selected an Interest Period of one, two or three months, the last day of such Interest Period, (c) as to any Eurodollar Loan in respect of which the Company has selected a longer Interest Period than the periods described in clause (b), each day that is three months, or a whole multiple thereof, after the first day of such Interest Period and (d) with respect to any CP Rate Loan, the related Settlement Date with respect thereto.

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

     (i)  initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loans and ending one, two, three or six months thereafter (or, with the consent of all the Banks, nine or twelve months thereafter), as selected by the Company in its notice of borrowing as provided in subsection 2.1(b) or its notice of conversion as provided in subsection 2.6(b), as the case may be; and

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

provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:
     (1)  if any Interest Period pertaining to a Eurodollar Loan would otherwise end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

     (2)  if the Company shall fail to give notice as provided above, the Company shall be deemed to have selected an Alternate Base Rate Loan to replace the affected Eurodollar Loan;

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

     (4)  any interest period pertaining to a Eurodollar Loan that would otherwise end after the Termination Date shall end on the Termination Date;

     (5)  the Company shall select Interest Periods so as not to require a payment or prepayment of any Eurodollar Loan during an Interest Period for such RFC Loan.

"Interest Rate Protection Agreement": any interest rate protection agreement, interest rate futures contract, interest rate option, interest rate cap or other interest rate hedge arrangement to or under which the Company or any of its Subsidiaries is a party or a beneficiary on the date hereof or becomes a party or a beneficiary after the date hereof.

"Jacksonville Facility": the offices of the Company located at 76 South Laura Street, Jacksonville, Florida.

"Lender Affiliate": (a) any Affiliate of any Bank, (b) any Person that is administered or managed by any Bank and that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business and (c) with respect to any Bank which is a fund that invests in commercial loans and similar extensions of credit, any other fund that invests in commercial loans and similar extensions of credit and is managed or advised by the same investment advisor as such Bank or by an Affiliate of such Bank or investment advisor.

"Leverage Ratio": at the last day of any full fiscal quarter of the Company, the ratio of (a) all Indebtedness of the Company and its Subsidiaries outstanding on such date to (b) Consolidated EBITDA for the period of four fiscal quarters of the Company ended on such day.

"Lexington": Lexington Parker Capital Company, LLC, a Delaware limited liability company.

"Lexington Credit Agreement": the Credit Agreement dated as of December 12, 2000, among RFC, Lexington and the other lenders, as amended, restated, supplemented or otherwise modified.

"Lien": any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), or preference, priority or other security agreement or preferential arrangement that has the same practical effect as any of the foregoing (including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing).

"Liquidity Agreement": the Liquidity Agreement, dated as of October 11, 2001, among RFC, the liquidity institutions from time to time party thereto and JPMorgan Chase Bank as Administrative Agent, as the same has been and may be amended, supplemented and modified from time to time.

"Loan Documents": this Agreement and the Notes.

"Margin Stock": as defined in Regulation U.

"Margin Stock Collateral": all Margin Stock (other than Portfolio Margin Stock) of the Company and its Subsidiaries by which the RFC Loans are deemed "indirectly secured" within the meaning of Regulation U.

"Material Adverse Effect": any material adverse effect on (a) the business, assets, operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole, (b) the ability of the Company to perform its obligations under this Agreement and the Notes or (c) the rights and remedies of the Banks with respect to the Company and its Subsidiaries under any of the Loan Documents.

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

"Non-U.S. Bank": as defined in subsection 2.14(b).

"Note": as defined in subsection 2.2(e).

"Other Collateral": all assets of the Company and its Subsidiaries (other than Margin Stock) by which the RFC Loans are deemed "indirectly secured" within the meaning of Regulation U.

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

"PBGC": the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA.

"Person": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

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

"Portfolio Margin Stock": Margin Stock held by Insurance Subsidiaries or HMO Subsidiaries as portfolio investments, as to which the restrictions of Section 6 shall not apply.

"Pricing Grid": the Pricing Grid set forth in Schedule II.

"Program Fee Letter": the letter dated as of October 3, 2001 between the Agent, the Company and RFC, as the same may from time to time be amended, modified or otherwise supplemented.

"Purchasing Banks": as defined in subsection 9.6(d).

"Reference Banks": JPMorgan Chase Bank, Citibank N.A. and Bank of America, N.A..

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

"Regulation T": Regulation T of the Board of Governors of the Federal Reserve System.

"Regulation U": Regulation U of the Board of Governors of the Federal Reserve System.

"Regulation X": Regulation X of the Board of Governors of the Federal Reserve System.

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

"Reportable Event": any of the events set forth in Section 4043(b) of ERISA, other than those events as to which the thirty day notice period is waived under subsections .22, .23, .25, .27 or .28 of PBGC Reg. Section 4043.

"Required Banks": (a) during the Facility Period, Banks whose Commitment Percentages aggregate at least 51% and (b) after the Facility Amount has been reduced to zero, Banks whose outstanding Bank Funded Loans represent in the aggregate at least 51% of all outstanding Bank Funded Loans.

"Requirement of Law": as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

"Responsible Officer": the chief executive officer, the chief operating officer, the president, any executive or senior vice president or vice president of the Company, the chief financial officer, treasurer or controller of the Company.

"RFC Facility Amount": means $265,000,000, as such amount may be reduced from time to time as provided in subsection 2.4(d).

"RFC Loans": all loans made by any of RFC and/or the Banks hereunder.

"RFC Obligations": as defined in subsection 7.1.

"Riverview Square": the office building of the Company located at 201 West Main Street, Louisville, Kentucky 40202.

"Section 2.1(c) Election": as defined in subsection 2.1(c).

"Settlement Date": for any CP Rate Loan, one or all of the first five Business Days of the month following the month in which the Borrowing Date for such RFC Loan occurs as specified in a notice to the Agent from RFC or any other Business Day agreeable to the Company and RFC.

"Settlement Period": as defined in the definition of "CP Cost of Funds".

"Significant Subsidiary": means, at any particular time, any Subsidiary of the Company that would be a "significant subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the Securities and Exchange Commission.

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

"Solvent": with respect to any Person (or group of Persons) on a particular date, that on such date (i) the fair value of the property of such Person (or group of Persons) is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person (or group of Persons), (ii) the present fair salable value of the assets of such Person (or group of Persons) is not less than the amount that will be required to pay the probable liability of such Person (or group of Persons) on its debts as they become absolute and matured, (iii) such Person (or group of Persons) is able to pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (iv) such Person (or group of Persons) does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's (or group of Person's) ability to pay as such debts and liabilities mature, (v) such Person (or group of Persons) is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person's (or group of Person's) property (after giving effect to any engagement in such business or transaction) would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person (or group of Persons) is engaged and (vi) such Person (or group of Persons) is solvent under all applicable HMO Regulations and Insurance Regulations. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

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

"Supplemental Fee": as defined in subsection 2.3(a).

"Synthetic Lease": each arrangement, however described, under which the obligor accounts for its interest in the property covered thereby under GAAP as lessee of a lease which is not a capital lease under GAAP and accounts for its interest in the property covered thereby for Federal income tax purposes as the owner.

"Synthetic Lease Interest Components": with respect to any Person for any period, the portion of rent paid or payable (without duplication) for such period under Synthetic Leases for such Person that would be treated as interest in accordance with Financial Accounting Standards Board Statement No. 13 if such Synthetic Leases were treated as capital leases under GAAP.

"Synthetic Lease Obligation": as to any Person with respect to any Synthetic Lease at any time of determination, the amount of the liability of such Person in respect of such Synthetic Lease that would (if such lease was required to be classified and accounted for as a capital lease on a balance sheet of such Person in accordance with GAAP) be required to be capitalized on the balance sheet of such Person at such time.

"364-Day Facility" means the Amended and Restated 364-Day Revolving Credit Agreement, dated as of October 2, 2002 among the Company, the several banks and other financial institutions from time to time party thereto and JPMorgan Chase Bank, as Agent and CAF Loan Agent thereunder, as the same has been and may be amended, supplemented and modified from time to time.

"Taxes": as defined in subsection 2.14.

"Termination Date": the date that is 364 days after the Closing Date (or, if such date is not a Business Day, the next preceding Business Day).

"Transfer Supplement": a Transfer Supplement, substantially in the form of Exhibit B.

"Type": as to any RFC Loan, its nature as an Alternate Base Rate Loan, Eurodollar Loan or CP Rate Loan.

"Waterside Building": the real property located at 101 East Main Street, Louisville, Kentucky 40202, including the building housing insurance claim processing operations of the Company.

"Waterside Garage": the parking garage of the Company located at 201 North Brook Street, Louisville, Kentucky 40202.

"Wind-Down Date": the date on which RFC receives a notice from the Agent on or after a Wind-Down Event has occurred and is continuing.

"Wind-Down Event": any one or more of the following events:
     (1)  An Event of Default has occurred and is continuing;

     (2)  Any Default or Event of Default has occurred and is continuing under the 364-Day Facility;

     (3)  the Leverage Ratio on the last day of any full fiscal quarter of the Company ending with any fiscal quarter set forth below is greater than the ratio set forth opposite such period below:

	
Fiscal Quarter
	
Leverage Ratio

	
September 30, 2002
	
2.80

	
December 31, 2002 -

September 30, 2003
	
2.55

	
December 31, 2003 -

and thereafter
	
2.30;

 

     (4)  the ratio of (i) Consolidated EBIT for any period of four consecutive fiscal quarters of the Company ending with any fiscal quarter set forth below to (ii) Consolidated Interest Expense during such period, is less than the ratio set forth opposite such period below:

	
Fiscal Quarter
	
Interest Coverage Ratio

	
September 30, 2002
	
3.20

	
December 31, 2002 -

September 30, 2003
	
3.70

	
December 31, 2003 -

and thereafter
	
4.20; or

 

     (5)  The Company's long-term unsecured indebtedness is rated less than BBB- by S&P and less than Baa3 by Moody's.

"Working Day": any Business Day on which dealings in foreign currencies and exchange between banks may be carried on in London, England.

1.2   Other Definitional Provisions.   (a)  Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the Notes or any certificate or other document made or delivered pursuant hereto.

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

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

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

SECTION 2.   AMOUNT AND TERMS OF LOANS

2.1   RFC Loans.   (a)   Subject to the terms and conditions hereof, RFC may, in its sole discretion, make loans to the Company from time to time during the Facility Period in an aggregate principal amount at any one time outstanding which does not exceed the RFC Facility Amount. Subject to the terms and conditions hereof, the Banks shall make loans pursuant to a Section 2.1(c) Election; provided, that, after giving effect thereto, the aggregate sum of RFC Loans made by the Banks pursuant to Section 2.1(c) Elections would not exceed the Facility Amount less the RFC Facility Amount as reduced pursuant to subsection 2.4(d); provided, further, that, after giving effect thereto, the sum of the outstanding principal amount of CP Rate Loans made by RFC and any RFC Loans purchased by the Banks under the Liquidity Agreement shall not exceed the RFC Facility Amount. Notwithstanding anything herein, the aggregate principal amount of outstanding RFC Loans shall not exceed the Facility Amount. During the Facility Period the Company may use the Facility Amount by borrowing, prepaying the RFC Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. The RFC Loans held by RFC will be CP Rate Loans. RFC Loans purchased from RFC by the Banks pursuant to the Liquidity Agreement, may be (i) Eurodollar Loans, (ii) Alternate Base Rate Loans or (iii) a combination thereof, as determined by the Company and notified to the Agent in accordance with subsection 2.6. Eurodollar Loans shall be maintained by each Bank at its Eurodollar Lending Office, and Alternate Base Rate Loans shall be maintained by each Bank at its Domestic Lending Office. Notwithstanding anything to the contrary set forth herein, nothing in this Agreement shall be construed as a commitment by RFC to make RFC Loans to the Company. 

     (b)  The Company may request a borrowing from RFC hereunder during the Facility Period on any Business Day other than an Excluded Day; provided that the Company shall give RFC and the Agent irrevocable notice (which notice must be received by RFC prior to 3:00 P.M., New York City time one Business Day prior to the requested Borrowing Date) specifying (A) the amount to be borrowed and (B) the requested Borrowing Date (which shall not be an Excluded Day); provided, that if such notice is not received prior to such deadline, RFC will use its best efforts given prevailing market conditions to fund the CP Rate Loan on the requested Borrowing Date; provided, further, that at no time shall the sum of any requested borrowing or borrowings pursuant to this subsection 2.1(b) and subsection 2.1(c) exceed the Available Facility Amount. Each borrowing hereunder shall be in an aggregate principal amount equal to $10,000,000 or a whole multiple of $1,000,000 in excess thereof. RFC shall notify the Company and the Agent by 11:30 A.M., New York City time, on the requested Borrowing Date if it does not intend to make the requested RFC Loan. If RFC decides to make the requested RFC Loan, RFC will make the amount thereof available to the Agent for the account of the Company at the office of the Agent set forth in subsection 9.2 prior to the close of business, New York City time, on the Borrowing Date requested by the Company in funds immediately available to the Agent. The proceeds of such RFC Loan will then be promptly made available to the Company by the Agent at such office of the Agent by crediting the account of the Company on the books of such office with the aggregate of the amounts made available to the Agent by RFC.

     (c)  The Company may elect to make a borrowing (such election, a "Section 2.1(c) Election") from the Banks hereunder during the Facility Period on any Working Day if the borrowing is of Eurodollar Loans or on any Business Day if the borrowing is of Alternate Base Rate Loans; provided that the Company shall give the Agent irrevocable notice (which notice must be received by the Agent (i) prior to 11:30 A.M., New York City time three Working Days prior to the requested Borrowing Date, in the case of Eurodollar Loans, and (ii) prior to 12:00 P.M., New York City time, on the requested Borrowing Date, in the case of Alternate Base Rate Loans), specifying (A) the amount to be borrowed, (B) the requested Borrowing Date, (C) whether such Loans are to be Eurodollar Loans, Alternate Base Rate Loans, or a combination thereof, and (D) if the borrowing is to be entirely or partly of Eurodollar Loans, the length of the Interest Period therefor; provided, further, that at no time shall the sum of any requested borrowing or borrowings pursuant to subsection 2.1(b) and this subsection 2.1(c) exceed the Available Facility Amount. Each borrowing hereunder shall be in an aggregate principal amount equal to $10,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon receipt of such notice from the Company, the Agent shall promptly notify each Bank thereof. Each Bank will make the amount of its pro rata share of each borrowing pursuant to a Section 2.1(c) Election available to the Agent for the account of the Company at the office of the Agent set forth in subsection 9.2 prior to the close of business, New York City time, on such date in funds immediately available to the Agent. The proceeds of such RFC Loan will then be promptly made available to the Company by the Agent at such office of the Agent by crediting the account of the Company on the books of such office with the aggregate of the amounts made available to the Agent by Banks. 

2.2   Repayment of RFC Loans; Evidence of Debt.   (a)  The Company hereby unconditionally promises to pay to RFC or the Agent for the account of the Banks, as the case may be, the then unpaid principal amount of each RFC Loan, except CP Rate Loans, on the Termination Date (or such earlier date on which the RFC Loans become due and payable pursuant hereto). The Company hereby further agrees to pay interest on the unpaid principal amount of the RFC Loans from time to time outstanding from the date hereof until payment in full thereof at the rates per annum, and on the dates, set forth in subsection 2.7. The unpaid principal amount of each CP Rate Loan will be due and payable on the applicable Settlement Dates and the Termination Date.

     (b)  Each of RFC and each Bank shall maintain for its own account in accordance with its usual practice an account or accounts evidencing indebtedness of the Company to RFC or such Bank, as the case may be, resulting from each RFC Loan from time to time held by it, including the amounts of principal and interest payable and paid to RFC or to such Bank from time to time under this Agreement.

     (c)  The Agent shall maintain the Register pursuant to subsection 9.6(d), and a subaccount therein for RFC and each Bank, in which shall be recorded (i) (A) the amount of each RFC Loan made hereunder, the Type thereof and each Interest Period, if applicable, thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Company to RFC and to each Bank hereunder and (iii) both the amount of any sum received by the Agent hereunder from the Company and RFC's and each Bank's share thereof.

     (d)  The entries made in the Register and the accounts of RFC maintained pursuant to subsection 2.2(b) and (c) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Company therein recorded; provided, however, that the failure of RFC, any Bank or the Agent to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Company to repay (with applicable interest) the RFC Loans in accordance with the terms of this Agreement.

     (e)  The Company agrees that, upon the request to the Agent by any Bank that holds any RFC Loans after the Facility Period has expired, the Company will execute and deliver to such Bank a promissory note of the Company evidencing such loans substantially in the form of Exhibit A with appropriate insertions as to payee, date and principal amount (a "Note"). 

2.3   Fees.   (a)  If a Wind-Down Event occurs after the Cross-Over Funding Date, the Company shall pay to the Agent, for the account of the Banks, a supplemental fee calculated as set forth below; provided that such fee shall not be payable if the Company has terminated this Agreement and repaid all outstanding RFC Loans and all other amounts owing hereunder prior to the occurrence of such Wind-Down Event. The supplemental fee is the sum, for each day from the Cross-Over Funding Date to but excluding the date on which such Wind-Down Event occurs, of an amount equal to the product of the outstanding face amount of commercial paper allocable by the CP Issuer to the funding of the RFC Loans on such day and the margin applicable to Eurodollar Loans hereunder on such day divided by 360. "Cross-Over Funding Date" is the first day on or after the Closing Date on which the Company's long-term unsecured indebtedness is rated less than BBB- by S&P or less than Baa3 by Moody's. Such fee shall be payable on the fifth Business Day following the date of such Wind-Down Event.

     (b)  The Company agrees to pay to the Agent the other fees in the amounts, and on the dates, agreed to by the Company and the Agent in the Program Fee Letter. The Agent will distribute to the Banks their respective portions of upfront fees paid by the Company to the Agent, as agreed between the Agent and each Bank. 

2.4   Termination or Changes to Facility Amount or RFC Facility Amount.   (a)  The Company shall have the right, upon not less than five Business Days' notice to the Agent and to RFC, from time to time, to reduce by an equal amount each of the Facility Amount and the RFC Facility Amount, provided that no such reduction shall be effective if, after giving effect thereto and to any prepayments of the RFC Loans made on the effective date thereof (including by way of converting such RFC Loans to Loans under the 364-Day Facility), the then outstanding principal amount of the CP Rate Loans and the outstanding principal amount of any RFC Loans purchased by the Banks under the Liquidity Agreement would exceed the RFC Facility Amount or the outstanding principal amount of the RFC Loans would exceed the Facility Amount. Any such reduction shall be in an amount of $10,000,000 or a whole multiple of $1,000,000 in excess thereof, and shall reduce permanently the amount of the Facility Amount and the RFC Facility Amount.

     (b)  The Facility Amount shall be reduced to zero automatically on the date specified in subsection 2.5(b).

     (c)  This Agreement shall terminate on the date on which the Facility Amount has been reduced to zero and all amounts owing hereunder to RFC, the Banks and the Agent have been paid in full.

     (d)  The RFC Facility Amount shall be decreased by RFC Loans made by the Banks pursuant to a Section 2.1(c) Election and increased by the repayment of any such loans, in each case, upon written notice from the Administrative Agent to RFC (which notice the Administrative Agent shall promptly provide to RFC upon such event); provided, that no such reduction shall be effective if, after giving effect thereto and to any prepayments of the RFC Loans made on the effective date thereof (including by way of converting such RFC Loans to Loans under the 364-Day Facility), the then outstanding principal amount of the CP Rate Loans and the outstanding principal amount of any RFC Loans purchased by the Banks under the Liquidity Agreement would exceed the RFC Facility Amount or the outstanding principal amount of the RFC Loans would exceed the Facility Amount. 

2.5   Prepayments.   (a)  The Company may at any time and from time to time, prepay the RFC Loans, in whole or in part, without premium or penalty (subject to the provisions of subsection 2.15), upon at least three Business Days' in the case of Eurodollar Loans, upon at least two Business Days' in the case of CP Rate Loans and upon at least one Business Day in the case of Alternate Base Rate Loans, irrevocable notice to the Agent and RFC specifying the date and amount of prepayment and whether the prepayment is of CP Rate Loans, Eurodollar Loans or Alternate Base Rate Loans or a combination thereof, and if of a combination thereof, the amount of prepayment allocable to each. Upon receipt of such notice the Agent shall promptly notify RFC and, if applicable, each Bank thereof. If such notice is given, the payment amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to such date and amounts that are owing under subsection 2.15, on the amount prepaid. Partial prepayments shall be in an aggregate principal amount of $5,000,000, or a whole multiple of $1,000,000 in excess thereof, and may only be made if, after giving effect thereto, subsection 2.6(d) shall not have been contravened.

     (b)  The Company shall prepay all outstanding RFC Loans, together with all accrued interest thereon and any amounts due pursuant to subsection 2.15 on the date that is 30 days after the date on which a Wind-Down Event occurs.

2.6   Conversion Options; Minimum Amount of RFC Loans.   (a)  CP Rate Loans may not be converted into RFC Loans of another Type except in accordance with this subsection 2.6(a), it being understood that only RFC Loans acquired by the Banks under the Liquidity Agreement may be maintained as Eurodollar Loans or Alternate Base Rate Loans hereunder. Immediately upon the consummation of a Purchase (as defined in and pursuant to the Liquidity Agreement) by a Bank, the amount thereof (other than the amount of such Purchase attributable to Yield (as defined in the Liquidity Agreement)), shall be automatically converted (without regard to any conditions precedent thereto) into an Alternate Base Rate Loan of such Bank. Any portion of such Purchase constituting Yield shall be due and payable to the Banks as accrued interest on the next Settlement Date applicable to the related CP Rate Loan purchased by such Bank and shall accrue interest from the date of such Purchase until paid in full at the rate applicable to Alternate Base Rate Loans.

     (b)  The Company may elect from time to time to convert Eurodollar Loans to Alternate Base Rate Loans by giving the Agent at least two Business Days' prior irrevocable notice of such election (given before 10:00 A.M., New York City time, on the date on which such notice is required). The Company may elect from time to time to convert Alternate Base Rate Loans to Eurodollar Loans by giving the Agent at least three Working Days' prior irrevocable notice of such election (given before 11:30 A.M., New York City time, on the date on which such notice is required). Upon receipt of such notice, the Agent shall promptly notify each Bank thereof. Promptly following the date on which such conversion is being made each Bank shall take such action as is necessary to transfer its portion of such RFC Loans to its Domestic Lending Office or its Eurodollar Lending Office, as applicable. All or any part of outstanding Eurodollar Loans and Alternate Base Rate Loans may be converted as provided herein, provided that, unless the Required Banks otherwise agree, (i) no RFC Loan may be converted into a Eurodollar Loan when any Event of Default has occurred and is continuing, (ii) partial conversions shall be in an aggregate principal amount of $5,000,000 or a whole multiple thereof, and (iii) any such conversion may only be made if, after giving effect thereto, subsection 2.6(d) shall not have been contravened.

     (c)  Any Eurodollar Loans may be continued as such upon the expiration of an Interest Period with respect thereto by compliance by the Company with the notice provisions contained in subsection 2.6(b); provided that, unless the Required Banks otherwise agree, no Eurodollar Loan may be continued as such when any Event of Default has occurred and is continuing, but shall be automatically converted to an Alternate Base Rate Loan on the last day of the then current Interest Period with respect thereto. The Agent shall notify the Banks promptly that such automatic conversion contemplated by this subsection 2.6(c) will occur.

     (d)  All borrowings, conversions, payments, prepayments and selection of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of the RFC Loans comprising any Eurodollar Tranche shall not be less than $10,000,000. At no time shall there be more than 10 Eurodollar Tranches.

2.7   Interest Rate and Payment Dates for RFC Loans.   (a)  The Eurodollar Loans comprising each Eurodollar Tranche shall bear interest for each day during each Interest Period with respect thereto on the unpaid principal amount thereof at a rate per annum equal to the Eurodollar Rate plus the Applicable Margin.

     (b)  Alternate Base Rate Loans shall bear interest for each day from and including the date thereof on the unpaid principal amount thereof at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin.

     (c)  CP Rate Loans shall bear interest for each Settlement Period relating thereto at the CP Rate applicable to such Settlement Period.

     (d)  If all or a portion of the (i) principal amount of any RFC Loans, (ii) any interest payable thereon or (iii) any fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum which is 2% above the Alternate Base Rate, and any overdue interest or other amount payable hereunder shall bear interest at a rate per annum which is 2% above the Alternate Base Rate, in each case from the date of such non-payment until paid in full (after as well as before judgment). If all or a portion of the principal amount of any RFC Loans shall not be paid when due (whether at stated maturity, by acceleration or otherwise), each Eurodollar Loan shall, unless the Required Banks otherwise agree, be converted to an Alternate Base Rate Loan at the end of the last Interest Period with respect thereto.

     (e)  Interest shall be payable in arrears on each Interest Payment Date.

2.8   Computation of Interest and Fees.   (a)  Interest in respect of Alternate Base Rate Loans shall be calculated on the basis of a (i) 365-day (or 366-day, as the case may be) year for the actual days elapsed when such Alternate Base Rate Loans are based on the Prime Rate, and (ii) a 360-day year for the actual days elapsed when based on the Base CD Rate or the Federal Funds Effective Rate. All other interest and fees payable hereunder shall be calculated on the basis of a 360-day year for the actual days elapsed. The Agent shall as soon as practicable notify the Company and the Banks of each determination of a Eurodollar Rate. Any change in the interest rate on a RFC Loan resulting from a change in the Alternate Base Rate or the Applicable Margin or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change in the Alternate Base Rate is announced, such Applicable Margin changes as provided herein or such change in the Eurocurrency Reserve Requirements shall become effective, as the case may be. The Agent shall as soon as practicable notify the Company and the Banks of the effective date and the amount of each such change.

     (b)  Each determination of an interest rate by the Agent pursuant to any provision of this Agreement or of the CP Rate by RFC shall be conclusive and binding on the Company and the Banks in the absence of manifest error. The Agent shall, at the request of the Company, deliver to the Company a statement showing the quotations used by the Agent in determining any interest rate pursuant to subsection 2.7(a).

     (c)  If any Reference Bank's Commitment shall terminate (otherwise than on termination of all the Commitments), or its RFC Loans shall be assigned for any reason whatsoever, such Reference Bank shall thereupon cease to be a Reference Bank, and if, as a result of the foregoing, there shall only be one Reference Bank remaining, then the Agent (after consultation with the Company and the Banks) shall, by notice to the Company and the Banks, designate another Bank as a Reference Bank so that there shall at all times be at least two Reference Banks.

     (d)  Each Reference Bank shall use its best efforts to furnish quotations of rates to the Agent as contemplated hereby. If any of the Reference Banks shall be unable or otherwise fails to supply such rates to the Agent upon its request, the rate of interest shall be determined on the basis of the quotations of the remaining Reference Banks or Reference Bank.

2.9   Inability to Determine Interest Rate.   (a)  In the event that:
     (i)  the Agent shall have determined in its reasonable judgment (which determination shall be conclusive and binding upon the Company) that, by reason of circumstances affecting the interbank eurodollar market generally, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for any requested Interest Period;

     (ii)  only one of the Reference Banks is able to obtain bids for its Dollar deposits for such Interest Period in the manner contemplated by the term "Eurodollar Rate"; or

     (iii)  the Agent shall have received notice prior to the first day of such Interest Period from Banks constituting the Required Banks that the interest rate determined pursuant to subsection 2.7(a) for such Interest Period does not accurately reflect the cost to such Banks (as conclusively certified by such Banks) of making or maintaining their affected RFC Loans during such Interest Period;

with respect to (A) proposed RFC Loans that the Company has requested the Banks make as Eurodollar Loans, (B) Eurodollar Loans that will result from the requested conversion of Alternate Base Rate Loans into Eurodollar Loans or (C) the continuation of Eurodollar Loans beyond the expiration of the then current Interest Period with respect thereto, the Agent shall forthwith give facsimile or telephonic notice of such determination to the Company and the Banks at least one day prior to, as the case may be, the requested Borrowing Date for such Eurodollar Loans, the conversion date of such Eurodollar Loans or the last day of such Interest Period. If such notice is given (x) any requested Eurodollar Loans shall be made as Alternate Base Rate Loans, (y) any Alternate Base Rate Loans that were to have been converted to Eurodollar Loans shall be continued as Alternate Base Rate Loans and (z) any outstanding Eurodollar Loans shall be converted, on the last day of the then current Interest Period with respect thereto, to Alternate Base Rate Loans. Until the Agent has withdrawn such notice, the Company shall not have the right to convert Alternate Base Rate Loans to Eurodollar Loans. The Agent shall withdraw such notice upon its determination that the event or events which gave rise to such notice no longer exist.

2.10   Pro Rata Borrowings and Payments.   (a)  Each borrowing by the Company of RFC Loans pursuant to subsection 2.1(c) shall be made ratably from the Banks in accordance with their Commitment Percentages.

     (b)  If the Company pays less than the amount of interest due hereunder on any date, the Agent shall distribute such interest to RFC and each Bank based on the ratio that the amount of such interest then due and owing to RFC or such Bank bears to the amount then due and owing to RFC and all Banks.

     (c)  Each payment (including each prepayment) by the Company on account of principal of the RFC Loans shall be made first to the payment in full of RFC Loans held by RFC and then to the payment in full of RFC Loans held by the Banks, pro rata according to the respective outstanding principal amounts of such RFC Loans then held by the Banks.

     (d)  All payments (including prepayments) to be made by the Company on account of principal, interest and fees shall be made without set-off or counterclaim and shall be made to RFC or the Agent, for the account the Banks, as the case may be, at RFC's or the Agent's office set forth in subsection 9.2, as applicable, in lawful money of the United States of America and in immediately available funds. The Agent shall distribute any such payments it receives to the Banks promptly upon receipt in like funds as received. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. Any amount received by RFC later than 11:00 A.M., New York City time, on a Business Day will be deemed to have been received on the following Business Day and such amount shall continue to accrue interest at the applicable rate until the next Business Day. 

     (e)  Unless the Agent shall have been notified in writing by any Bank prior to a Borrowing Date that such Bank will not make the amount which would constitute its Commitment Percentage of the borrowing of RFC Loans pursuant to subsection 2.1(c) on such date available to the Agent, the Agent may assume that such Bank has made such amount available to the Agent on such Borrowing Date, and the Agent may, in reliance upon such assumption, make available to the Company a corresponding amount. If such amount is made available to the Agent on a date after such Borrowing Date, such Bank shall pay to the Agent on demand an amount equal to the product of (i) the daily average Federal Funds Effective Rate during such period as quoted by the Agent, times (ii) the amount of such Bank's Commitment Percentage of such borrowing, times (iii) a fraction the numerator of which is the number of days that elapse from and including such Borrowing Date to the date on which such Bank's Commitment Percentage of such borrowing shall have become immediately available to the Agent and the denominator of which is 360. A certificate of the Agent submitted to any Bank with respect to any amounts owing under this subsection 2.10(e) shall be conclusive, absent manifest error. If such Bank's Commitment Percentage of such borrowing is not in fact made available to the Agent by such Bank within three Business Days of such Borrowing Date, the Agent shall be entitled to recover such amount with interest thereon at the rate per annum applicable to Alternate Base Rate Loans hereunder, on demand, from the Company.

2.11   Illegality.   Notwithstanding any other provisions herein, if after the date hereof the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Bank to make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the Bank shall, within 30 Working Days after it becomes aware of such fact, notify the Company, through the Agent, of such fact, (b) the commitment of such Bank hereunder to make Eurodollar Loans or to convert Alternate Base Rate Loans to Eurodollar Loans shall forthwith be cancelled and (c) such Bank's RFC Loans then outstanding as Eurodollar Loans, if any, shall be converted automatically to Alternate Base Rate Loans on the respective last days of the then current Interest Periods for such RFC Loans or within such earlier period as required by law. Each Bank shall take such action as may be reasonably available to it without material legal or financial disadvantage (including changing its Eurodollar Lending Office) to prevent the adoption of or any change in any such Requirement of Law from becoming applicable to it.

2.12   Requirements of Law.   (a)   If after the date hereof the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Bank with any request or directive (whether or not having the force of law) after the date hereof from any central bank or other Governmental Authority:
     (i)  shall subject any Bank to any tax of any kind whatsoever (other than a withholding tax) with respect to this Agreement, any Note, or any Eurodollar Loans held by it, or change the basis of taxation of payments to such Bank of principal, facility fee, interest or any other amount payable hereunder in respect of RFC Loans (except for changes in the rate of tax on the overall net income of such Bank);

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

     (iii)  shall impose on such Bank any other condition; 

and the result of any of the foregoing is to increase the cost to such Bank, by any amount which such Bank reasonably deems to be material, of making, renewing or maintaining advances or extensions of credit or to reduce any amount receivable hereunder, in each case, in respect thereof, then, in any such case, the Company shall promptly pay such Bank, upon its demand, any additional amounts necessary to compensate such Bank for such additional cost or reduced amount receivable; provided, however, that notwithstanding anything contained in this subsection 2.12(a) to the contrary, such Bank shall not be entitled to receive any amounts pursuant to this subsection 2.12(a) that it is also entitled to pursuant to subsection 2.14(a). If a Bank becomes entitled to claim any additional amounts pursuant to this subsection 2.12(a), it shall, within 30 Business Days after it becomes aware of such fact, notify the Company, through the Agent, of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by such Bank, through the Agent, to the Company shall be conclusive in the absence of manifest error. Each Bank shall take such action as may be reasonably available to it without legal or financial disadvantage (including changing its Eurodollar Lending Office) to prevent any such Requirement of Law or change from becoming applicable to it. This covenant shall survive the termination of this Agreement and payment of the outstanding RFC Loans and all other amounts payable hereunder.

     (b)  In the event that after the date hereof a Bank is required to maintain reserves of the type contemplated by the definition of "Eurocurrency Reserve Requirements", such Bank may require the Company to pay, promptly after receiving notice of the amount due, additional interest on the related Eurodollar Loan of such Bank at a rate per annum determined by such Bank up to but not exceeding the excess of (i) (A) the applicable Eurodollar Rate divided by (B) one minus the Eurocurrency Reserve Requirements over (ii) the applicable Eurodollar Rate. Any Bank wishing to require payment of any such additional interest on account of any of its Eurodollar Loans shall notify the Company no more than 30 Working Days after each date on which interest is payable on such Eurodollar Loan of the amount then due it under this subsection 2.12(b), in which case such additional interest on such Eurodollar Loan shall be payable to such Bank at the place indicated in such notice. Each such notification shall be accompanied by such information as the Company may reasonably request.

2.13   Capital Adequacy.    If any Bank shall have determined that after the date hereof the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Bank or any corporation controlling such Bank with any request or directive after the date hereof regarding capital adequacy (whether or not having the force of law) from any central bank or Governmental Authority, does or shall have the effect of reducing the rate of return on such Bank's or such corporation's capital as a consequence of its obligations hereunder or its obligations under the Liquidity Agreement to a level below that which such Bank or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Bank's or such corporation's policies with respect to capital adequacy) by an amount which is reasonably deemed by such Bank to be material, then from time to time, promptly after submission by such Bank, through the Agent, to the Company of a written request therefor (such request shall include details reasonably sufficient to establish the basis for such additional amounts payable and shall be submitted to the Company within 30 Working Days after it becomes aware of such fact), the Company shall promptly pay to such Bank such additional amount or amounts as will compensate such Bank for such reduction. The agreements in this subsection 2.13 shall survive the termination of this Agreement, the Liquidity Agreement and payment of the RFC Loans and the Notes and all other amounts payable hereunder.

2.14   Taxes.   (a)   All payments made by the Company under this Agreement shall be made free and clear of, and without reduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority excluding, in the case of the Agent, RFC (and its beneficial owners) and each Bank, net income and franchise taxes imposed on the Agent, RFC (or its beneficial owners) or such Bank by the jurisdiction under the laws of which the Agent, RFC (or its beneficial owners) or such Bank is organized or any political subdivision or taxing authority thereof or therein, or by any jurisdiction in which such Bank's Domestic Lending Office or Eurodollar Lending Office, as the case may be, is located or any political subdivision or taxing authority thereof or therein (all such non-excluded taxes, levies, imposts, deductions, charges or withholdings being hereinafter called "Taxes"). If any Taxes are required to be withheld from any amounts payable to the Agent, RFC or any Bank hereunder or under the Notes, the amounts so payable to the Agent, RFC or such Bank shall be increased to the extent necessary to yield to the Agent, RFC or such Bank (after payment of all Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Notes. Whenever any Taxes are payable by the Company, as promptly as possible thereafter, the Company shall send to the Agent for its own account or for the account of RFC or such Bank, as the case may be, a certified copy of any original official receipt that is received by the Company showing payment thereof (or, if no official receipt is received by the Company, a statement of the Company indicating payment thereof). If the Company fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required receipts or other required documentary evidence, the Company shall indemnify the Agent, RFC and the Banks for any incremental taxes, interest or penalties that may become payable by the Agent, RFC or any Bank as a result of any such failure, except to the extent such failure is attributable to a failure by a Non-U.S. Bank to comply with the form delivery and notice requirements of paragraph (b) below or a breach of the representations contained in paragraph (d) below.

     (b)  Each of the Agent, RFC and each Bank (or Transferee) that, is not a citizen or resident of the United States of America, a corporation, partnership or other entity created or organized in or under the laws of the United States of America (or any jurisdiction thereof), or any estate or trust that is subject to federal income taxation regardless of the source of its income (in each case, a "Non-U.S. Bank") shall deliver to the Company and the Agent (or, in the case of a Participant, to the Bank from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Bank claiming complete exemption from U.S. federal withholding tax on all payments by the Company under this Agreement. Such forms shall be delivered by each Non-U.S. Bank on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation). In addition, each Non-U.S. Bank shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Bank. Each Non-U.S. Bank shall promptly notify the Company at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Company (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this paragraph, a Non-U.S. Bank shall not be required to deliver any form pursuant to this paragraph that such Non-U.S. Bank is not legally able to deliver, provided, however, that in the event that the failure to be able to deliver such form is not attributable to a change in law, the Company shall be relieved of the obligation to make additional payments under subsection 2.14(a) above.

     (c)  The agreements in subsection 2.14 shall survive the termination of this Agreement and the payment of the RFC Loans and all other amounts payable hereunder.

     (d)  RFC represents that it is solely owned by a domestic partnership within the meaning of Code Section 7701(a)(30)(B) as of the Closing Date, and that it will remain solely owned by a domestic partnership within the meaning of Code Section 7701(a)(30)(B) or a domestic corporation within the meaning of Code Section 7701(a)(30)(C).

2.15   Indemnity.    The Company agrees to indemnify RFC and each Bank and to hold RFC and each Bank harmless from any loss or expense (other than any loss of anticipated margin or profit) which RFC or such Bank may sustain or incur as a consequence of (a) default by the Company in payment when due of the principal amount of or interest on CP Rate Loans by RFC or any Eurodollar Loans of such Bank, (b) default by the Company in making a borrowing or conversion after the Company has given a notice of borrowing in accordance with subsection 2.1(b) or a notice of continuation or conversion pursuant to subsection 2.6, (c) default by the Company in making any prepayment after the Company has given a notice in accordance with subsection 2.6 or (d) the making of (i) a prepayment of a Eurodollar Loan on a day which is not the last day of an Interest Period with respect and/or (ii) a prepayment of principal of a CP Rate Loan in an amount that is excess of the principal amount of Allocated Commercial Paper that is maturing on such prepayment date ("CP Excess Amount"), including, without limitation, in respect of Eurodollar Loans, any such loss or expense arising from the reemployment of funds obtained by it to maintain its Eurodollar Loans hereunder or from fees payable to terminate the deposits from which such funds were obtained and in respect of CP Rate Loans, CP Breakage Costs. Any Bank claiming any amount under this subsection 2.15 shall provide calculations, in reasonable detail, of the amount of its loss or expense. This covenant shall survive termination of this Agreement and payment of the outstanding RFC Loans and all other amounts payable hereunder.

2.16   Application of Proceeds of RFC Loans.    Subject to the provisions of the following sentence, the Company may use the proceeds of the RFC Loans for any lawful general corporate purpose, including acquisitions. The Company will not, directly or indirectly, apply any part of the proceeds of any such RFC Loan for the purpose of "purchasing" or "carrying" any Margin Stock within the respective meanings of each of the quoted terms under Regulation U, or to refund any indebtedness incurred for such purpose, provided that the Company may use the proceeds of RFC Loans for such purposes, if such usage does not violate Regulation U as now and from time to time hereafter in effect.

2.17   Notice of Certain Circumstances; Assignment of Commitments Under Certain Circumstances.   (a)   Any Bank claiming any additional amounts payable pursuant to subsections 2.12, 2.13 or 2.14 or exercising its rights under subsection 2.11, shall, in accordance with the respective provisions thereof, provide notice to the Company and the Agent. Such notice to the Company and the Agent shall include details reasonably sufficient to establish the basis for such additional amounts payable or the rights to be exercised by the Bank.

     (b)  Any Bank claiming any additional amounts payable pursuant to subsections 2.12, 2.13 or 2.14 or exercising its rights under subsection 2.11, shall use reasonable efforts (consistent with legal and regulatory restrictions) to file any certificate or document requested by the Company or to change the jurisdiction of its applicable lending office if the making of such filing or change would avoid the need for or reduce the amount of any such additional amounts which may thereafter accrue or avoid the circumstances giving rise to such exercise and would not, in the reasonable determination of such Bank, be otherwise disadvantageous in any material respect to such Bank.

     (c)  In the event that the Company shall be required to make any additional payments to any Bank pursuant to subsections 2.12, 2.13 or 2.14 or any Bank shall exercise its rights under subsection 2.11, the Company shall have the right at its own expense, upon notice to such Bank and the Agent, to require such Bank to transfer and to assign without recourse (in accordance with and subject to the terms of subsection 10.6) all its interest, rights and obligations under this Agreement to another financial institution (including any Bank) acceptable to the Agent and RFC (which approval shall not be unreasonably withheld) which shall assume such obligations; provided that (i) no such assignment shall conflict with any Requirement of Law and (ii) such assuming financial institution shall pay to such Bank in immediately available funds on the date of such assignment the outstanding principal amount of the RFC Loans held by such Bank together with accrued interest thereon and all other amounts accrued for its account or owed to it hereunder, including, but not limited to additional amounts payable under subsections 2.11, 2.12, 2.13 or 2.14.

2.18   Regulation U.   (a)   If at any time the Company shall use the proceeds of any RFC Loans for the purpose of "purchasing" or "carrying" any Margin Stock within the respective meanings of each of the quoted terms under Regulation U, or to refund any indebtedness incurred for such purpose, and, after giving effect to such purchase or refund, more than 25% of the value (determined in accordance with Regulation U) of the assets subject to the restrictions of Section 7 would be represented by Margin Stock, the Company shall give notice thereof to the Agent, RFC and the Banks, and thereafter the RFC Loans made by each Bank shall at all times be treated for purposes of Regulation U as two separate extensions of credit (the "A Credit" and the "B Credit" of such Bank and, collectively, the "A Credits" and the "B Credits"), as follows:
     (i)  the aggregate amount of the A Credit of RFC or such Bank shall be an amount equal to such RFC or such Bank's pro rata share (based on the amount of its Commitment Percentage) of the maximum loan value (as determined in accordance with Regulation U), of all Margin Stock Collateral; and

     (ii)  the aggregate amount of the B Credit of RFC or such Bank shall be an amount equal to RFC or such Bank's pro rata share (based on the amount of its Commitment Percentage) of all RFC Loans outstanding hereunder minus such Bank's A Credit.

In the event that any Margin Stock Collateral is acquired or sold, the amount of the A Credit of such Bank shall be adjusted (if necessary), to the extent necessary by prepayment, to an amount equal to such Bank's pro rata share (based on the amount of its Commitment Percentage) of the maximum loan value (determined in accordance with Regulation U) as of the date of such acquisition or sale) of the Margin Stock Collateral immediately after giving effect to such acquisition or sale. Nothing contained in this subsection 2.18 shall be deemed to permit any sale of Margin Stock Collateral in violation of any other provisions of this Agreement.

     (b)  Each Bank will maintain its records to identify the A Credit of such Bank and the B Credit of such Bank, and, solely for the purposes of complying with Regulation U, the A and B Credits shall be treated as separate extensions of credit. Each Bank hereby represents and warrants that the loan value of the Other Collateral is sufficient for such Bank to lend its pro rata share of the B Credit.

     (c)  The benefits of the indirect security in Margin Stock Collateral created by any provisions of this Agreement shall be allocated first to the benefit and security of the payment of the principal of and interest on the A Credits of the Banks and of all other amounts payable by the Company under this Agreement in connection with the A Credits (collectively, the "A Credit Amounts") and second, only after the payment in full of the A Credit Amounts, to the benefit and security of the payment of the principal of and interest on the B Credits of the Banks and of all other amounts payable by the Company under this Agreement in connection with the B Credits (collectively, the "B Credit Amounts"). The benefits of the indirect security in Other Collateral created by any provisions of this Agreement, shall be allocated first to the benefit and security of the payment of the B Credit Amounts and second, only after the payment in full of the B Credit Amounts, to the benefit and security of the payment of the A Credit Amounts.

     (d)  The Company shall furnish to each Bank at the time of each acquisition and sale of Margin Stock Collateral such information and documents as the Agent or such Bank may require to determine the A and B Credits, and at any time and from time to time, such other information and documents as the Agent or such Bank may reasonably require to determine compliance with Regulation U.

     (e)  Each Bank shall be responsible for its own compliance with and administration of the provisions of this subsection 2.18 and Regulation U, and the Agent shall have no responsibility for any determinations or allocations made or to be made by any Bank as required by such provisions.

2.19     Purchase and Termination.   If (x) a Wind-Down Event has occurred, or (y) at any time when all of the RFC Loans are held by the Banks or no CP Rate Loans are outstanding, or (z) on or after the tenth Business Day immediately preceding the Termination Date, the Company may deliver a notice (the "CP Termination Notice") to the Administrative Agent, RFC and the CP Issuer. Upon delivery of a CP Termination Notice and in the case of (x) and (z) of the preceding sentence, RFC shall take such action as set forth in subsection 4.13 of the Liquidity Agreement. The Company agrees to pay any amounts owing under subsection 2.15 in connection with any such purchase. Upon the delivery of the CP Termination Notice and, in the case of (x) and (z) of the first sentence of this subsection 2.19, payment of such amounts as may be due RFC pursuant to subsection 4.13 of the Liquidity Agreement, the Company shall convert the outstanding amount of such RFC Loans into loans under the 364-Day Facility in accordance with subsection 2.1(d) thereof. Upon such conversion the Facility Amount shall be zero.

2.20     Additional Fee Payable to Downgraded Banks.   If a Bank funds a Downgrade Deposit under the Liquidity Agreement, then the Company shall pay to the Agent, for the account of such Bank, on the amount of such Downgrade Deposit from time to time, an amount per annum equal to the Applicable Margin with respect to Eurodollar Loans as an additional fee hereunder. Such fee shall be payable by the Company in arrears on the last day of each month, commencing on the first of such days to occur after such Bank funds its Downgrade Deposit and on the Termination Date.

SECTION 3.   REPRESENTATIONS AND WARRANTIES

The Company hereby represents and warrants that:

3.1   Corporate Existence; Compliance with Law.    Each of the Company and its Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the corporate power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification and (d) is in compliance with all Requirements of Law, including, without limitation, HMO Regulations and Insurance Regulations, except to the extent that the failure to be so qualified or to comply therewith would not have a Material Adverse Effect.

3.2   No Legal Obstacle to Agreement; Enforceability.   Neither the execution and delivery of any Loan Document, nor the making by the Company of any borrowings hereunder, nor the consummation of any transaction herein or therein referred to or contemplated hereby or thereby nor the fulfillment of the terms hereof or thereof or of any agreement or instrument referred to in this Agreement, has constituted or resulted in or will constitute or result in a breach of any Requirement of Law, including without limitation, HMO Regulations and Insurance Regulations, or any Contractual Obligation of the Company or any of its Subsidiaries, or result in the creation under any agreement or instrument of any security interest, lien, charge or encumbrance upon any of the assets of the Company or any of its Subsidiaries. No approval, authorization or other action by any Governmental Authority, including, without limitation, HMO Regulators and Insurance Regulators, or any other Person is required to be obtained by the Company or any of its Subsidiaries in connection with the execution, delivery and performance of this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby, or the making of any borrowing by the Company hereunder. This Agreement has been, and each other Loan Document will be, duly executed and delivered on behalf of the Company. This Agreement constitutes, and each other Loan Document when executed and delivered will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

3.3   Litigation.    Except as disclosed in the Company's Annual Report on Form 10-K for its fiscal year ended December 31, 2001 and the Company's Quarterly Reports on Form 10-Q for its fiscal quarters ended March 31, 2002 and June 30, 2002 filed with the Securities and Exchange Commission and previously distributed to the Banks, as of the date hereof, there is no litigation, at law or in equity, or any proceeding before any federal, state, provincial or municipal board or other governmental or administrative agency, including without limitation, HMO Regulators and Insurance Regulators, pending or to the knowledge of the Company threatened which, after giving effect to any applicable insurance, could reasonably be expected to have a Material Adverse Effect or which seeks to enjoin the consummation of any of the transactions contemplated by this Agreement or any other Loan Document, and no judgment, decree, or order of any federal, state, provincial or municipal court, board or other governmental or administrative agency, including without limitation, HMO Regulators and Insurance Regulators, has been issued against the Company or any Subsidiary which has, or may involve, a material risk of a Material Adverse Effect. The Company does not believe that the final resolution of the matters disclosed in its Annual Report on Form 10-K for its fiscal year ended December 31, 2001 and the Company's Quarterly Reports on Form 10-Q for its fiscal quarters ended March 31, 2002 and June 30, 2002 filed with the Securities and Exchange Commission and previously distributed to the Banks, will have a Material Adverse Effect.

3.4   Disclosure.    Neither this Agreement nor any agreement, document, certificate or statement furnished to the Banks by the Company in connection herewith (including, without limitation, the information relating to the Company and its Subsidiaries included in the Confidential Information Memorandum dated September 2002 delivered in connection with the syndication of the credit facilities hereunder) contains any untrue statement of material fact or, taken as a whole together with all other information furnished to the Banks by the Company, omits to state a material fact necessary in order to make the statements contained herein or therein not misleading. All pro forma financial statements made available to the Banks have been prepared in good faith based upon reasonable assumptions. There is no fact known to the Company which materially adversely affects or in the future could reasonably be expected to materially adversely affect the business, operations, affairs or condition of the Company and its Subsidiaries on a consolidated basis, except to the extent that they may be affected by future general economic conditions.

3.5   Defaults.    Neither the Company nor any of its Subsidiaries is in default under or with respect to any Requirement of Law or Contractual Obligation in any respect which has had, or may have, a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.

3.6   Financial Condition.    The Company has furnished to the Agent and each Bank copies of the following:

     (a)  The Annual Report of the Company on Form 10-K for the fiscal year ended December 31, 2001; and

     (b)  the Quarterly Reports of the Company on Form 10-Q for the fiscal quarters ended March 31, 2002 and June 30, 2002.

The financial statements included therein, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as disclosed therein). As of the date of such financial statements, neither the Company nor any of its Subsidiaries had any known contingent liabilities of any significant amount which in accordance with GAAP are required to be referred to in said financial statements or in the notes thereto which could reasonably be expected to have a Material Adverse Effect. During the period from December 31, 2001 to and including the date hereof, there has been no sale, transfer or other disposition by the Company or any of its consolidated Subsidiaries of any asset reflected on the balance sheet referred to above that would have been a material part of its business or property and no purchase or other acquisition of any business or property (including any capital stock of any other Person) material in relation to the consolidated financial condition of the Company and its consolidated Subsidiaries at December 31, 2001 other than as disclosed in Schedule VI.

3.7   Changes in Condition.    Since December 31, 2001, there has been no development or event nor any prospective development or event, which has had, or could reasonably be expected to have, a Material Adverse Effect.

3.8   Assets.    The Company and each Subsidiary have good and marketable title to all material assets carried on their books and reflected in the financial statements referred to in subsection 4.6 or furnished pursuant to subsection 6.4, except for assets held on Financing Leases or purchased subject to security devices providing for retention of title in the vendor, and except for assets disposed of as permitted by this Agreement.

3.9   Tax Returns.    The Company and each of its Subsidiaries have filed all tax returns which are required to be filed and have paid, or made adequate provision for the payment of, all taxes which have or may become due pursuant to said returns or to assessments received. All federal tax returns of the Company and its Subsidiaries through their fiscal years ended in 1999 have been audited by the Internal Revenue Service or are not subject to such audit by virtue of the expiration of the applicable period of limitations, and the results of such audits are fully reflected in the balance sheets referred to in subsection 3.6. The Company knows of no material additional assessments since said date for which adequate reserves have not been established.

3.10   Contracts, etc.    Attached hereto as Schedule III is a statement of outstanding Indebtedness of the Company and its Subsidiaries for borrowed money in excess of $2,000,000 as of the date set forth therein, and a complete and correct list of all agreements, contracts, indentures, instruments, documents and amendments thereto to which the Company or any Subsidiary is a party or by which it is bound pursuant to which any such Indebtedness of the Company and its Subsidiaries is outstanding on the date hereof. Said Schedule III also includes a complete and correct list of all such Indebtedness of the Company and its Subsidiaries outstanding on the date indicated in respect of Guarantee Obligations in excess of $2,000,000 and letters of credit in excess of $2,000,000, and there have been no increases in such Indebtedness since said date other than as permitted by this Agreement.

3.11   Subsidiaries.    As of the date hereof, the Company has only the Subsidiaries set forth in Schedule IV, all of the outstanding capital stock of each of which is duly authorized, validly issued, fully paid and nonassessable and owned as set forth in said Schedule IV. Schedule IV indicates all Subsidiaries of the Company which are not Wholly-Owned Subsidiaries and the percentage ownership of the Company and its Subsidiaries in each such Subsidiary. The capital stock and securities owned by the Company and its Subsidiaries in each of the Company's Subsidiaries are owned free and clear of any mortgage, pledge, lien, encumbrance, charge or restriction on the transfer thereof other than restrictions on transfer imposed by applicable securities laws and restrictions, liens and encumbrances outstanding on the date hereof and listed in said Schedule IV.

3.12   Burdensome Obligations.    Neither the Company nor any Subsidiary is a party to or bound by any agreement, deed, lease or other instrument, or subject to any charter, by-law or other corporate restriction which, in the reasonable opinion of the management thereof, is so unusual or burdensome as to in the foreseeable future have a Material Adverse Effect. The Company does not presently anticipate that future expenditures of the Company and its Subsidiaries needed to meet the provisions of any federal or state statutes, orders, rules or regulations will be so burdensome as to have a Material Adverse Effect.

3.13   Pension Plans.    Each Plan maintained by the Company, any Subsidiary or any Control Group Person or to which any of them makes or will make contributions is in material compliance with the applicable provisions of ERISA and the Code. Neither the Company nor any Subsidiary nor any Control Group Person maintains, contributes to or participates in any Plan that is a "defined benefit plan" as defined in ERISA. Neither the Company, any Subsidiary, nor any Control Group Person has since August 31, 1987 maintained, contributed to or participated in any Multiemployer Plan, with respect to which a complete withdrawal would result in any withdrawal liability. The Company and its Subsidiaries have met all of the funding standards applicable to all Plans that are not Multiemployer Plans, and there exists no event or condition which would permit the institution of proceedings to terminate any Plan that is not a Multiemployer Plan. The current value of the benefits guaranteed under Title IV of ERISA of each Plan that is not a Multiemployer Plan does not exceed the current value of such Plan's assets allocable to such benefits. 

3.14   Environmental and Public and Employee Health and Safety Matters.    The Company and each Subsidiary has complied with all applicable Federal, state, and other laws, rules and regulations relating to environmental pollution or to environmental regulation or control or to public or employee health or safety, except to the extent that the failure to so comply would not be reasonably likely to result in a Material Adverse Effect. The Company's and the Subsidiaries' facilities do not contain, and have not previously contained, any hazardous wastes, hazardous substances, hazardous materials, toxic substances or toxic pollutants regulated under the Resource Conservation and Recovery Act, the Comprehensive Environmental Response Compensation and Liability Act, the Hazardous Materials Transportation Act, the Toxic Substance Control Act, the Clean Air Act, the Clean Water Act or any other applicable law relating to environmental pollution or public or employee health and safety, in violation of any such law, or any rules or regulations promulgated pursuant thereto, except for violations that would not be reasonably likely to result in a Material Adverse Effect. The Company is aware of no events, conditions or circumstances involving environmental pollution or contamination or public or employee health or safety, in each case applicable to it or its Subsidiaries, that would be reasonably likely to result in a Material Adverse Effect.

3.15   Federal Regulations.    No part of the proceeds of any RFC Loans will be used in any transaction or for any purpose which violates the provisions of Regulations T, U or X as now and from time to time hereafter in effect. If requested by any Bank or the Agent, the Company will furnish to the Agent and each Bank a statement to the foregoing effect in conformity with the requirements of Form FR U-1 or Form FR G-3 referred to in Regulation U.

3.16   Investment Company Act; Other Regulations.    The Company is not an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. Except as set forth in Schedule VII, the Company is not subject to regulation under any Federal or State statute or regulation (other than Regulation X) which limits its ability to incur Indebtedness.

3.17   Solvency.    Each of the Company, and the Company and its Subsidiaries taken as a whole, is Solvent.

3.18   Casualties.    Neither the businesses nor the properties of the Company or any of its Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other material labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that could reasonably be expected to have a Material Adverse Effect.

3.19   Business Activity.    Except as set forth in Schedule VIII, neither the Company nor any of its Subsidiaries is engaged in any line of business that is not related to the healthcare industry other than the sale of life insurance in connection with the sale of medical insurance or other healthcare services, sale of long term care insurance, or any business or activity which is immaterial to the Company and its Subsidiaries on a consolidated basis.

3.20   Purpose of RFC Loans.    The proceeds of the RFC Loans shall be used to finance any lawful general corporate purpose, including acquisitions, provided that no part of the proceeds of any RFC Loans will be used in any transaction or for any purpose which violates the provisions of Regulation U as now and from time to time hereafter in effect.

SECTION 4.   CONDITIONS

4.1   Conditions to the Closing Date.    The Company will not request the initial RFC Loan hereunder unless the Company has satisfied the following conditions:

     (a)  Loan Documents.   The Agent shall have received this Agreement and the Liquidity Agreement, executed and delivered by a duly authorized officers of each of the parties thereto.

     (b)  Legal Opinions.  The Agent shall have received, with a copy for each Bank, opinions rendered by (i) the assistant general counsel of the Company, substantially in the form of Exhibit D-1, and (ii) Fried, Frank, Harris, Shriver & Jacobson, counsel to the Company, substantially in the form of Exhibit D-2.

     (c)  Closing Certificate.  The Agent shall have received, with a copy for each Bank, a Closing Certificate, substantially in the form of Exhibit C and dated the Closing Date, executed by a Responsible Officer of the Company.

     (d)  Legality, etc.  The consummation of the transactions contemplated hereby shall not contravene, violate or conflict with any Requirement of Law including, without limitation, HMO Regulations and Insurance Regulations, and all necessary consents, approvals and authorizations of any Governmental Authority or any Person to or of such consummation shall have been obtained and shall be in full force and effect.

     (e)  Fees.   The Agent shall have received the fees to be received on the Closing Date referred to in subsection 2.3(b).

     (f)  Corporate Proceedings.   The Agent shall have received a copy of the resolutions, in form and substance reasonably satisfactory to the Agent, of the Board of Directors of the Company authorizing (i) the execution, delivery and performance of this Agreement, the Notes and the other Loan Documents, and (ii) the borrowings contemplated hereunder, certified by the Secretary or an Assistant Secretary of the Company as of the Closing Date, which certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded and shall be in form and substance reasonably satisfactory to the Agent.

     (g)  Corporate Documents.   The Agent shall have received true and complete copies of the certificate of incorporation and by-laws of the Company, certified as of the Closing Date as complete and correct copies thereof by the Secretary or an Assistant Secretary of the Company.

     (h)  No Material Litigation.   Except as previously disclosed to the Agent pursuant to subsection 3.3, no litigation, inquiry, investigation, injunction or restraining order (including any proposed statute, rule or regulation) shall be pending, entered or threatened which, in the reasonable judgment of the Required Banks, could reasonably be expected to have a Material Adverse Effect.

     (i)  Incumbency Certificate.   The Agent shall have received a certificate of the Secretary or an Assistant Secretary of the Company, dated the Closing Date, as to the incumbency and signature of the officers of the Company executing each Loan Document and any certificate or other document to be delivered by it pursuant hereto and thereto, together with evidence of the incumbency of such Secretary or Assistant Secretary.

     (j)  Good Standing Certificates.   The Agent shall have received copies of certificates dated as of a recent date from the Secretary of State or other appropriate authority of such jurisdiction, evidencing the good standing of the Company in its jurisdiction of incorporation and in Kentucky.

     (k)  No Change.   There shall not have occurred any change, or event, and the Agent shall not have become aware of any previously undisclosed information regarding the Company and its Subsidiaries, which in each case in the reasonable judgment of the Required Banks, could reasonably be expected to have a Material Adverse Effect.

     (l)  Conditions under 364-Day Facility. On or prior to the Closing Date, all conditions to the funding of the initial loans under the 364-Day Facility shall have been satisfied and the Agent shall have received a certificate of a Responsible Officer of the Company to such effect.

4.2     Conditions to Each Loan.   The Company will not request any RFC Loan hereunder unless the Company has satisfied the following conditions:

     (a)  Representations and Warranties.   Each of the representations and warranties made by the Company and its Subsidiaries in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of such date as if made on and as of such date.

     (b)  No Default.   No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the RFC Loans requested to be made on such date.

     (c)  Additional Matters.   All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by this Agreement and the other Loan Documents shall be reasonably satisfactory in form and substance to the Agent, and the Agent shall have received such other documents, instruments, legal opinions or other items of information reasonably requested by it, including, without limitation, copies of any debt instruments, security agreements or other material contracts to which the Company may be a party in respect of any aspect or consequence of the transactions contemplated hereby or thereby as it shall reasonably request.

     (d)  Regulations.   In the case of any RFC Loan the proceeds of which will be used, in whole or in part, to finance an acquisition, such acquisition shall be in full compliance with all applicable requirements of law, including, without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System.

     (e)  Governmental, Third Party Approvals.   In the case of any RFC Loan the proceeds of which will be used, in whole or in part, to finance an acquisition, all necessary governmental and regulatory approvals, and all third party approvals the failure to obtain which would result in the acceleration of indebtedness unless such indebtedness is paid when due, in connection with such acquisition or in connection with this Agreement shall have been obtained and remain in effect, and all applicable waiting periods with respect to antitrust matters shall have expired without any action being taken by any competent authority which restrains such acquisition.

     (f)  No Restraints.   In the case of any RFC Loan the proceeds of which will be used, in whole or in part, to finance an acquisition, there shall exist no judgment, order, injunction or other restraint which would prevent the consummation of such acquisition.

     (g)  Form FR U-1; Form FR G-3.   In the case of any RFC Loan the proceeds of which will be used, in whole or in part, to purchase or carry Margin Stock, the Company shall have executed and delivered to the Agent and each Bank a statement on Form FR U-1 referred to in Regulation U or, if applicable, Form FR G-3 referred to in Regulation U, showing compliance with Regulation U after giving effect to such RFC Loan. 

     (h)  Legal Opinion.   In the case of any RFC Loan the proceeds of which will be used, in whole or in part, to purchase or carry Margin Stock, the Agent shall have received a written legal opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel to the Company, or such other counsel reasonably acceptable to the Agent, to the effect that such RFC Loan and the Company's use of the proceeds thereof does not violate Regulation U or Regulation X.

     (i)  Liquidity Agreement.   With respect to any requested RFC Loans that are CP Rate Loans only, the Liquidity Agreement is in full force and effect and no default has occurred and is continuing thereunder or would result from such requested RFC Loans.

     (j)  Wind-Down Event.   No Wind-Down Event has occurred and is continuing or would result from the requested RFC Loan.

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

SECTION 5.   AFFIRMATIVE COVENANTS

The Company hereby agrees that, from and after the Closing Date and so long as the Commitments remain in effect, any Note remains outstanding and unpaid or any other amount is owing to RFC, any Bank or the Agent hereunder, the Company shall and (except in the case of delivery of financial information, reports and notices) shall cause each of its Subsidiaries to:

5.1   Taxes, Indebtedness, etc.    Duly pay, discharge or otherwise satisfy, or cause to be paid, discharged or otherwise satisfied, before the same shall become in arrears, all taxes, assessments, levies and other governmental charges imposed upon such corporation and its properties, sales and activities, or any part thereof, or upon the income or profits therefrom; provided, however, that any such tax, assessment, charge or levy need not be paid if the validity or amount thereof shall currently be contested in good faith by appropriate proceedings and if the Company or the Subsidiary in question shall have set aside on its books appropriate reserves in conformity with GAAP with respect thereto. Each of the Company and its Subsidiaries will promptly pay when due, or in conformance with customary trade terms, all other Indebtedness, liabilities and other obligations of whatever nature incident to its operations; provided, however, that any such Indebtedness, liability or obligation need not be paid if the validity or amount thereof shall currently be contested in good faith and if the Company or the Subsidiary in question shall have set aside on its books appropriate reserves in conformity with GAAP with respect thereto.

5.2   Maintenance of Properties; Maintenance of Existence.    Keep its material properties in good repair, working order and condition and will comply at all times with the provisions of all material leases and other material agreements to which it is a party so as to prevent any material loss or forfeiture thereof or thereunder unless compliance therewith is being contested in good faith by appropriate proceedings and if the Company or the Subsidiary in question shall have set aside on its books appropriate reserves in conformity with GAAP with respect thereto; and in the case of the Company or any Subsidiary of the Company while such Person remains a Subsidiary, will do all things necessary to preserve, renew and keep in full force and effect and in good standing its corporate existence and all rights, privileges and franchises necessary to continue such businesses.

5.3   Insurance.    Maintain or cause to be maintained, with financially sound and reputable insurers including any Subsidiary which is engaged in the business of providing insurance protection, insurance (including, without limitation, public liability insurance, business interruption insurance, reinsurance for medical claims and professional liability insurance against claims for malpractice) with respect to its material properties and business and the properties and business of its Subsidiaries in at least such amounts and against at least such risks as are customarily carried under similar circumstances by other corporations engaged in the same or a similar business; and furnish to the Agent, upon written request, full information as to the insurance carried. Such insurance may be subject to co-insurance, deductibility or similar clauses which, in effect, result in self-insurance of certain losses, and the Company may self-insure against such loss or damage, provided that adequate insurance reserves are maintained in connection with such self-insurance.

5.4   Financial Statements.    The Company will and will cause each of its Subsidiaries to maintain a standard modern system of accounting in which full, true and correct entries will be made of all dealings or transactions in relation to its business and affairs in accordance with GAAP consistently applied, and will furnish (or make available via the IntraLinks website) the following to the Agent (if not provided via IntraLinks, in duplicate if so requested):

     (a)  Annual Statements.   As soon as available, and in any event within 100 days after the end of each fiscal year, the consolidated balance sheet as at the end of each fiscal year and consolidated statements of profit and loss and of retained earnings for such fiscal year of the Company and its Subsidiaries, together with comparative consolidated figures for the next preceding fiscal year, accompanied by reports or certificates of PricewaterhouseCoopers, or, if they cease to be the auditors of the Company, of other independent public accountants of national standing and reputation, to the effect that such balance sheet and statements were prepared in accordance with GAAP consistently applied and fairly present the financial position of the Company and its Subsidiaries as at the end of such fiscal year and the results of their operations and changes in financial position for the year then ended and the statement of such accountants and of the treasurer of the Company that such said accountants and treasurer have caused the provisions of this Agreement to be reviewed and that nothing has come to their attention to lead them to believe that any Default exists hereunder or, if such is not the case, specifying such Default or possible Default and the nature thereof. In addition, such financial statements shall be accompanied by a certificate of the treasurer of the Company containing computations showing compliance with subsections 6.1, 6.2, 6.3 and 6.5.

     (b)  Quarterly Statements.   As soon as available, and in any event within 55 days after the close of each of the first three fiscal quarters of the Company and its Subsidiaries in each year, consolidated balance sheets as at the end of such fiscal quarter and consolidated profit and loss and retained earnings statements for the portion of the fiscal year then ended, of the Company and its Subsidiaries, together with computations showing compliance with subsections 6.1, 6.2, 6.3 and 6.5, accompanied by a certificate of the treasurer of the Company that such statements and computations have been properly prepared in accordance with GAAP, consistently applied, and fairly present the financial position of the Company and its Subsidiaries as at the end of such fiscal quarter and the results of their operations and changes in financial position for such quarter and for the portion of the fiscal year then ended, subject to normal audit and year-end adjustments, and to the further effect that he has caused the provisions of this Agreement and all other agreements to which the Company or any of its Subsidiaries is a party and which relate to Indebtedness to be reviewed, and has no knowledge that any Default has occurred under this Agreement or under any such other agreement, or, if said treasurer has such knowledge, specifying such Default and the nature thereof.

     (c)  ERISA Reports.   The Company will furnish the Agent with copies of any request for waiver of the funding standards or extension of the amortization periods required by Sections 303 and 304 of ERISA or Section 412 of the Code promptly after any such request is submitted by the Company to the Department of Labor or the Internal Revenue Service, as the case may be. Promptly after a Reportable Event occurs, or the Company or any of its Subsidiaries receives notice that the PBGC or any Control Group Person has instituted or intends to institute proceedings to terminate any pension or other Plan, or prior to the Plan administrator's terminating such Plan pursuant to Section 4041 of ERISA, the Company will notify the Agent and will furnish to the Agent a copy of any notice of such Reportable Event which is required to be filed with the PBGC, or any notice delivered by the PBGC evidencing its institution of such proceedings or its intent to institute such proceedings, or any notice to the PBGC that a Plan is to be terminated, as the case may be. The Company will promptly notify the Agent upon learning of the occurrence of any of the following events with respect to any Plan which is a Multiemployer Plan: a partial or complete withdrawal from any Plan which may result in the incurrence by the Company or any of is Subsidiaries of withdrawal liability in excess of $1,000,000 under Subtitle E of Title IV of ERISA, or of the termination, insolvency or reorganization status of any Plan under such Subtitle E which may result in liability to the Company or any of its Subsidiaries in excess of $1,000,000. In the event of such a withdrawal, upon the request of the Agent, the Company will promptly provide information with respect to the scope and extent of such liability, to the best of the Company's knowledge.

5.5    Certificates; Other Information.   Furnish (or make available via the IntraLinks website) to the Agent:

     (a)  within five Business Days after the same are sent, copies of all financial statements and reports which the Company sends to its stockholders, and within five Business Days after the same are filed, copies of all financial statements and reports which the Company may make to, or file with, the Securities and Exchange Commission; 

     (b)  not later than thirty days prior to the end of each fiscal year of the Company, a schedule of the Company's insurance coverage and such supplemental schedules with respect thereto as the Agent may from time to time reasonably request; 

     (c)  within five Business Days after the consummation of a transaction described in subsection 6.4(c) or (d) or subsection 6.5(f) which, in each case, involves a Significant Subsidiary or assets which, if they constituted a separate Subsidiary, would constitute a Significant Subsidiary, a certificate of the treasurer or chief financial officer of the Company demonstrating pro forma compliance with the financial covenants in this Agreement after giving effect to such transaction; and

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

5.6   Compliance with ERISA.   Each of the Company and its Subsidiaries will meet, and will cause all Control Group Persons to meet, all minimum funding requirements applicable to any Plan imposed by ERISA or the Code (without giving effect to any waivers of such requirements or extensions of the related amortization periods which may be granted), and will at all times comply, and will cause all Control Group Persons to comply, in all material respects with the provisions of ERISA and the Code which are applicable to the Plans. At no time shall the aggregate actual and contingent liabilities of the Company under Sections 4062, 4063, 4064 and other provisions of ERISA (calculated as if the 30% of collective net worth amount referred to in Section 4062(b)(1)(A)(i)(II) of ERISA exceeded the actual total amount of unfunded guaranteed benefits referred to in Section 4062(B)(1)(A)(i)(I) of ERISA) with respect to all Plans (and all other pension plans to which the Company, any Subsidiary, or any Control Group Person made contributions prior to such time) exceed $5,000,000. Neither the Company nor its Subsidiaries will permit any event or condition to exist which could permit any Plan which is not a Multiemployer Plan to be terminated under circumstances which would cause the lien provided for in Section 4068 of ERISA to attach to the assets of the Company or any of its Subsidiaries.

5.7   Compliance with Laws.   Comply with all Contractual Obligations and Requirements of Law (including, without limitation, the HMO Regulations, Insurance Regulations, Regulation X and laws relating to the protection of the environment), except where the failure to comply therewith could not, in the aggregate, have a Material Adverse Effect.

5.8     Inspection of Property; Books and Records; Discussions.   Keep proper books of records and account in which full, true and correct entries in conformity with GAAP, all Requirements of Law, including but not limited to, HMO Regulations and Insurance Regulations, and the terms hereof shall be made of all dealings and transactions in relation to its business and activities; and permit, upon reasonable notice, representatives of any Bank to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Company and its Subsidiaries with officers and employees of the Company and its Subsidiaries and with its independent certified public accountants.

5.9   Notices.   Promptly give notice to the Agent and to RFC of:

     (a)  the occurrence of any Default, Event of Default or Wind-Down Event;

     (b)  any (i) default or event of default under any Contractual Obligation of the Company or any of its Subsidiaries or (ii) litigation, investigation or proceeding which exists at any time between the Company or any of its Subsidiaries and any Governmental Authority (including, without limitation, HMO Regulators and Insurance Regulators), which in either case, if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect;

     (c)  the commencement of any litigation or proceeding or a material development or material change in any ongoing litigation or proceeding affecting the Company or any of its Subsidiaries as a result of which commencement, development or change the Company or one of its Subsidiaries could reasonably be expected to incur a liability (as a result of an adverse judgment or ruling, settlement, incurrence of legal fees and expenses or otherwise) of $10,000,000 or more and not covered by insurance or in which material injunctive or similar relief is sought;

     (d)  the following events, as soon as possible and in any event within 30 days after the Company knows: (i) the occurrence or expected occurrence of any Reportable Event with respect to any Plan, or any withdrawal from, or the termination, Reorganization or Insolvency of any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Company or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan; 

     (e)  a development or event which could reasonably be expected to have a Material Adverse Effect;

     (f)  the material non-compliance with any Contractual Obligation or Requirement of Law, including, without limitation, HMO Regulations and Insurance Regulations, that is not currently being contested in good faith by appropriate proceedings;

     (g)  the revocation of any material license, permit, authorization, certificate or, qualification of the Company or any Subsidiary by any Governmental Authority, including, without limitation, the HMO Regulators and Insurance Regulators; and

     (h)  any significant change in or material additional restriction placed on the ability of a Significant Subsidiary to continue business as usual, including, without limitation, any such restriction prohibiting the payment to the Company of dividends by any Significant Subsidiary, by any Governmental Authority, including, without limitation, the HMO Regulators and Insurance Regulators.

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

5.10   Maintenance of Licenses, Etc.   Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, all licenses, permits, authorizations, certifications and qualifications (including, without limitation, those qualifications with respect to solvency and capitalization) required under the HMO Regulations or the Insurance Regulations in connection with the ownership or operation of HMO's or insurance companies except were the failure to do so would not result in a Material Adverse Effect.

5.11   Further Assurances.   Execute any and all further documents, and take all further action which the Agent may reasonably request in order to effectuate the transactions contemplated by the Loan Documents. 

SECTION 6.   NEGATIVE COVENANTS

     The Company hereby agrees that, from and after the Closing Date and so long as the Commitments remain in effect, any Note remains outstanding and unpaid or any other amount is owing to RFC, any Bank or the Agent hereunder, the Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly:

6.1   Financial Condition Covenants.   (a)  Maintenance of Net Worth. Permit Consolidated Net Worth at any time to be less than 75% of its Consolidated Net Worth of the Company and its consolidated subsidiaries as at March 31, 2001 plus 50% of Consolidated Net Income for each full fiscal quarter after March 31, 2001 (without any deduction for any such fiscal quarter in which such Consolidated Net Income is a negative number).

     (b)  Interest Coverage. Permit the ratio of (i) Consolidated EBIT for any period of four consecutive fiscal quarters of the Company ending with any fiscal quarter set forth below to (ii) Consolidated Interest Expense during such period, to be less than the ratio set forth opposite such period below:

	
Fiscal Quarter Ending
	
Interest Coverage Ratio

	
September 30, 2002
	
3.00

	
December 31, 2002 -

September 30, 2003
	
3.50

	
December 31, 2003 -

and thereafter
	
4.00

 

     (c)  Maximum Leverage Ratio. Permit the Leverage Ratio on the last day of any full fiscal quarter of the Company ending with any fiscal quarter set forth below to be more than the ratio set forth opposite such period below:

	
Fiscal Quarter Ending
	
Leverage Ratio

	
September 30, 2002
	
3.00

	
December 31, 2002 -

September 30, 2003
	
2.75

	
December 31, 2003 -

and thereafter
	
2.50

 

6.2   Limitation on Subsidiary Indebtedness.   The Company shall not permit any of the Subsidiaries of the Company to create, incur, assume or suffer to exist any Indebtedness, except:

     (a)  Indebtedness of any Subsidiary to the Company or any other Subsidiary; 

     (b)  Indebtedness of a corporation which becomes a Subsidiary after the date hereof, provided that (i) such indebtedness existed at the time such corporation became a Subsidiary and was not created in anticipation thereof and (ii) immediately before and after giving effect to the acquisition of such corporation by the Company no Default or Event of Default shall have occurred and be continuing; or

     (c)  additional Indebtedness of Subsidiaries of the Company not exceeding $125,000,000 in aggregate principal amount at any one time outstanding.

6.3   Limitation on Liens.   Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for:

     (a)  Liens, if any, securing the obligations of the Company under this Agreement and the Notes;

     (b)  Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Company or its Subsidiaries, as the case may be, in conformity with GAAP;

     (c)  carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith by appropriate proceedings;

     (d)  pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation;

     (e)  deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

     (f)  easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not substantial in amount and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Company or such Subsidiary;

     (g)  Liens in existence on the Closing Date listed on Schedule V, securing Indebtedness in existence on the Closing Date, provided that no such Lien is spread to cover any additional property after the Closing Date and that the amount of Indebtedness secured thereby is not increased;

     (h)  Liens securing Indebtedness of the Company and its Subsidiaries not prohibited hereunder incurred to finance the acquisition of fixed or capital assets, provided that (i) such Liens shall be created substantially simultaneously with the acquisition of such fixed or capital assets, (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (iii) the principal amount of Indebtedness secured by any such Lien shall at no time exceed 80% of the original purchase price of such property;

     (i)  Liens on the property or assets of a corporation which becomes a Subsidiary after the date hereof, provided that (i) such Liens existed at the time such corporation became a Subsidiary and were not created in anticipation thereof, (ii) any such Lien is not spread to cover any other property or assets after the time such corporation becomes a Subsidiary and (iii) the amount of Indebtedness secured thereby, if any, is not increased; 

     (j)  Liens on the Headquarters, Riverview Square, the Waterside Garage, the Green Bay Facility, the Jacksonville Facility and the Waterside Building; or

     (k)  Liens not otherwise permitted under this subsection 6.3 securing obligations in an aggregate amount not exceeding at any time 10% of Consolidated Net Tangible Assets as at the end of the immediately preceding fiscal quarter of the Company.

6.4   Limitations on Fundamental Changes.   Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or make any material change in its method of conducting business, or purchase or otherwise acquire all or substantially all of the Capital Stock, or the property, business or assets, of any other Person (other than any Subsidiary) or any business division thereof except:

     (a)  any Subsidiary of the Company may be merged or consolidated with or into the Company (provided that the Company shall be the continuing or surviving corporation) and any Subsidiary of the Company may be merged or consolidated with or into any one or more wholly owned Subsidiaries of the Company (provided that the surviving corporation shall be a wholly owned Subsidiary);

     (b)  the Company may merge into another corporation owned by the Company for the purpose of causing the Company to be incorporated in a different jurisdiction;

     (c)  the Company or a wholly owned Subsidiary of the Company may merge with another corporation, provided that (i) the Company or such wholly owned Subsidiary (subject to clause (ii)), as the case may be, shall be the continuing or surviving corporation of such merger, (ii) in the case of a wholly owned Subsidiary of the Company which is merged into another corporation which is the continuing or surviving corporation of such merger, the Company shall cause such continuing or surviving corporation to be a wholly owned Subsidiary of the Company and (iii) immediately before and after giving effect to such merger no Default or Event of Default shall have occurred and be continuing; or

     (d)  the Company and its Subsidiaries may purchase or otherwise acquire all or substantially all of the Capital Stock, or the property, business or assets, of any other Person, or any business division thereof, so long as no Default or Event of Default shall have occurred and be continuing.

6.5   Limitation on Sale of Assets.   Convey, sell, lease, assign, transfer or otherwise dispose of any of its property, business or assets (including, without limitation, receivables and leasehold interests), whether now owned or hereafter acquired, except:

     (a)  obsolete or worn out property disposed of in the ordinary course of business; 

     (b)  the sale or discount without recourse of accounts receivable arising in the ordinary course of business in connection with the compromise or collection thereof; 

     (c)  the sale or other disposition of the Headquarters, Riverview Square, the Waterside Garage, the Green Bay Facility, the Jacksonville Facility and the Waterside Building; 

     (d)  the sale or other disposition of securities held for investment purposes in the ordinary course of business;

     (e)  any wholly owned Subsidiary may sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Company or any other wholly owned Subsidiary of the Company (except to a Subsidiary referred to in subsection 6.2(b)); or

     (f)  the sale or other disposition of any other property so long as no Default or Event of Default shall have occurred and be continuing; provided that the aggregate book value of all assets so sold or disposed of in any period of twelve consecutive calendar months shall not exceed in the aggregate 12% of the Consolidated Assets of the Company and its Subsidiaries as on the first day of such period.

6.6   Limitation on Distributions.   The Company shall not make any Distribution except that, so long as no Default exists or would exist after giving effect thereto, the Company may make a Distribution. 

6.7   Transactions with Affiliates.   Enter into any transaction (unless such transaction or any series of such transactions is immaterial), including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate (other than the Company and its Subsidiaries) unless such transaction is otherwise permitted under this Agreement, is in the ordinary course of the Company's or such Subsidiary's business and is upon fair and reasonable terms no less favorable to the Company or such Subsidiary, as the case may be, than it would obtain in an arm's length transaction.

6.8   Sale and Leaseback.   Enter into any arrangement with any Person providing for the leasing by the Company or any Subsidiary of real or personal property which has been or is to be sold or transferred by the Company or such Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Company or such Subsidiary, unless such arrangement is upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would be obtained in a comparable arm's length transaction between an informed and willing seller or lessor under no compulsion to sell or lease and an informed and willing buyer or lessee under no compulsion to buy or lease.

SECTION 7.   DEFAULTS

7.1   Events of Default.   Upon the occurrence of any of the following events.

     (a)  any default shall be made by the Company in any payment in respect of: (i) interest on any of the RFC Loans or any fee payable hereunder as the same shall become due and such default shall continue for a period of five days; or (ii) any principal of the RFC Loans as the same shall become due, whether at maturity, by prepayment, by acceleration or otherwise; or

     (b)  any default shall be made by either the Company or any Subsidiary of the Company in the performance or observance of any of the provisions of subsections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7 and 6.8; or

     (c)  any default shall be made in the due performance or observance of any other covenant, agreement or provision to be performed or observed by the Company under this Agreement, and such default shall not be rectified or cured within a period of 30 days; or

     (d)  any representation or warranty made or deemed made by the Company herein or in any other Loan Document or which is contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement shall have been untrue in any material respect on or as of the date made and the facts or circumstances to which such representation or warranty relates shall not have been subsequently corrected to make such representation or warranty no longer incorrect in any material respect; or

     (e)  any default shall be made in the payment of any item of Indebtedness of the Company or any Subsidiary, or under the terms of any agreement relating to any Indebtedness of the Company or any Subsidiary, and such default shall continue without having been duly cured, waived or consented to, beyond the period of grace, if any, therein specified; provided, however, that such default shall not constitute an Event of Default unless the aggregate outstanding principal amount of such item of Indebtedness and all other items of Indebtedness of the Company and its Subsidiaries as to which such defaults exist and have continued without being duly cured, waived or consented to beyond the respective periods of grace, if any, therein specified exceeds $25,000,000; or

     (f)  either the Company or any Subsidiary shall be involved in financial difficulties as evidenced:
     (i)  by its commencement of a voluntary case under Title 11 of the United States Code as from time to time in effect, or by its authorizing, by appropriate proceedings of its board of directors or other governing body, the commencement of such a voluntary case;

     (ii)  by the filing against it of a petition commencing an involuntary case under said Title 11 which shall not have been dismissed within 60 days after the date on which said petition is filed or by its filing an answer or other pleading within said 60-day period admitting or failing to deny the material allegations of such a petition or seeking, consenting or acquiescing in the relief therein provided;

     (iii)  by the entry of an order for relief in any involuntary case commenced under said Title 11;

     (iv)  by its seeking relief as a debtor under any applicable law, other than said Title 11, of any jurisdiction relating to the liquidation or reorganization of debtors or to the modification or alteration of the rights of creditors, or by its consenting to or acquiescing in such relief;

     (v)  by the entry of an order by a court of competent jurisdiction (i) finding it to be bankrupt or insolvent, (ii) ordering or approving its liquidation, reorganization or any modification or alteration of the rights of its creditors, or (iii) assuming custody of, or appointing a receiver or other custodian for, all or a substantial part of its property; or

     (vi)  by its making an assignment for the benefit of, or entering into a composition with, its creditors, or appointing or consenting to the appointment of a receiver or other custodian for all or a substantial part of its property; or

     (vii)  the Company or any of its Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or 

     (g)  a Change in Control of the Company shall occur;

     (h)  (i) any Person shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Banks, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Company or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Banks is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist, with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could subject the Company or any of its Subsidiaries to any tax, penalty or other liabilities which in the aggregate could have a Material Adverse Effect; or

     (i)  one or more judgments or decrees shall be entered against the Company or any of its Subsidiaries and such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 45 days from the entry thereof that (i) involves in the aggregate a liability (not paid or fully covered by insurance) of $25,000,000 or more, or (ii) could reasonably be expected to have a Material Adverse Effect; or

     (j)  (i) any material non-compliance by the Company or any Significant Subsidiary with any term or provision of the HMO Regulations or Insurance Regulations pertaining to fiscal soundness, solvency or financial condition; or (ii) the assertion in writing by an HMO Regulator or Insurance Regulator that it is taking administrative action against the Company or any Significant Subsidiary to revoke or suspend any contract of insurance, license, permit, certification, authorization, accreditation or charter or to enforce the fiscal soundness, solvency or financial provisions or requirements of the HMO Regulations or Insurance Regulations against any of such entities and the Company or such Significant Subsidiary shall have been unable to cause such HMO Regulator or Insurance Regulator to withdraw such written notice within five Business Days following receipt of such written notice by the Company or such Significant Subsidiary, in each of clauses (i) and (ii), to the extent such event will or is reasonably expected to have a Material Adverse Effect; or

     (k)  on or after the Closing Date, (i) for any reason any Loan Document ceases to be or is not in full force and effect or (ii) the Company shall assert that any Loan Document has ceased to be or is not in full force and effect; 

then, and in any such event, (A) if such event is an Event of Default specified in paragraph (f) above with respect to the Company, automatically the Facility Period shall immediately terminate and the RFC Loans hereunder (with accrued interest thereon and amounts payable pursuant to subsection 2.15) and all other amounts owing under this Agreement and the Notes shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Banks, the Agent may, or upon the request of the Required Banks, the Agent shall, by notice to the Company and to RFC, declare the Facility Period to be terminated forthwith, whereupon the Facility Period shall immediately terminate; and (ii) with the consent of the Required Banks, the Agent may, or upon the request of the Required Banks, the Agent shall, by notice of default to the Company and to RFC, declare the RFC Loans hereunder (with accrued interest thereon and amounts payable pursuant to subsection 2.15) and all other amounts owing under this Agreement (the "RFC Obligations") to be due and payable forthwith, whereupon the same shall immediately become due and payable. 

Except as expressly provided above in this subection, presentment, demand, protest and all other notices of any kind are hereby expressly waived.

7.2   Annulment of Defaults.   An Event of Default shall not be deemed to be in existence for any purpose of this Agreement if the Agent, with the consent of or at the direction of the Required Banks, subject to subsection 9.1, shall have waived such event in writing or stated in writing that the same has been cured to its reasonable satisfaction, but no such waiver shall extend to or affect any subsequent Event of Default or impair any rights of the Agent or the Banks upon the occurrence thereof.

7.3   Waivers.   The Company hereby waives to the extent permitted by applicable law (a) all presentments, demands for performance, notices of nonperformance (except to the extent required by the provisions hereof), protests, notices of protest and notices of dishonor in connection with any RFC Loans, (b) any requirement of diligence or promptness on the part of RFC or any Bank in the enforcement of its rights under the provisions of this Agreement or any Note, and (c) any and all notices of every kind and description which may be required to be given by any statute or rule of law.

7.4   Course of Dealing.   No course of dealing between the Company and RFC or any Bank shall operate as a waiver of any of RFC's or the Banks' rights under this Agreement or any Note. No delay or omission on the part of RFC or any Bank in exercising any right under this Agreement or any Note or with respect to any of the RFC Obligations shall operate as a waiver of such right or any other right hereunder. A waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion. No waiver or consent shall be binding upon RFC or any Bank unless it is in writing and signed by the Agent or RFC and/or such of the Banks as may be required by the provisions of this Agreement. The making of a RFC Loan during the existence of a Default shall not constitute a waiver thereof.

SECTION 8.   THE AGENT

8.1   Appointment.   RFC and each Bank hereby irrevocably designates and appoints JPMorgan Chase Bank as the Agent of such Person under this Agreement, and each such Person irrevocably authorizes JPMorgan Chase Bank, as the Agent for such Person, to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are expressly delegated to the Agent, as the case may be, by the terms of this Agreement, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with RFC or any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Agent.

8.2   Delegation of Duties.   The Agent may execute any of its duties under this Agreement by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

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

8.4   Reliance by Agent.   The Agent shall be entitled to rely, and shall be fully protected in relying, upon any Note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Company), independent accountants and other experts selected by the Agent. The Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement unless it shall first receive such advice or concurrence of RFC and/or the Required Banks as it deems appropriate or it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the Notes in accordance with a request of RFC or the Required Banks, as the case may be, and such request and any action taken or failure to act pursuant thereto shall be binding upon RFC and all the Banks and all future holders of the Notes.

8.5   Notice of Default.   The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Agent has received notice from RFC, a Bank or the Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall promptly give notice thereof to RFC and the Banks. The Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Banks; provided that, unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of RFC and the Banks.

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

8.7   Indemnification.   The Banks agree to indemnify the Agent in its capacity as such (to the extent not reimbursed by the Company and without limiting the obligation of the Company to do so), ratably according to the respective amounts of their then existing Commitments, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including without limitation at any time following the payment of the RFC Loans) be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of this Agreement, or any documents contemplated by or referred to herein or the transactions contemplated hereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; provided that no Bank shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct. The agreements in this subsection shall survive the payment of the RFC Loans and all other amounts payable hereunder.

8.8   Agent in Its Individual Capacity.   The Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Company as though the Agent were not the Agent hereunder. With respect to its RFC Loans held by it and any Note issued to it, the Agent shall have the same rights and powers under this Agreement as any Bank and may exercise the same as though it were not the Agent, and the terms "Bank" and "Banks" shall include the Agent in its individual capacity.

8.9   Successor Agent.   The Agent may resign as Agent, upon 10 days' notice to the Banks and RFC. If the Agent shall resign as Agent under this Agreement, then the Required Banks shall appoint from among the Banks a successor agent for the Banks which successor agent shall be approved by the Company and RFC, whereupon such successor agent shall succeed to the rights, powers and duties of the Agent and the term "Agent" shall mean such successor agent effective upon its appointment, and the former Agent's rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent or any of the parties to this Agreement or any holders of the Notes. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 8 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. 

SECTION 9.   MISCELLANEOUS

9.1   Amendments and Waivers.   Neither this Agreement, any Note, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this subsection. With the written consent of the Required Banks and RFC, the Agent and the Company may, from time to time, enter into written amendments, supplements or modifications hereto for the purpose of adding any provisions to this Agreement or the Notes or changing in any manner the rights of the Banks or of the Company hereunder or thereunder or waiving, on such terms and conditions as the Agent may specify in such instrument, any of the requirements of this Agreement or the Notes or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (a) extend the maturity (whether as stated, by acceleration or otherwise) of any Note, or reduce the rate or extend the time of payment of interest thereon, or reduce or extend the payment of any fee payable to the Banks hereunder, or reduce the principal amount thereof, or amend, modify, waive any provision of subsection 2.10, in each case without the consent of each Bank directly affected thereby, or (b) amend, modify or waive any provision of this subsection 9.1 or reduce the percentage specified in the definition of Required Banks or consent to the assignment or transfer by the Company of any of its rights and obligations under this Agreement, in each case without the written consent of all the Banks, or (c) amend, modify or waive any provision of Section 8 without the written consent of the then Agent. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Banks and shall be binding upon the Company, the Banks, RFC, the Agent and all future holders of the Notes. In the case of any waiver, the Company, RFC, the Banks and the Agent shall be restored to their former position and rights hereunder and under the outstanding Notes, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon.

9.2   Notices.   All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or three Business Days after being deposited in the mail, postage prepaid, or one Business Day after being deposited with an overnight courier service, or, in the case of telecopy notice, when sent, confirmation of receipt received, addressed (i) in the case of notices, requests and demands to or upon the Company, the Agent, and RFC, as set forth below and (ii) in the case of notices, requests and demands to or upon any Bank, as set forth in an administrative questionnaire delivered by such Bank to the Agent, or, in each case, to such other address as may be hereafter notified by the respective parties hereto and any future holders of the Notes:

	
The Company:
	
Humana Inc.

The Humana Building

500 West Main Street

Louisville, Kentucky 40202

Attention:    James H. Bloem

                Senior Vice President and

                Chief Financial Officer

Telecopy:    (502) 580-3615

	
The Agent:
	
JPMorgan Chase Bank

270 Park Avenue

New York, New York 10017

Attention:    Dawn Lee Lum

Telecopy:    (212) 270-3279

	
with a copy to:
	
Chase Agent Bank Services

One Chase Manhattan Plaza, 8th Floor

New York, New York 10081

Attention:    Janet Belden

Telecopy:    (212) 552-5658

	
RFC:
	
c/o The Liberty Hampshire Company, LLC

227 West Monroe

Suite 4000

Chicago, Illinois 60606

Attention:    Operations Department

Fax:   (312) 977-1967/1699

provided that any notice, request or demand to or upon the Agent, RFC or the Banks pursuant to Section 2 shall not be effective until received.

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

9.4   Survival of Representations and Warranties.   All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the Notes.

9.5   Payment of Expenses and Taxes; Indemnity.  
(a) The Company agrees (i) to pay or reimburse the Agent and RFC for all their reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement, the Liquidity Agreement and the Notes and any other documents prepared in connection herewith, and the consummation of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and disbursements of counsel to the Agent and to RFC, (ii) to pay or reimburse, RFC each Bank and the Agent for all their reasonable costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the Notes and any such other documents, including, without limitation, reasonable fees and disbursements of counsel(including, without limitation, the allocated cost of in-house counsel) to the Agent, to RFC and to the several Banks, and (iii) to pay, indemnify, and hold RFC, each Bank and the Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the Notes and any such other documents.

     (b)  The Company will indemnify each of the Agent, RFC, the CP Issuer and the Banks and the directors, officers, managers, members and employees thereof and each Person, if any, who controls each one of the Agent, RFC, the CP Issuer and the Banks (any of the foregoing, an "Indemnified Person") and hold each Indemnified Person harmless from and against any and all claims, damages, liabilities and expenses (including without limitation (i) all fees and disbursements of counsel (including without limitation, the allocated cost of in-house counsel) with whom an Indemnified Person may consult in connection therewith and all expenses of litigation or preparation therefore and (ii) any amounts paid or payable by any Bank pursuant to its indemnity obligations under subsection 4.8 of the Liquidity Agreement) which an Indemnified Person may incur or which may be asserted against it in connection with any litigation or investigation (whether or not such Indemnified Person is a party to such litigation or investigation) involving this Agreement, the use of any proceeds of any RFC Loans under this Agreement by the Company or any Subsidiary, any officer, director, member, manager or employee thereof, excluding litigation commenced by the Company against any of the Agent or the Banks which (i) seeks enforcement of any of the Company's rights hereunder and (ii) is determined adversely to any of the Agent or the Banks (all such non-excluded claims, damages, liabilities and expenses, "Indemnified Liabilities"), provided that the Company shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities to the extent such Indemnified Liabilities resulted from the gross negligence or willful misconduct of such Indemnified Person.

     (c)  The agreements in this subsection 9.5 shall survive repayment of the RFC Loans and all other amounts payable hereunder.

9.6   Successors and Assigns; Participations; Purchasing Banks.   (a)   This Agreement shall be binding upon and inure to the benefit of the Company, the Banks, the Agent, all future holders of the Notes and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Bank and RFC.

     (b)  Any Bank other than a Conduit Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests in any RFC Loans owing to such Bank, any Notes held by such Bank, and/or any other interests of such Bank hereunder and under the other Loan Documents. In the event of any such sale by a Bank of a participating interest to a Participant, such Bank's obligations under this Agreement to the other parties under this Agreement shall remain unchanged, such Bank shall remain solely responsible for the performance thereof, such Bank shall remain the holder of any such Notes for all purposes under this Agreement, and the Company, RFC and the Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement and under the other Loan Documents. The Company agrees that if amounts outstanding under this Agreement and the Notes are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of offset in respect of its participating interest in amounts owing under this Agreement and any Notes to the same extent as if the amount of its participating interest were owing directly to it as a Bank under this Agreement or any Notes, provided that such right of offset shall be subject to the obligation of such Participant to share with the Banks, and the Banks agree to share with such Participant, as provided in subsection 9.7. The Company also agrees that each Participant shall be entitled to the benefits of subsections 2.12, 2.13 and 2.14 with respect to its participation in the Commitments and the Eurodollar Loans outstanding from time to time; provided that no Participant shall be entitled to receive any greater amount pursuant to such subsections than the transferor Bank would have been entitled to receive in respect of the amount of the participation transferred by such transferor Bank to such Participant had no such transfer occurred. No Participant shall be entitled to consent to any amendment, supplement, modification or waiver of or to this Agreement or any Note, unless the same is subject to clause (a) of the proviso to subsection 9.1.

     (c)  Any Bank other than a Conduit Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time sell to any Bank or any Lender Affiliate thereof, and, with the consent of the Company (unless an Event of Default is continuing), RFC and the Agent (which in each case shall not be unreasonably withheld) to one or more additional banks or financial institutions ("Purchasing Banks") all or any part of its rights and/or obligations under this Agreement and the Notes pursuant to a Transfer Supplement, executed by such Purchasing Bank, such transferor Bank and the Agent (and, in the case of a Purchasing Bank that is not then a Bank or a Lender Affiliate, and subject to the other qualifiers above, by the Company and RFC) and agreement by such Purchasing Banks to be bound by the terms of this agreement including without limitation the provisions of subsection 9.15 hereof; provided, however, that (i) each such sale shall be accompanied by a corresponding simultaneous assignment of such selling Bank's pro rata share to the Purchasing Bank of (x) its Commitment by taking such action as set forth in subsection 4.5(a) of the Liquidity Agreement and (y) its Tranche B Commitment (as defined in the 364-Day Facility) pursuant to and in accordance with the provisions of subsection 10.6(d) of the 364-Day Facility and (ii) the Purchasing Bank shall be an Eligible Assignee (as defined in the Liquidity Agreement). Upon (i) such execution of such Transfer Supplement, (ii) delivery of an executed copy thereof to the Company and RFC, (iii) compliance with the assignment procedures under subsection 4.5(a) of the Liquidity Agreement and (iv) payment, if any, by such Purchasing Bank, such Purchasing Bank shall for all purposes be a Bank party to this Agreement and shall have all the rights and obligations of a Bank under this Agreement, to the same extent as if it were an original party hereto. Such Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Bank and the resulting adjustment of all or a portion of the rights and obligations of such transferor Bank under this Agreement and the Notes. Upon the consummation of any transfer to a Purchasing Bank, pursuant to this subsection 9.6(c), the transferor Bank, the Agent and the Company shall make appropriate arrangements so that, if required, replacement Notes are issued to such transferor Bank and new Notes or, as appropriate, replacement Notes, are issued to such Purchasing Bank, in each case in principal amounts reflecting their interests or, as appropriate, their outstanding RFC Loans as adjusted pursuant to such Transfer Supplement. Notwithstanding the foregoing, any Conduit Lender may assign at any time to its designating Bank hereunder with the consent of RFC, which consent shall not be unreasonably withheld, but without the consent of the Company or the Agent any or all of the RFC Loans it may have funded hereunder and pursuant to its designation agreement and without regard to the limitations set forth in the first sentence of this subsection 9.6(c); provided, that such designating Bank affirms its obligations pursuant to subsection 9.15.

     (d)  The Agent shall maintain at its address referred to in subsection 9.2 (a) copy of Transfer Supplement delivered to it and a register (the "Register") for the recordation of the names and addresses of the Banks and the Commitment of, and principal amount of the RFC Loans owing to, RFC and to each Bank from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Company, the Agent, RFC and the Banks may treat each Person whose name is recorded in the Register as the owner of the RFC Loan recorded therein for all purposes of this Agreement. The Register shall be available for inspection by the Company, RFC or any Bank at any reasonable time and from time to time upon reasonable prior notice.

     (e)  Upon its receipt of a Transfer Supplement executed by a transferor Bank and a Purchasing Bank (and, in the case of a Purchasing Bank that is not then a Bank or an affiliate thereof, by the Company, RFC and the Agent) together with payment to the Agent of a registration and processing fee of $3,500, the Agent shall (i) promptly accept such Transfer Supplement (ii) on the Transfer Effective Date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to RFC, the Banks and the Company.

     (f)  The Company authorizes each Bank to disclose to any Participant or Purchasing Bank (each, a "Transferee") and any prospective Transferee any and all financial information in such Bank's possession concerning the Company which has been delivered to such Bank by the Company pursuant to this Agreement or which has been delivered to such Bank by the Company in connection with such Bank's credit evaluation of the Company prior to entering into this Agreement.

     (g)  If, pursuant to this subsection 9.6, any interest in this Agreement or any Note is transferred to a Non-U.S. Bank, the transferor Bank shall cause such Transferee, concurrently with the effectiveness of such transfer to comply with the provisions of subsection 2.14.

     (h)  For the avoidance of doubt, the parties to this Agreement acknowledge that the provisions of this subsection 9.6 concerning assignments relate only to absolute assignments and that such provisions do not prohibit assignments creating security interests, including any pledge or assignment by a Bank to any Federal Reserve Bank in accordance with applicable law. 

     (i)  Each of the Company, each Bank and the Agent hereby confirms that it will not institute against a Conduit Lender or join any other Person in instituting against a Conduit Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any state bankruptcy or similar law, for one year and one day after the payment in full of the latest maturing commercial paper note issued by such Conduit Lender; provided, however, that each Bank designating any Conduit Lender hereby agrees to indemnify, save and hold harmless each other party hereto for any loss, cost, damage or expense arising out of its inability to institute such a proceeding against such Conduit Lender during such period of forbearance.

     (j)  Nothing in this section is intended to modify the requirements contained in the Liquidity Agreement for replacement, addition or participation of Banks thereto. 

     (k)  RFC may, without the consent of any party, assign the RFC Loans at any time to a Liquidity Institution pursuant to the terms of the Liquidity Agreement.

9.7   Adjustments; Set-off.    (a)  Except to the extent that this Agreement provides for payments to be allocated to a particular Bank or Banks, if any Bank (a "Benefited Bank") shall at any time receive any payment of all or part of its RFC Loans, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by offset, pursuant to events or proceedings of the nature referred to in subsection 7.1(f), or otherwise) in a greater proportion than any such payment to and collateral received by any other Bank, if any, in respect of such other Bank's RFC Loans, or interest thereon, such Benefited Bank shall purchase for cash from the other Banks such portion of each such other Bank's RFC Loans, or shall provide such other Banks with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Bank to share the excess payment or benefits of such collateral or proceeds ratably with each of the Banks; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Bank, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. The Company agrees that each Bank so purchasing a portion of another Bank's RFC Loan may exercise all rights of a payment (including, without limitation, rights of offset) with respect to such portion as fully as if such Bank were the direct holder of such portion.

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

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

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

9.10   WAIVERS OF JURY TRIAL.   THE COMPANY, RFC, THE AGENT AND THE BANKS EACH HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

9.11   Submission To Jurisdiction; Waivers.   The Company hereby irrevocably and unconditionally:

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

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

9.12   Confidentiality of Information.   Each Bank acknowledges that some of the information furnished to such Bank pursuant to this Agreement may be received by such Bank prior to the time such information shall have been made public, and each Bank agrees that it will keep all information so furnished confidential and shall make no use of such information until it shall have become public, except (a) in connection with matters involving operations under or enforcement of this Agreement or the Notes, (b) in accordance with each Bank's obligations under law or regulation or pursuant to subpoenas or other process to make information available to governmental or regulatory agencies and examiners or to others, (c) to each Bank's Affiliates, employees, agents (including accountants, legal counsel and other advisors) and Transferees and prospective Transferees so long as such Persons agree to be bound by this subsection 9.12 and (d) with the prior written consent of the Company.

9.13   Bankruptcy Petition Against RFC.   Each party to this Agreement hereby covenants and agrees that on behalf of itself and each of its affiliates, that prior to the date which is one year and one day after the payment in full of all outstanding indebtedness of RFC, such party will not institute against, or join any other Person in instituting against, RFC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States. The agreements contained in this subsection and the parties' respective obligations hereunder shall survive the termination of this Agreement.

9.14   Special RFC Indemnity.    The Company agrees to indemnify RFC and its officers, managers, members (and the direct and indirect owners of such members), employees, representatives and agents from and against all liabilities, losses, suits, costs or expenses of any kind in any way related to the acquisition by RFC of RFC Loans (collectively, "Indemnified Amounts"), provided, however that the Company shall not have any obligations pursuant to this subsection 9.14 relating to any Indemnified Amounts resulting solely from the gross negligence or willful misconduct of the Person seeking indemnification. The Company's liability with respect to any Indemnified Amounts with respect to income taxes shall be limited to the amount of tax (calculated based upon the highest marginal U.S. federal income tax rate for individuals and the highest marginal state and local tax rates for individuals resident in New York City), plus interest and penalties thereon, on the increase in net income of RFC as a result of, arising out of, or in any way related to or by reason of the successful assertion by any governmental authority that the Intended Characterization is inappropriate in any regard. As used herein, "Intended Characterization" means that, for all applicable state, local and federal income tax purposes, RFC's acquisition of RFC Loans shall be treated as the acquisition by RFC of a debt instrument. This indemnity is in addition to any obligations of the Company set forth in subsection 9.5. The agreements contained in this subsection and the parties' respective obligations hereunder shall survive the termination of this Agreement.

9.15   Limited Recourse.    Each party to this Agreement acknowledges and agrees that all transactions with RFC shall be without recourse of any kind to RFC. RFC shall have no obligation to pay any amounts constituting fees, reimbursement for expense or indemnities owing under this Agreement (collectively, "Expense Claims") and such Expense Claims shall not constitute a claim (as defined in Section 101 of Title 11 of the United States Bankruptcy Code) against RFC unless and until RFC has received sufficient amounts pursuant to the CP Rate Loans to pay such Expense Claims and such amounts are not required to pay the outstanding indebtedness of RFC. The agreements contained in this section and the parties' respective obligations hereunder shall survive the termination of this Agreement.

[remainder of this page intentionally blank - signature pages follow]

 

 

 

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

	
HUMANA INC.

	

By:     /s/  James H. Bloem                      

	
     Name:     James H. Bloem                  

	
     Title:   Senior Vice President, Chief Financial              Officer and Interim Treasurer         

	
JPMORGAN CHASE BANK, as Agent and as a Bank

	

By:    /s/  Dawn Lee Lum                      

	
     Name:  Dawn Lee Lum                     

	
     Title:    Vice President                     

	
 

RELATIONSHIP FUNDING COMPANY, LLC

	
By:    /s/  Thomas J. Irvin             

	
     Name:    Thomas J. Irvin          

	
     Title:     Manager                 

	
 

BANK OF AMERICA, N.A.

	
By:    /s/  Richard L. Nichols, Jr.               

	
     Name:    Richard L. Nichols, Jr.            

	
     Title:      Managing Director               

 

	
CITIBANK, N.A.

	

By:    /s/  David A. Dodge                      

	
     Name:    David A. Dodge                  

	
     Title:     Managing Director                

 

	
WACHOVIA BANK

	

By:     /s/  Thomas L. Stitchberry              

	
     Name:   Thomas L. Stitchberry            

	
     Title:     Managing Director                

	
 

LEHMAN BROTHERS HOLDINGS, INC.

	

By:     /s/  G. Andrew Keith                   

	
     Name:   G. Andrew Keith                   

	
     Title:    Vice President                      

	
 

THE BANK OF NOVA SCOTIA

	

By:    /s/  Carolyn A. Calloway                

	
     Name:   Carolyn A. Calloway              

	
     Title:    Managing Director                 

	
 

U.S. BANK NATIONAL ASSOCIATION

	

By:     /s/  Sandra J. Hartay                    

	
     Name:   Sandra J. Hartay                   

	
     Title:    Vice President                     

 

	
PNC BANK, N.A.

	

By:   /s/  Nicholas A. Aponte                   

	
     Name:   Nicholas A. Aponte                

	
     Title:    Vice President                      

	
 

NATIONAL CITY BANK OF KENTUCKY

	

By:    /s/  Deroy Scott                         

	
     Name:   Deroy Scott                       

	
     Title:    Senior Vice President             

	
 

THE BANK OF NEW YORK

	

By:    /s/  Michael Flannery                    

	
     Name:   Michael Flannery                  

	
     Title:    Managing Director                 

 

	
 

BRANCH BANKING AND TRUST COMPANY

	

By:    /s/  Frank R. Eckerd                     

	
     Name:   Frank R. Eckerd                   

	
     Title:    Senior Vice President             

 

 

SCHEDULE I

Lending Offices; Addresses for Notices

JPMORGAN CHASE BANK

270 Park Ave, 48th Floor

New York, NY 10017

Attention: Dawn Lee Lum

Telephone: (212) 270-2472

PNC BANK, NATIONAL ASSOCIATION

1600 Market Street, 22nd Floor

Philadelphia, PA 19103

Attention: Nicholas A. Aponte

Telephone: (215) 585-5407

THE BANK OF NOVA SCOTIA

600 Peachtree St. N.E

Atlanta, GA 30308

Attention: Pat Brown

Telephone: (404) 877-1506

LEHMAN BROTHERS HOLDING, INC.

745 7th Avenue, 19th Floor

New York, NY 10019

Attention: Francis Chang

Telephone: (212) 526-5390

THE BANK OF NEW YORK

One Wall Street

New York, NY 10286

Attention: Patrick Vatel

Telephone: (212) 635-7882

NATIONAL CITY BANK OF KENTUCKY

101 South Fifth Street, 37th Floor

Louisville, KY 40202

Attention: Deroy Scott

Telephone: (502) 581-7821

 

 

BANK OF AMERICA, N.A.

100 N. Tryon Street, NC 1-007-17-11

Charlotte, NC 28255

Attention: Joe Corah

Telephone (704) 386-5976

WACHOVIA BANK, N.A.

301 S. College Street DC-5

Charlotte, NC 28288

Attention: Lance Black

Telephone: (704) 374-6628

CITIBANK, N.A.

388 Greenwich Street

New York, NY 10013

Attention: David Dodge

Telephone: (212) 816-4143

U.S. BANK NATIONAL ASSOCIATION

777 E. Wisconsin Avenue, MK-WI-TGCB

Milwaukee, WI 53202

Attention: Sandra J. Hartay

Telephone: (414) 765-6004

BRANCH BANKING AND TRUST COMPANY

500 West Broadway

Louisville, KY 40202

Attention: Frank Eckerd

Telephone: (502) 562-5877

 

 

SCHEDULE II

PRICING GRID

	
Public Debt Ratings

S&P/Moody's
	
Alternate Base Rate Margin
	
Eurodollar Margin

	
Level 1> BBB+/Baa1
	
0 bps
	
85 bps

	
Level 2 > BBB/Baa2
	
0 bps
	
95 bps

	
Level 3 > BBB-/Baa3
	
5 bps
	
105 bps

	
Level 4 > BB+/Ba1
	
20 bps
	
120 bps

	
Level 5 < BB+/Ba1
	
37.5 bps
	
137.5 bps

 

Pricing will be determined based upon the lower of the ratings from S&P or Moody's, but in the event the Company's ratings are more than one Level apart, the pricing will be determined by using the rating which is one Level above the lower rating; provided, that (i) if on any day the ratings from S&P or Moody's are not at the same Level, then the Level applicable to the lower of such ratings shall be applicable for such day, (ii) if on any day the rating of only one of S&P or Moody's is available, then the Level of such rating shall be applicable for such day and (iii) if on any day a rating is available from neither of S&P or Moody's, then Level 5 shall be applicable for such day. Any change in the applicable Level resulting from a change in the rating of a S&P or Moody's shall become effective on the date such change is publicly announced by S&P or Moody's, as applicable.EXHIBIT 4(b)
==================================================================

                   SEARS ROEBUCK ACCEPTANCE CORP.

                                AND

                     BNY MIDWEST TRUST COMPANY,

                               Trustee

                             -----------

                              Indenture

                     Dated as of October 1, 2002

                             -----------

==================================================================

                   SEARS ROEBUCK ACCEPTANCE CORP.

                             INDENTURE

                   dated as of October 1, 2002

                    --------------------------
                         TABLE OF CONTENTS*

                                                          PAGE

PARTIES                                                     1

RECITALS	                                                1

                            ARTICLE I

                 DEFINITIONS OF CERTAIN TERMS

SECTION 1.1. Definitions                                  I-1
             Affiliate                                    I-1
             Authenticating Agent	                      I-1
             Board                                        I-1
             Business Day                                 I-1
             Certified Resolution                         I-1
             Commission                                   I-1
             Company                                      I-1
             Currency                                     I-1
             Defaulted Interest                           I-1
             Depository                                   I-2
             Dollar                                       I-2
             Eligible Obligations                         I-2
             Euro	                                        I-2
             Fixed Charge Coverage and Ownership AgreementI-2
             Fixed Charge Coverage Ratio                  I-2
             Foreign Currency                             I-2
             Global Security                              I-3
             Holder                                       I-3
             Indenture                                    I-3
             Interest                                     I-3
             Interest Payment Date                        I-3
             Market Exchange Rate                         I-3
             Maturity                                     I-3
             Officers' Certificate                        I-3
             Opinion of Counsel                           I-4
             Original Issue Discount Security             I-4
             Outstanding                                  I-4
             Person                                       I-4
             Redemption Date                              I-4
             Redemption Price                             I-4
             Regular Record Date                          I-5
             Responsible Officer                          I-5
             Sears                                        I-5
             Securities                                   I-5
             Security Register                            I-5
             Special Record Date                          I-5
----------------
*This table of contents shall not, for any purpose, be deemed
 to be a part of the Indenture.
                            i

            Stated Maturity .............................I-5
            Subsidiary; Voting Stock.....................I-5
            Trustee......................................I-5
            U.S. Government Obligations .................I-6
SECTION 1.2.Trust Indenture Act definitions controlling..I-6

                       ARTICLE II
                    THE SECURITIES

SECTION 2.1.Amount Unlimited; Issuable in Series; Forms
            Generally; Form of Trustee's Certificateof
            Authentication                              II-1
SECTION 2.2.Denominations                               II-3
SECTION 2.3.Execution,Authentication,Delivery and DatingII-3
SECTION 2.4.Temporary Securities                        II-4
SECTION 2.5.Registration,Registration of
            Transfer and Exchange                       II-4
SECTION 2.6.Mutilated, Destroyed, Lost and
            Stolen Securities                           II-5
SECTION 2.7.Payment of Interest;Interest
            Rights Preserved                            II-6
SECTION 2.8.Persons Deemed Owners                       II-7
SECTION 2.9.Cancellation.	                          II-7
SECTION 2.10.Securities Issuable as a Global Security   II-7
SECTION 2.11.Currency of Payments in Respect
             of Securities                              II-8
SECTION 2.12.Availability of Currency of Payment in
             Respect of Securities                      II-8

                    ARTICLE III
              COVENANTS OF THE COMPANY
SECTION 3.1.Payment of principal and interest          III-1
SECTION 3.2.Maintenance of office or agency
            for notices and demands                    III-1
SECTION 3.3.File certain reports and information
             with the Trustee and the Securities and
             Exchange Commission                       III-1
            Transmit to Holders summaries of certain
            documents filed with the Trustee           III-2
            Furnish list of Holders to the Trustee     III-2
SECTION 3.4.File statement by officers annually with
            the Trustee                                III-2
SECTION 3.5.Duties of paying agent                     III-2
SECTION 3.6.Certain restrictions                       III-3

                    ARTICLE IV
               REDEMPTION OF SECURITIES
SECTION 4.1.Applicability of Article                    IV-1
SECTION 4.2.Election to Redeem; Notice to Trustee	  IV-1
SECTION 4.3.Selection by Trustee of Securities to Be
            Redeemed	                                IV-1
SECTION 4.4.Notice of Redemption                        IV-1
SECTION 4.5.Deposit of Redemption Price                 IV-2
SECTION 4.6.Securities Payable on Redemption Date       IV-2
SECTION 4.7.Securities Redeemed in Part                 IV-2

                      ARTICLE V
                    SINKING FUNDS
SECTION 5.1.Applicability of Article                     V-l
SECTION 5.2.Satisfaction of Sinking Fund Payments
            with Securities                              V-l
SECTION 5.3.Redemption of Securities for Sinking Fund    V-l

                      ARTICLE VI
                 REMEDIES UPON DEFAULT
SECTION 6.1.Defaults defined-acceleration of maturity
            upon default-waiver of Default              VI-I

                          ii

SECTION 6.2.Covenant of Company to pay to Trustee
            whole amount due on default in
      	payment of principal or interest-Trustee
            may recover judgment for whole amount
            due-application of moneys received by
            the Trustee                                VI-3
SECTION 6.3.Trustee may enforce rights of action
            without possession of Securities           VI-4
SECTION 6.4.Delays or omissions not to impair any
            rights or powers accruing upon Default     VI-4
SECTION 6.5.In event of default Trustee may protect
            and enforce its rights by appropriate
            proceedings-holders of a majority in
            principal amount of Securities of a
            particular series may waive default        VI-5
SECTION 6.6.Holders of a majority in principal
            amount of Securities of a particular
            series may direct exercise of remedies     VI-5
SECTION 6.7.Limitation on suits by Holders             VI-5
SECTION 6.8.No Securities owned or held by or for
            the account of the Company to be
      	deemed outstanding for purpose of
            payment or distribution                    VI-6
SECTION 6.9.Company and Trustee restored to former
            position on discontinuance or	abandonment
            of proceedings	                         VI-6

                     ARTICLE VII
                CONCERNING THE HOLDERS
SECTION 7.1.Evidence of action by Holders              VII-1
SECTION 7.2.Proof of execution of instruments
            and holding of Securities                  VII-1
SECTION 7.3.Who may be deemed owners of Securities     VII-2
SECTION 7.4.Securities owned by Company or its
            affiliates disregarded for certain
      	Purposes                                   VII-2
SECTION 7.5.Action by Holders binds future Holders     VII-2

                     ARTICLE VIII
         IMMUNITY OF INCORPORATORS, SHAREHOLDERS,
               OFFICERS AND DIRECTORS
SECTION 8.1.No recourse against incorporators or othersVIII-l

                       ARTICLE IX
              MERGER, CONSOLIDATION OR SALE
SECTION 9.1.Merger, consolidation, sale or conveyance
            of property not prohibitedexcept under
            certain conditions-execution of
            supplemental indenture.                     IX-1
SECTION 9.2.Rights and duties of successor corporation  IX-1
            Issuance of Securities by successor
            corporation                                 IX-1
SECTION 9.3.Opinion of Counsel to Trustee               IX-1

                         ARTICLE X
                  CONCERNING THE TRUSTEE
SECTION 10.1.Acceptance of Trust                         X-l
             Trustee not relieved from liability for
             negligence or misconduct                    X-l
             Trustee not responsible for validity or
             execution of Indenture or of	Securities or
             for recitals in Indenture or Securities     X-l
             Trustee may rely upon documents believed
             genuine-may consult with counsel-may
             accept officers' certificates-may require
             indemnity-not to be liable for action taken
             in good faith                               X-2
             Prior to default and after curing of
             defaults Trustee not bound to investigate
             unless requested by Holders of majority in
             principal amount of Securities of a
             series-may require indemnification          X-2
             Trustee may execute trusts or powers
             directly or by attorneys                    X-3
SECTION 10.2.Trustee to be entitled to compensation-Trustee
             not to be accountable for application of
             proceeds-moneys held by Trustee to be
             trust funds                                 X-3
                            iii

SECTION 10.3.Trustee to give Holders notice of default  X-3
SECTION 10.4.Trustee acquiring conflicting interest
             must eliminate it or resign; Definition
      	 of conflicting interest; Definition of
             certain terms                              X-3
             Calculation of percentages of securities   X-7
SECTION 10.5.Eligibility of Trustee                     X-8
SECTION 10.6.Resignation or removal of Trustee          X-9
SECTION 10.7.Acceptance by successor Trustee            X-9
SECTION 10.8.Successor to Trustee by merger or
             consolidation                              X-10
SECTION 10.9.Limitations on right of Trustee as a
             creditor to obtain payment of certain
             Claims                                     X-10
SECTION 10.10.Trustee to make annual report to Holders  X-14
              Trustee to make other reports to Holders  X-14
              Holders to whom reports to be transmitted X-15
SECTION 10.11.Preservation of information by Trustee    X-15
              Trustee to give certain information to
              Holders upon application                  X-15
SECTION 10.12.Trustee or an Authenticating Agent may
              hold Securities and otherwise deal
              with Company                              X-16
SECTION 10.13.Trustee may comply with any rule,
              regulation or order of the Securities
              and Exchange Commission                   X-16
SECTION 10.14.Authenticating Agent                      X-16

                      ARTICLE XI
                 SUPPLEMENTAL INDENTURES
SECTION 11.1.Purposes for which supplemental indentures
             may be entered into withoutconsent of
             Holders                                   XI-1
SECTION 11.2.Modification of Indenture with consent of
             Holders of a majority in principal amount
             of Securities of any series	             XI-2
SECTION 11.3.Effect of supplemental indentures         XI-2
SECTION 11.4.Securities may bear notation of changes   XI-3
SECTION 11.5.Trustee may rely upon Opinion of Counsel  XI-3
SECTION 11.6.Instruments of further assurance          XI-3

                     ARTICLE XII
                 MEETINGS OF HOLDERS
SECTION 12.1.Purposes for which meetings may be called XII-1
SECTION 12.2.Manner of calling meetings                XII-1
SECTION 12.3.Call of meetings by Company or Holders    XII-1
SECTION 12.4.Who may attend and vote at meetings       XII-2
SECTION 12.5.Regulations may be made by Trustee-conduct
             of the meeting-voting rights-adjournment  XII-2
SECTION 12.6.Manner of voting at meetings and record
             to be kept                                XII-3
SECTION 12.7.Exercise of rights of Trustee or Holders
             may not be hindered or delayed by call of
             meeting of Holders.                       XII-3

                      ARTICLE XIII
            SATISFACTION AND DISCHARGE OF INDENTURE
                 OR CERTAIN OBLIGATIONS
SECTION 13.1.Satisfaction and discharge of Indenture XIII-1
SECTION 13.2.Deposits for payment or redemption of
             Securities to be held in trust.         XIII-1
SECTION 13.3.Repayment of moneys held by Trustee;
             Repayment of moneys held by paying agentXIII-2
SECTION 13.4.Defeasance of Securities of any series  XIII-2
SECTION 13.5.Application of Trust Money	           XIII-4

                         iv

                    ARTICLE XIV
              MISCELLANEOUS PROVISIONS
SECTION 14.1.Rights under Indenture limited to the
             parties and Holders of Securities          XIV-1
SECTION 14.2.Certificate of independent accountants
             conclusive                                 XIV-1
SECTION 14.3.Remaining provisions not affected by
             invalidity of any other provisions-
             required provisions of Trust Indenture
             Act of 1939, as amended, to Control        XIV-1
SECTION 14.4.Company released from Indenture
             requirements if entitled to have
             Indenture cancelled	                    XIV-1
SECTION 14.5.Date of execution                          XIV-1
SECTION 14.6.Officers' certificates and Opinions of
             Counsel to be furnished Trustee            XIV-1
SECTION 14.7.Payments and deposits due other than
              on a Business Day                         XIV-2
SECTION 14.8.Presentation of notices and demands        XIV-2
SECTION 14.9.Successors and assigns bound by Indenture  XIV-3
SECTION 14.10.Descriptive headings for convenience only XIV-3
SECTION 14.11.Indenture may be executed in counterparts XIV-3
SECTION 14.12.Controlling law                           XIV-3

TESTIMONIUM

SIGNATURES AND SEALS

ACKNOWLEDGMENTS

                              v

                 SEARS ROEBUCK ACCEPTANCE CORP.

            Reconciliation and Tie between Indenture
                dated as of October 1, 2002

                            and

         Trust Indenture Act of 1939, as amended

Trust Indenture Act Section         Indenture Section
310(a)(1)                                 10.5
(a)(2)                                    10.5
(a)(3)                                Not applicable
(a)(4)                                Not applicable
(a)(5)                                    10.5
(b)                                     10.4,10.5
(c)                                   Not applicable
311(a)                                  10.9(a),(c)
(b)                                     10.9(b)
(c)                                   Not applicable
312(a)                                  3.3(d), 10.11
(b)                                       10.11
(c)                                       10.11
313(a)                                    10.10(a)
(b)(1)                                Not applicable
(b)(2)                                    10.10(b)
(c)                                       10.10(c)
(d)                                       10.10(c)
314(a)(1)                                  3.3 (a)
(a)(2)                                     3.3 (b)
(a)(3)                                     3.3 (c)
(a)(4)                                     3.4
(b)                                   Not applicable
(c)                                       14.6
(d)                                   Not applicable
(e)                                       14.6
(f)                                   Not required
315(a)(l)                              10.1(a),(b)
(a)(2)                                 10.1(a),(b),(d)
(b)                                       10.3
(c)                                       10.1(a)
(d)                                    10.1(a),(b)
(e)                                        6.7
316(a)(1A)                                 6.6
(a)(1B)                                    6.5
(a)(2)                                Not required
(b)                                        6.7
(c)                                        7.1
317(a)(1)                                  6.2
(a)(2)                                     6.2
(b)                                        3.5
318(a)                                    14.3

Note: This reconciliation and tie shall not, for any purpose,
be deemed to be a part of the Indenture.

                            vi

     INDENTURE, dated as of the 1st day of October, 2002, between SEARS ROEBUCK
ACCEPTANCE CORP. (hereinafter called the "Company"), a corporation organized
and existing under the laws of the Stateof Delaware, and BNY MIDWEST TRUST
COMPANY (hereinafter called the "Trustee"), an Illinois trust company, as
Trustee:
                   RECITALS OF THE COMPANY

     The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture provided.

     All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms,
have been done.

     NOW, THEREFORE, THIS INDENTURE WITNESSETH:

     For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities or of
series thereof, as follows

                               ARTICLE I

                       DEFINITIONS OF CERTAIN TERMS

     SECTION 1.1. Unless the context otherwise requires, the terms defined in
this Article I shall for all purposes of this Indenture and of any indenture
supplemental hereto have the meaning herein specified, the following definitions
to be equally applicable to both the singular and plural forms of any of the
terms herein defined:

Affiliate

     An "Affiliate" of a specified Person shall mean another Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such first Person.

Authenticating Agent

     The term "Authenticating Agent" shall mean any Authenticating Agent
appointed by the Trustee pursuant to Section 10.14.

Board

     The term "Board" or "Board of Directors" shall mean the Board of Directors
of the Company or the Executive Committee of such Board.

Business Day

     The term "Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a legal holiday for banking institutions in any
of the City of Wilmington, the City of Chicago, The City of New York or the city
in which the principal corporate trust office of the Trustee is located.

Certified Resolution

     The term "Certified Resolution" shall mean a copy of a resolution
certified by the Secretary or an Assistant Secretary of the Company to have been
duly adopted by the Board of Directors and to be in full force and effect on the
date of such certification.

Commission

     The term "Commission" shall mean the Securities and Exchange Commission.

Company

     The term "Company" shall mean Sears Roebuck Acceptance Corp. and, subject
to the provisions of Article IX, shall also include its successors and assigns.

Currency

     The term "Currency" shall mean Dollars or Foreign Currency.

Defaulted Interest

     The term "Defaulted Interest" shall have the meaning specified in Section
 2.7.

                                      I-1

Depository

     The term "Depository" shall mean, with respect to Securities of any series
for which the Company shall determine that such Securities will be issued in
whole or in part as one or more Global Securities, The Depository Trust
Company, New York, New York, another clearing agency or any successor
registered under the Securities Exchange Act of 1934, as amended, or
other applicable statute or regulation, which, in each case, shall be
designated by the Company pursuant to either Section 2.1 or 2.10.

Dollar

     The term "Dollar" shall mean the currency issued by the government of the
United States.

Eligible Obligations

     The term "Eligible Obligations" shall mean obligations as a result of the
deposit of which (along with the simultaneous deposit, if any, of money or U.S.
Government Obligations or both) the relevant series of Securities will be rated
in the highest generic long term debt rating category assigned by one or more
nationally recognized rating agencies to debt with respect to which the issuer
thereof has been released from its obligations to the same extent that the
Company has been released from its obligations under this Indenture pursuant to
Section 13.4 hereof.

Euro

     The term "Euro" shall mean the lawful currency of the member states of the
European Economic and Monetary Union, pursuant to the Treaty establishing the
European Community, as amended by the Treaty on European Union.

Fixed Charge Coverage and Ownership Agreement

     The term "Fixed Charge Coverage and Ownership Agreement" shall mean the
letter agreement between the Company and Sears dated September 24, 2002.

Fixed Charge Coverage Ratio

     The term "Fixed Charge Coverage Ratio" shall mean, for any period, the
Company's ratio of earnings to fixed charges, determined for such period in
accordance with Item 503(d) of Regulation S-K promulgated by the Commission, as
in effect on the date hereof.

Foreign Currency

     The term "Foreign Currency" shall mean either (i) a currency issued by the
government of any country other than the United States, including the Euro, or
(ii) any composite currency the value of which is determined by reference to the
values of the currencies of any group of countries.

                                     I-2

Global Security

     The term "Global Security" shall mean, with respect to any series of
Securities, a Security executed by the Company and authenticated and held by the
Trustee as agent for the Depository or delivered pursuant to the Depository's
instruction, all in accordance with this Indenture and pursuant to a Company
order, which (i)shall be registered in the name of the Depository or its
nominee and (ii) shall constitute, and shall be denominated in an amount equal
to the aggregate principal amount of, all or part of the Outstanding Securities
of such series.

Holder

     The terms "Holder", "Holder of Securities" or other similar terms, shall
mean the person in whose name a particular Security shall be registered on the
books of the Company kept for that purpose in accordance with the terms hereof,
and the word "majority", used in connection with the terms "Holder", "Holder of
Securities", or other similar terms, shall signify the "majority in principal
amount" whether or not so expressed.

Indenture

     The term "Indenture" shall mean this instrument as originally executed or,
if amended or supplemented as herein provided, as so amended or supplemented,
and shall include the terms of particular series of Securities established as
contemplated by Section 2.1.

Interest

     The term "Interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, shall mean
interest payable after Maturity.

Interest Payment Date

     The term "Interest Payment Date", when used with respect to any Security,
shall mean the Stated Maturity of any installment of interest on the Security.

Market Exchange Rate

     The "Market Exchange Rate" on a given date for a given foreign currency
shall mean the noon buying rate in New York City for cable transfers in such
currency as certified for customs purposes by the Federal Reserve Bank of New
York on such date.

Maturity

     The term "Maturity", when used with respect to any Security, shall mean
the date on which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.

Officers' Certificate

     The term "Officers' Certificate" shall mean a certificate signed by the
Chairman of the Board, the Chief Executive Officer, the President or any Vice
President and by the Vice President, Finance, Treasurer or any Assistant
Treasurer or the Secretary or any Assistant Secretary of the Company.

                                   I-3

Opinion of Counsel

     The term "Opinion of Counsel" shall mean an opinion in writing signed by
legal counsel (who may be counsel to the Company) acceptable to the Trustee.

Original Issue Discount Security

     The term "Original Issue Discount Security" shall mean any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 6.1.

Outstanding

     The term "outstanding" or "principal amount outstanding", when used with
respect to the Securities, shall not, except as otherwise provided herein,
include (i) Securities held by the Company or any Affiliate of the
Company in its treasury, or (ii) Securities for the payment or redemption
of which moneys in the necessary amount shall have been deposited in
trust with the Trustee, provided that if such Securities are to be
redeemed prior to the Maturity thereof, notice of such redemption
shall have been duly given or provision satisfactory to the Trustee
shall have been made for giving such notice, or (iii) Securities in
ieu of or in substitution for which other Securities shall have been
authenticated and delivered pursuant to the terms of Section 2.3, or
(iv) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation. The term "outstanding" or "principal
amount outstanding", when used with respect to indebtedness other
than the Securities, shall not include any such indebtedness held
by the Company in its treasury or for the payment or redemption of
which moneys in the necessary amount shall have been deposited in
trust or set aside and segregated in trust by the Company, provided
that, if such other indebtedness is to be redeemed prior to the
maturity thereof, any notice of such redemption required by the
terms thereof shall have been duly given or provision satisfactory
to the trustee shall have been made for giving such notice.

Person

    The term "Person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association,
joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

Redemption Date

     The term "Redemption Date", when used with respect to any
Security to be redeemed, shall mean the date fixed for such
redemption by or pursuant to this Indenture.

Redemption Price

     The term "Redemption Price" shall mean the amount payable
for the redemption of any Security on the Redemption Date, and
shall always include interest accrued and unpaid to the Redemption
Date, unless otherwise specifically provided.

                                  I-4

Regular Record Date

     The term "Regular Record Date" for the interest payable on any
Interest Payment Date on the Securities of any series shall mean the
date specified for that purpose as contemplated by Section 2.1.

Responsible Officer

     The term "Responsible Officer", when used with respect to the Trustee,
shall mean the chairman of the board of directors, the president, every vice
president (whether or not designated by a number or a word or words
added before or after the title "vice president"), the secretary, every
trust officer, every assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such officers, or to
whom any corporate trust matter is referred because of his knowledge of
and familiarity with the particular subject.

Sears

     The term "Sears" shall mean Sears, Roebuck and Co.

Securities

     The term "Securities" shall mean any Securities authenticated
and delivered under this Indenture.

Security Register

     The term "Security Register" shall have the meaning specified
in Section 2.5.

Special Record Date

    The term "Special Record Date" for the payment of any Defaulted
Interest shall mean a date fixed by the Trustee pursuant to Section 2.7.

Stated Maturity

    The term "Stated Maturity", when used with respect to any Security
or any installment of interest thereon, shall mean the date specified
in such Security as the fixed date on which the principal of such
Security or such installment of interest is due and payable.

Subsidiary; Voting Stock

    The term "Subsidiary" shall mean any corporation of which shares
of Voting Stock entitled to elect a majority of the directors are at
the time owned directly or indirectly by the Company and its other
Subsidiaries. The term "Voting Stock" shall mean outstanding shares
of stock having voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such
voting power because of default in dividends or some other default.

Trustee

    The term "Trustee" shall mean the party named as such above
until a successor becomes such pursuant hereto and thereafter shall
mean or include each party who is then a trustee hereunder, and if
at any time there is more than one such party, "Trustee" as used
with respect to the Securities of any series shall mean the Trustee
with respect to Securities of that series. If Trustees with respect
to different series of Securities are trustees hereunder, nothing
herein shall constitute the Trustees as co-trustees of the same
trust, and each Trustee shall be the trustee of a trust separate
and apart from any trust administered by any other Trustee
with respect to a different series of Securities.

                        I-5

U.S. Government Obligations

    The term "U.S. Government Obligations" shall mean securities
which are (i) direct obligations of the United States of America
for the payment of which its full faith and credit is pledged or
(ii) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as
a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable
at the option of the issuer thereof, and shall also include
a depository receipt issued by a bank or trust company as
custodian with respect to any such U.S. Government Obligations
or a specific payment of interest on or principal of any such
U.S. Government Obligations held by such custodian for the
account of the holder of a depository receipt; provided that
(except as required by law) such custodian is not authorized
to make any deduction from the amount payable to the holder
of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligations or
the specific payment of interest on or principal of the
U.S. Government Obligations evidenced by such depository
receipt.

    SECTION 1.2.  All terms used in this Indenture which are
defined in the Trust Indenture Act of 1939, as amended, or
which are by reference therein defined in the Securities Act
of 1933, as amended (except as herein otherwise expressly
provided or unless the context otherwise requires), shall
have the meanings assigned to such terms in the Trust
Indenture Act of 1939, as amended, and the Securities Act of 1933,
as amended, as they were respectively in force at the date of
this Indenture.

                        I-6

                   ARTICLE II

                 THE SECURITIES

     SECTION 2.1. (a) The aggregate principal amount of Securities
which may be authenticated and delivered under this Indenture is
unlimited.  The Securities may be issued in one or more series.
There shall be established in or pursuant to a resolution of the
Board and set forth in an Officers' Certificate, or established in
one or more indentures supplemental hereto, prior to the issuance
of Securities of any series,

 (1) the title of the Securities of the series (which shall distinguish
the Securities of the series from all other Securities);

 (2) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 2.4, 2.5, 2.6, 4.7 or 11.4);

 (3) the date or dates on which the principal of the Securities of the
series is payable;

 (4) the rate or rates (which may be fixed or variable) per annum at
which the Securities of the series shall bear interest, if any, the
date or dates from which such interest shall accrue, the date or dates
on which payment of such interest shall commence, the Interest Payment
Dates on which such interest shall be payable and the Regular Record
Date for the interest payable on any Interest Payment Date;

 (5) if other than as set forth in Section 3.2, the place or places
where the principal of (and premium, if any, on) and interest, if any,
on Securities of the series shall be payable;

(6) the period or periods within which, the price or prices at which
and the terms and conditions upon which Securities of the series may
be redeemed, in whole or in part, at the option, or as an obligation,
of the Company;

(7) the obligation or right, if any, of the Company to redeem or
purchase Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the
period or periods within which, the price or prices at which and
the terms and conditions upon which Securities of the series
shall be redeemed or purchased, in whole or in part, pursuant to
such obligation or right;

(8) the terms, if applicable, of conversion or exchange for other
securities, at the option of the Company or the Holder, of Securities
of the series;

(9) any subordination provisions;

(10) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall
be issuable;

(11) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be
payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 6.1;

(12) the terms of any warrants attached to the Securities of the
 series;

                             II-2

(13) the currency or currencies, including composite currencies, in
which the Securities may be purchased and in which principal of (and
premium, if any) and interest, if any, on the Securities of the series
shall be payable (if other than Dollars);

(14) if the amount of payments of principal of (and premium, if any)
or interest, if any, on the Securities of the series may be determined
with reference to an index, the manner in which such amounts shall be
determined;

(15) provisions, if any, for the defeasance of Securities of a
particular series (including provisions permitting defeasance of
less than all Securities of a particular series), which provisions may
be in addition to, in substitution for, in subtraction from, or in
modification of (or any combination of the foregoing) the
provisions of Article Thirteen;

(16) whether the Securities of the series are issuable in whole or in
part as one or more Global Securities and, in such case, the identity
of the Depository for such Global Security or Securities; and

(17) any other terms of the series (which terms shall not be inconsistent
with the provisions of this Indenture but which may modify or delete any
such provision of this Indenture insofar as it applies to such
series; provided that no term thereof shall be modified or deleted if
imposed by operation of subsection (c) of Section 318 of the Trust
Indenture Act of 1939, as amended, and provided further that any
modification or deletion of the rights, duties or immunities of the
Trustee shall have been consented to in writing by the Trustee).

If any of the foregoing terms are not available at the time such
resolutions are adopted, or such Officers' Certificate or any
supplemental indenture is executed, such resolutions, Officers'
Certificate or supplemental indenture may reference the document or
documents to be created in which such terms will be set forth prior
to the issuance of such Securities.

    All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in
or pursuant to such resolution of the Board and set forth in such Officers'
Certificate or in any such indenture supplemental hereto.

    If any of the terms of the series are established by action taken
pursuant to a resolution of the Board, a copy of an appropriate record
of such action shall be included in the Officers' Certificate setting
forth the terms of the series.

    (b) The Securities of each series shall be in substantially the
form as shall be established by or pursuant to a resolution of the
Board or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and
may have such letters, numbers or other marks of identification and
such legends or endorsements placed thereon as may be required to
comply with any law or with any rules made pursuant thereto or with
any rules of any securities exchange or as may, consistently herewith,
be determined by the officers executing such Securities, as evidenced
by their execution of the Securities.

    The definitive Securities shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other
manner, all as determined by the officers executing such Securities,
as evidenced by their execution of such Securities.

    (c) The Trustee's certificate of authentication on all Securities
shall be in substantially the following form:

                             II-2

     This is one of the Securities of the series referred to in
the within-mentioned Indenture.

                                    as Trustee

                                    By ______________________________
                                       Authorized Officer

     SECTION 2.2. The Securities of each series shall be issuable in
registered form without coupons in such denominations as shall be specified
as contemplated by Section 2.1. In the absence of any contrary provisions
with respect to the Securities of any series, the Securities of such series
shall be issuable in denominations of $1,000 and any integral multiple
thereof and shall be payable only in Dollars.

     SECTION 2.3. The Securities shall be executed on behalf of the Company
by any two of its Chairman of the Board, its Chief Executive Officer, its
President or one of its Vice Presidents, under its corporate seal reproduced
thereon. The signature of any of these officers on the Securities may be
manual or facsimile.

     Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did
not hold such offices at the date of such Securities.

     At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed
by the Company to the Trustee for authentication, together with a written
order of the Company signed by its Chairman of the Board, its Chief Executive
Officer, its President or one of its Vice Presidents for the authentication
and delivery of such Securities, and the Trustee in accordance with such
order shall authenticate and deliver such Securities. If the form or terms
of the Securities of the series have been established in or pursuant to one
or more resolutions of the Board as permitted by Section 2.1, in authenticating
such Securities, and accepting the additional responsibilities under this
Indenture in relation to such Securities, the Trustee shall be entitled to
receive, and (subject to Section 10.1) shall be fully protected in relying
upon, an Opinion of Counsel stating,

  (a) if the form and terms of such Securities have been established by
 or pursuant to a resolution of the Board as permitted by Section 2.1,
 that such form and terms have been established in conformity with the
  provisions of this Indenture; and

  (b) that such Securities, when authenticated and delivered by the Trustee
 and issued by the Company in the manner and subject to any conditions
 specified in such Opinion of Counsel, will constitute valid and
 binding obligations of the Company in accordance with their terms, subject
 to insolvency, bankruptcy, reorganization and other laws relating to or
 affecting the enforcement of creditors' rights or by general equity
 principles.

                                   II-3

     The Trustee shall have the right to decline to authenticate and deliver
any Securities under this Section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if the Trustee in
good faith by its board of directors or trustees, executive committee, or a
trust committee of directors or trustees and/or responsible officers shall
determine (i) that such action would expose the Trustee to liability
to existing Holders, or (ii) in the case of Securities designated pursuant
to one or more resolutions of the Board as permitted by Section 2.1, that
such action would affect the Trustees' own rights, duties or immunities
under this Indenture or otherwise.

     Each Security shall be dated the date of its authentication.

     No Security shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided
for herein executed by the Trustee by manual signature, and such certificate
upon any Security shall be conclusive evidence, and the only evidence,
that such Security has been duly authenticated and delivered hereunder
and is entitled to the benefits of this Indenture.

     SECTION 2.4. Pending the preparation of definitive Securities of
any series, the Company may execute, and upon a written order of the
Company signed by its Chairman of the Board, its Chief Executive Officer,
its President or one of its Vice Presidents, the Trustee shall authenticate
and deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities
in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing
such Securities may determine, as evidenced by their execution of such
Securities.

    If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Securities of
such series, the temporary Securities of such series shall be
exchangeable for definitive Securities of such series, without
charge to the Holder, upon surrender of the temporary Securities of
such series at the office or agency of the Company for that series
to be maintained in accordance with the provisions of Section 3.2.
Upon surrender for cancellation of any one or more temporary
Securities of any series the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of the same series of authorized
denominations. Until so exchanged the temporary Securities of any
series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series.

    SECTION 2.5. The Company shall keep or cause to be kept a register
for each series of Securities issued hereunder (herein called a
"Security Register") at any office or agency of the Company to be
maintained in accordance with the provisions of Section 3.2 in
which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Securities and
of transfers of Securities. The Security Register shall be in written
form or capable of being converted into written form within a
reasonable time. Unless otherwise specifically designated by the
Company in a written notice to the Trustee, the Security Register
shall be maintained at the principal corporate trust office of the
Trustee.

     Upon surrender for registration of transfer of any Security of
any series at the office or agency for that series to be maintained
in accordance with the provisions of Section 3.2, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name
of the designated transferee or transferees, one or more
Securities of the same series, of any authorized denominations
and of a like aggregate principal amount and Stated Maturity and
bearing a number not contemporaneously outstanding.

                             II-4

      At the option of the Holder, Securities of any series may be
exchanged for other Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and Stated Maturity
and bearing a number not contemporaneously outstanding upon surrender
of the Securities to be exchanged at such office or agency. Whenever
any Securities are so surrendered for exchange, the Company shall execute,
and the Trustee shall authenticate and deliver, the Securities which the
Holder making the exchange is entitled to receive.

      All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as
the Securities surrendered upon such registration of transfer or exchange.

      Every Security presented or surrendered for registration of transfer
or for exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company duly executed,
by the Holder thereof or his attorney duly authorized in writing.

     No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Sections 2.4, 4.7 or 11.4,
not involving any transfer.

      The Company shall not be required (i) to issue, register the transfer
of or exchange Securities of any series during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of Securities of that series selected for redemption under
Section 4.3 and ending at the close of business on the day of such mailing,
or (ii) to register the transfer of or exchange any Security theretofore
designated for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.

       SECTION 2.6. If any mutilated Security is surrendered to the Trustee,
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a Security of the same series and principal amount and
Stated Maturity and bearing a number not contemporaneously outstanding.

      If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them
to save each of them and any agent of either of them harmless, then, in
the absence of notice to the Company or the Trustee that such Security
has been acquired by a bona fide purchaser, the Company shall execute
and upon its request the Trustee shall authenticate and deliver, in
lieu of any such destroyed, lost or stolen Security, a Security of the
same series and principal amount and Stated Maturity and bearing a number
not contemporaneously outstanding.

     In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its
discretion may, instead of issuing a Security in substitution of
such Security, pay such Security, provided the conditions set forth
in the next preceding paragraph are satisfied.

     Upon the issuance of any Security pursuant to this Section,
the Company may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation
thereto and any other expenses, including counsel fees, of the Company
and the Trustee, any Authenticating Agent, and any paying agent or
Security registrar connected therewith and in addition a further
sum not exceeding two dollars for each Security so issued in substitution.

                                II-5

     Every Security of any series issued pursuant to this Section
in lieu of any destroyed, lost or stolen Security shall constitute
an original additional contractual obligation of the Company, whether
or not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other
Securities of that series duly issued hereunder.

     The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen
securities.

     SECTION 2.7. Each installment of interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid only to or upon the written order of the
Person in whose name that Security is registered at the close of
business on the Regular Record Date for such interest.

     Any interest on any Security of any series which is payable,
but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall forthwith
cease to be payable to the Holder on the relevant Regular Record
Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case,
as provided in clause (1) or (2) below:

     (1) the Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such
series are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner: (a) the Company shall
notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security of such series and the date
of the proposed payment which shall be at least 20 days from the
date of such notice, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided; (b) thereupon
the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt
by the Trustee of the notice of the proposed
payment; and (c) the Trustee shall promptly notify the
Company of such Special Record Date and, in the
name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of
Securities of such series at his address as it appears
in the Security Register, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special
Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the
Securities of such series are registered at the close of
business on such Special Record Date; or

     (2) the Company may make payment of any Defaulted
Interest on the Securities of any series in any
other lawful manner not inconsistent with the requirements
of any securities exchange on which such
Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given
by the Company to the Trustee of the proposed payment
pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee.

                        II-6

     Subject to the foregoing provisions of this Section,
each Security delivered under this Indenture upon
registration of transfer of or in exchange for or in lieu of
 any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such
other Security.

     SECTION 2.8. Prior to due presentment of a Security for
registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered
upon the Security Register as the owner of such Security for
the purpose of receiving payment of principal of
(and premium, if any, on) and (subject to Section 2.7) interest
on such Security and for all other purposes whatsoever, whether
or not such Security be overdue, and neither the Company, the
Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.

     Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee, or any agent of the Company or the Trustee
from giving effect to any written certification, proxy or other
authorization furnished by the Depository or its nominee, or impair,
as between the Depository and holders of beneficial interests in
any Global Security, the operation of customary practices governing
the exercise of the rights of the Depository as holder of such
Global Security, including without limitation the granting of proxies or
other authorization, direction, notice, consent, waiver or other action
which a Holder is entitled to give or take under this Indenture.

     SECTION 2.9. All Securities surrendered for payment, redemption,
registration of transfer or exchange or for credit against any
sinking fund payment shall be delivered to the Trustee and shall
be promptly cancelled by it. The Company may at any time deliver
to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered
shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled
as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Securities held by the Trustee shall be
disposed of as directed by a written order of the Company signed by
its Chairman of the Board, its President or one of its Vice Presidents.

     SECTION 2.10. (a) If the Company shall establish pursuant to
Section 2.1 that the Securities of a particular series are to be
issued in whole or in part as one or more Global Securities, then
the Company shall execute and the Trustee shall, in accordance with
Section 2.3 and the order of the Company delivered to the Trustee
thereunder, authenticate and deliver, one or more Global Securities
which (i) shall constitute, and shall be denominated in an amount
equal to the aggregate principal amount of, all or part of the
outstanding Securities of such series, (ii) shall be registered in
the name of the Depository or its nominee, (iii) shall be
held by the Trustee as agent for the Depository or delivered
pursuant to the Depository's instruction and (iv) shall bear a
legend substantially to the following effect: "Except as otherwise
provided in Section 2.10 of the Indenture, this Security may be
transferred, in whole but not in part, only to another nominee of
the Depository or to a successor Depository or to a nominee of
such successor Depository."

                              II-7

    (b) Notwithstanding any other provision (other than Section 2.10(c))
of this Section 2.10 or of Section 2.5, the Global Securities of a series
may be transferred, in whole but not in part and in the manner provided in
Section 2.5, only to another nominee of the Depository for such series, or
to a successor Depository for such series selected or approved by the
Company or to a nominee of such successor Depository.

    (c) If (i) the Company advises the Trustee in writing that the
Depository is no longer willing or able to discharge properly its
responsibilities with respect to any Securities of any series represented
by one or more Global Securities, and the Trustee or the Company is unable
to locate a qualified successor, or (ii) the Company, at its option, advises
the Trustee in writing that it has determined that any Securities of any
series represented by one or more Global Securities shall no longer be
represented by one or more Global Securities, then in either event the
Company will execute, and the Trustee, upon receipt of an Officers'
Certificate evidencing such determination by the Company, will
authenticate and deliver, Securities of such series in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of such Global
Securities in exchange for such Global Securities. Upon the exchange of
Global Securities for such Securities in definitive registered form without
coupons, in authorized denominations, the Global Securities shall be cancelled
by the Trustee and the provisions of this Section 2.10 shall no longer be
applicable to such Securities. Such Securities in definitive registered form
issued in exchange for Global Securities pursuant to this Section 2.10(c)
shall be registered in such names and in such authorized denominations
as the Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Securities to the Persons in whose names such Securities
are so registered.

     SECTION 2.11. (a) Except as otherwise specified pursuant to Section 2.1,
payment of the principal of (and premium, if any) and interest on Securities
of any series will be made in Dollars.

     (b) For purposes of any provision of this Indenture where the Holders
of outstanding Securities of a series may perform an act which requires
that a specified percentage of the outstanding Securities of such series
perform such act and for purposes of any decision or determination by
the Trustee of amounts due and unpaid for the principal (and premium,
if any) and interest on the outstanding Securities of such series in
respect of which moneys are to be disbursed ratably, the principal of
(and premium, if any) and interest on the outstanding Securities of
such series denominated in a Foreign Currency will be the amount in
Dollars based upon the Market Exchange Rate for such Foreign Currency
on the latest date for which such rate was established on or before
the date for determining the Holders entitled to perform such act,
or the date of such decision or determination by the Trustee, as
the case may be.

      SECTION 2.12. If the principal of (and premium, if any) and
interest on any Securities is payable in a Foreign Currency and such
Foreign Currency is not available for payment due to the imposition
of exchange controls or other circumstances beyond the control of
the Company, then the Company shall be entitled to satisfy its
obligations to Holders under this Indenture by making such payment
in Dollars on the basis of the Market Exchange Rate for such Foreign
Currency on the latest date for which such rate was established on or
before the date on which payment is due. Any payment made pursuant to
this Section 2.12 in Dollars where the required payment is in a
Foreign Currency shall not constitute a default under this Indenture.

                            II-8

                        ARTICLE III

                  COVENANTS OF THE COMPANY

     Subject to the provisions of Section 13.4, so long as Securities
are outstanding hereunder, the Company covenants for the benefit of
each series of Securities that:

     SECTION 3.1. The Company will punctually pay the principal
(premium, if any) and interest, if any, to become due in respect
of all the Securities of that series according to the terms of
the Securities of that series and this Indenture. Such interest on
Securities shall be payable without presentation of such
Securities and (subject to the provisions of Section 2.7) only
to or upon the written order of the Holders of such Securities.
 Except as otherwise specified as contemplated by Section 2.1
for Securities of any series, payments of interest shall be
made either, at the option of the Company, by check mailed to the
address of the person entitled thereto as such address shall appear
on the Security Register for that series, or at any one or more of
the offices or agencies of the Company maintained in accordance with
Section 3.2.

     SECTION 3.2. The Company will maintain in the Borough of
Manhattan of The City of New York, and may maintain in the city
in which the principal executive offices of the Company are located
or the city in which the principal corporate trust office of the
Trustee is located, an office or agency where, except as otherwise
provided herein, the Securities of that series may be presented for
payment, an office or agency where the Securities of that series
may be presented for registration of transfer and for exchange
as provided in this Indenture and an office or agency where notices
and demands to or upon the Company in respect of such Securities
or of this Indenture may be served. Until otherwise designated by
the Company in a written notice to the Trustee, such office or agency
in the Borough of Manhattan of The City of New York for all of the
above purposes shall be 101 Barclay Street, New York, New York
10286, Attention: Corporate Trust Administration.

     SECTION 3.3. The Company will

  (a) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports which
the Company may be required to file with the Commission pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of
1934, as amended (or copies of such portions thereof as may be
prescribed by the Commission under the provisions of the Trust
Indenture Act of 1939, as amended); or, if the Company is not
required to file with the Commission information, documents or
reports pursuant to either Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended,
then the Company will file with the Trustee and will file
with the Commission, in accordance with rules and regulations
prescribed by the Commission, such of the supplementary and periodic
information, documents and reports required pursuant to
Section 13 of the Securities Exchange Act of 1934, as amended,
in respect of a security listed and registered on a national
securities exchange as may be prescribed in such rules and
regulations;

  (b) file with the Trustee and the Commission, in accordance
with the rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by the Company with the

                          III-1
 conditions and covenants provided for in this
Indenture as may be required by such rules and regulations,
including, in the case of annual reports, if required by such
rules and regulations, certificates or opinions of independent
public accountants, conforming to the requirements of Section 14.6,
as to compliance with conditions or covenants, compliance
with which is subject to verification by accountants;

  (c) transmit to the Holders of that series of Securities, in the
 manner and to the extent provided in subdivision (c) of
Section 10.10 hereof, such summaries of any information,
documents and reports required to be filed with the Trustee
pursuant to the provisions of subdivisions (a) and (b) of
this Section 3.3 as may be required by the rules and regulations
of the Commission under the provisions of the Trust Indenture Act
of 1939, as amended; and

  (d) furnish or cause to be furnished to the Trustee semi-annually not
later than each Interest Payment Date for each series of Securities,
provided that interest on such Securities is payable at least
semi-annually, and at such other times as the Trustee may request
in writing, within 30 days after receipt by the Company of any
such request, a list in such form as the Trustee may reasonably
require containing all information in the possession or control
of the Company or of any paying agent, other than the Trustee,
as to the names and addresses of the Holders of such series
of Securities obtained since the date as of which the next
previous list, if any, was furnished. Any such list may be
dated as of a date not more than 15 days prior to the time
such information is furnished or caused to be furnished,
and need not include information received after such date.

    SECTION 3.4. Within 120 days after the close of each
fiscal year of the Company ending after the date
hereof, the Company will file with the Trustee a statement
signed by the Chairman of the Board, the Chief
Executive Officer or its President or any Vice President
and by the Treasurer or any Assistant Treasurer or
the Secretary or any Assistant Secretary of the Company
(provided, that one of such signatories shall be the
Company's principal executive officer, principal financial
officer or principal accounting officer), stating
that in the course of the performance by the signers
of their duties as officers of the Company they would
normally obtain knowledge of any default by the Company
in the performance or fulfillment of any
covenant, agreement or condition contained in this
Indenture, and stating whether or not they have obtained
knowledge of any such default, and, if so, specifying each
such default of which the signers have knowledge and the
nature thereof. For purposes of this Section 3.4,
"default" shall mean any default defined
in Section 6.1 hereof, irrespective of the giving
of any specified notice and excluding any periods of grace
provided for therein.

     SECTION 3.5. The Company will cause any paying agent
which it may appoint, other than the Trustee, to
execute and deliver to the Trustee an instrument in which
such agent shall agree with the Trustee,

 (a) that it will hold all sums held by it as such agent
for the payment of the principal of and premium, if
any, or interest on the Securities of that series
(whether such sums have been paid to it by the Company
or by any other obligor on such Securities) in trust
for the benefit of the Holders of such Securities or of
the Trustee, as the case may be,

  (b) that it will give the Trustee notice of any
failure by the Company (or by any other obligor on such
Securities) to make any payment of the principal
(and premium, if any, on) or interest on such Securities
when the same shall be due and payable, and
(c) that in the case of a default by the Company
hereunder, that it will deliver to the Trustee any sums
then held by it in respect of the Securities.

                        III-2

  If the Company acts as its own paying agent, it will,
on or before each due date of principal (and
premium, if any) or of any installment of interest on
such Securities, set aside and segregate and hold in
trust for the benefit of the Holders of such Securities
or the Trustee a sum sufficient to pay such principal
(and premium, if any) or interest and will notify the
Trustee of such action.

SECTION 3.6. The Company will:

 (a) maintain a Fixed Charge Coverage Ratio for
any fiscal quarter of not less than 1.10;

(b) cause Sears to continue to own and to hold all
legal title to and beneficial interest in all of the
outstanding voting stock of the Company;

(c) cause Sears to observe and perform in all material
respects all covenants or agreements of Sears
contained in the Fixed Charge Coverage and Ownership
Agreement; and

 (d) not amend, waive, terminate or otherwise modify
any provision of the Fixed Charge Coverage and
Ownership Agreement.
                       III-3

                    ARTICLE IV

            REDEMPTION OF SECURITIES

    SECTION 4.1. Securities of any series which are
redeemable before their Stated Maturity shall be
redeemable in accordance with their terms and
(except as otherwise specified as contemplated
by Section 2.1 for Securities of any series)
in accordance with this Article.

  SECTION 4.2. The election of the Company to redeem
any Securities shall be evidenced by an Officers'
Certificate. In case of any redemption at the election
of the Company of less than all the Securities of any
series, the Company shall, at least 45 days prior to
the Redemption Date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee),
 notify the Trustee of such Redemption Date and of the
principal amount of Securities of such series to be
redeemed. In the case of any redemption of Securities
which is subject to any restriction on such redemption
provided in the terms of such Securities or elsewhere
in this Indenture, the Company shall furnish the
Trustee with an Officers' Certificate evidencing compliance
with such restriction.

  SECTION 4.3. If less than all the Securities of
any series are to be redeemed, the particular Securities to be
redeemed shall be selected from the outstanding Securities of
such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide
for the selection for redemption of portions (equal
to the minimum authorized denomination for Securities of that
series or any integral multiple thereof, if less than all
the Securities of that series are to be redeemed on the
applicable Redemption Date) of the principal amount of
Securities of such series of a denomination larger
than the minimum authorized denomination for Securities
of that series.

  The Trustee shall promptly notify the Company in
writing of the Securities selected for redemption and, in
the case of the Securities selected for partial redemption,
the principal amount thereof to be redeemed.

  For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the
redemption of Securities shall relate, in the case of any
Securities redeemed or to be redeemed only in part,
to the portion of the principal amount of such Securities
which has been or is to be redeemed.

  SECTION 4.4. Notice of redemption shall be given by first-class
 mail, postage prepaid, mailed not less than
30 nor more than 60 days prior to the Redemption Date,
to each Holder of Securities to be redeemed, at his
address appearing in the Security Register.

All notices of redemption shall state:

(1) the Redemption Date;

(2) the Redemption Price;

(3) if less than all the outstanding
Securities of any series are to be redeemed,
the identification (and, in the case of partial
redemption, the principal amount) of the particular
Securities to be redeemed;

(4) that on the Redemption Date the Redemption
Price will become due and payable upon each such
Security to be redeemed and, if applicable, that
 interest thereon will cease to accrue on and after said
date;

                      IV-1

(5) the place or places where such Securities are to
be surrendered for payment of the Redemption Price;
and

(6) that the redemption is for a sinking fund, if such
is the case.

  Notice of redemption of Securities to be redeemed
at the election of the Company shall be given by the
Company or, at the Company's request, by the Trustee
in the name and at the expense of the Company.

  Any notice which is mailed in the manner herein
provided shall be conclusively presumed to be duly
given, whether or not the Holder receives such notice;
any failure to give such notice by mail or any
defect in such notice to the Holder of a particular
Security designated for redemption as a whole or in
part shall not affect the validity of the proceedings
for the redemption of any other Security.

   SECTION 4.5.  On or prior to any Redemption Date,
the Company shall deposit with the Trustee or with
a paying agent (or, if the Company is acting as its
own paying agent, segregate and hold in trust as
provided in Section 3.5) an amount of money sufficient
to pay the Redemption Price of, and (except if
the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities which are
to be redeemed on that date.

   SECTION 4.6. Notice of redemption having been
given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable
at the Redemption Price therein specified, and
from and after such date (unless the Company shall
default on the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear
interest. Upon surrender of any such Security for
redemption in accordance with said notice, such
Security shall be paid by the Company at the
Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that
installments of interest whose Stated Maturity
is on or prior to the Redemption Date shall be payable to
the Holders of such Securities, registered as such at the
close of business on the relevant Regular or Special Record
Dates according to their terms and the provisions of Section 2.7.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the
principal (and premium, if any) shall, until paid, bear
interest from the Redemption Date at the rate
prescribed therefor in the Security.

   SECTION 4.7. Any Security which is to be redeemed
 only in part shall be surrendered at the office or
agency of the Company to be maintained pursuant to
 Section 3.2 (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company
and to the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing),
and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of
such Security without service charge, a Security
or Securities of the same series and Stated
Maturity of any authorized denomination as
requested by such Holder, in aggregate
principal amount equal to and in exchange for
the unredeemed portion of the principal of
the Security so surrendered and bearing a
number not contemporaneously outstanding. If
a Global Security is so surrendered such new
Security or Securities so issued shall be a
Global Security or Global Securities.

                               IV-2

                        ARTICLE V

                      SINKING FUNDS

        SECTION 5.1.  The provisions of this Article
shall be applicable to any sinking fund for the retirement
of Securities of a series except as otherwise specified
as contemplated by Section 2.1 for Securities of
such series.

       The minimum amount of any sinking fund payment
provided for by the terms of Securities of any series
is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such
minimum amount provided for by the terms of Securities
of any series is herein referred to as an
"optional sinking fund payment". Unless otherwise
provided for by the terms of Securities of any series,
the cash amount of any sinking fund payment may be
subject to reduction as provided in Section 5.2.
Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for
by the terms of Securities of such series.

      SECTION 5.2. The Company (1) may deliver
outstanding Securities (including for purposes of this
clause (1) any Securities held by the Company in its
treasury) of a series (other than any previously
called for redemption) and (2) may, by written notice
to the Trustee, apply as a credit Securities of a
series which have been redeemed either at the election
of the Company pursuant to the terms of such
Securities or through the application of permitted
optional sinking fund payments pursuant to the terms
of such Securities, in each case in satisfaction of
all or any part of any sinking fund payment with respect
to the Securities of such series required to be made
pursuant to the terms of such Securities; provided,
however, that such Securities have not been previously
so credited. Such Securities shall be credited for
such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through
operation of the sinking fund and the amount of such
sinking fund payment shall be reduced accordingly.

      SECTION 5.3. Not less than 45 days prior to
each sinking fund payment date for any series of Securities,
the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next
ensuing sinking fund payment for that series
pursuant to the terms of that series, the
portion thereof, if any, which is to be
satisfied by payment of cash and the portion thereof,
if any, which is to be satisfied
by crediting Securities of that series pursuant to
Section 5.2 and will also deliver to the Trustee any
Securities to be delivered pursuant to clause (1) of
Section 5.2. Not less than 30 days before each such
sinking fund payment date the Trustee shall select or
cause to be selected the Securities to be redeemed
upon such sinking fund payment date in the manner
specified in Section 4.3 and cause notice of the
redemption thereof to be given in the name of and
at the expense of the Company in the manner
provided in Section 4.4. Such notice having been duly
given, the redemption of such Securities shall be
made upon the terms and in the manner stated in
Sections 4.6 and 4.7

                      V-1

                  ARTICLE VI

            REMEDIES UPON DEFAULT

    SECTION 6.1.  Subject to the provisions
of Section 2.12, the following events are hereby defined for all
purposes of this Indenture with respect to Securities
of any series (except where the term is otherwise
defined for specific purposes) as "defaults":

(a) Failure to pay the principal of (and premium,
if any, on) any of the Securities of that series, when
and as the same shall become due and payable, whether
at Stated Maturity thereof, by call for
redemption or otherwise; or

(b) Failure to pay any installment of interest
 on any of the Securities of that series, when and as the
same shall become payable as therein expressed,
and such failure shall continue for a period of 30
days (it being understood that if the entire amount
of such payment of interest is deposited by the
Company with the Trustee, or with another paying
agent duly appointed hereunder, before the
expiration of such period of 30 days, such default
 shall no longer be considered to be continuing
under this Indenture); or

(c) Failure to perform or observe any other of the
 covenants, conditions or agreements on the part of
the Company in this Indenture (other than a covenant,
 condition or agreement a default in whose
performance or whose breach is elsewhere in this
Section specifically dealt with or which has
expressly been included in this Indenture solely
for the benefit of series of Securities other than that
series) or in the Securities of that series contained,
 and such failure shall continue for a period of 60
days after written notice to the Company from the
Trustee or to the Company and to the Trustee from
the Holders of not less than a majority of the
Securities of that series then outstanding under this
Indenture; or

(d) Except as a result of compliance with any court
order to which the Company or Sears is subject or
any applicable law or any government decree, if an
event of default as defined in any mortgage,
indenture or instrument, under which there may be
issued, or by which there may be secured or
evidenced, any indebtedness for borrowed money of
the Company or of Sears (including this
Indenture), whether such indebtedness now exists
or shall hereafter be created, shall happen and shall
result in such indebtedness becoming or being declared
due and payable prior to the date on which it
would otherwise become due and payable, and such
acceleration shall not be rescinded or annulled
within 30 days after written notice to the Company
from the Trustee or to the Company and to the
Trustee from the Holders of not less than a majority
 of the Securities of that series then outstanding
under this Indenture; provided, however, that it
shall not be a default hereunder if the principal
amount of indebtedness the maturity of which, if
so accelerated, is less than $100,000,000; provided,
further, that if, prior to a declaration of acceleration
 of the maturity of the Securities then outstanding
or the entry of judgment in favor of the Trustee in
a suit pursuant to Section 6.2, such default shall be
remedied or cured by the Company or Sears or waived by
the holders of such indebtedness, or such
indebtedness shall be discharged, then the default
hereunder by reason thereof shall be deemed
likewise to have been thereupon remedied, cured or
waived without further action upon the part of
either the Trustee or any of the Holders of the Securities; or

                     VI-1

(e) If the Company shall file a petition commencing
a voluntary case under any chapter of the Federal
bankruptcy laws; or the Company shall file a petition
or answer or consent seeking reorganization,
arrangement, adjustment, or composition under any
 other similar applicable Federal law, or shall
consent to the filing of any such petition, answer,
or consent; or the Company shall appoint, or
consent to the appointment of a custodian, receiver,
liquidator, trustee, assignee, sequestrator or other
similar official in bankruptcy or insolvency of it or
 of any substantial part of its property; or shall
make an assignment for the benefit of creditors, or
 shall admit in writing its inability to pay its debts
generally as they become due; or

(f) If any order for relief against the Company shall
have been entered by a court having jurisdiction
in the premises under any chapter of the Federal
bankruptcy laws, and such order shall have
continued undischarged or unstayed for a period of
120 days; or a decree or order by a court having
jurisdiction in the premises shall have been entered
approving as properly filed a petition seeking
reorganization, arrangement, adjustment, or composition
of the Company under any other similar
applicable Federal law, and such decree or order shall
have continued undischarged or unstayed for a
period of 120 days; or a decree or order of a court
having jurisdiction in the premises for the
appointment of a custodian, receiver, liquidator,
trustee, assignee, sequestrator, or other similar
official in bankruptcy or insolvency of the Company
or of any substantial part of its property, or for
the winding up or liquidation of its affairs, shall
have been entered, and such decree or order shall
have remained in force undischarged or unstayed for
a period of 120 days; or

(g) Any other default provided with respect to Securities
of that series.

     If one or more defaults with respect to Securities
 of any series shall happen and be continuing, then, and in
each and every such case, either the Trustee, by notice in
writing to the Company, or the Holders of not less
than a majority in principal amount of the Securities
of that series then outstanding, by notice in writing to
the Company and to the Trustee, may declare due and payable,
if not already due and payable, the principal
amount (or, if the Securities of that series are Original
Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series)
of all of the Securities of that series; and upon any
such declaration all Securities of that series shall become
and be immediately due and payable, anything in
this Indenture or in any of such Securities contained to
the contrary notwithstanding. This provision,
however, is subject to the condition that if, at
any time after the principal (or portion thereof) of the
Securities of that series shall have been declared due
and payable, and prior to the Stated Maturity of the
principal thereof, all arrears of interest upon all such
Securities (with interest so far as may be lawful on any
overdue installments of interest at the rate specified in
such Securities) and the expenses of the Trustee, its
agents or attorneys shall be paid by or for the account of
the Company, and all defaults as aforesaid (other
than the payment of principal which has been so declared
due and payable) shall have been made good or
secured to the satisfaction of the Trustee and provision
deemed by the Trustee to be adequate shall be made
therefor, then and in every such case the Trustee shall,
upon the written request of the Holders of a majority
in principal amount of the Securities of that series then
outstanding, delivered to the Company and to the
Trustee, waive such default and its consequences and
rescind or annul such declaration; but no such waiver
shall extend to or affect any subsequent default, or
impair any right consequent thereon.

                       VI-2

     Notwithstanding the foregoing, to the extent the
Company shall have been relieved of any of its obligations
under this Indenture with respect to Securities of any
series pursuant to Section 13.4 hereof, the failure of the
Company to perform any such obligations as to which it
has been relieved shall not constitute a default as
contemplated by this Indenture.

   SECTION 6.2. In case the Company:

   (a) shall fail to pay any installment of interest on
any Security of any series when and as it shall become
payable and such failure shall have continued for a period
of 30 days (it being understood that if the
entire amount of such payment of interest is deposited by the
Company with the Trustee, or with another
paying agent duly appointed hereunder, before the expiration
 of such period of 30 days, such default
shall no longer be considered to be continuing under this
Indenture); or

  (b) shall fail to pay the principal, or portion thereof,
of (or premium, if any, on) any Security of any series
when it shall have become due and payable, whether at the
Stated Maturity thereof, by call for redemption, by
declaration as authorized by this Indenture (unless
annulled pursuant to Section 6.1), or otherwise;

then, upon demand of the Trustee, the Company shall
pay to the Trustee, for the benefit of the Holders of the
Securities of that series then outstanding, the whole
amount which then shall have become due on all such
Securities for principal (or premium, if any) or interest,
as the case may be, including interest at the rate
specified in the Securities of that series on overdue
principal (and premium, if any) and, so far as may be
lawful, on overdue installments of interest; and in
case the Company shall fail to pay the same forthwith
upon such demand, the Trustee in its own name and as
trustee of an express trust, shall be entitled to recover
judgment for the whole amount so due and unpaid against
the Company or any other obligor on the
Securities of that series. The right of the Trustee to
recover such judgment shall not be affected by the
exercise of any other right, power or remedy for the
enforcement of the provisions of this Indenture.

     The Trustee shall be entitled and empowered, either
in its own name or as trustee of an express trust, or as
attorney-in-fact for the Holders of the Securities of any
series, or in any one or more of such capacities, to
file such proof of debt, amendment of proof of debt, claim,
 petition or other document as may be necessary
or advisable in order to have the claims of the Trustee and
of the Holders of the Securities of that series
allowed in any equity receivership, insolvency, bankruptcy,
 liquidation, readjustment, reorganization or other
judicial proceedings relative to the Company or any
other obligor on such Securities or their creditors, or
affecting their property. The Trustee is hereby irrevocably
appointed (and the successive respective Holders
of the Securities of that series by taking and holding the
same shall be conclusively deemed to have so
appointed the Trustee) the true and lawful attorney-in-fact
of the respective Holders of the Securities of that
series, with authority to make and file in the respective
names of the Holders of such Securities, or on behalf
of the Holders of the Securities of that series as a class,
subject to deduction from any such claims of the
amounts of any claims filed by any of the Holders of the
Securities of that series themselves, any proof of
debt, amendment of proof of debt, claim, petition or
other document in any such proceeding and to receive
payment of any sums becoming distributable on account
thereof, and to execute any such other papers and
documents and to do and perform any and all such acts
and things including participating as a member of any
official or unofficial committee of creditors acting with
respect to such proceeding for and on behalf of such
holders of the Securities of that series, as may be
necessary or advisable in the opinion of the Trustee in order
to have the respective claims of the Trustee and of the Holders
of the Securities of that series allowed in any
such proceedings, and to receive payment of or on
account of such claims; provided, however, that nothing
contained in this Indenture shall be deemed to give the
 Trustee any right to accept or consent to any plan of
reorganization or otherwise by action of any character
in any such proceedings to waive or change in any
way any right of any Holder.

                           VI-3

    Any moneys received by the Trustee under this
Section 6.2 shall be applied in the order following, at
the date or dates fixed by the Trustee for the distribution
of such moneys, upon presentation of the several Securities
of any series, and stamping thereon the payment, if only
partially paid, and upon surrender thereof if fully paid:

 First: To the payment of costs and expenses of collection,
and reasonable compensation to the Trustee,
its agents, attorneys and counsel, and of all other expenses
incurred, and all advances made, by the
Trustee except as a result of its negligence or willful
misconduct;

 Second: In case the principal of (and premium, if any,
on) the outstanding Securities of that series shall
not have become due and be unpaid, to the payment of
interest on the Securities of that series, in the
order of the maturity of the installments of such interest,
with interest, so far as may be lawful, upon the
overdue installments of interest at the rate specified
in the Securities of that series, such payments to be
made ratably to the persons entitled thereto, without
discrimination or preferences;

 Third: In case the principal of (or premium, if any,
 on) the outstanding Securities of that series shall
have become due, by declaration or otherwise, to the
payment of the whole amount then owing and
unpaid upon such Securities of that series for principal
(and premium, if any) and interest, with interest
at the rate specified in the Securities of that series
on the overdue principal (and premium, if any) and,
so far as may be lawful, on the overdue installments
of interest; and in case such moneys shall be
insufficient to pay in full the whole amount so due and
unpaid upon such Securities, then to the payment
of such principal (and premium, if any) and interest,
 without preference or priority of principal over
interest, or of interest over principal or of any
installment of interest over any other installment of
interest, ratably to the aggregate of such principal
and accrued and unpaid interest;

 Fourth: In case the Trustee shall retain possession
of any funds after all obligations of the Company
hereunder have been fully paid and satisfied, such funds
shall be paid to the Company, its successors or
assigns;

provided, however, that when interest alone is to be paid,
the Trustee at its election may waive presentation
of the Securities of that series.

     SECTION 6.3. All rights of action under this
Indenture or any of the Securities outstanding hereunder,
enforceable by the Trustee, may be enforced by the Trustee
without possession of any of the Securities or the
production thereof at the trial or other proceeding relative
thereto, and any such suit or proceedings instituted
by the Trustee shall be brought for the ratable benefit of
the Holders of the Securities in respect of which any
judgment has been recovered, subject to the provisions of
this Indenture.

     SECTION 6.4. No delay or omission of the Trustee or of
the Holders of any Securities to exercise any rights
or powers accruing upon any default shall impair any such
right or power, or shall be construed to be a
waiver of any such default or acquiescence therein; and
every power and remedy given by this Article to the
Trustee or the Holders may be exercised from time to time
and as often as may be deemed expedient by the
Trustee or by the Holders.
                          VI-4

     SECTION 6.5. If any one or more defaults shall
happen and be continuing, the Trustee may, in its
discretion, proceed to protect and enforce the rights
vested in it by this Indenture by such appropriate
judicial proceedings as the Trustee, being advised by
its counsel, shall deem most effectual to protect and
enforce any of said rights, either by suit in equity or
by action at law or by proceeding in bankruptcy or
otherwise, whether for the specific performance of any
covenant or agreement contained in the Indenture or
in aid of the exercise of any power granted in the Indenture,
or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.

     Provided the Securities of any series shall not
then be due and payable by reason of a declaration pursuant
to Section 6.1 hereof, the Holders of a majority in principal
amount of the Securities of that series at the
time outstanding may on behalf of the Holders of all of
such Securities waive any past default hereunder
and its consequences, except a default in the payment of
interest on or the principal of (or premium, if any,
on) any of such Securities. In the case of any such waiver,
the Company, the Trustee and the Holders of
such Securities shall be restored to their former
positions and rights hereunder, respectively; but no such
waiver shall extend to any subsequent or other default or
impair any right consequent thereon.

     SECTION 6.6. The Holders of a majority in principal
amount of the Securities of any series then outstanding
shall have the right, by an instrument in writing executed
and delivered to the Trustee, to direct the time,
method and place of conducting any proceeding for any
remedy available to the Trustee, or of exercising any
power or trust conferred upon the Trustee under this
Indenture; provided, however, that subject to the
provisions of Section 10.1 of this Indenture, the Trustee
shall have the right to decline to follow any such
direction if the Trustee being advised by counsel determines
that the action or proceeding so directed may
not lawfully be taken or if the Trustee in good faith shall
by responsible officers determine that the action or
proceeding so directed would involve the Trustee in liability.

     SECTION 6.7. No Holder of any Security of any series shall
have the right to institute any suit, action or
proceeding, in equity or at law, for the execution of
any trust or power hereof, or for the enforcement of any
other remedy under or upon this Indenture, unless such
Holder previously shall have given to the Trustee
written notice of default with respect to the Securities
of that series, and unless also the Holders of a majority
in principal amount of the Securities of that series then
outstanding shall have made written request upon the
Trustee and shall have afforded to it a reasonable opportunity
either to proceed to exercise the powers hereinbefore granted
or to institute such action, suit or proceeding in its own name,
and shall have offered to the Trustee security and indemnity
satisfactory to it against the costs, expenses and liabilities
to be incurred therein or thereby, and the Trustee shall
have refused or neglected to comply with such request within a
reasonable time; it being understood and intended that no one
or more Holders of Securities of that series
shall have any right in any manner whatever hereunder or
under the Securities of that series by his or their
action to enforce any right hereunder except in the
manner herein provided, and that all proceedings
hereunder, at law or in equity, shall be instituted,
had and maintained in the manner herein provided and for
the ratable benefit of all Holders of such Securities.
Nothing herein contained shall, however, affect or impair
the right which is absolute and unconditional, of any
Holder of any Security to institute suit to enforce the

                           VI-5

payment of the principal of (or premium, if any, on) and
interest on his Security at and after the respective
due dates expressed in such Security (including Maturity
by call for redemption, declaration (unless annulled
pursuant to Section 6.1 hereof) of the acceleration of
the Maturity of such principal (or premium if any, on)
or interest, or otherwise), or the obligation of the
Company, which is also absolute and unconditional, to pay
the principal of (or premium, if any, on) and interest
on each of the Securities of that series to the respective
Holders thereof at the times and places in the Securities expressed.

     Anything to the contrary notwithstanding contained in this
Section 6.7, the parties to this Indenture agree and
each Holder of any Security of any series by his acceptance
thereof shall be deemed to have agreed that any
court may in its discretion require, in any suit for the
enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action
taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs
of such suit, and such court may in its discretion
assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having
due regard to the merit and good faith of the claims or
defenses made by such party litigant; provided,
however, that the provisions of this paragraph shall not
apply to any suit instituted, directly or through an
agent or agents, by the Trustee, to any suit instituted
by any Holder, or group of Holders, holding in the
aggregate more than 10% in principal amount of the Securities
of any series outstanding or to any suit
instituted by any Holder for the enforcement of the payment
of the principal of (or premium, if any, on) or
interest on his Securities of that series at and after
the respective due dates of such principal (premium, if
any) or interest expressed in his Securities of that series.

     SECTION 6.8. No Securities of any series which are
known by the Trustee to be owned or held by, for the
account of or for the benefit of, the Company or any other
obligor under this Indenture or any Affiliate of the
Company or of such other obligor (other than Securities of
that series pledged in good faith which would be
deemed outstanding under the provisions of Section 7.4) shall
be deemed outstanding for the purpose of any
payment or distribution provided for in this Article.

     SECTION 6.9. If the Trustee or any Holder shall have
proceeded to enforce any right under this Indenture,
and such proceedings shall have been discontinued or
abandoned because of waiver, or for any other reason,
or shall have been determined adversely to the Trustee
or such Holder, then, and in any such case, the
Company and the Trustee and such Holder or Holders
shall each be restored to its former position and rights
hereunder, and all rights, remedies and powers of the
Trustee and the Holders shall continue as though no
such proceedings had been taken.

                   VI-6

                 ARTICLE VII
          CONCERNING THE HOLDERS

     SECTION 7.1.  Whenever in this Indenture it is provided
that the Holders of a specified percentage or a
majority in aggregate principal amount of the Securities of
any series may take any action (including the
making of any demand or request, the giving of any notice,
consent or waiver or the taking of any other
action) the fact that at the time of taking any such action
the Holders of such specified percentages have
joined therein may be evidenced (a) by any instrument or any
number of instruments of similar tenor
executed by Holders of Securities of that series in person or
by attorney or proxy appointed in writing, or (b)
by the record of the Holders of Securities of that series
voting in favor thereof at any meeting of such
Holders duly called and held in accordance with the
provisions of Article XII, or (c) by a combination of
such instrument or instruments and any such record of
such a meeting of such Holders. The Company or the
Trustee may (and in case of any action taken by Holders
of a specified percentage or majority in aggregate
principal amount of the Securities of any series pursuant
to Section 6.1 or 6.6 hereof, the Trustee shall) set a
record date and time for purposes of determining the identity
of Holders of any series entitled to vote or
consent to any action, which record date shall be the later
of 30 days prior to the first solicitation of such
consent or the date of the most recent list of Holders
of such series of Securities furnished to the Trustee
prior to such solicitation pursuant to Section 3.3(d)
hereof. If the Company or the Trustee sets such a record
date, only those persons who are registered Holders of
such Securities at the record date and time so fixed
shall be entitled to vote or consent with respect to
such action whether or not they are Holders at the time of
such vote or consent.

     SECTION 7.2.  Subject to the provisions of Section 10.1,
proof of the execution of any instrument by a
Holder of Securities of any series or his attorney or
proxy and proof of the holding by any person of any of
the Securities of that series shall be sufficient for
any purpose of this Indenture if made in the following
manner:

  (a) The fact and date of the execution by any such
person of any instrument may be proved by the
certificate of any notary public, or other officer of
any jurisdiction of or within the United States of
America authorized to take acknowledgments of deeds
to be recorded in such jurisdiction, that the person
executing such instrument acknowledged to him the
execution thereof, or by an affidavit of a witness to
such execution sworn to before any such notary or
other such officer. Where such execution is by an
officer of a corporation or association or a member
of a partnership on behalf of such corporation,
association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his
authority.

  (b) The ownership of Securities of that series shall
be proved by the Security Register with respect to
such Securities or by a certificate of any duly appointed
registrar thereof.

  The Trustee shall not be bound to recognize any person
as a Holder of Securities of any series unless and
until his authority to vote the Securities held by him
is proved in the manner in this Article VII provided.
The record of any Holders' meeting shall be proved in
the manner provided in Section 12.6.

   The Trustee may require such additional proof of any
matter referred to in this Section 7.2 as it shall deem
necessary.

                           VII-1

    SECTION 7.3.  The Company, the Trustee, any
Authenticating Agent, any paying agent and any Security
registrar may deem and treat the person in whose name
any Security shall be registered upon the Security
Register as the absolute owner of such Security (whether
or not such Security shall be overdue and
notwithstanding any notice of ownership or writing thereon
made by anyone other than the Company or any
Security registrar) for the purpose of receiving
payment of or on account of the principal of (premium, if any,
on) and interest on such Security and for all other purposes;
and neither the Company nor the Trustee nor any
Authenticating Agent nor any paying agent nor any Security
registrar shall be affected by any notice to the
contrary. All such payments so made to any such registered
Holder for the time being or upon his order shall
be valid and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for
moneys payable upon any such Security.

     SECTION 7.4. In determining whether the Holders of
the requisite aggregate principal amount of Securities
of any series have concurred in any direction, consent
or waiver under this Indenture, Securities of that series
which are owned by or held by or for the account of or
interest of the Company or any other obligor upon the
Securities of that series, or any Affiliate of the Company
or of any other obligor upon the Securities of that
series, shall be disregarded and deemed not to be
outstanding for the purpose of any such determination,
except that for the purpose of determining whether the
Trustee shall be protected in relying on any such
direction, consent or waiver only Securities of that
series which the Trustee knows are so owned or held shall
be so disregarded. The Securities of that series so
owned or held which have been pledged in good faith may
be regarded as outstanding for the purposes of this
Section 7.4 if the pledgee shall establish to the satisfaction
of the Trustee the pledgee's right to vote such Securities
and that the pledgee is not an Affiliate of the
Company or of any such other obligor. In case of a
dispute as to such right, any decision by the Trustee taken
upon the advice of counsel shall be full protection to the Trustee.

     SECTION 7.5. Any demand, request, waiver, consent or
vote of the Holder of any Security of any series
shall be conclusive and binding upon such Holder and upon
all future Holders and owners of such Security,
and of any Security issued in exchange therefor or in place
thereof, irrespective of whether or not any
notation in regard thereto is made upon such Security.
Any action taken by the Holders of the majority or
percentage in aggregate principal amount of the Securities
of that series specified in this Indenture in
connection with such action shall be conclusively
binding upon the Company, the Trustee and the Holders of
all the Securities of that series.

                        VII-2

                    ARTICLE VIII

        IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
                OFFICERS AND DIRECTORS

     SECTION 8.1. No recourse under or upon any obligation,
covenant or agreement of this Indenture, or of any
Security of any series, or for any claim based thereon or
otherwise in respect thereof, shall be had against any
incorporator, stockholder, officer or director, as such,
past, present or future, of the Company or of any
successor corporation, either directly or through the
Company, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment
 or penalty or otherwise; it being expressly
understood that this Indenture and the obligations issued
 hereunder are solely corporate obligations, and that
no such personal liability whatever shall attach to, or
is or shall be incurred by the incorporators,
stockholders, officers or directors, as such, of the
Company or of any successor corporation, or any of them,
because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture
 or in any of the Securities of any series or implied
therefrom; and that any and all such personal liability,
either at common law or in equity or by constitution
or statute, of, and any and all such rights and claims
 against, every such incorporator, stockholder, officer or
director, as such, because of the creation of the
indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this
Indenture or in any Security of any series or implied
therefrom, are hereby expressly waived and released
as a condition of, and as a consideration for, the
execution of this Indenture and the issue of such Securities.

                               VIII-1

                              ARTICLE IX
                   MERGER, CONSOLIDATION OR SALE

     SECTION 9.1. Nothing in this Indenture shall prevent any
consolidation or merger of the Company with or
into any other corporation, or any consolidation or merger
of any other corporation with or into the
Company, or any sale or transfer of its assets and
liabilities substantially as an entirety to any other
corporation lawfully entitled to acquire the same;
provided, however, that, so long as Securities are
outstanding hereunder, the Company covenants and
agrees, that any such consolidation, merger, sale or
transfer shall be upon the condition that the due
and punctual payment of the principal of (or premium, if
any, on) and interest on, all the Securities according
to their tenor, and the due and punctual performance and
observance of all the terms, covenants and conditions of
this Indenture to be kept or performed by the
Company shall, by an indenture supplemental hereto,
executed and delivered to the Trustee, be assumed by
the corporation (if other than the Company) formed by
or resulting from any such consolidation or merger,
or which shall have received the transfer of the assets
and liabilities of the Company substantially as an
entirety, just as fully and effectually as if such
successor corporation had been the original party of the first
part hereto; and in the event of any such sale or transfer
the predecessor Company may be dissolved, wound
up and liquidated at any time thereafter.

     SECTION 9.2. Every such successor corporation
upon executing an indenture supplemental hereto, as
provided in Section 9.1, in form satisfactory to the
Trustee, shall succeed to and be substituted for the
Company with the same effect as if it had been named
herein as the Company; and any order, certificate or
resolution of officers of the Company or the Board
provided for in this Indenture may be made by like
officials of such successor corporation. Such successor
corporation may thereupon cause to be signed, either
in its own name or in the name of the Company, with
such suitable reference, if any, to such consolidation,
merger, sale or transfer as may be required by the
Trustee, any or all of the Securities of any series which
shall not theretofore have been signed by the Company and
authenticated by the Trustee or an Authenticating
Agent on its behalf; and upon the written order of
such successor corporation in lieu of the Company, and
subject to all the terms, conditions and restrictions
herein prescribed with respect to the authentication and
delivery of the Securities of any series, the Trustee or
an Authenticating Agent on its behalf shall
authenticate and deliver any and all Securities of
that series which shall have been previously signed by the
proper officers of the Company and delivered to the
Trustee or an Authenticating Agent on its behalf for
authentication, and any of such Securities which such
successor corporation shall thereafter, in accordance
with the provisions of this Indenture, cause to be signed
and delivered to the Trustee or an Authenticating
Agent on its behalf for such purpose. All Securities
of that series so authenticated and delivered shall in all
respects have the same rank as the Securities of that
series theretofore or thereafter authenticated and
delivered in accordance with the terms of this Indenture.
In case of any such consolidation, merger, sale or
 transfer, such changes in phraseology and form (but not in
substance) may be made in the Securities of any series
thereafter to be issued as may be appropriate.
SECTION 9.3. The Trustee may receive and shall, subject
to the provisions of Section 10.1 of this Indenture,
be fully protected in relying upon an Opinion of Counsel
or an Officers' Certificate as conclusive evidence
that any supplemental indenture executed under the
foregoing Section 9.1 complies with the foregoing
conditions and provisions of this Article.

                   IX-1

                ARTICLE X

          CONCERNING THE TRUSTEE

     SECTION 10.1. (a) The Trustee undertakes, prior to
default and after the curing of all defaults which may
have occurred, to perform such duties and only such duties
as are specifically set forth in this Indenture, and
in case of default (but only during the continuance thereof)
to exercise such of the rights and powers vested
in it by this Indenture, and to use the same degree of care
and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of
his own affairs.

     The Trustee, upon receipt of any resolution, certificate,
statement, opinion, report, document, order or other
instrument furnished to the Trustee pursuant to any provision
of this Indenture, shall examine them to
determine whether they conform to the requirements of this Indenture.

  (b) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own
negligent action, its own negligent failure to act,
or its own willful misconduct, except that:

      (i) prior to default hereunder and after the
curing of all defaults which may have occurred, the Trustee
shall not be liable except for the performance of such duties
as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read
into this Indenture against the Trustee but the
duties and obligations of the Trustee, prior to default
and after the curing of all defaults which may have
occurred, shall be determined solely by the express
provisions of this Indenture;

     (ii) prior to default hereunder and after the
curing of all defaults which may have occurred, and in the
absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions
conforming to the requirements of this Indenture;

     (iii) the Trustee shall not be liable for any error
of judgment made in good faith by the Trustee unless it
shall be proved that the Trustee was negligent in ascertaining
the pertinent facts; and

     (iv) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of
not less than a majority in principal amount of the
Securities of any series then outstanding relating to
the time, method and place of conducting any
proceeding for any remedy available to the Trustee
or exercising any trust or power conferred upon the
Trustee, under this Indenture.

   None of the provisions of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise
incur any personal financial liability in the performance
of any of its duties hereunder, or in the exercise of
any of its rights or powers, if there shall be reasonable
grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not
reasonably assured to it.

 (c) The Trustee shall not be responsible for the validity,
 sufficiency or the execution by the Company of this
Indenture, or of any indentures supplemental hereto,
 or of the Securities of any series, or for the recitals
herein or in the Securities contained (such recitals
being made solely by the Company).

                 X-1

 (d) Subject to the limitations contained in subdivisions
(a) and (b) of this Section 10.1:

    (i) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, opinion, notice, consent, request, order,
 appraisal, report, bond or other paper or document
believed by it to be genuine and to have been signed
 or presented by the proper party or parties;

   (ii) the Trustee may consult with counsel (who may
be counsel to the Company) and any advice or
opinion of such counsel shall be full and
complete authorization and protection in
respect of any action taken, omitted or
suffered by it hereunder in good faith and
in accordance with the advice or opinion of
such counsel;

  (iii) whenever in the administration of
this Indenture, prior to a default hereunder
and after the curing of
all defaults which may have occurred, the
Trustee shall deem it necessary or desirable
that a matter be proved or established prior to
taking or suffering any action hereunder, such
matter (unless other evidence in respect
thereof be herein specifically prescribed)
may be deemed to be conclusively proved
and established by an Officers' Certificate
delivered to the Trustee, and such certificate shall be full
warrant to the Trustee for any action taken or
suffered by it under the provisions of this Indenture upon
the faith thereof;

    (iv) the Trustee shall be under no obligation
to exercise any of the trusts or powers hereof at the request,
order or direction of any of the Holders of Securities
of any series, pursuant to the provisions of this
Indenture, unless such Holders shall have offered
to the Trustee security or indemnity satisfactory to it
against the costs, expenses and liabilities to be
incurred therein or thereby; and

   (v) the Trustee shall not be liable for any action
taken by it in good faith and believed by it to be
authorized or within the discretion or power conferred
upon it by this Indenture.

 (e) Subject to the provisions of subdivision (b)
of this Section 10.1, prior to a default hereunder and after the
curing of all defaults which may have occurred, the Trustee
shall not be bound to make any investigation into
the facts or matters stated in any resolution,
certificate, opinion, notice, consent, request,
order, appraisal, report, bond or other document
or instrument unless requested in writing so to
do by the Holders of not less than a majority in
principal amount of the Securities of any series
then outstanding; provided, however, that
if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be
incurred by it without negligence or bad faith in the
making of such investigation is, in the opinion of the
Trustee (subject to the provisions of subdivisions
(a) and (b) of this Section 10.1), not reasonably assured to
the Trustee by the security afforded to it by the
terms of this Indenture, the Trustee may require reasonable
indemnity against such costs, expenses or liabilities
as a condition to so proceeding; and provided further,
that nothing in this subdivision (e) shall require the
Trustee to give the Holders of such Securities any notice
other than that required by Section 10.3 hereof. The
reasonable expense of every such examination shall be
paid by the Company or, if paid by the Trustee, shall
be repaid by the Company upon demand.

  (f) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and
the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney
appointed with due care by it hereunder.

                      X-2

     SECTION 10.2. The Trustee shall be entitled to
reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a
 trustee of an express trust) for services rendered by it in
the execution of the trusts hereby created. The Company
also agrees to indemnify the Trustee for and hold it
harmless against loss, liability or expense incurred
without negligence or bad faith on the part of the Trustee
arising out of or in connection with the acceptance or
administration of this trust, including the costs and
expenses of defending against any claim of liability
in the premises. The Trustee shall have a first lien on
all moneys coming into its possession hereunder, for the
payment to it of its compensation and for the
repayment to it of all expenses and disbursements
payable by the Company hereunder.

     The Trustee shall not be accountable for the use or
application by the Company of any Securities of any
series authenticated and delivered hereunder or of
the proceeds of such Securities, or for the use or
application of any moneys paid over by the Trustee
in accordance with any provision of this Indenture, or for
the use or application of any moneys received by
any paying agent.

     All moneys received by the Trustee under or
pursuant to any provision of this Indenture shall constitute trust
funds for the purposes for which they were paid or are held,
but need not be segregated in any manner from
any other moneys and may be deposited by the Trustee,
under such conditions as may be prescribed by law,
in its general banking department, and the Trustee
shall not be liable for any interest thereon, except that, so
long as the Company is not in default hereunder,
the Trustee will allow and credit to the Company
interest, if any, upon such moneys at such rate
as may then be customary for similar deposits.

     SECTION 10.3. The Trustee shall give to the Holders
of Securities of any series notice, in the manner
and to the extent provided in subdivision (c) of Section
10.10, of the happening of all defaults known to it
with respect to Securities of such series, within 90 days
after the occurrence thereof unless such defaults
shall have been cured before the giving of such notice;
but, except in the case of a default resulting from the
failure to make any payment of principal of, premium,
if any, on or interest on the Securities of such series,
or in the payment of any sinking or purchase fund
installment of such series, the Trustee may withhold the
giving of such notice if and so long as the board of
directors, the executive committee or a trust committee of
directors and/or Responsible Officers, of the Trustee
in good faith determines that the withholding of such
notice is in the interest of the Holders of Securities
 of such series. For the purposes of this Section 10.3, the
term "default" shall mean any default defined in
Section 6.1, irrespective of the giving of any specified
notice and excluding any periods of grace provided for
therein. Notwithstanding anything to the contrary
herein, the Trustee shall only be deemed to have
notice of an event of default (other the pursuant
to Sections 6. l(a) and (b)) when a Vice President,
Assistant Vice President or the officer specifically assigned to
administer the Trustee's duties under this Indenture has
actual notice of such event of default.

     SECTION 10.4. If the Trustee has or shall acquire any
conflicting interest as defined in this Section 10.4,
with respect to the Securities of any series it shall,
within 90 days after ascertaining that it has such
conflicting interest if the default (as defined in
Section 10.3) to which such conflicting interest relates has not
been cured or duly waived or otherwise eliminated before
the end of such 90-day period, either eliminate
such conflicting interest or, except as otherwise provided
below, resign with respect to the Securities of that
series, such resignation to become effective upon the appointment
of a successor trustee and such successor's
acceptance of such appointment, and the Company shall take
prompt steps to have a successor appointed in
the manner provided in Section 10.6. Except in the case
of a default (as defined in Section 10.3) in

                       X-3

the payment of the principal of (or premium, if any) or
interest on any such Security, or in the payment of any
sinking or purchase fund installment, the Trustee shall
not be required to resign as otherwise provided by this
Section if the Trustee shall have sustained the burden
of proving, on application to the Commission and after
opportunity for hearing thereon, that: (i) the default
(as defined in Section 10.3) may be cured or waived
during a reasonable period and under the procedures
described in such application; and (ii) a stay of the
Trustee's duty to resign will not be inconsistent with
the interests of Holders of such Securities. The filing of
such an application shall automatically stay the performance
of the duty to resign until the Commission
orders otherwise. For the purposes of this Section 10.4
the Trustee shall be deemed to have a conflicting
interest with respect to the Securities of any series
if such Securities are in default (as defined in Section
10.3) and:

  (1) the Trustee is trustee under another indenture under
 which any other securities, or  certificates of
interest or participation in any other securities, of the
Company are outstanding, or is trustee for more
than one outstanding series of securities under a single
indenture of the Company, unless such other
indenture is a collateral trust indenture under which the
only collateral consists of Securities issued and
outstanding under this Indenture, provided that there
shall be excluded from the operation of this
paragraph other series under such indenture and any
indenture or indentures under which other securities
or certificates of interest or participation in other
securities of the Company are outstanding if (i) such
other indenture or indentures (and all series of
securities issuable thereunder) are wholly unsecured and
rank equally and such other indenture or indentures
(and such series) are hereafter qualified under the
Trust Indenture Act of 1939, as amended, unless the
 Commission shall have found and declared by order
pursuant to subsection (b) of Section 305 or subsection
(c) of Section 307 of the Trust Indenture Act of
1939, as amended, that differences exist between the
provisions of this Indenture (or such series) and the
provisions of such other indenture or indentures (or
such series) which are so likely to involve a material
conflict of interest as to make it necessary in the
public interest or for the protection of investors to
disqualify the Trustee from acting as such under this
Indenture and under such other indenture or
indentures, or (ii) the Company shall have sustained
the burden of proving, on application to the
Commission and after opportunity for hearing thereon,
that the trusteeship under this Indenture and such
other indenture or under more than one outstanding
series under a single indenture is not so likely to
involve a material conflict of interest as to make
it necessary in the public interest or for the protection of
investors to disqualify the Trustee from acting as
such under this Indenture and under such other
indenture or indentures;

(2) the Trustee or any of its directors or executive
officers is an underwriter for the Company;

(3) the Trustee directly or indirectly controls
or is directly or indirectly controlled by or is under direct or
indirect common control with an underwriter for the Company;

(4) the Trustee or any of its directors or executive
officers is a director, officer, partner, employee,
appointee or representative of the Company or of an
underwriter (other than the Trustee itself) for the
Company who is currently engaged in the business of
underwriting, except that (A) one individual may
be a director and/or an executive officer of the
Trustee and a director and/or an executive officer of the
Company, but may not be at the same time an executive
officer of both the Trustee and of the Company,
and (B) if and so long as the number of directors of
the Trustee in office is more than nine, one additional
individual may be a director and/or an executive officer
of the Trustee and a director of the Company,
and (C) the Trustee may be designated by the Company
or by any underwriter for the Company to act in
the capacity of transfer agent, registrar, custodian,
paying agent, fiscal agent, escrow agent, or depositary,
or in any other similar capacity, or, subject to the
provisions of subdivision (1) of this Section 10.4, to act
as trustee, whether under an indenture or otherwise;

                      X-4

(5) 10% or more of the voting securities of the Trustee
is beneficially owned either by the Company or
by any director, partner or executive officer of the
Company or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more
of such persons; or 10% or more of the voting
securities of the Trustee is beneficially owned either
by an underwriter for the Company or by any
director, partner or executive officer of any such
underwriter, or is beneficially owned, collectively, by
any two or more such persons;

(6) the Trustee is the beneficial owner of, or holds
as collateral security for an obligation which is in
default as hereinafter in this Section 10.4 defined,
(A) 5% or more of the voting securities or 10% or
more of any other class of security of the Company,
not including the Securities issued under this
Indenture and the securities issued under any other
indenture of the Company under which the Trustee is
also trustee, or (B) 10% or more of any class of
security of any underwriter for the Company;

(7) the Trustee is the beneficial owner of, or holds
as collateral security for an obligation which is in
default as hereinafter in this Section 10.4 defined,
5% or more of any voting securities of any person
who, to the knowledge of the Trustee, owns 10% or
more of the voting securities of, or controls directly
or indirectly or is under direct or indirect common
control with, the Company;

(8) the Trustee is the beneficial owner of, or holds
as collateral security for an obligation which is in
default as hereinafter in this Section 10.4 defined,
10% or more of any class of security of any person
who, to the knowledge of the Trustee, owns 50% or
 more of the voting securities of the Company;

(9) the Trustee owns, on the date of such default
(as defined in Section 10.3) or any anniversary of such
default while such default remains outstanding, in
the capacity of executor, administrator, testamentary
or inter vivos trustee, guardian, committee or conservator,
or in any other similar capacity, an aggregate
of 25% or more of the voting securities, or of any
class of security, of any person, the beneficial
ownership of a specified percentage of which would
have constituted a conflicting interest under
subdivisions (6), (7), or (8) of this Section 10.4.
As to any such securities of which the Trustee acquired
ownership through becoming executor, administrator or
testamentary trustee of an estate which included
them, the provisions of the preceding sentence shall
not apply, for a period of not more than two years
from the date of such acquisition, to the extent that
such securities included in such estate do not exceed
25% of such voting securities or 25% of any such class
of security. Promptly after the date of any such
default and annually in each succeeding year that the
Securities of any series remain in default, the
Trustee shall make a check of its holdings of such
securities in any of the above mentioned capacities as
of such dates. If the Company fails to make payment in
full of principal of, or premium, if any, on or
interest on any of the Securities issued under this
Indenture when and as the same becomes due and
payable, and such failure continues for 30 days thereafter,
the Trustee shall make a prompt check of its
holdings of such securities in any of the above mentioned
capacities as of the date of the expiration of
such 30-day period, and after such date, notwithstanding
the foregoing provisions of this subdivision (9),
all such securities so held by the Trustee, with sole or
joint control over such securities vested in it, shall,
but only so long as such failure shall continue, be
considered as though beneficially owned by the
Trustee, for the purposes of subdivisions (6), (7), and
(8) of this Section 10.4; or

                         X-5

  (10) except under the circumstances described in paragraphs
(1), (3), (4), (5) or (6) of Section 10.9(b),
the Trustee shall be or become a creditor of the Company.

     In determining whether the Trustee has a conflicting
interest with respect to any series of Securities under
this Section 10.4, each other series of Securities will be
treated as having been issued under an indenture
other than this Indenture unless such series of Securities
rank equally and are wholly unsecured.

      The specification of percentages in subdivisions (5) to
(9), inclusive, of this Section 10.4 shall not be
construed as indicating that the ownership of such
percentages of the securities of a person is or is not
necessary or sufficient to constitute direct or indirect
control for the purposes of subdivision (3) or (7) of this
Section 10.4.

     For the purposes of subdivisions (6), (7), (8),
and (9) of this Section 10.4, (A) the term "security" and
"securities" shall include only such securities as
are generally known as corporate securities, but shall not
include any note or other evidence of indebtedness
issued to evidence an obligation to repay moneys lent to a
person by one or more banks, trust companies, or
banking firms, or any certificate of interest or participation
in any such note or evidence of indebtedness; (B)
an obligation shall be deemed to be in default when a
default in payment of principal shall have continued
for 30 days or more, and shall not have been cured; and
(C) the Trustee shall not be deemed the owner or holder of
(i) any security which it holds as collateral
security (as trustee or otherwise) for an obligation
which is not in default as defined in clause (B) above, or
(ii) any security which it holds as collateral security
under this Indenture, irrespective of any default
hereunder, or (iii) any security which it holds as agent
for collection, or as a custodian, escrow agent or
depositary, or in any similar representative capacity.

     Except as provided in the next preceding paragraph,
the word "security" or "securities" as used in this
Section 10.4 shall mean any note, stock, treasury stock,
security future, bond, debenture, evidence of
indebtedness, certificate of interest or participation in
any profit-sharing agreement, collateral trust
certificate, pre-organization certificate or subscription,
transferable share, investment contract, voting-trust
certificate, certificate of deposit for a security,
fractional undivided interest in oil, gas, or other mineral
rights, any put, call, straddle, option, or privilege
on any security, certificate of deposit, or group or index of
securities (including any interest therein or based on the
value thereof), or any put, call, straddle, option, or
privilege entered into on a national securities exchange
relating to foreign currency, or, in general, any
interest or instrument commonly known as a "security",
or any certificate of interest or participation in,
temporary or interim certificate for, receipt for,
guarantee of, or warrant or right to subscribe to or purchase,
any of the foregoing.

     For the purposes of this Section 10.4:

(I) The term "underwriter" when used with reference
to the Company shall mean every person who,
within one year prior to the time as of which the
determination is made, has purchased from the
Company with a view to, or has offered or sold for
the Company in connection with, the distribution of
any security of the Company outstanding at such time,
or has participated or has had a direct or indirect
participation in any such undertaking, or has participated
or has had a participation in the direct or
indirect underwriting of any such undertaking, but such
term shall not include a person whose interest
was limited to a commission from an underwriter or dealer
not in excess of the usual and customary
distributors' or sellers' commission.

               X-6

(II) The term "director" shall mean any director
of a corporation or any individual performing similar
functions with respect to any organization whether
incorporated or unincorporated.

(III) The term "person" shall mean an individual,
 a corporation, a partnership, an association, a joint-
stock company, a trust, an unincorporated organization,
or a government or political subdivision thereof.
As used in this paragraph, the term "trust" shall include
only a trust where the interest or interests of the
beneficiary or beneficiaries are evidenced by a security.

(IV) The term "voting security" shall mean any security
presently entitling the owner or holder thereof to
vote in the direction or management of the affairs of a
person, or any security issued under or pursuant to
any trust, agreement, or arrangement whereby a trustee or
 trustees or agent or agents for the owner or
holder of such security are presently entitled to vote
in the direction or management of the affairs of a
person.

(V) The term "Company" shall mean any obligor upon the Securities.

(VI) The term "executive officer" shall mean the president,
every vice president, every trust officer, the
cashier, the secretary, and the treasurer of a corporation,
and any individual customarily performing
similar functions with respect to any organization whether
incorporated or unincorporated but shall not
include the chairman of the board of directors.

     The percentages of voting securities and other
securities specified in this Section 10.4 shall be calculated in
accordance with the following provisions:

(a) A specified percentage of the voting securities
 of a person means such amount of the outstanding
voting securities of such person as entitles the
holder or holders thereof to cast such specified
percentage of the aggregate votes which the holders
 of all the outstanding voting securities of such
person are entitled to cast in the direction or
management of the affairs of such person.

(b) A specified percentage of a class of securities
of a person means such percentage of the aggregate
amount of securities of the class outstanding.

(c) The term "amount", when used in regard to securities,
means the principal amount if relating to
evidences of indebtedness, the number of shares
if relating to capital shares, and the number of units
if relating to any other kind of security.

(d) The term "outstanding" means issued and
not held by or for the account of the issuer. The
following securities shall not be deemed outstanding
within the meaning of this definition:

(1) securities of an issuer held in a sinking fund
relating to securities of the issuer of the same
class;

(2) securities of an issuer held in a sinking
fund relating to another class of securities of the issuer,
if the obligation evidenced by such other class
of securities is not in default as to principal or
interest or otherwise;

                   X-7

(3) securities pledged by the issuer thereof
as security for an obligation of the issuer not in default
as to principal or interest or otherwise;

(4) securities held in escrow if placed in
escrow by the issuer thereof; provided,
however, that any voting securities of an
issuer shall be deemed outstanding if any person
other than the issuer is entitled to exercise
the voting rights thereof.

(e) A security shall be deemed to be of the
same class as another security if both securities confer
upon the holder or holders thereof substantially
the same rights and privileges, provided, however,
that, in the case of secured evidences of indebtedness,
all of which are issued under a single
indenture, differences in the interest rates
or maturity dates of various series thereof shall not be
deemed sufficient to constitute such series
different classes, and provided, further, that,
in the case of
unsecured evidences of indebtedness, differences
in the interest rates or maturity dates thereof shall
not be deemed sufficient to constitute them securities
of different classes, whether or not they are
issued under a single indenture.

     SECTION 10.5. There shall at all times be at least
one corporate Trustee under this Indenture which shall be
a bank or trust company in good standing, organized and
doing business under the laws of the United States,
or any state thereof or a corporation or other person
permitted to act as trustee by the Commission, and
having a combined capital and surplus of not less than
$20,000,000, which is authorized under the laws of
the jurisdiction of incorporation to exercise corporate
trust powers and is subject to supervision or
examination by Federal or state authority. No obligor
upon the Securities or Affiliate of such obligor shall
serve as Trustee. If the Trustee or any successor publishes
reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising
or examining authority, the combined capital and
surplus of the Trustee or of such successor Trustee shall
be deemed to be its combined capital and surplus as
set forth in its most  recent report of condition so
published. If the Trustee shall at any time cease to satisfy
the foregoing qualifications, then the Trustee shall
resign within 30 days thereafter, such resignation to
become effective upon the appointment of a successor
Trustee and such successor's acceptance of such
appointment. If the Trustee shall fail or refuse to
resign within such 30-day period, or if the Trustee has or
shall acquire any conflicting interest of the character
specified in Section 10.4 with respect to the Securities
of one or more series and shall fail or refuse either to
eliminate such conflicting interest or to resign within
the period in Section 10.4 provided in respect of such
resignation, then (i) the Trustee shall, within 10 days
after the expiration of such period, transmit notice of
such failure or refusal to the Holders of Securities of
any such series in the manner and to the extent provided
in subdivision (c) of Section 10.10; and (ii) any
Holder of Securities of such series, who has been the
bona fide Holder of a Security of such series for at least
six months, may, subject to the provisions of the last
paragraph of Section 6.7 hereof, on behalf of himself
and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee,
and the appointment of a successor, if the Trustee fails,
after written request therefor by such Holder of
Securities of such series, to comply with the
provisions of Section 10.4.

                         X-8

     SECTION 10.6.  The Trustee may resign and be
discharged from the trust hereby created with respect to the
Securities of one or more series by giving notice
thereof to the Company specifying the date when such
resignation shall take effect, and by giving notice
thereof to the Holders of Securities of such series, in the
manner and to the extent provided in subdivision (c)
 of Section 10.10. Except as otherwise provided in
Sections 10.4 and 10.5, such resignation shall take
effect on the date specified in such notice unless
previously a successor Trustee shall have been
 appointed as hereinafter provided, in which event such
resignation shall take effect upon the appointment of
such successor Trustee.

     The Trustee may be removed at any time with
respect to the Securities of any series by an instrument or
instruments in writing delivered to the Trustee and
to the Company signed by the Holders of a majority in
principal amount of the Securities of that series
then outstanding or by their duly authorized attorneys-in-
fact.

     In case the Trustee shall resign or be removed or
otherwise shall become incapable of acting as Trustee, with
respect to the Securities of one or more series, a successor
 Trustee may be appointed by the Holders of a
majority in principal amount of the Securities of any
series then outstanding by an instrument or instruments
in writing filed with the Company and with the Trustee
and signed by such Holders or by their duly
authorized attorneys-in-fact, or, in the case of the
removal of the Trustee pursuant to the provisions of
Section 10.5, by any court of competent jurisdiction
acting pursuant to the provisions of Section 10.5; but
until a new trustee shall be appointed by the Holders
of Securities of that series or a court of competent
jurisdiction as herein authorized, the Company, by an
 instrument executed by order of its Board, shall
appoint a Trustee to fill the vacancy. Every such
successor Trustee so appointed by the Holders of Securities
of that series, by a court of competent jurisdiction
 or by the Company, shall be a bank or trust company
meeting the requirements provided in Section 10.5.

     If in a proper case no appointment of a successor
Trustee with respect to the Securities of any series shall be
made pursuant to the foregoing provisions of this Article
within six months after a vacancy shall have
occurred in the office of Trustee, the Holder of any Security
of that series or any retiring Trustee may apply
to any court of competent jurisdiction to appoint a successor
Trustee. The court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint
a successor Trustee.

     SECTION 10.7.  (a) Any successor Trustee appointed
under any of the methods herein provided with respect
to all Securities shall execute, acknowledge and deliver
to its predecessor Trustee and to the Company an
instrument in writing accepting such appointment hereunder
and thereupon such successor Trustee, without
any further act, deed or conveyance, shall become fully
vested with the rights, powers, trusts, duties and
obligations of its predecessor in the trust hereunder
with like effect as if originally named as Trustee
hereunder. The predecessor Trustee shall, nevertheless,
at the written request of the successor Trustee, pay
over to the successor Trustee all moneys at the time
held by it hereunder; and the Company and the
predecessor Trustee, upon payment or provision therefor
of any amounts then due the predecessor Trustee
pursuant to the provisions of Section 10.2, shall
execute and deliver such instruments and do such other
things as may reasonably be required for more fully
and certainly vesting and confirming in the successor
Trustee all such rights, powers, trusts, duties and
obligations. The Company shall promptly give notice of the
appointment of such successor Trustee to the Holders
of all Securities in the manner and to the extent
provided in subdivision (c) of Section 10.10.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more
(but not all) series under any of the methods herein
provided, the Company, the predecessor Trustee and each
successor Trustee with respect to the Securities of one
or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee
shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable

                       X-9

 to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and
duties of the predecessor Trustee with respect to the
Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the
predecessor Trustee is not retiring with respect
to all Securities, shall contain such provisions as shall be
deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the predecessor
Trustee with respect to the Securities of that or
those series as to which the predecessor Trustee is not retiring
shall continue to be vested in the predecessor Trustee,
and (3) shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by
more than one Trustee, it being understood that nothing
 herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust
and that each such Trustee shall be trustee of a trust or
trusts hereunder separate and apart from any trust or
trusts hereunder administered by any other such
Trustee; and upon the execution and delivery of such
supplemental indenture the resignation or removal of
the predecessor Trustee shall become effective to the
extent provided therein and each such successor
Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts
and duties of the predecessor Trustee with respect to the
Securities of that or those series to which the
appointment of such successor Trustee relates; but, on
request of the Company or any successor Trustee,
such predecessor Trustee shall duly assign, transfer
and deliver to such successor Trustee all property and
money held by such predecessor Trustee hereunder with
respect to the Securities of that or those series to
which the appointment of such successor Trustee relates.
The Company shall promptly give notice of the
appointment of such successor Trustee with respect to
one or more (but not all) series of Securities to the
Holders of such series in the manner and to the extent
provided in subdivision (c) of Section 10.10.
SECTION 10.8. Any corporation into which the Trustee or
any successor to it in the trust created by this
Indenture may be merged or converted, or with which it or
any successor to it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Trustee or any successor to
it shall be a party, shall be the successor Trustee
under this Indenture without the execution or filing of any
instruments or any further act on the part of any of
the parties hereto.

     SECTION 10.9. (a) Subject to the provisions
of subdivision (b) of this Section 10.9, if the Trustee, in its
individual capacity, shall be or shall become a creditor,
directly or indirectly, secured or unsecured, of the
Company or of any other obligor upon the Securities of
any series (other than a relationship of the nature
specified in subdivision (b) of this Section 10.9)
within three months prior to a default (as defined in
subdivision (c) of this Section 10.9) or subsequent
to such a default, then, unless and until such default shall
be cured, the Trustee shall set apart and hold in a
special account for the benefit of the Trustee individually,
the Holders of the Securities and the holders of
other indenture securities (as defined in subdivision (c) of
this Section 10.9):

(1) an amount equal to any and all reductions in the
amount due and owing upon any claim as such
creditor in respect of principal or interest, effected
after the beginning of such three months' period and
valid as against the Company and its other creditors,
except any such reduction resulting from the receipt
or disposition of any property described in paragraph
(2) of this subdivision, or from the exercise of any
right of set-off which the Trustee could have exercised
if a petition in bankruptcy had been filed by or
against the Company upon the date of such default; and

                   X-10

(2) all property received by the Trustee in respect
of any claim as such creditor, either as security
therefor, or in satisfaction or composition thereof,
or otherwise, after the beginning of such three months'
period, or an amount equal to the proceeds of any such
 property, if disposed of, subject, however, to the
rights, if any, of the Company and its other creditors
in such property or such proceeds.

Nothing herein contained, however, shall affect the right of the Trustee:

(A) to retain for its own account (i) payments made on account
of any such claim by any person (other
than the Company) who is liable thereon, and (ii) the
proceeds of the bona fide sale of any such claim by
the Trustee to a third person, and (iii) distributions
made in cash, securities or other property in respect of
claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization
pursuant to the Federal bankruptcy laws or applicable state law;

(B) to realize, for its own account, upon any property held
by it as security for any such claim, if such
property was so held prior to the beginning of such three
 months' period;

(C) to realize, for its own account, but only to the
extent of the claim hereinafter mentioned, upon any
property held by it as security for any such claim,
if such claim was created after the beginning of such
three months' period and such property was received
as security therefor simultaneously with the creation
thereof, and if the Trustee shall sustain the burden
of proving that at the time such property was so
received the Trustee had no reasonable cause to believe
that a default as defined in subdivision (c) of this
Section 10.9 would occur within three months; or

(D) to receive payment on any claim referred to in paragraph
(B) or (C), against the release of any
property held as security for such claim as provided in paragraph
(B) or (C), as the case may be, to the
extent of the fair value of such property.

     For the purposes of paragraphs (B), (C) and (D),
 property substituted after the beginning of such three
months' period for property held as security at the
time of such substitution shall, to the extent of fair value
of the property released, have the same status as the
 property released, and, to the extent that any claim
referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of
repaying or refunding any pre-existing claim of the
Trustee as such creditor, such claim shall have the same
status as such pre-existing claim.

      If the Trustee shall be required to account,
the funds and property held in such special account and the
proceeds thereof shall be apportioned between the
Trustee, the Holders of Securities of any series and the
holders of other indenture securities in such manner
that the Trustee, the Holders of Securities of any series
and the holders of other indenture securities realize,
as a result of payments from such special account and
payments of dividends on claims filed against the Company
in bankruptcy or receivership or in proceedings
for reorganization pursuant to the Federal bankruptcy
laws or applicable state law, the same percentage of
their respective claims, figured before crediting to
the claim of the Trustee anything on account of the receipt
by it from the Company of the funds and property in such
special account and before crediting to the
respective claims of the Trustee, the Holders of
Securities of any series and the holders of other indenture
securities dividends on claims filed against the
Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal bankruptcy
laws or applicable state law, but after crediting thereon

                  X-11

receipts on account of the indebtedness represented
by their respective claims from all sources other than
from such dividends and from the funds and property
so held in such special account. As used in this
paragraph, with respect to any claim, the term
"dividends" shall include any distribution with respect to such
claim, in bankruptcy or receivership or in proceedings
for reorganization pursuant to the Federal bankruptcy
laws or applicable state law, whether such distribution
is made in cash, securities, or other property, but shall
not include any such distribution with respect to the
secured portion, if any, of such claim. The court in
which such bankruptcy, receivership or proceeding for
reorganization is pending shall have jurisdiction (i) to
apportion between the Trustee, the Holders of Securities
 of any series, and the holders of other indenture
securities, in accordance with the provisions of this
 paragraph, the funds and property held in such special
account and the proceeds thereof, or (ii) in lieu of
such apportionment, in whole or in part, to give to the
provisions of this paragraph due consideration in
determining the fairness of the distributions to be made to
the Trustee, the Holders of Securities of any series,
and the holders of other indenture securities, with respect
to their respective claims, in which event it shall
not be necessary to liquidate or to appraise the value of any
securities or other property held in such special
account or as security for any such claim, or to make a
specific allocation of such distributions as between
the secured and unsecured portions of such claims, or
otherwise to apply the provisions of this paragraph
as a mathematical formula.

     Any trustee who has resigned or been removed
after the beginning of such three months' period shall be
subject to the provisions of this subsection as
though such resignation or removal had not occurred. If any
trustee has resigned or been removed prior to the
beginning of such three months' period, it shall be subject
to the provisions of this subdivision if and only
if the following conditions exist-

(i) the receipt of property or reduction of claim which would
 have given rise to the obligation to account,
if such trustee had continued as Trustee, occurred after the
beginning of such three months' period; and

(ii) such receipt of property or reduction of
claim occurred within three months after such resignation or
removal.

(b) There shall be excluded from the operation of
subdivision (a) of this Section 10.9 a creditor
relationship arising from-

(1) the ownership or acquisition of securities
issued under any indenture, or any security or securities
having a maturity of one year or more at the time of
acquisition by the Trustee; and for the purposes of
this clause the term "security" shall mean any note,
stock, treasury stock, security future, bond,
debenture, evidence of indebtedness, certificate of
interest or participation in any profit-sharing
agreement, collateral trust certificate, pre-organization
certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate
of deposit for a security, fractional undivided
interest in oil, gas, or other mineral rights, any put,
 call, straddle, option, or privilege on any security,
certificate of deposit, or group or index of securities
 (including any interest therein or based on the value
thereof), or any put, call, straddle, option, or privilege
entered into on a national securities exchange
relating to foreign currency, or, in general, any interest
or instrument commonly known as a "security",
or any certificate of interest or participation in,
temporary or interim certificate for, receipt for, guarantee
of, or warrant or right to subscribe to or purchase,
any of the foregoing;

(2) advances authorized by a receivership or bankruptcy
court of competent jurisdiction, or by this
Indenture, for the purpose of preserving any property
which shall at any time be subject to the lien of
this Indenture or discharging tax liens or other prior
liens or encumbrances on the trust estate, if notice
of such advance and of the circumstances surrounding
the making thereof is given to the Holders of
Securities of the applicable series as provided in
Section 10.10;

                       X-12

(3) disbursements made in the ordinary course of
business in the capacity of trustee under an indenture,
transfer agent, registrar, custodian, paying agent,
fiscal agent or depositary, or other similar capacity;

(4) an indebtedness created as a result of services
rendered or premises rented; or an indebtedness
created as a result of goods or securities sold in a
 cash transaction as defined in subdivision (c) of this
Section 10.9;

(5) the ownership of stock or of other securities
of a corporation organized under the provisions of
Section 25(a) of the Federal Reserve Act, as amended,
which is directly or indirectly a creditor of the
Company; or

(6) the acquisition, ownership, acceptance or
negotiation of any drafts, bills of exchange, acceptances or
obligations which fall within the classification
of self-liquidating paper as defined in subdivision (c) of
this Section 10.9.

(c) As used in this Section 10.9:

(1) the term "default" shall mean any failure
to make payment in full of the principal of
(or premium, if any, on) or interest on any
of the Securities or upon the other indenture
 securities when and as such
principal, premium, if any, or interest becomes
due and payable;

(2) the term "other indenture securities"
shall mean securities upon which the Company
is an obligor (as defined in the Trust Indenture
Act of 1939, as amended) outstanding under any
other indenture (A) under which the Trustee
is also trustee, (B) which contains provisions
 substantially similar to the
provisions of subdivision (a) of this Section 10.9,
and (C) under which a default (as defined under such
indenture) exists at the time of the apportionment of
the funds and property held in said special account;

(3) the term "cash transaction" shall mean any
transaction in which full payment for goods or securities
sold is made within seven days after delivery of
the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand;

(4) the term "self-liquidating paper" shall mean any
draft, bill of exchange, acceptance or obligation
which is made, drawn, negotiated or incurred by the
Company for the purpose of financing the purchase,
processing, manufacture, shipment, storage or sale
of goods, wares or merchandise and which is secured
by documents evidencing title to, possession of, or
 a lien upon the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the
goods, wares or merchandise previously constituting
the security, provided the security is received by
the Trustee simultaneously with the creation of the
creditor relationship with the Company arising from
the making, drawing, negotiating or incurring of the
draft, bill of exchange, acceptance or obligation; and

(5) the term "Company" shall mean any obligor upon the
Securities at the time in question.

     SECTION 10.10. (a) The Trustee shall, so long as
any Securities of any series are outstanding hereunder,
transmit to the Holders, as hereinafter provided, within
60 days after May 15 of each year, beginning with
the year 2003, a brief report as of such May 15 with
respect to any of the following events which may have
occurred within the previous twelve months (but if no
such event has occurred within such period no report
need be transmitted)-

                   X-13

(1) any change to the eligibility under Section 10.5
and qualification under Section 10.4 of the Trustee to
serve as Trustee under this Indenture;

(2) the creation of or any material change to
a relationship specified in subsections (1) through (10) of the
first paragraph of Section 10.4 hereof;

(3) the character and amount of any advances
(and if the Trustee elects so to state the circumstances
surrounding the making thereof) made by it as Trustee
which remain unpaid on the date of such report,
and for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Securities,
on property or funds held or collected by it as a Trustee,
except that the Trustee shall not be required (but
may elect) to state such advances if such advances so
remaining unpaid aggregate not more than 1/2 of
1% of the principal amount of the Securities outstanding
 on such date;

(4) any change to the amount, interest rate and
maturity date of all other indebtedness owing to it in its
individual capacity, on the date of such report,
by the Company or any other obligor under this Indenture,
with a brief description of any property held as
collateral security therefor, except an indebtedness based
upon a creditor relationship arising in any manner
described in paragraph (2), (3), (4) or (6) of
subdivision (b) of Section 10.9;

(5) any change to the property and funds
physically in the possession of the Trustee in such capacity on
the date of such report;

(6) any release, or release and substitution, of
property subject to the lien of this Indenture, and any
consideration therefor, which it has not previously reported;

(7) any additional issue of Securities which it has
not previously reported; and

(8) any action taken by the Trustee in the performance
of its duties under this Indenture which it has not
previously reported and which in the opinion of the
Trustee materially affects the Securities or the trust
estate, except action in respect of a default, notice
 of which has been or is to be withheld by the Trustee
in accordance with Section 10.3.

(b) The Trustee shall, so long as any Securities
of any series shall be outstanding hereunder, also transmit to
the Holders, as hereinafter provided, within the
times hereinafter specified, a brief report with
respect to the character and amount of any advances
(and if the Trustee so elects to state the circumstances
surrounding the
making thereof) made by the Trustee, as such, since the
date of the last report transmitted pursuant to the
provisions of subdivision (a) of this Section 10.10 (or
if no such report has been so transmitted, since the date
of the execution of this Indenture), for the reimbursement
 of which it claims or may claim a lien or charge
prior to that of the Securities, on the trust estate or on
 property or funds held or collected by the Trustee, as
such, and which it has not previously reported pursuant to
this paragraph, if such advances remaining unpaid
at any time aggregate more than 10% of the principal amount
 of Securities outstanding at such time, such
report to be so transmitted within 90 days after such time.

(c) All reports required by this Section 10.10, and all
other reports or notices which are required by any
other provision of this Indenture to be transmitted in
accordance with the provisions of this Section, shall be
transmitted by mail, first class postage pre-paid to all
Holders, as the names and addresses of such Holders
appear upon the Security Register and to such holders
as have, within the two years preceding such
transmission, filed their names and addresses with the
Trustee for that purpose.

     The Trustee shall, at the time of the transmission
 to the Holders of any report or notice pursuant to this
Section 10.10, file a copy thereof with each stock exchange,
if any, upon which the Securities are listed and
with the Commission. The Company will notify the
Trustee when Securities are listed on a stock exchange.

                  X-14

     SECTION 10.11. The Trustee shall preserve, in as current
a form as is reasonably practicable, all
information furnished it pursuant to subdivision (d)
of Section 3.3 hereof, or received by it as paying agent
hereunder. The Trustee may destroy (1) any information so
furnished to it by the Company upon receipt of
new information from the Company, (2) any information
received by it as a paying agent, by delivering to
itself, as Trustee, not earlier than 45 days after
an interest payment date on the Securities, a list containing
the names and addresses of the Holders of Securities
obtained from such information since the delivery of
the last previous list, if any, and (3) any list
delivered to itself, as Trustee, which was  compiled from
information received by it as paying agent upon the
receipt of a new list so delivered.

     Within five business days after receipt by
the Trustee of a written application by any three
or more Holders of Securities stating that the applicants desire
to communicate with other Holders with respect to their rights
under this Indenture or under the Securities, and
accompanied by a copy of the form of proxy or other
communication which such applicants proposed to transmit,
and by reasonable proof that each such applicant
has owned a Security or Securities for a period of at
least six months preceding such application, the Trustee
shall, at its election, either (1) afford to such
applicants access to all information so furnished to or received
by the Trustee and not destroyed pursuant to the
provisions of this Section 10.11, or (2) inform such
applicants as to the approximate number of Holders
according to the most recent information so furnished to
or received by the Trustee, and as to the approximate
cost of mailing to the Holders the form of proxy or
other communication, if any, specified in such application.
If the Trustee shall elect not to afford to such
applicants access to such information, the Trustee
shall, upon the written request of such applicants, mail to
all Holders whose names and addresses are contained
in the then current information filed with the Trustee
as aforesaid, copies of the form of proxy or other
communication which is specified in such request, with
reasonable promptness after a tender to the Trustee
of the material to be mailed and the payment, or
provision for the payment, of the reasonable expenses
of such mailing, unless within five days after such
tender, the Trustee shall mail to such applicants,
and file with the Commission, together with a copy of the
material to be mailed, a written statement to the
effect that, in the opinion of the Trustee, such
mailing would be contrary to the best interest
of the Holders or would be in violation of
applicable law. Such written
statement shall specify the basis of such opinion.
If the Commission, after granting opportunity for a hearing
upon the objections specified in said written statement
and on notice to the Trustee, shall enter an order
refusing to sustain any of such objections, or if,
after the entry of an order sustaining one or more of such
objections, the Commission shall find, after notice
and opportunity for a hearing, that all objections sustained
have been met and shall enter an order so declaring,
the Trustee shall comply with such determination with
reasonable promptness after such determination and
the renewal of the aforesaid tender; otherwise the
Trustee shall be relieved of any obligation or duty
to such applicants respecting their application.

     Neither the Company nor the Trustee nor any
Authenticating Agent nor any paying agent nor any Security
registrar shall be liable or accountable to the Company
or to any Holder by reason of disclosure of any such
information as to the names and addresses of Holders in
accordance with the provisions of this Section
10.11, regardless of the source from which such
information was derived, nor by reason of the mailing of any
material pursuant to a request made under this Section 10.11.

                     X-15

     SECTION 10.12. The Trustee or any Authenticating Agent
or any paying agent or Security registrar in its
individual or any other capacity may buy, own, hold and
sell any of the Securities or any other evidences of
indebtedness or other securities, whether heretofore or
hereafter created or issued, of the Company or any
Subsidiary or Affiliate of the Company with the same
rights it would have if it were not Trustee,
Authenticating Agent, paying agent or Security registrar;
and any Authenticating Agent and, subject to the
provisions of this Article X, the Trustee may engage or
 be interested in any financial or other transaction with
the Company or any Subsidiary or Affiliate, including,
without limitation, secured and unsecured loans to the
Company or any Subsidiary or Affiliate, and may maintain
any and all other general banking and business
relations with the Company and any Subsidiary or Affiliate,
and may act as trustee under an indenture with
respect to indebtedness thereof, with like effect and in
the same manner and to the same extent as if the
Trustee were not a party to this Indenture; and no
implied covenant shall be read into this Indenture against
the Trustee in respect of any such matters.

     SECTION 10.13. The Trustee may comply in good faith
with any rule, regulation or order of the Commission
made pursuant to the terms and provisions of the Trust
Indenture Act of 1939, as amended, and shall be fully
protected in so doing notwithstanding that such rule,
regulation or order may thereafter be amended or
rescinded or determined by judicial or other authority
to be invalid for any reason, but nothing herein
contained shall require the Trustee to take any action
or omit to take any action in accordance with such rule,
regulation or order, except as otherwise required by
subdivisions (a) and (b) of Section 10.1.

     SECTION 10.14. At any time when any of the
Securities remain outstanding there may be an Authenticating
Agent with respect to one or more series of Securities
 appointed by the Trustee to act on its behalf and subject
to its direction in connection with the authentication of
the Securities of such series as set forth in Articles II,
IV, V, IX and XI. Such Authenticating Agent shall be
acceptable to the Company and shall at all times be a
corporation organized and doing business under the laws
 of the United States or of any State or Territory or of
the District of Columbia, authorized under such laws to
act as Authenticating Agent, having a combined
capital and surplus of not less than $20,000,000, and
being subject to supervision or examination by Federal,
State, Territorial, or District of Columbia authority
and (if there be such a corporation willing and able to act
as Authenticating Agent on reasonable and customary terms)
having its principal office and place of business
in the State of Delaware or in the Borough of Manhattan
of The City of New York. If such corporation
publishes reports of conditions at least annually,
 pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the
purposes of this Section 10.14 the combined capital and
surplus of such corporation shall be deemed to be its
 combined capital and surplus as set forth in its most
recent report of condition so published.

     Any corporation into which any Authenticating Agent
may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger,
conversion or consolidation to which any
Authenticating Agent shall be a party, or any corporation
 succeeding to the corporate agency business of any
Authenticating Agent, shall continue to be the Authenticating
Agent without the execution or filing of any
paper or any further act on the part of the Trustee or such
Authenticating Agent.

     Any Authenticating Agent with respect to one or more
series of Securities may at any time resign by giving
written notice of resignation to the Trustee and to the
Company. The Trustee may at any time terminate the
agency of any Authenticating Agent by giving written
notice of termination to such Authenticating Agent and
to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any
time any Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section
10.14, the Trustee may appoint a successor Authenticating
 Agent with respect to any series of Securities
which shall be acceptable to the Company, shall give
written notice of such appointment to the Company, and

                    X-16

the Company shall mail notice of such appointment to
all Holders of Securities of the series with respect to
which such Authenticating Agent will serve, as the
names and addresses of such Holders appear upon the
Security Register. Any successor Authenticating Agent
 upon acceptance of its appointment hereunder shall
become vested with all the rights, powers, duties and
responsibilities of its predecessor hereunder, with like
effect as if originally named as Authenticating Agent
herein. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this
Section 10.14.

     The Trustee agrees to pay to each Authenticating
 Agent from time to time reasonable compensation for its
services, and the Trustee shall be entitled to be
reimbursed for such payments subject to the provisions of
Section 10.2. An Authenticating Agent shall have no
 responsibility or liability for any action taken by it as
such at the direction of the Trustee.

     If an appointment is made pursuant to this Section,
the Securities shall have endorsed thereon, in addition to
the Trustee's Certificate, an Authenticating Agent's
Certificate in the following form:

This is one of the Securities of the series designated
and referred to in the within mentioned Indenture.

__________________________________
As Authenticating Agent

By:_________________________________
Authorized Officer

                             X-17

                         ARTICLE XI

                  SUPPLEMENTAL INDENTURES

     SECTION 11.1. The Company, when authorized by resolution of
its Board, and the Trustee, subject to the
conditions and restrictions in this Indenture contained, may from
 time to time and at any time enter into an
indenture or indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture
Act of 1939 as then in effect) for one or more of the following purposes:

(a) to evidence the succession of another corporation to the
Company, or successive successions, and the
assumption by the successor corporation of the covenants,
agreements and obligations of the Company
pursuant to Article IX;

(b) to add to the covenants and agreements of the Company
for the benefit of the Holders of all or any
series of Securities (and if such covenants and
agreements are for the benefit of less than all series of
Securities, stating that such covenants and agreements are
 expressly being included solely for the benefit
of such series), and to surrender any right or power
herein reserved to or conferred upon the Company;
(c) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to
permit or facilitate the issuance of Securities in bearer
form, registrable or not registrable as to principal,
and with or without interest coupons;

(d) to change or eliminate any of the provisions of
this Indenture, provided that any such change or
elimination (i) shall become effective only when there
is no Security outstanding of any series created
prior to the execution of such supplemental indenture
which is entitled to the benefit of such provision or
(ii) shall not apply to any such outstanding Security;

(e) to establish the form or terms of Securities of any
 series as permitted by Section 2.1;

(f) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with
respect to the Securities of one or more series and
to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by
more than one Trustee, pursuant to the requirements
of Section 10.7(b);

(g) to cure any ambiguity or to correct or supplement
any defective or inconsistent provision contained in
this Indenture or in any supplemental indenture; or

(h) to make such provisions with respect to matters or
questions arising under this Indenture as may be
necessary or desirable and not inconsistent with this
Indenture.

     The Trustee is hereby authorized to join with the
Company in the execution of any supplemental indenture
authorized or permitted by the terms of this Indenture,
to make any further appropriate agreements and
stipulations which may be therein contained, but the
Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or
otherwise.

     Any supplemental indenture authorized by the provisions
 of this Section 11.1 may be executed by the
Company and the Trustee without the consent of the Holders of
any of the Securities at the time outstanding,
notwithstanding any of the provisions of Section 11.2.

                   XI-1

     SECTION 11.2. With the consent (evidenced as provided
in Section 7.1) of the Holders (or persons entitled
to vote, or to give consents respecting the same) of not less
than a majority in principal amount of the
outstanding Securities of each series affected by such
supplemental indenture, the Company, when
authorized by a resolution of its Board, and the Trustee
 may from time to time and at any time enter into an
indenture or indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture
Act of 1939 as then in effect) for the purpose of adding
any provisions to or modifying or altering in any
manner or eliminating any of the provisions of this
Indenture or of any supplemental indenture or of
modifying or altering in any manner the rights and
obligations of the Holders of such Securities and of the
Company; provided, however, that no such supplemental
indenture shall (i) change the Stated Maturity of the
principal of (premium, if any, on), or the interest on,
any Security, or reduce the principal amount of
(premium, if any, on), or the rate of interest on any
 Security, or change the Currency in which the principal
of (and premium, if any) or interest on such Securities is
 denominated or payable, or reduce the amount of
the principal of an Original Issue Discount Security that
would be payable upon a declaration of acceleration
of the Maturity thereof pursuant to Section 6.1 without
the consent of the Holder of each outstanding
Security so affected, or (ii) reduce the aforesaid
percentage of Securities of any series the Holders of which
are required to consent to any such supplemental indenture,
without the consent of the Holders of each
outstanding Security affected thereby.

     A supplemental indenture which changes or
eliminates any covenant or other provision of this Indenture
which has expressly been included solely for the
benefit of one or more particular series of Securities, or
which modifies the rights of the Holders of Securities
of such series with respect to such covenant or other
provision, shall be deemed not to affect the rights
under this Indenture of the Holders of Securities of any
other series.

     Upon the request of the Company accompanied by
a Certified Resolution authorizing the execution of any
such supplemental indenture and upon the filing with
the Trustee of evidence of the consent of Holders of
Securities affected thereby as aforesaid, the Trustee
shall join with the Company in the execution of such
supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.

    It shall not be necessary for the consent of the
Holders under this Section 11.2 to approve the particular form
of any proposed supplemental indenture, but it shall
be sufficient if such consent shall approve the substance
thereof.

     Promptly after the execution by the Company and
the Trustee of any supplemental indenture pursuant to the
provisions of this Section 11.2 the Company shall mail,
first class postage prepaid, to the Holders of the

                       XI-2

Securities affected thereby at their last addresses as
they shall appear upon the Security Register, a notice,
setting forth in general terms the substance of such
supplemental indenture. Any failure of the Company to
mail such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any
such supplemental indenture.

     SECTION 11.3. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article
XI, or of Section 9.1, this Indenture shall be and be deemed
to be modified and amended in accordance
therewith and the respective rights, limitations of rights,
 obligations, duties and immunities under this
Indenture of the Trustee, the Company and the Holders of
Securities affected thereby shall thereafter be
determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments,
and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.

     SECTION 11.4. Securities of any series authenticated and
delivered after the execution of any supplemental
indenture pursuant to the provisions of this Article XI, or
after any action taken at a Holders' meeting
pursuant to Article XII, may bear a notation in form
approved by the Trustee as to any matter provided for in
such supplemental indenture or as to any action taken at
any such meeting; and in such case, suitable
notation may be made upon outstanding Securities affected
thereby after proper presentation and demand. If
the Company shall so determine, Securities of any series
so modified as to conform, in the opinion of the
Trustee and the Board, to any modification or alteration
of this Indenture contained in any such supplemental
indenture, or to any action taken at any such meeting,
may be prepared by the Company, authenticated by the
Trustee or an Authenticating Agent on its behalf and
delivered in exchange for outstanding Securities of such
series upon demand of and without cost to, the Holders
thereof, upon surrender of such Securities.

     SECTION 11.5. The Trustee may receive and shall, subject
to the provisions of Section 10.1, be fully
protected in relying upon an Opinion of Counsel as
conclusive evidence that any supplemental indenture
executed pursuant to this Article XI is authorized
or permitted by the terms of this Indenture and that it is not
inconsistent therewith.

     SECTION 11.6. Nothing in this Article contained shall
affect or limit the right or obligation of the Company
to execute and deliver to the Trustee any instrument of
further assurance or other instrument which
elsewhere in this Indenture it is provided shall be
delivered to the Trustee.

                       XI-3

                  ARTICLE XII

              MEETINGS OF HOLDERS

     SECTION 12.1. A meeting of Holders of any series of Securities
may be called at any time and from time to
time pursuant to the provisions of this Article XII for any of the
following purposes:

(1) to give any notice to the Company or to the Trustee, or to
give any direction to the Trustee or to
waive or consent to the waiving of any default hereunder and
its consequences, or to take any other
action authorized to be taken by such Holders pursuant to any
of the provisions of Article VI;

(2) to remove the Trustee or appoint a successor trustee
pursuant to the provisions of Article X;

(3) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the
provisions of Section 11.2; or

(4) to take any other action authorized to be taken
by or on behalf of the Holders of any specified
aggregate principal amount of the Securities of that
series under any other provision of this Indenture, or
authorized or permitted by law.

     SECTION 12.2. The Trustee may at any time call a
meeting of Holders of Securities of any series to take any
action specified in Section 12.1, to be held at such time
 and at such place in any of the city in which the
principal executive offices of the Company are located,
 the City of Wilmington, Delaware, the city in which
the principal corporate trust office of the Trustee is
located, the City of Chicago or in the Borough of
Manhattan of The City of New York, as the Trustee shall
 determine. Notice of every meeting of such
Holders, setting forth the time and place of such meeting
and in general terms the action proposed to be
taken at such meeting, shall be mailed by the Trustee,
first class postage prepaid, to the Company, and to the
Holders of Securities of that series at their last
addresses as they shall appear upon the Security Register, not
less than 20 nor more than 60 days prior to the date
fixed for the meeting.

     Any meeting of the Holders of Securities of any
series shall be valid without notice if the Holders of all
Securities of that series then outstanding are present
in person or by proxy, or if notice is waived before or
after the meeting by the Holders of all outstanding
Securities of that series, and if the Company and the
Trustee are either present by duly authorized
representatives or have, before or after the meeting, waived
notice.

     SECTION 12.3. In case at any time the Company, pursuant
 to resolution of its Board, or Holders of not less
than a majority in aggregate principal amount of the Securities
of any series then outstanding, shall have
requested the Trustee to call a meeting of Holders of Securities
of that series to take any action specified in
Section 12.1, by written request setting forth in reasonable
 detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed the notice of
such meeting within 20 days after receipt of
such request, then the Company or such Holders in the amount
above specified may determine the time and
the place in any of the city in which the principal executive
offices of the Company are located, the City of
Wilmington, Delaware, the city in which the principal
corporate trust office of the Trustee is located, the
City of Chicago or in the Borough of Manhattan of The
City of New York, for such meeting and may call
such meeting for the purpose of taking such action, by
mailing or causing to be mailed notice thereof as
provided in Section 12.2.

                          XII-1

     SECTION 12.4. To be entitled to vote at any meeting
of Holders of Securities of any series a person shall (a)
be a registered Holder of one or more Securities of that
series, or (b) be a person appointed by an instrument
in writing as proxy for the registered Holder or Holders
of Securities of that series. The only persons who
shall be entitled to be present or to speak at any meeting
of Holders shall be the persons entitled to vote at
such meeting and their counsel and any representatives of
the Trustee and its counsel and any representatives
of the Company and its counsel.

     SECTION 12.5.  Notwithstanding any other provisions
of this Indenture, the Trustee may make such
reasonable regulations as it may deem advisable for any
meeting of Holders of Securities of any series, in
regard to proof of the holding of Securities of that
series and of the appointment of proxies, and in regard to
the appointment and duties of inspectors of votes, and
submission and examination of proxies, certificates
and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it
shall think fit. Unless otherwise determined by the
Company pursuant to Section 7.1, such regulations may
fix a record date and time for purposes of determining
the registered Holders of any series of Securities
entitled to vote at such meeting, which record date shall
be (i) the later of 30 days prior to the first
solicitation of the vote at such meeting or the date of
the most recent list of Holders furnished to the Trustee
prior to such solicitation pursuant to Section 3.3(d)
hereof or (ii) such other date determined by the Trustee.
If the Trustee sets such a record date only those persons
who are registered Holders of such Securities at the
record date and time so fixed shall be entitled to vote
at such meeting whether or not they shall be such
Holders at the time of the meeting. Such regulations
 may further provide that written instruments appointing
proxies, regular on their face, may be presumed valid
and genuine without the proof specified in Section 7.2
or other proof. Except as otherwise permitted or required
 by any such regulations, the holding of such
Securities shall be proved in the manner specified in
 Section 7.2 and the appointment of any proxy shall be
proved in the manner specified in Section 7.2 or by
having the signature of the person executing the proxy
witnessed or guaranteed by any bank, banker or trust
company satisfactory to the Trustee.

     The Trustee shall, by an instrument in writing,
appoint a temporary chairman of the meeting, unless the
meeting shall have been called by the Company or
by Holders of Securities of any series as provided in
Section 12.3, in which case the Company or such
Holders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent
chairman and a permanent secretary of the
meeting shall be elected by vote of the Holders
of a majority in principal amount of the Securities of that
series represented at the meeting and entitled to vote.

     Subject to the provisions of Section 7.4, at any meeting
each Holder of Securities of any series or proxy
shall be entitled to one vote for each $1,000 principal
amount at Stated Maturity (or the Dollar equivalent
thereof based upon the Market Exchange Rate on the latest
date for which such rate was established on or
before the date for determining the Holders entitled to
perform such act, if the principal amount of any
Securities of any series is denominated in any Foreign Currency)
 of Securities of that series, provided,
however, that no vote shall be cast or counted at any meeting
in respect of any Securities of that series
challenged as not outstanding and ruled by the chairman of the
meeting to be not outstanding. The chairman
of the meeting shall have no right to vote other than by
virtue of Securities of that series held by him or
instruments in writing as aforesaid duly designating him
as the person to vote on behalf of other such

                    XII-2

Holders. At any meeting of Holders of Securities of
that series, the presence of persons holding or
representing any number of such Securities shall be
sufficient for a quorum. Any meeting of such Holders
duly called pursuant to the provisions of Section 12.2
or 12.3 may be adjourned from time to time by vote
of the Holders of a majority in principal amount of
the Securities of that series represented at the meeting
and entitled to vote, and the meeting may be held as
so adjourned without further notice.
SECTION 12.6. The vote upon any resolution submitted
to any meeting of Holders of Securities of any
series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of
that series or of their representatives by proxy and the
principal amount of the Securities of that series voted
by the ballot. The permanent chairman of the meeting
shall appoint two inspectors of votes, who shall count
all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of
the meeting their verified written reports in duplicate
of all votes cast at the meeting. A record in duplicate
of the proceedings of each meeting of Holders shall be
prepared by the secretary of the meeting and there
shall be attached to said record the original reports
of the inspectors of votes on any vote by ballot taken
thereat and affidavits by one or more persons having
knowledge of the facts, setting forth a copy of the
notice of the meeting and showing that said notice
was mailed as provided in Section 12.2. The record shall
be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one of
the duplicates shall be delivered to the Company and
the other to the Trustee to be preserved by the Trustee,
the latter to have attached thereto the ballots voted
at the meeting.

Any record so signed and verified shall be
conclusive evidence of the matters therein stated.

     SECTION 12.7.  Nothing in this Article XII contained
shall be deemed or construed to authorize or permit,
by reason of any call of a meeting of Holders of Securities
of any series or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance
or delay in the exercise of any right or rights conferred
upon or reserved to the Trustee or to the Holders of
Securities of that series under any of the provisions of
this Indenture or of such Securities.

                        XII-3

                    ARTICLE XIII

       SATISFACTION AND DISCHARGE OF INDENTURE
               OR CERTAIN OBLIGATIONS

     SECTION 13.1. If (a) the Company shall deliver to the
Trustee for cancellation all Securities theretofore
authenticated (other than any Securities which shall have
been destroyed, lost or stolen and in lieu of or in
substitution for which other Securities shall have been
authenticated and delivered) and not theretofore
cancelled, or (b) all the Securities not theretofore
cancelled or delivered to the Trustee for cancellation shall
have become due and payable, or are by their terms to become
due and payable at their Stated Maturity
within one year or are to be called for redemption within one
year under arrangements satisfactory to the
Trustee for the giving of notice of redemption, and the Company
shall deposit with the Trustee as trust funds
the entire amount sufficient to pay at Stated Maturity or upon
redemption all of the Securities (other than any
Securities which shall have been destroyed, lost or stolen
and in lieu of or in substitution for which other
Securities shall have been authenticated and delivered) not
theretofore cancelled or delivered to the Trustee
for cancellation, including principal (and premium, if any)
and interest due or to become due to such date of
Stated Maturity or Redemption Date, as the case may be, but,
excluding, however, the amount of any
moneys for the payment of principal of (and premium, if any, on)
or interest on the Securities theretofore
deposited with the Trustee and (1) repaid by the Trustee
to the Company in accordance with the provisions
of Section 13.3, or (2) paid by the Trustee to any State
 pursuant to its unclaimed property or similar laws,
and if in either case the Company shall also pay or cause
to be paid all other sums payable hereunder by the
Company, then this Indenture shall cease to be of further
effect, and the Trustee, on demand of the Company
accompanied by an Officers' Certificate and an Opinion of
Counsel, each stating that in the opinion of the
signers all conditions precedent to the satisfaction and
discharge of this Indenture have been complied with,
and at the cost and expense of the Company, shall execute
proper instruments acknowledging satisfaction of
and discharging this Indenture. The Company agrees
to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the
Trustee in connection with the Indenture or the Securities,
and any such obligation for reimbursement shall survive
this Indenture.

     SECTION 13.2. Any moneys, U.S. Government Obligations,
and Eligible Obligations which at any time
shall be deposited by the Company or on its behalf
with the Trustee or any paying agent (other than the
Company) for the purpose of paying or redeeming any
of the Securities shall be held in trust and applied by
the Trustee to the payment, to the Holders of the
particular Securities for the payment or redemption of
which such moneys have been deposited, of all sums due
and to become due thereon for principal (and
premium, if any) and interest, or analogous payments as
contemplated by Section 13.4, upon presentation
and surrender of such Securities at the office of the
Trustee or any paying agent, all subject, however, to the
provisions hereinafter contained in this Article XIII.
Neither the Company nor the Trustee (except as
provided in Section 10.2) nor any paying agent shall be
required to pay interest on any moneys so deposited.

     The Company shall pay and shall indemnify the Trustee
 against any tax, fee or other charge imposed on or
assessed against U.S. Government Obligations or Eligible
Obligations deposited pursuant to Section 13.4 or
the interest and principal received in respect of such
obligations other than any payable by or on behalf of
Holders.

                      XIII-1

     The Trustee shall deliver or pay to the Company from
time to time upon the request of the Company any
money, U.S. Government Obligations, or Eligible Obligations
held by it as provided in Section 13.4 which,
in the opinion of any independent firm of public
accountants of recognized standing selected by the Board
expressed in a written certification thereof delivered
to the Trustee, are then in excess of the amount thereof
which then would have been required to be deposited for
the purpose for which such money, U.S.
Government Obligations, or Eligible Obligations were
deposited or received.

     SECTION 13.3.  Any moneys deposited with the Trustee
or any paying agent remaining unclaimed by the
Holders of Securities for three years after the date upon
which the principal of (premium if any, on) or
interest on such Securities shall have become due and payable,
shall be repaid to the Company by the Trustee
or such paying agent, upon demand, and such Holders shall
thereafter be entitled to look only to the
Company for payment thereof; provided, however, that, before
being required to make any such payment to
the Company, the Trustee may, at the expense of the Company,
 cause to be mailed to the Holders of such
Securities, at their last addresses as they appear
on the Security Register, notice that such moneys remain
unclaimed and that, after a date named in said notice,
the balance of such moneys then unclaimed will be
returned to the Company.

     Upon the satisfaction and discharge of this
Indenture as to the Securities of any series,
all moneys then held by any paying agent
other than the Trustee hereunder shall,
upon demand of the Company, be repaid to it and
thereupon such paying agent shall be released
 from all further liability with respect to such moneys.

     SECTION 13.4.  Except as otherwise provided in
this Section 13.4 or pursuant to Section 2.1, the Company
may terminate its obligations as to the Securities
of any series if:

(a) all Securities of such series previously
authenticated and delivered (other than destroyed, lost or
stolen Securities which have been replaced
or Securities which are paid pursuant to Section 3.1 or
Securities for whose payment money or securities
 have theretofore been held in trust and thereafter
repaid to the Company, as provided in Sections 13.2
and 13.3) have been delivered to the Trustee for
cancellation and the Company has paid all sums
payable by it hereunder; or

(b)(l) the Company has irrevocably deposited or
caused to be deposited with the Trustee or a paying
agent (and conveyed all right, title and interest
for the benefit of the Holders, under the terms of an
irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust solely
for the benefit of the Holders for that purpose),
(A) money in an amount sufficient, or (B) U.S.
Government Obligations (if the Securities of the
series are denominated in Dollars) or Eligible
Obligations (if the Securities of the series are
 denominated in a Foreign Currency) maturing as to
principal and interest in such amounts and at such
 times as are sufficient in the opinion of a nationally
recognized firm of independent public accountants
expressed in a written certification thereof delivered
to the Trustee (without consideration of any
reinvestment of such interest), or (C) a combination thereof
in an amount sufficient, to pay principal (and premium,
if any) and interest on the outstanding Securities
of such series on the dates such installments are
due to redemption or maturity, and any mandatory
sinking fund payments or analogous payments
applicable to such outstanding Securities;

(2) such deposit as described in this Section 13.4
will not result in a breach or violation of, or constitute a
default under, any other agreement or instrument to
which the Company is a party or by which it is
bound;

(3) no defaults as defined in Section 6.1 shall have
 occurred and be continuing on the date of such
deposit, and no default under Section 6. l(e) or 6. l(f)
shall have occurred and be continuing on the 91st
day after such date;

(4) the Company shall have delivered to the Trustee
(i) either (A) a ruling received from the Internal
Revenue Service to the effect that the Holders of
the Securities of such series will not recognize income,
gain or loss for Federal income tax purposes as a
result of the Company's exercise of its option under this
Section 13.4 and will be subject to Federal income tax
on the same amount and in the same manner and
at the same times as would have been the case if such
option had not been exercised, or (B) an Opinion
of Counsel by recognized counsel who is not an employee
of the Company to the same effect as the
ruling described in clause (A) and (ii) an Opinion of
 Counsel to the effect that, after the passage of 90
days following the deposit, (x) the trust funds will
not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally, or (y) if a
court was to rule under any such law in any case or
 proceeding that the trust funds remained property of
the Company (AA) assuming such trust funds remained
 in the Trustee's possession prior to such court
ruling to the extent not paid to Holders of Securities
of such series, the Trustee will hold, for the benefit
of the Holders of such Securities, a valid and perfected
security interest in such trust funds that is not
avoidable in bankruptcy or otherwise, and (BB) the
 Holders of Securities will be entitled to receive
adequate protection of their interests in such trust
funds if such trust funds are used;

(5) the Company has paid or caused to be paid all sums
then payable by the Company hereunder and
under such Securities; and

(6) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for
 herein relating to the satisfaction and discharge of this
Indenture with respect to Securities of such series
have been complied with.

     Notwithstanding the foregoing clause (b) prior to
the end of the 90-day period referred to in subclause
(b)(4)(ii) above, none of the Company's obligations under
this Indenture shall be discharged, and subsequent
to the end of such 90-day period only the Company's
obligations in Sections 2.5, 2.6, 3.1, 3.2, 10.2 and 13.2
shall survive until the Securities of such series are
no longer outstanding. If and when a ruling from the
Internal Revenue Service or Opinion of Counsel referred to
in subclause (b)(4)(i) above is able to be
provided specifically without regard to, and not in reliance
 upon, the continuance of the Company's
obligations under Section 3.1, then the Company's obligations
under such Section 3.1 shall cease upon
delivery to the Trustee of such ruling or Opinion of Counsel
and compliance with the other conditions
precedent provided for herein relating to the satisfaction
and discharge of this Indenture with respect to
Securities of such series.

     After any such irrevocable deposit the Trustee upon
request shall acknowledge in writing the discharge of
the Company's obligations under the Securities of such
 series and this Indenture with respect to such
Securities except for those surviving obligations specified above.

                        XIII-3

     SECTION 13.5. The Trustee or a paying agent (other
than the Company) shall hold, in trust, the money, U.S.
Government Obligations or Eligible Obligations deposited
 with it pursuant to Section 13.4 hereof. The
Trustee or paying agent shall have been irrevocably
instructed to apply the deposited money and the
proceeds from the U.S. Government Obligations or
Eligible Obligations in accordance with the terms of this
Indenture and the terms of the Securities of the
series to the payment of principal (and premium, if any) and
interest on such Securities.

                       XIII-4

                    ARTICLE XIV

             MISCELLANEOUS PROVISIONS

    SECTION 14.1. Nothing in this Indenture, expressed or
implied, is intended or shall be construed to confer
upon, or to give to, any person or corporation, other than
the parties hereto, their successors and assigns, and
the Holders of the Securities of any series, any right,
remedy or claim under or by reason of this Indenture or
any provisions hereof; and the provisions of this Indenture
are for the exclusive benefit of the parties hereto,
their successors and assigns, any Authenticating Agent or
paying agent and the Holders of the Securities of
any series.

     SECTION 14.2. Unless otherwise specifically provided,
the certificate or opinion of any independent firm of
public accountants of recognized standing selected by the
Board shall be conclusive evidence of the
correctness of any computation made under the provisions
of this Indenture. The Company shall furnish to
the Trustee upon its request a copy of any such
certificate or opinion.

     SECTION 14.3. In case any one or more of the
provisions contained in this Indenture or in the Securities of
any series shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other
provisions of this Indenture, but this Indenture shall be
construed as if such invalid or illegal or unenforceable
provisions had never been contained herein.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by operation of
subsection (c) of Section 318 of the Trust Indenture Act
of 1939, as amended, the imposed duties shall
control.

     SECTION 14.4.  Whenever in this Indenture the
Company shall be required to do or not to do anything so
long as any of the Securities of any series shall be
outstanding, the Company shall, notwithstanding any such
provision, not be required to comply with such provisions
if it shall be entitled to have this Indenture
satisfied and discharged pursuant to the provisions
hereof, even though in either case the Holders of any of
the Securities of that series shall have failed to
present and surrender them for payment pursuant to the terms
of this Indenture.

     SECTION 14.5. Although this Indenture, for
convenience and for the purpose of reference, is dated as of
October 1, 2002, the actual date of execution by the Company
and by the Trustee is as indicated by their
respective acknowledgments hereto annexed.

    SECTION 14.6.  Unless otherwise expressly provided,
any order, notice, request, demand, certificate or
statement of the Company required or permitted to be made
or given under any provision hereof shall be
sufficiently executed if signed by its Chairman of the
Board, its Chief Executive Officer, its President or one
of its Vice Presidents and by its Vice President, Finance,
its Treasurer or one of its Assistant Treasurers or its
Secretary or one of its Assistant Secretaries.

    Upon any application, demand or request by the Company
 to the Trustee to take any action under any of the
provisions of this Indenture, the Company shall furnish
 to the Trustee an Officers' Certificate stating that all
conditions precedent, if any (including any covenants
compliance with which constitutes a condition
precedent), provided for in this Indenture relating to
the proposed action, have been complied with, and an
Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent have been
complied with.

   Each certificate or opinion by or on behalf of
the Company with respect to compliance with a condition or
covenant provided for in this Indenture (other
than certificates provided pursuant to Section 3.4

                       XIV-1

of this Indenture) shall include (l) a statement that
the person making such certificate or opinion has read such
covenant or condition; (2) a brief statement as to the
nature and scope of the examination or investigation
upon which the statements or opinions contained in such
certificate or opinion are based; (3) a statement that,
in the opinion of such person, he has made such
examination or investigation as is necessary to enable
him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and (4)
a statement as to whether or not, in the opinion of
such person, such condition or covenant has been
complied with.

    Any certificate, statement or opinion of an
officer of the Company may be based, insofar as it
relates to legal matters, upon a certificate or
opinion of or representations by counsel, unless
such officer knows that the certificate or opinion
or representations with respect to the matters upon
which his certificate, statement or opinion may
be based as aforesaid are erroneous, or in the
exercise of reasonable care should know that
the same are erroneous.

    Any certificate, statement or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon
information which is in the possession of the Company,
upon the certificate, statement or opinion of or
representations by an officer or officers of the
Company, unless such counsel knows that the certificate,
statement or opinion or representations with respect
to the matters upon which his certificate, statement, or
opinion may be based as aforesaid are erroneous, or
in the exercise of reasonable care should know that the
same are erroneous.

     Any certificate, statement or opinion of an officer
of the Company or of counsel may be based, insofar as it
relates to accounting matters, upon a certificate or opinion
of or representations by an accountant or firm of
accountants in the employ of the Company, unless
such officer or counsel, as the case may be, knows that
the certificate or opinion or representations with
respect to the accounting matters upon which his
certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable
care should know that the same are erroneous. Any
certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a
statement that such firm is independent.

     SECTION 14.7.  If any Interest Payment Date or
other payment date shall fall on a day other than a
Business Day, then any payment or deposit by or on
behalf of the Company required under the terms hereof
to be made on such date may be made instead on the
next succeeding Business Day with the same force and
effect as if made on such date.

     SECTION 14.8.  All notices to or demands upon
the Trustee shall be in writing and may be served or
presented, and such demands may be made, at the
designated office of the Trustee, c/o The Bank of New
York, 101 Barclay St., Floor 8W, New York, NY, 10286,
attention: Corporate Trust Administration.  Any
notice to or demand upon the Company shall be deemed
to have been sufficiently given or served by the
Trustee or any Holder for all purposes, by being
mailed by registered mail addressed to the Company,
attention of the President, at 3711 Kennett Pike,
Greenville, DE, 19807, or at such other address as may be
filed in writing by the Company with the Trustee.

                    XIV-2

     SECTION 14.9.  All the covenants, promises and
agreements in this Indenture contained by or on behalf of
the Company, or by or on behalf of the Trustee, shall
bind and inure to the benefit of their respective
successors and assigns, whether so expressed or not.

    SECTION 14.10. The descriptive headings of the several
Articles of this Indenture are inserted for
convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.

     SECTION 14.11. This Indenture may be simultaneously
executed in any number of counterparts, each of which
when so executed and delivered shall be an original; but
such counterparts shall together constitute but one and
the same instrument.

     SECTION 14.12.  This Indenture shall be governed
in accordance with the internal laws of the State of
Delaware.

                   XIV-3

     IN WITNESS WHEREOF, SEARS ROEBUCK ACCEPTANCE CORP.
has caused this Indenture to be signed in its corporate
name by its President, and its corporate seal to be
affixed hereto and attested to by one of its Assistant
Secretaries, and BNY MIDWEST TRUST COMPANY has caused
this Indenture to be signed in its corporate name by
one of its Assistant Vice Presidents and impressed
with its corporate seal  and attested to by one of
its Assistant Treasurers, all as of the day and
year first above written.

SEARS ROEBUCK ACCEPTANCE CO.

By   /s/ KEITH E. TROST
   ------------------------

(CORPORATE SEAL)
Attest:

/S/ GEORGE F. SLOOK
---------------------------

BNY MIDWEST TRUST COMPANY

By  /S/ M. CALLAHAN
---------------------------

(CORPORATE SEAL)
Attest:

/S/ L. GARCIA
---------------------------

STATE OF DELAWARE

COUNTY OF NEW CASTLE

     I, DOLORES L. SMALLWOOD, a Notary Public in and
for the County and State aforesaid, DO HEREBY CERTIFY
THAT KEITH E. TROST, the President, and GEORGE F. SLOOK,
an Assistant Secretary, of SEARS ROEBUCK
ACCEPTANCE CORP., who are personally known to me
to be the same persons whose names are subscribed to
the foregoing Indenture as such President and
Assistant Secretary, appeared before me this day in person,
and acknowledged that they signed, sealed and
delivered the said Indenture as their free
and voluntary act, and as the free and voluntary
act of said Company for the uses and purposes
therein set forth, and caused the corporate seal
of said Company to be thereto affixed.
GIVEN under my hand and notarial seal,
this 1st day of October, 2002.

/S/ DOLORES L. SMALLWOOD
------------------------
Notary Public

My Commission Expires:       8/14/05

[SEAL]

STATE OF ILLINOIS
COUNTY OF COOK

	I, K. GIBSON, a Notary Public in and for
the County and State aforesaid, DO HEREBY CERTIFY that MARY
CALLAHAN, an Assistant Vice President, and LINDA GARCIA,
an Assistant Treasurer, of BNY MIDWEST
TRUST COMPANY, Trustee under the foregoing Indenture,
who are personally known to me to be the same
persons whose names are subscribed to the foregoing
instrument as such and appeared before me this day in
person, and acknowledged that they signed, sealed and
delivered the said Indenture as their free and
voluntary act, and as the free and voluntary act of
said corporation for the uses and purposes therein set
forth, and caused the corporate seal of said
corporation to be thereto affixed.

   GIVEN under my hand and notarial seal,
this 1st day of October, 2002.

/S/ K. GIBSON
-----------------------
Notary Public

My Commission Expires:      7/8/08

[SEAL]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00044-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00044-of-00352.parquet"}]]