Document:

Unassociated Document

    Exhibit
      10.2

    
 

    EXECUTION
      VERSION

     

    
      

      

    

    AMENDED
      AND RESTATED CREDIT AGREEMENT

    dated
      as
      of 

    March
      19,
      2007,

    which
      amends and restates the

    AMENDED
      AND RESTATED CREDIT AGREEMENT

    dated
      as
      of July 25, 2006,

    which
      amended and restated the

    AMENDED
      AND RESTATED CREDIT AGREEMENT

    dated
      as
      of September 30, 2003,

    which
      amended and restated the

    AMENDED
      AND RESTATED CREDIT AGREEMENT

    dated
      as
      of October 19, 2001,

    which
      amended and restated both the

    CREDIT
      AGREEMENT

    Originally
      dated as of October 27, 1989

    Amended
      and restated as of June 1, 1993

    and
      the

    CREDIT
      AGREEMENT

    Originally
      dated as of June 30, 1995,

    among

    FREEPORT-MCMORAN
      COPPER & GOLD INC.,

    PT
      FREEPORT INDONESIA,

    The
      Lenders Party Hereto,

    The
      Issuing Banks Party Hereto,

     

    JPMORGAN
      CHASE BANK, N.A.,

    as
      Administrative Agent, Security Agent, JAA Security Agent and Collateral
      Agent

     

    and

     

    MERRILL
      LYNCH, PIERCE, FENNER

    &
      SMITH INCORPORATED,

    as
      Syndication Agent,

    and

    HSBC
      BANK
      USA, NATIONAL ASSOCIATION,

    THE
      BANK
      OF NOVA SCOTIA,

    UBS
      SECURITIES LLC,

    as
      Co-Documentation Agents,

    and

    U.S.
      BANK
      NATIONAL ASSOCIATION,

    as
      FI
      Trustee

    ___________________________

    
      	 	
              J.P.
                MORGAN SECURITIES INC.

            	
              MERRILL
                LYNCH, PIERCE, FENNER

              &
                SMITH INCORPORATED

            	 
	 	
              as
                Joint Lead Arrangers and Joint Bookrunners

            	 

    

              

     

    
      

      

    

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

     

    TABLE
      OF
      CONTENTS

    Page

     

    ARCLE
      I

     

    Definitions

     

    
      
        	
                SECTION
                  1.01. 

              	
                Defined
                  Terms

              	
                1

              
	
                SECTION
                  1.02. 

              	
                Classification
                  of Loans and Borrowings

              	
                47

              
	
                SECTION
                  1.03. 

              	
                Terms
                  Generally

              	
                47

              
	
                SECTION
                  1.04. 

              	
                Accounting
                  Terms; GAAP

              	
                48

              

      

    

     

    ARTICLE
      II

     

    The
      Credits

     

    
      
        	
                SECTION
                  2.01. 

              	
                Revolving
                  Commitments

              	
                48

              
	
                SECTION
                  2.02. 

              	
                Loans
                  and Borrowings

              	
                48

              
	
                SECTION
                  2.03. 

              	
                Requests
                  for Borrowings

              	
                49

              
	
                SECTION
                  2.04. 

              	
                Funding
                  of Borrowings

              	
                50

              
	
                SECTION
                  2.05. 

              	
                Letters
                  of Credit

              	
                50

              
	
                SECTION
                  2.06. 

              	
                Interest
                  Elections

              	
                55

              
	
                SECTION
                  2.07. 

              	
                Termination
                  and Reduction of Commitments

              	
                57

              
	
                SECTION
                  2.08. 

              	
                Repayment
                  of Loans; Evidence of Debt

              	
                57

              
	
                SECTION
                  2.09. 

              	
                [intentionally
                  omitted]

              	
                58

              
	
                SECTION
                  2.10. 

              	
                Prepayment
                  of Loans

              	
                58

              
	
                SECTION
                  2.11. 

              	
                Fees

              	
                59

              
	
                SECTION
                  2.12. 

              	
                Interest

              	
                60

              
	
                SECTION
                  2.13. 

              	
                Alternate
                  Rate of Interest

              	
                60

              
	
                SECTION
                  2.14. 

              	
                Increased
                  Costs

              	
                61

              
	
                SECTION
                  2.15. 

              	
                Break
                  Funding Payments

              	
                62

              
	
                SECTION
                  2.16. 

              	
                Taxes

              	
                63

              
	
                SECTION
                  2.17. 

              	
                Payments
                  Generally; Pro Rata Treatment; Sharing of Set-offs

              	
                66

              
	
                SECTION
                  2.18. 

              	
                Mitigation
                  Obligations; Replacement of Lenders

              	
                68

              
	
                SECTION
                  2.19. 

              	
                Swingline
                  Loans

              	
                69

              

      

    

     

    ARTICLE
      III

     

    
      Representations
        and Warranties

    

     

    
      
        	
                SECTION
                  3.01. 

              	
                Organization;
                  Powers

              	
                70

              
	
                SECTION
                  3.02. 

              	
                Authorization;
                  Enforceability

              	
                70

              
	
                SECTION
                  3.03. 

              	
                Governmental
                  Approvals; No Conflicts

              	
                71

              
	
                SECTION
                  3.04. 

              	
                Financial
                  Condition; No Material Adverse Change

              	
                71

              
	
                SECTION
                  3.05. 

              	
                Properties

              	
                72

              
	
                SECTION
                  3.06. 

              	
                Litigation
                  and Environmental Matters

              	
                72

              
	
                SECTION
                  3.07. 

              	
                Compliance
                  with Laws and Agreements

              	
                73

              
	
                SECTION
                  3.08. 

              	
                Investment
                  Company Status

              	
                73

              
	
                SECTION
                  3.09. 

              	
                Taxes

              	
                73

              
	
                SECTION
                  3.10. 

              	
                ERISA

              	
                73

              
	
                SECTION
                  3.11. 

              	
                Disclosure

              	
                73

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                SECTION
                  3.12. 

              	
                Subsidiaries

              	
                73

              
	
                SECTION
                  3.13. 

              	
                Insurance

              	
                74

              
	
                SECTION
                  3.14. 

              	
                Labor
                  Matters

              	
                74

              
	
                SECTION
                  3.15. 

              	
                Security
                  Documents

              	
                74

              
	
                SECTION
                  3.16. 

              	
                Federal
                  Reserve Regulations

              	
                76

              
	
                SECTION
                  3.17. 

              	
                Solvency

              	
                76

              
	
                SECTION
                  3.18. 

              	
                Senior
                  Indebtedness

              	
                76

              

      

    

     

    
      ARTICLE
        IV

      

      Conditions

      

      
        	
                SECTION
                  4.01. 

              	
                Effective
                  Date

              	
                76

              
	
                SECTION
                  4.02. 

              	
                Each
                  Credit Event

              	
                80

              

      

      

      ARTICLE
        V

      

      Affirmative
        Covenants

      

      
        	
                SECTION
                  5.01. 

              	
                Financial
                  Statements and Other Information

              	
                80

              
	
                SECTION
                  5.02. 

              	
                Notices
                  of Material Events

              	
                82

              
	
                SECTION
                  5.03. 

              	
                Information
                  Regarding Collateral

              	
                83

              
	
                SECTION
                  5.04. 

              	
                Existence;
                  Conduct of Business

              	
                83

              
	
                SECTION
                  5.05. 

              	
                Payment
                  of Obligations

              	
                83

              
	
                SECTION
                  5.06. 

              	
                Maintenance
                  of Properties

              	
                83

              
	
                SECTION
                  5.07. 

              	
                Insurance

              	
                83

              
	
                SECTION
                  5.08. 

              	
                Casualty
                  and Condemnation

              	
                84

              
	
                SECTION
                  5.09. 

              	
                Books
                  and Records; Inspection and Audit Rights

              	
                84

              
	
                SECTION
                  5.10. 

              	
                Compliance
                  with Laws; Environmental Reports

              	
                84

              
	
                SECTION
                  5.11. 

              	
                Use
                  of Proceeds and Letters of Credit

              	
                85

              
	
                SECTION
                  5.12. 

              	
                Additional
                  Subsidiaries

              	
                86

              
	
                SECTION
                  5.13. 

              	
                Further
                  Assurances

              	
                86

              
	
                SECTION
                  5.14. 

              	
                Source
                  of Interest

              	
                87

              

      

      

      ARTICLE
        VI

      

      Negative
        Covenants

      

      
        	
                SECTION
                  6.01. 

              	
                Indebtedness;
                  Certain Equity Securities

              	
                87

              
	
                SECTION
                  6.02. 

              	
                Liens

              	
                89

              
	
                SECTION
                  6.03. 

              	
                Fundamental
                  Changes

              	
                91

              
	
                SECTION
                  6.04. 

              	
                Investments
                  in Unrestricted Subsidiaries

              	
                93

              
	
                SECTION
                  6.05. 

              	
                Asset
                  Sales

              	
                93

              
	
                SECTION
                  6.06. 

              	
                Sale
                  and Leaseback Transactions

              	
                96

              
	
                SECTION
                  6.07. 

              	
                Hedging
                  Agreements

              	
                96

              
	
                SECTION
                  6.08. 

              	
                Restricted
                  Payments; Certain Payments of Indebtedness

              	
                96

              
	
                SECTION
                  6.09. 

              	
                Transactions
                  with Affiliates

              	
                98

              
	
                SECTION
                  6.10. 

              	
                Restrictive
                  Agreements

              	
                99

              
	
                SECTION
                  6.11. 

              	
                Amendment
                  of Material Documents

              	
                99

              
	
                SECTION
                  6.12. 

              	
                Fiscal
                  Year

              	
                100

              
	
                SECTION
                  6.13. 

              	
                Designation
                  of Unrestricted Subsidiaries

              	
                100

              
	
                SECTION
                  6.14. 

              	
                Total
                  Leverage Ratio

              	
                101

              
	
                SECTION
                  6.15. 

              	
                Total
                  Secured Leverage Ratio

              	
                101

              
	
                SECTION
                  6.16. 

              	
                Covenants
                  with Respect to PTII

              	
                101

              

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
                SECTION
                  6.17. 

              	
                Covenants
                  Relating to the RTZ Transactions

              	
                102

              

      

       

      
        ARTICLE
          VII

        

        Events
          of
          Default

        

        ARTICLE
          VIII

        

        The
          Agents
          and the FI Trustee

        

        ARTICLE
          IX

        

        Miscellaneous

        

        
          	
                  SECTION
                    9.01. 

                	
                  Notices

                	
                  110

                
	
                  SECTION
                    9.02. 

                	
                  Waivers;
                    Amendments

                	
                  111

                
	
                  SECTION
                    9.03. 

                	
                  Expenses;
                    Indemnity; Damage Waiver

                	
                  113

                
	
                  SECTION
                    9.04. 

                	
                  Successors
                    and Assigns

                	
                  114

                
	
                  SECTION
                    9.05. 

                	
                  Survival

                	
                  117

                
	
                  SECTION
                    9.06. 

                	
                  Counterparts;
                    Integration; Effectiveness

                	
                  118

                
	
                  SECTION
                    9.07. 

                	
                  Severability

                	
                  118

                
	
                  SECTION
                    9.08. 

                	
                  Right
                    of Setoff

                	
                  118

                
	
                  SECTION
                    9.09. 

                	
                  Governing
                    Law; Jurisdiction; Consent to Service of Process; Sovereign
                    Immunity

                	
                  118

                
	
                  SECTION
                    9.10. 

                	
                  WAIVER
                    OF JURY TRIAL

                	
                  119

                
	
                  SECTION
                    9.11. 

                	
                  Headings

                	
                  119

                
	
                  SECTION
                    9.12. 

                	
                  Confidentiality

                	
                  119

                
	
                  SECTION
                    9.13. 

                	
                  Interest
                    Rate Limitation

                	
                  120

                
	
                  SECTION
                    9.14. 

                	
                  Judgment
                    Currency

                	
                  120

                
	
                  SECTION
                    9.15. 

                	
                  RTZ
                    Transactions

                	
                  121

                
	
                  SECTION
                    9.16. 

                	
                  Patriot
                    Act

                	
                  121

                
	
                  SECTION
                    9.17. 

                	
                  No
                    Fiduciary Relationship

                	
                  122

                
	
                  SECTION
                    9.18. 

                	
                  Release
                    of Liens and Guarantees; Rejurisdictioning of PTFI

                	
                  122

                
	
                  SECTION
                    9.19. 

                	
                  Non-Public
                    Information

                	
                  123

                
	
                  SECTION
                    9.20. 

                	
                  Parallel
                    Debt

                	
                  123

                
	
                  SECTION
                    9.21. 

                	
                  Joint
                    and Several Obligations

                	
                  123

                
	
                  SECTION
                    9.22. 

                	
                  Agreements
                    under the Existing Credit Agreement

                	
                  123

                

        

        

        SCHEDULES:

        

        
          	
                  Schedule
                    1.01A—

                	
                  Disclosed
                    Matters

                
	
                  Schedule
                    1.01B—

                	
                  Existing
                    Letters of Credit

                
	
                  Schedule
                    1.01C-1 —

                	
                  Ratable
                    FCX Obligations

                
	
                  Schedule
                    1.01C-2 —

                	
                  Ratable
                    Cyprus Obligations

                
	
                  Schedule
                    1.01C-3 —

                	
                  Ratable
                    PD Obligations

                
	
                  Schedule
                    1.01D—

                	
                  Mortgaged
                    Properties

                
	
                  Schedule
                    1.01E—

                	
                  Excluded
                    Cable and Wire Subsidiaries

                
	
                  Schedule
                    2.01 — 

                	
                  Commitments

                
	
                  Schedule
                    3.03 — 

                	
                  Governmental
                    Approvals

                
	
                  Schedule
                    3.04(e) — 

                	
                  Certain
                    Developments

                
	
                  Schedule
                    3.12 — 

                	
                  Subsidiaries

                

        

         

        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

        

         

        
          	
                  Schedule
                    3.13 — 

                	
                  Insurance

                
	
                  Schedule
                    5.10A — 

                	
                  ICMM
                    Principles

                
	
                  Schedule
                    5.10B — 

                	
                  ICMM
                    Commitments with Respect to World Heritage Properties

                
	
                  Schedule
                    5.10C —

                	
                  Response
                    to Audit of Indonesian Operations by the International Centre
                    for
                    Corporate Accountability

                
	
                  Schedule
                    6.01 — 

                	
                  Existing
                    Indebtedness

                
	
                  Schedule
                    6.02 — 

                	
                  Existing
                    Liens

                
	
                  Schedule
                    6.10 — 

                	
                  Existing
                    Restrictions

                

        

        

          EXHIBITS:

           

          
            	
                    Exhibit
                      A — 

                  	
                    Form
                      of Assignment and Assumption

                  
	
                    Exhibit
                      B-1— 

                  	
                    Form
                      of Perfection Certificate

                  
	
                    Exhibit
                      B-2— 

                  	
                    Form
                      of Additional Perfection Certificate

                  
	
                    Exhibit
                      C — 

                  	
                    Form
                      of Issuing Bank Agreement

                  
	
                    Exhibit
                      D-1 — 

                  	
                    Form
                      of Collateral Agreement

                  
	
                    Exhibit
                      D-2 — 

                  	
                    Form
                      of Additional Collateral Agreement

                  
	
                    Exhibit
                      E — 

                  	
                    Form
                      of Indonesian Guarantee Agreement

                  
	
                    Exhibit
                      F — 

                  	
                    Form
                      of Affiliate Subordination Agreement

                  
	
                    Exhibit
                      G-1 — 

                  	
                    Form
                      of opinion of Davis Polk & Wardwell, New York counsel for the Borrower
                      and the Subsidiaries

                  
	
                    Exhibit
                      G-2 — 

                  	
                    Form
                      of opinion of Jones, Walker, Waechter, Poitevant, Carrère & Denègre,
                      L.L.P., U.S. counsel for the Borrower and the
                      Subsidiaries

                  
	
                    Exhibit
                      G-3 — 

                  	
                    Form
                      of opinion of Indonesian counsel for the Borrower

                  
	
                    Exhibit
                      G-4 — 

                  	
                    Form
                      of opinion of Indonesian counsel for the
                      Lenders

                  

          

        

      

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    AMENDED
      AND RESTATED CREDIT AGREEMENT dated as of March 19, 2007 (this “Agreement”),
      which
      amends and restates the AMENDED AND RESTATED CREDIT AGREEMENT dated as of July
      25, 2006, which amended and restated the AMENDED AND RESTATED CREDIT AGREEMENT
      dated as of September 30, 2003, which amended and restated the AMENDED AND
      RESTATED CREDIT AGREEMENT dated as of October 19, 2001, which amended and
      restated both the CREDIT AGREEMENT originally dated as of October 27, 1989
      and
      amended and restated as of June 1, 1993 and the CREDIT AGREEMENT originally
      dated as of June 30, 1995, among FREEPORT-MCMORAN COPPER & GOLD INC., a
      Delaware corporation, PT FREEPORT INDONESIA, a limited liability company
      organized under the laws of the Republic of Indonesia and domesticated under
      the
      laws of Delaware as a corporation, U.S. BANK NATIONAL ASSOCIATION, a national
      banking association (for purposes of Article VIII only), as trustee for the
      Lenders and certain other lenders under the FI Trust Agreement, the Lenders
      party hereto, the Issuing Banks party hereto, and JPMORGAN CHASE BANK, N.A.,
      (“JPMCB”),
      as
      Administrative Agent, Security Agent, JAA Security Agent and Collateral Agent,
      and MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (“Merrill”),
      as
      Syndication Agent.

     

    The
      Borrowers have requested that the Lenders agree to amend and restate the
      Existing Credit Agreement (such term and each other capitalized term used but
      not otherwise defined herein having the meaning assigned to it in Article I)
      in
      order to continue the credit facilities provided for therein and to extend
      credit in the form of Revolving Loans, Swingline Loans and Letters of Credit,
      in
      each case at any time and from time to time during the Revolving Availability
      Period such that the aggregate Revolving Exposures will not exceed $500,000,000
      at any time. The proceeds of Revolving Loans may be used on the Effective Date
      to (A) pay a portion of the cash portion of the Merger Consideration and (B)
      pay
      a portion of the Transaction Costs. Letters of Credit and the proceeds of other
      Revolving Loans and Swingline Loans drawn on and after the Effective Date will
      be used for working capital and other general corporate purposes of each of
      the
      Borrowers and their Subsidiaries. The Lenders are willing to continue such
      credit facilities, and to amend and restate the Existing Credit Agreement in
      the
      form hereof, upon the terms and subject to the conditions set forth herein.
      Accordingly, the parties hereto agree as follows:

     

    ARTICLE
      I

     

    Definitions

     

    SECTION
      1.01. Defined
      Terms.
      Capitalized terms used but not defined in this Agreement have the meanings
      assigned to such terms in the Parent Credit Agreement. As used in this
      Agreement, the following terms have the meanings specified below:

     

    
      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

    

    

    “ABR”,
      when
      used in reference to any Loan or Borrowing, refers to whether such Loan, or
      the
      Loans comprising such Borrowing, are bearing interest at a rate determined
      by
      reference to the Alternate Base Rate.

     

    “Additional
      Collateral Agreement”
means
      an
      amendment and restatement of the Collateral Agreement in substantially the
      form
      of Exhibit D-2.

     

    “Additional
      Collateral Date”
means
      the date on which the Additional Collateral Requirement is first
      satisfied.

     

    “Additional
      Collateral Requirement”
means
      the requirement, at all times after September 15, 2007, when the Full Stock
      Pledge Condition is not satisfied, that:

     

    (a)
      the
      Administrative Agent shall have received from each PCA Loan Party either (x)
      a
      counterpart of the Additional Collateral Agreement or (y) in the case of any
      Person that becomes a PCA Loan Party after the Additional Collateral Date,
      a
      supplement to the Additional Collateral Agreement, in the form specified
      therein, duly executed and delivered on behalf of such PCA Loan
      Party;

     

    (b)
      a
      security interest in all Indebtedness of FCX and each Subsidiary that is owing
      to any PCA Loan Party (other than Indebtedness owned by FCX, which is governed
      by clause (e) of the definition of Collateral and Guarantee Requirement) shall
      have been granted pursuant to the Additional Collateral Agreement; and any
      such
      Indebtedness (other than Indebtedness of any Subsidiary owing to a PCA Loan
      Party that is less than $25,000,000 in the aggregate for all such Indebtedness
      of such Subsidiary owing to such PCA Loan Party) shall be evidenced by a
      promissory note, which shall have been delivered to the Collateral Agent,
      together with undated instruments of transfer with respect thereto endorsed
      in
      blank;

     

    (c)
      all
      documents and instruments, including Uniform Commercial Code financing
      statements and Indonesian security register filings, and all control agreements
      required under the Additional Collateral Agreement, required by law or
      reasonably requested by the Collateral Agent to be filed, registered or recorded
      to create the Liens intended to be created by the Additional Security Documents
      and perfect such Liens to the extent required by, and with the priority required
      by, the Additional Security Documents, shall have been filed, registered or
      recorded or delivered to the Collateral Agent for filing, registration or
      recording;

     

    (d)
      the
      Administrative Agent shall have received (i) a completed Additional Perfection
      Certificate dated the Additional Collateral Date and signed by the President,
      a
      Vice President or a Financial Officer of FCX, and (ii) the results of a lien
      search with respect to each PCA Loan Party in the jurisdiction where such PCA
      Loan Party is located (within the meaning of Section 9-307 of the Uniform
      Commercial Code as in effect in the State of New York) and, if applicable,
      all
      locations where such Loan Party owns, leases or operates a minehead and evidence
      reasonably satisfactory to the Administrative Agent that the Liens indicated
      by
      such search are permitted by Section 6.02 or have been released.

     

    (e)
      the
      Administrative Agent shall have received (i) counterparts of a Mortgage with
      respect to each Mortgaged Property duly executed and delivered by the record
      owner of such Mortgaged Property, (ii) a title report issued by a nationally
      recognized title insurance company with respect to each fee
      interest

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    and
      patented claim included in each Mortgaged Property (other than any such fee
      interest or patented claim as to which the Administrative Agent shall have
      agreed that no such title report shall be required), and (iii) such legal
      opinions (but not including any “title” opinions) and other documents as the
      Collateral Agent may reasonably request with respect to any such Mortgage;
      the
      Mortgaged Properties subject to Mortgages shall at all times on and after the
      Additional Collateral Date include (x) in the case of producing properties
      and
      real properties owned by any Permitted Guarantor as of the Effective Date,
      each
      property that is set forth on Schedule 1.01D and (y) in the case of producing
      properties and real properties acquired by any Permitted Guarantor after the
      Effective Date, each such property having a fair market value, as reasonably
      determined by FCX, in excess of $100,000,000;

     

    (f)
      the
      Administrative Agent shall have received evidence that any additional insurance
      required on and after the Additional Collateral Date by the Additional Security
      Documents is in effect;

     

    (g)
      the
      Intellectual Property subject to the Lien of the Additional Collateral Agreement
      shall constitute all the United States intellectual property owned by FCX and
      the Permitted Guarantors that is material to their business; neither FCX, nor
      any PCA Loan Party shall own any United States intellectual property that is
      not
      subject to the Lien of the Additional Collateral Agreement the loss of the
      use
      of which would materially and adversely affect the operations of FCX and its
      Subsidiaries; and

     

    (h)
      each
      PCA Loan Party shall have obtained all material consents and approvals required
      to be obtained by it in connection with the execution and delivery of all
      Additional Security Documents to which it is a party, the performance of its
      obligations thereunder and the granting by it of the Liens
      thereunder.

     

    Notwithstanding
      the foregoing, (A) assets may be excluded from the Collateral required to be
      provided under the Additional Collateral Requirement in circumstances (x) where
      FCX and the Credit Agents mutually agree that the cost of obtaining a security
      interest or pledge in such assets are excessive in relation to the benefit
      to
      the Lenders of the security to be afforded thereby or (y) where such assets
      may
      not be subjected to a Lien securing the Secured Obligations pursuant to
      agreements permitted pursuant to Section 6.10 and (B) no Indonesian Subsidiary
      shall be required to provide any Guarantee of the Obligations or the Secured
      Obligations or any Collateral to secure the Obligations or the Secured
      Obligations pursuant to the Additional Collateral Requirement. 

     

    “Additional
      Perfection Certificate”
means
      the perfection certificate executed by FCX substantially in the form of
      Exhibit B-2.

     

    “Additional
      Security Documents”
means
      the Additional Collateral Agreement, the Mortgages, each control agreement
      delivered pursuant to the Additional Collateral Agreement and each other
      security agreement or other instrument or document executed and delivered in
      satisfaction of the Additional Collateral Requirement.

     

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

     

    “Administrative
      Questionnaire”
means
      an
      Administrative Questionnaire in a form supplied by the Administrative
      Agent.

     

    
      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

    

    

    “Affiliate”
means,
      with respect to a specified Person, another Person that directly, or indirectly
      through one or more intermediaries, Controls or is Controlled by or is under
      common Control with the Person specified.

     

    “Affiliate
      Subordination Agreement”
means
      the Affiliate Subordination Agreement among the Borrowers, the Subsidiaries
      from
      time to time party thereto and the Administrative Agent, substantially in the
      form of Exhibit F.

     

    “Agents”
means,
      collectively, the Administrative Agent, Security Agent, JAA Security Agent,
      the
      FI Security Agent, the Collateral Agent and the Syndication Agent.

     

    “Agreement”
has
      the
      meaning assigned to such term in the preamble hereto.

     

    “Alternate
      Base Rate”
means,
      for any day, a rate per annum equal to the greater of (a) the Prime Rate in
      effect on such day and (b) the Federal Funds Effective Rate in effect on
      such day plus 1⁄2 of 1%. Any change in the Alternate Base Rate due to a
      change in the Prime Rate or the Federal Funds Effective Rate shall be effective
      from and including the effective date of such change in the Prime Rate or the
      Federal Funds Effective Rate, respectively.

     

    “Applicable
      Percentage”
means,
      at any time with respect to any Revolving Lender, the percentage of the
      aggregate Revolving Commitments represented by such Lender’s Revolving
      Commitment at such time. If the Revolving Commitments have terminated or
      expired, the Applicable Percentages shall be determined based upon the Revolving
      Commitments most-recently in effect, giving effect to any assignments of
      Revolving Loans, LC Exposures and Swingline Exposures that occur after such
      termination or expiration.

     

    “Applicable
      Rate”
means,
      for any day, with respect to any Revolving Loan or with respect to the
      commitment fees payable hereunder, as the case may be, the applicable rate
      per
      annum set forth below under the caption “ABR Spread”, “Eurodollar Spread”, or
“Commitment Fee Rate”, as the case may be, based upon the Credit Ratings by
      Moody’s and S&P applicable on such date:

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              Credit
                Ratings:

            	
              Eurodollar
                Spread

              (bps
                per annum)

            	
              ABR
                Spread 

              (bps
                per annum)

            	
              Commitment
                Fee Rate

              (bps
                per annum)

            
	
              Category
                1

               

              BBB/Baa2
                or higher

            	
               

               

              100

            	
               

               

              0

            	
               

               

              20

            
	
              Category
                2

               

              BBB-/Baa3

            	
               

               

              125

            	
               

               

              25

            	
               

               

              25

            
	
              Category
                3

               

              BB+/Ba1

            	
               

               

              150

            	
               

               

              50

            	
               

               

              37.5

            
	
              Category
                4

               

              BB/Ba2

            	
               

               

              150

            	
               

               

              50

            	
               

               

              50

            
	
              Category
                5

               

              BB-/Ba3
                or lower

            	
               

               

              175

            	
               

               

              75

            	
               

               

              50

            

    

    

    For
      purposes of the foregoing, (i) if either Moody’s or S&P shall not have
      in effect a Credit Rating (other than by reason of the circumstances referred
      to
      in the last sentence of this definition), then FCX and the Lenders shall
      negotiate in good faith to agree upon another rating agency to be substituted
      by
      an amendment to this Agreement for the rating agency which shall not have a
      Credit Rating in effect, and pending the effectiveness of such amendment, the
      Applicable Rate shall be determined by reference to the available Credit Rating;
      (ii) if the Credit Rating established or deemed to have been established by
      Moody’s and S&P shall fall within different Categories, the Applicable Rate
      shall be based on the higher of the two Credit Ratings unless one of the two
      Credit Ratings is two or more Categories lower than the other, in which case
      the
      Applicable Rate shall be determined by reference to the Category next below
      that
      of the higher of the two Credit Ratings; and (iii) if the Credit Rating
      established or deemed to have been established by Moody’s and S&P shall be
      changed (other than as a result of a change in the rating system of Moody’s or
      S&P), such change shall be effective as of the date on which it is first
      announced by the applicable rating agency. Each change in the Applicable Rate
      shall apply during the period commencing on the effective date of such change
      and ending on the date immediately preceding the effective date of the next
      such
      change. If the rating system of Moody’s or S&P shall change, or if either
      such rating agency shall cease to be in the business of rating corporate debt
      obligations, FCX and the Lenders shall negotiate in good faith to amend this
      definition to reflect such changed rating system or the unavailability of
      ratings from such rating agency and, pending the effectiveness of any such
      amendment, the Applicable Rate shall be determined by reference to the Credit
      Rating most recently in effect prior to such change or cessation.

     

    “Assignment
      and Assumption”
means
      an
      assignment and assumption entered into by a Lender and an assignee (with the
      consent of any party whose consent is

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    required
      by Section 9.04), and accepted by the Administrative Agent, in the form of
      Exhibit A attached hereto or any other form approved by the Administrative
      Agent.

     

    “Atlantic
      Copper Financing”
means
      that certain Third Amended and Restated Term Loan and Working Capital Agreement,
      as amended from time to time, among Atlantic Copper, S.A., the lenders party
      thereto, Barclays Capital, as arranger and Barclays Bank PLC, as
      agent.

     

    “Attributable
      Debt”
means,
      on any date, in respect of any lease of FCX or any Restricted Subsidiary entered
      into as part of a Project Financing or a sale and leaseback transaction subject
      to Section 6.06, (i) if such lease is a Capital Lease Obligation, the
      capitalized amount thereof that would appear on a balance sheet of such Person
      prepared as of such date in accordance with GAAP and (ii) if such lease is
      not a Capital Lease Obligation, the capitalized amount of the remaining lease
      payments under such lease that would appear on a balance sheet of such Person
      prepared as of such date in accordance with GAAP if such lease were accounted
      for as a Capital Lease Obligation.

     

    “Attributable
      Debt Payments”
means,
      for FCX and the Restricted Subsidiaries for any period, all payments made during
      such period in respect of Attributable Debt.

     

    “Available
      Domestic Cash”
means,
      as of any date, the aggregate amount of cash and Permitted Investments held
      on
      such date by FCX or any Restricted Subsidiary that is incorporated or organized
      under the laws of the United States of America, any State thereof or the
      District of Columbia or any Guarantor, other than cash and Permitted Investments
      (a) held in accounts outside the United States of America or (b) subject to
      any
      Lien securing Indebtedness or other obligations (other than any Lien under
      the
      Loan Documents or “Loan Documents” (as defined in the Parent Credit
      Agreement)).

     

    “Block
      A”
means
      Contract Area Block A, as defined in the Contract of Work.

     

    “Block A
      Base Production”
means
      the scheduled production of FI Product from Block A for any given year as shown
      on the Product Schedule appearing as Annex A to the Participation Agreement,
      as
      in effect on the date hereof, subject however to adjustment from time to time
      pursuant to clause 16.4.2 of the Participation Agreement, as in effect on
      the date hereof.

     

    “Block
      B
      Assets”
means
      assets now owned or hereafter acquired and utilized in connection with the
      development and exploitation of Contract Area Block B (as defined in the
      Contract of Work), including with respect to mining, concentrating, processing,
      transportation, delivery and related operations (and assets used in connection
      therewith) in respect of FI Product obtained or provided from Contract Area
      Block B, but such term shall not in any event include the existing and future
      mining, concentration, processing, transportation, delivery and related
      operations (and assets used in connection therewith) in respect of FI Product
      obtained or provided from Contract Area Block A (as defined in the Contract
      of
      Work).

     

    “Board”
means
      the Board of Governors of the Federal Reserve System of the United States of
      America.

     

    “Borrower”
means
      each of FCX and PTFI.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    “Borrowing”
means
      (a) Loans of the same Class and Type, made, converted or continued on the same
      date and, in the case of Eurodollar Loans, as to which a single Interest Period
      is in effect, or (b) a Swingline Loan.

     

    “Borrowing
      Request”
means
      a
      request by the Borrower for a Borrowing in accordance with
      Section 2.03.

     

    “Business
      Day”
means
      any day that is not a Saturday, Sunday or other day on which commercial banks
      in
      New York City are authorized or required by law to remain closed; provided
      that,
      when used in connection with a Eurodollar Loan, the term “Business Day” shall
      also exclude any day on which banks are not open for dealings in dollar deposits
      in the London interbank market.

     

    “Capital
      Lease Obligations”
of
      any
      Person means the obligations of such Person to pay rent or other amounts under
      any lease of (or other arrangement conveying the right to use) real or personal
      property, or a combination thereof, which obligations are required to be
      classified and accounted for as capital leases on a balance sheet of such Person
      under GAAP, and the amount of such obligations shall be the capitalized amount
      thereof determined in accordance with GAAP.

     

    “CFC”
shall
      mean (a) each person that is a "controlled foreign person" for purposes of
      the
      Code and (b) each Subsidiary of each such controlled foreign person.

     

    “Change
      in Control”
means
      (a) the failure of FCX to own, either directly or through its wholly owned
      Subsidiaries, PTFI Shares representing at least 80% of the aggregate ordinary
      voting power attributable to all of the issued and outstanding PTFI Shares
      (or
      following a transaction permitted under Section 6.05(c), the minimum percentage
      of PTFI Shares then permitted to be held by FCX); (b) the acquisition of
      ownership, directly or indirectly, beneficially or of record, by any Person
      or
      group (within the meaning of the Securities Exchange Act of 1934 and the rules
      of the Securities and Exchange Commission thereunder as in effect on the date
      hereof) of Equity Interests representing more than 50% of the aggregate ordinary
      voting power represented by the issued and outstanding Equity Interests in
      FCX;
      (c) occupation of a majority of the seats (other than vacant seats) on the
      board of directors of FCX by Persons who were not (i) members of the board
      of
      directors of FCX on the Effective Date or (ii) appointed as, or nominated
      for election as, directors by a majority of directors referred to in clause
      (i)
      above or approved pursuant to this clause (ii); or (d) the occurrence of
      any “Change of Control” or “Change in Control” as defined in the Senior Notes
      Documents or in any indenture or other governing agreement relating to any
      Material Indebtedness of FCX or any Disqualified Stock of FCX (to the extent
      the
      aggregate amount of the applicable Disqualified Stock exceeds
      $100,000,000).

     

    “Change
      in Law”
means
      (a) the adoption of any law, rule or regulation after the date of this
      Agreement, (b) any change in any law, rule or regulation or in the
      interpretation or application thereof by any Governmental Authority after the
      date of this Agreement or (c) compliance by any Lender or Issuing Bank (or,
      for purposes of Section 2.14(b), by any lending office of such Lender or by
      such Lender’s or Issuing Bank’s holding company, if any) with any request,
      guideline or directive (whether or not having the force of law) of any
      Governmental Authority made or issued after the date of this
      Agreement.

     

    “Class”,
      when
      used in reference to any Loan or Borrowing, refers to whether such Loan, or
      the
      Loans comprising such Borrowing, are Revolving Loans or Swingline
      Loans.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    “Class”,
      when
      used in reference to any Lender, refers to whether such Lender has a Loan or
      Commitment with respect to a particular Class.

     

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

     

    “Collateral”
means
      any and all “Collateral”, as defined in any applicable Security Document, or any
      asset or right in which a Lien is granted in favor of the Collateral Agent,
      the
      Security Agent, the JAA Security Agent, the FI Security Agent or the FI Trustee
      pursuant to any Security Document, and shall also after the Additional
      Collateral Date include the Mortgaged Properties.

     

    “Collateral
      Agent”
means
      JPMCB in its capacity as Collateral Agent under the Collateral Agreement and
      other Security Documents.

     

    “Collateral
      Agreement”
means
      the Guarantee and Collateral Agreement among FCX, the Subsidiary Guarantors
      and
      the Collateral Agent, substantially in the form of Exhibit D-1. In the event
      that the Guarantee provided by PTII is provided in a document other than the
      Collateral Agreement, references herein to the Collateral Agreement shall be
      deemed to include such other document to the extent of such
      Guarantee.

     

    “Collateral
      and Guarantee Minimum Requirement”
means,
      at any time, the requirement that the combined assets and revenues of all the
      Permitted Guarantors that are not PCA Loan Parties and of all the Permitted
      Pledgees the Equity Interests in which are not pledged to the extent required
      under clause (b) or (d), as applicable, of the definition of Collateral and
      Guarantee Requirement (other than Excluded Guarantors and Excluded Pledgees),
      taken together with all the assets and revenues of their subsidiaries, represent
      less than 5% of Consolidated Total Assets and less than 5% of Consolidated
      Revenues; provided
      that for
      purposes of the foregoing calculation, (i) subject to clause (F) of the
      definition of Collateral and Guarantee Requirement, the only pledge of PTFI
      Shares held by FCX required to satisfy the Collateral and Guarantee Minimum
      Requirement shall be the pledge required to be made on the Effective Date under
      this Agreement by the Third Amended and Restated FCX Pledge Agreement (PTFI
      Shares), (ii) the PTFI Shares held by PTII shall not be required to be pledged
      at any time, (iii) other than the PTII Shares, the Equity Interests in or owned
      by the other Indonesian Subsidiaries shall not be required to be pledged at
      any
      time and (iv) the failure to establish a Holdco in circumstances in which a
      Holdco is required shall be deemed to be the failure of a Permitted Guarantor
      to
      become a Subsidiary Guarantor.

     

    “Collateral
      and Guarantee Requirement”
means,
      at any time, the requirement that:

     

    (a)
      the
      Collateral Agent shall have received from each Loan Party (i) either (x) in
      the
      case of each PCA Loan Party, a counterpart of the Collateral Agreement, duly
      executed and delivered on behalf of such PCA Loan Party or, in the case of
      each
      Indonesian Loan Party, an Indonesian Guarantee Agreement, duly executed and
      delivered on behalf of such Indonesian Loan Party, or (y) in the case of any
      Person that becomes a Loan Party after the Effective Date, in the case of each
      PCA Loan Party, a supplement to the Collateral Agreement (or after the
      Additional Collateral Date, the Additional Collateral Agreement) or, in the
      case
      of each Indonesian Loan Party, a supplement to the Indonesian Guarantee
      Agreement, in each case in the form specified therein, duly executed and
      delivered on behalf of such Loan Party and (ii) with respect to any PCA
      Loan

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    Party
      that
      directly owns Equity Interests of a Foreign Subsidiary required to be pledged
      under paragraph (d) below, a counterpart of each Foreign Pledge Agreement that
      the Administrative Agent determines, based on the advice of counsel, to be
      necessary or advisable in connection with the pledge of, or the granting of
      security interests in, Equity Interests of such Foreign Subsidiary, in each
      case
      duly executed and delivered on behalf of such PCA Loan Party and such Foreign
      Subsidiary; and the Administrative Agent shall have received from each Borrower
      a counterpart of each Security Document to which such Borrower is a party duly
      executed and delivered on behalf of such Borrower;

     

    (b)
      (i) on
      and after the Effective Date, the Pledged PTII Shares shall have been pledged
      pursuant to the Third Amended and Restated FCX/ISI Pledge Agreement (PTII
      Shares) and the Collateral Agent shall have received (A) a copy of the relevant
      page(s) of the share register book of PTII, certified as true and complete
      by an
      authorized officer of PTII, reflecting the recordation made pursuant to the
      Articles of Association of PTII of the pledge by FCX and by International
      Support Inc. of the Pledged PTII Shares under the Third Amended and Restated
      FCX/ISI Pledge Agreement (PTII Shares), and (B) certificates representing the
      Pledged PTII Shares; (ii) on and after the Effective Date, the Pledged PTFI
      Shares shall have been pledged pursuant to the Third Amended and Restated FCX
      Pledge Agreement (PTFI Shares) and the Collateral Agent shall have received
      (A)
      a copy of the relevant page(s) of the share register book of PTFI, certified
      as
      true and complete by an authorized officer of PTFI, reflecting the recordation
      made pursuant to the Articles of Association of PTFI of the pledge by FCX of
      the
      Pledged PTFI Shares under the Third Amended and Restated FCX Pledge Agreement
      (PTFI Shares), and (B) certificates or other instruments representing the
      Pledged PTFI Shares; and (iii) following, as applicable, the satisfaction of
      the
      Full Stock Pledge Condition or the Partial Stock Pledge Condition, the Pledged
      PTFI Shares shall have been pledged pursuant to the Fourth Amended and Restated
      FCX Pledge Agreement (PTFI Shares) and the Collateral Agent shall have received
      (1) a copy of the relevant page(s) of the share register book of PTFI, certified
      as true and complete by an authorized officer of PTFI, reflecting the
      recordation made pursuant to the Articles of Association of PTFI of the pledge
      by FCX of the Pledged PTFI Shares under the Fourth Amended and Restated FCX
      Pledge Agreement (PTFI Shares), and (2) certificates representing the Pledged
      PTFI Shares;

     

    (c)
      for
      purposes of determining whether the Collateral and Guarantee Requirement has
      been established on any date after July 31, 2007, FCX shall have used
      commercially reasonable efforts to satisfy the Full Stock Pledge Condition
      on or
      prior to July 31, 2007;

     

    (d)
      all
      outstanding Equity Interests in Permitted Pledgees (other than Equity Interests
      in the Excluded Pledgees, PTFI Shares and PTII Shares), in each case owned
      by or
      on behalf of any PCA Loan Party (or any other Restricted Subsidiary (other
      than
      a CFC) that is not a PCA Loan Party but is not precluded from pledging Equity
      Interests), shall have been pledged pursuant to the Collateral Agreement or
      a
      Foreign Pledge Agreement (except that the PCA Loan Parties shall not be required
      to pledge more than 65% of the outstanding voting Equity Interests of any CFC
      that is not a PCA Loan Party) and the Collateral Agent shall (except in the
      case
      of any such Equity Interests that are not certificated securities) have received
      the certificates or other instruments representing all such Equity Interests,
      together with undated stock powers or other instruments of transfer with respect
      thereto endorsed in blank;

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (e)
      (i) a
      security interest in all Indebtedness of any Subsidiary that is owing to FCX
      shall have been granted pursuant to the Collateral Agreement (or after the
      Additional Collateral Date, the Additional Collateral Agreement); and any such
      Indebtedness (other than Indebtedness of any Subsidiary owing to FCX that is
      less than $25,000,000 in the aggregate for all such Indebtedness of such
      Subsidiary owing to FCX) shall be evidenced by a promissory note, which shall
      have been delivered to the Collateral Agent, together with undated instruments
      of transfer with respect thereto endorsed in blank; and (ii) all Indebtedness
      of
      FCX or any Subsidiary that is owing to PTFI shall be evidenced by a promissory
      note (other than Indebtedness in an aggregate amount for any Subsidiary less
      than $25,000,000) and shall have been pledged pursuant to the Fourth Amended
      and
      Restated Lender Fiduciary Assignment and/or the Lender Security Agreement Fourth
      Amendment, as applicable, and the Security Agent shall have received all
      promissory notes evidencing any such pledged indebtedness, together with (A)
      notification to the obligors of such indebtedness of such pledge and (B) undated
      instruments of transfer with respect thereto endorsed in blank;

     

    (f)
      all
      documents and instruments, including Uniform Commercial Code financing
      statements and Indonesian security register filings, and all control agreements
      required in respect of deposit or securities accounts of FCX under the
      Collateral Agreement, required by law or reasonably requested by the
      Administrative Agent to be filed, registered or recorded to create the Liens
      intended to be created by the Security Documents and perfect such Liens to
      the
      extent required by, and with the priority required by, the Security Documents,
      shall have been filed, registered or recorded or delivered to the Administrative
      Agent, the Collateral Agent or the Security Agent, as applicable, for filing,
      registration or recording;

     

    (g)
      the
      Collateral and Guarantee Minimum Requirement shall be satisfied; 

     

    (h)
      FCX
      shall have established each of the Holdcos referred to in clauses (a) and (b)
      of
      the definition of Holdco; all the Equity Interests in each Holdco shall have
      been pledged pursuant to the Collateral Agreement; and each Holdco shall be
      a
      Subsidiary Guarantor;

     

    (i)
      the
      Affiliate Subordination Agreement shall have been delivered to the
      Administrative Agent, and both Borrowers, each other Loan Party and each
      Subsidiary that is not a Loan Party and holds Indebtedness of either Borrower
      or
      any other Loan Party in an aggregate principal amount greater than $20,000,000
      shall be party thereto;

     

    (j)
      for
      purposes of determining whether the Collateral and Guarantee Requirement has
      been satisfied on any day after September 15, 2007, if the Full Stock Pledge
      Condition is not then satisfied, the Additional Collateral Requirement shall
      be
      satisfied; and

     

    (k)
      each
      Loan Party shall have obtained all material consents and approvals required
      to
      be obtained by it in connection with the execution and delivery of all Security
      Documents and FI Security Documents Amendments to which it is a party, the
      performance of its obligations thereunder and the granting by it of the Liens
      thereunder.

     

    Notwithstanding
      the foregoing:

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      
        	
                (A)

              	Permitted
                Guarantors shall not be required to provide Guarantees or Liens on
                any of
                their assets if in the absence of such Guarantees the Collateral
                and
                Guarantee Minimum Requirement shall be
                satisfied.

      

       

    

    
      	
              (B)

            	
              Equity
                Interests in Permitted Pledgees shall not be required to be pledged
                if in
                the absence of such pledges the Collateral and Guarantee Minimum
                Requirement shall be satisfied.

            

    

     

    
      	
              (C)

            	
              Assets
                may be excluded from the Collateral and Permitted Guarantors may
                be
                excluded from Guarantee requirements in circumstances where (1) FCX
                and
                the Credit Agents mutually agree (prior to the Effective Date in
                the case
                of assets and Subsidiaries held on the Effective Date) that the cost
                of
                obtaining a security interest or pledge in such assets or providing
                such a
                Guarantee are excessive in relation to the benefit to the Lenders
                of the
                security to be afforded thereby or (2) the granting of a Lien on
                any such
                assets or the provision of a Guarantee by any such Subsidiary shall
                require the consent of any Governmental Authority or any other Person
                that
                is not FCX or a Restricted Subsidiary and either (x) such consent
                has not
                been obtained despite commercially reasonable efforts of FCX and
                the
                Restricted Subsidiaries to obtain such consent or (y) FCX determines
                in
                good faith that requesting or obtaining such consent would be detrimental
                to the business of FCX and the Restricted Subsidiaries or to their
                relations with applicable Governmental Authorities or joint venture
                or
                other business partners or that such consents could not be obtained
                without the making of payments that are not de minimis
                in
                amount or the granting of material concessions to such Governmental
                Authorities or joint venture or business
                partners.

            

    

     

    
      	
              (D)

            	
              Equity
                Interests in Permitted Pledgees may be excluded or released from
                the
                Collateral and Permitted Guarantors may be excluded or released from
                the
                Guarantee requirements in the event of any Project Financing by a
                Project
                Financing Subsidiary (other than PD or PTFI) if FCX shall advise
                the
                Collateral Agent that (1) such exclusion or release of the Project
                Financing Subsidiary or its direct or indirect parent or parents
                will be
                required by the financing party or parties in connection with such
                Project
                Financing, and (2) a Subsidiary other than PD (which may be a new
                Holdco
                established for the purpose) that directly or indirectly holds such
                Project Financing Subsidiary as a subsidiary is a Guarantor or a
                Subsidiary the Equity Interests in which are pledged as Collateral
                to the
                extent required under clause (b) or (d), as applicable, of this definition
                of Collateral and Guarantee Requirement; provided,
                however,
                that no such Guarantee by a PCA Loan Party shall be released unless
                each
                Ratable Guarantee, if any, by the applicable PCA Loan Party shall
                be
                released upon the release of such PCA Loan Party’s Guarantee of the
                Secured Obligations.

            

    

     

    
      	
              (E)

            	
              None
                of PTFI, PTII or any other Indonesian Subsidiary will be required
                to
                provide any Collateral to secure the Secured
                Obligations.

            

    

     

    
      	
              (F)

            	
              FCX
                shall be deemed to have satisfied the requirements of this Collateral
                and
                Guarantee Requirement on the Effective Date notwithstanding the failure
                to
                satisfy all the requirements set forth above so long as (i) FCX shall
                have
                used its commercially reasonable efforts to satisfy all such requirements
                and (ii) FCX shall have satisfied the above requirements with respect
                to
                (1) all Collateral the security interests in which may be perfected
                by the
                filing of a UCC financing statement and the security agreement giving
                rise
                to the security interest therein, (2) subject to the next sentence
                below,
                the pledge of substantially all the Equity Interests intended to
                be
                included in the Collateral (it being understood
                that

            

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    satisfaction
      of neither the Partial Stock Pledge Condition nor the Full Stock Pledge
      Condition is required on the Effective Date) and (3) the continuation of the
      Guarantees and the collateral provided under the FI Security Documents that
      are
      governed by New York law. For the avoidance of doubt, no Loan Document or FI
      Security Document governed by Indonesian law or subject to Indonesian notarial
      requirements shall be required to be in effect on the Effective Date to satisfy
      the Collateral and Guarantee Requirement hereunder and under the Parent Credit
      Agreement so long as FCX shall have used its commercially reasonable efforts
      to
      have such documents in effect on the Effective Date. It is understood that
      while
      not a condition precedent to the Effective Date, satisfaction of the remainder
      of the Collateral and Guarantee Requirement shall be required to be completed
      on
      or prior to April 2, 2007, and the failure to satisfy any such remaining
      requirement prior to such date shall not constitute a breach of the Collateral
      and Guarantee Requirement. Completion of such requirements shall include
      delivery of all opinions that would have been required to be delivered in
      connection therewith on the Effective Date had such requirements been satisfied
      on the Effective Date. The Administrative Agent may grant extensions of time
      for
      the satisfaction of the Collateral and Guarantee Requirement in respect of
      any
      particular Collateral or any particular Subsidiary if it determines that the
      satisfaction of the Collateral and Guarantee Requirement with respect to such
      Collateral or such Subsidiary cannot be accomplished without undue expense
      or
      unreasonable effort by the time or times at which it would otherwise be required
      to be satisfied under this Agreement or any Security Document.

     

    “Collateral
      Shortfall Period”
means
      any period (a) beginning on or after July 31, 2007, during which neither the
      Full Stock Pledge Condition nor the Partial Stock Pledge Condition is satisfied
      or (b) beginning on or after September 15, 2007, during which neither (i) the
      Full Stock Pledge Condition is satisfied nor (ii) both the Partial Stock Pledge
      Condition and the Additional Collateral Requirement are satisfied.

     

    “Commitment”
means
      a
      Revolving Commitment or Swingline Commitment, or any combination thereof (as
      the
      context requires).

     

    “Concentrate
      Sales Agreements”
means
      all contracts and agreements with respect to the sale or disposition of ores
      or
      minerals produced by the mining, concentrating and related operations conducted
      by PTFI pursuant to the Contract of Work.

     

    “Confidential
      Information Materials”
means
      the confidential information materials dated February 2007 relating to the
      Borrowers and the Transactions.

     

    “Consolidated
      Adjusted Net Income”
means,
      for any period, the net income of FCX and its Subsidiaries for such period;
      provided,
      however,
      that
      there shall not be included in the calculation of such Consolidated Adjusted
      Net
      Income:

     

    (1)
      any
      net income of any Person (other than FCX) if such Person is not a Restricted
      Subsidiary, except that: (A) subject to the limitations contained in clause
      (4)
      below, FCX’s equity in the net income of any such person for such period shall
      be included in such Consolidated Adjusted Net Income up to the aggregate amount
      of cash actually distributed by such Person during such period to FCX or a
      Restricted Subsidiary as a dividend or other distribution (subject, in the
      case
      of a dividend or other distribution made to a Restricted Subsidiary, to the
      limitations contained in clause (3) below); and (B) FCX’s equity in a net loss
      of

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    any
      such
      Person for such period shall be included in determining such Consolidated
      Adjusted Net Income;

     

    (2)
      any
      net income (or loss) of any Person acquired by FCX or a Subsidiary of FCX in
      a
      pooling of interests transaction (or any transaction accounted for in a manner
      similar to a pooling of interests) for any period prior to the date of such
      acquisition;

     

    (3)
      any
      net income (or loss) of any Restricted Subsidiary if such Restricted Subsidiary
      is subject to restrictions, directly or indirectly, on the payment of dividends
      or the making of distributions by such Restricted Subsidiary, directly or
      indirectly, to FCX, except that: (A) subject to the limitations contained in
      clause (4) below, FCX’s equity in the net income of any such Restricted
      Subsidiary for such period shall be included in such Consolidated Adjusted
      Net
      Income up to the aggregate amount of cash actually distributed by such
      Restricted Subsidiary during such period to FCX or another Restricted Subsidiary
      as a dividend or other distribution (subject, in the case of a dividend or
      other
      distribution made to another Restricted Subsidiary, to the limitation contained
      in this clause); and (B) FCX’s equity in a net loss of any such Restricted
      Subsidiary for such period shall be included in determining such Consolidated
      Adjusted Net Income;

     

    (4)
      any
      gain (or loss) realized upon the sale or other disposition of any asset of
      FCX
      or its Subsidiaries (including pursuant to any sale and leaseback transaction)
      that is not sold or otherwise disposed of in the ordinary course of business
      and
      any gain (or loss) realized upon the sale or other disposition of any Equity
      Interest in any Person;

     

    (5)
      any
      extraordinary, unusual or non-recurring gain or loss;

     

    (6)
      the
      cumulative effect of a change in accounting principles;

     

    (7)
      any
      non-cash gain or loss attributable to any Hedging Agreement relating to
      commodity prices until such time as it is settled, at which time the net gain
      or
      loss shall be included;

     

    (8)
      accruals and reserves that are established within twelve months after the
      Effective Date and that are so required to be established as a result of the
      Transactions in accordance with GAAP;

     

    (9)
      any
      increase in amortization, depletion or depreciation, increase in cost of goods
      sold attributable to metal inventories or any one-time non-cash charges
      resulting from purchase accounting in connection with the Transactions or any
      acquisition that is consummated after the Effective Date;

     

    (10)
      any
      non-cash impairment charges resulting from the application of Statement of
      Financial Accounting Standards No. 142 and No. 144 and any amortization of
      intangibles pursuant to Statement of Financial Accounting Standards No.
      141;

     

    (11)
      any
      net after-tax income or loss from discontinued operations and any net after-tax
      gain or loss on disposal of discontinued operations;

     

    (12)
      any
      non-cash compensation expense recognized from grants of stock appreciation
      or
      similar rights, stock options, restricted stock, restricted stock
      units

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    or
      other
      rights to officers, directors and employees of such Person or any of its
      Restricted Subsidiaries; and

     

    (13)
      any
      premiums, fees and expenses (and any amortization thereof) paid in connection
      with the Transactions.

     

    in
      each
      case, for such period. Notwithstanding the foregoing, there shall be excluded
      from Consolidated Adjusted Net Income any dividends, repayments of loans or
      advances or other transfers of assets from Unrestricted Subsidiaries to FCX
      or a
      Restricted Subsidiary to the extent such dividends, repayments or transfers
      reduce the Restricted Uses.

     

    “Consolidated
      EBITDA”
means,
      for any period, Consolidated Net Income for such period plus (a) without
      duplication and to the extent deducted in determining such Consolidated Net
      Income, the sum of (i) consolidated interest expense and Attributable Debt
      Payments for such period, (ii) consolidated income tax expense for such
      period, (iii) all amounts attributable to depreciation and amortization for
      such period, (iv) any extraordinary charges or significant nonrecurring
      non-cash charges or non-cash charges resulting from requirements to
      mark-to-market derivative obligations (including commodity-linked securities)
      for such period (provided
      that any
      cash payment made with respect to any such non-cash charge shall be subtracted
      in computing Consolidated EBITDA for the period in which such cash payment
      is
      made), (v) any impairment charges or asset write offs or amortization related
      to
      intangible assets and long-lived assets pursuant to GAAP (including pursuant
      to
      Statement of Financial Accounting Standards No. 141, 142 or 144), (vi)
      integration expenses in connection with the Transactions and any restructuring
      charges and reserves, (vii) fees and expenses in respect of the Transactions,
      (viii) fees and expenses in respect of consummated or proposed acquisitions,
      dispositions or financings, (ix) any purchase accounting adjustments and any
      step-ups with respect to re-valuing assets and liabilities in connection with
      the Transactions or any acquisition or Investment consummated after the
      Effective Date (including any increase in amortization, depletion or
      depreciation, increase in cost of goods sold attributable to metal inventories
      or any one-time non-cash charges), (x) other non-cash charges, including
      non-cash charges attributable to stock options and other stock-based
      compensation, (xi) any costs or expenses incurred by FCX or a Restricted
      Subsidiary pursuant to any management equity plan or stock option plan or any
      other management or employee benefit plan or agreement or any stock subscription
      or stockholders agreement, to the extent that such costs or expenses are funded
      with cash proceeds contributed to the capital of FCX or net cash proceeds of
      issuance of Equity Interests of FCX, (xii) charges attributable to liability
      or
      casualty events or business interruption, to the extent covered (or reasonably
      expected to be covered) by insurance and (xiii) payments made in respect of
      obligations of the types included in clause (j) of the definition of
      Indebtedness; minus (b) without duplication and to the extent included in
      determining such Consolidated Net Income, any extraordinary gains or non-cash
      gains for such period; and plus or minus, as applicable, (c) without duplication
      and to the extent deducted or included, as the case may be, in determining
      such
      Consolidated Net Income (i) any after-tax effect of gains or losses (less all
      fees and expenses relating thereto) attributable to asset dispositions other
      than in the ordinary course of business, as determined in good faith by FCX,
      (ii) any net after-tax gains or losses from early extinguishment of Indebtedness
      or hedging obligations or other derivative instruments, including without
      limitation, any write-off of deferred financing costs, (iii) any net non-cash
      gain or loss resulting from currency translation gains or losses related to
      currency re-measurements of Indebtedness, (iv) the cumulative effect of a change
      in accounting principles and (v) any net after-tax income or loss from
      discontinued operations and any net after-tax gain or loss on disposal of
      discontinued operations, all determined on a

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    consolidated
      basis in accordance with GAAP. Notwithstanding anything to the contrary
      contained herein, Consolidated EBITDA shall be deemed to be $2,615,500,000,
      $2,455,700,000 and $2,355,500,000, respectively, for the fiscal quarters ended
      June 30, 2006, September 30, 2006 and December 31, 2006.

     

    For
      the
      purposes of calculating Consolidated EBITDA for any period of four consecutive
      fiscal quarters (each, a “Reference
      Period”),
      if
      during such Reference Period (or, in the case of pro forma calculations, during
      the period from the last day of such Reference Period to and including the
      date
      as of which such calculation is made) FCX or any Restricted Subsidiary shall
      have made a Material Disposition or Material Acquisition, Consolidated EBITDA
      for such Reference Period shall be calculated after giving pro forma effect
      thereto as if such Material Disposition or Material Acquisition occurred on
      the
      first day of such Reference Period (with the Reference Period for the purposes
      of pro forma calculations being the most recent period of four consecutive
      fiscal quarters for which the relevant financial information is available).
      As
      used in this definition, “Material
      Acquisition”
means
      any acquisition of property or series of related acquisitions of property that
      (a) constitutes assets comprising all or substantially all of an operating
      unit
      of a business or constitutes common stock of any Person and (b) involves
      consideration in excess of $200,000,000; and “Material
      Disposition”
means
      any sale, transfer or other disposition of property or series of related sales,
      transfers or other dispositions of property that (a) involves assets comprising
      all or substantially all of an operating unit of a business or involves common
      stock of any Person owned by FCX and the Restricted Subsidiaries and (b) yields
      gross proceeds to FCX or any Restricted Subsidiary in excess of
      $200,000,000.

     

    “Consolidated
      Net Income”
means,
      for any period, the net income or loss of FCX and the Restricted Subsidiaries
      for such period determined on a consolidated basis in accordance with GAAP;
      provided
      that
      there shall be excluded the income or loss of any Person accrued prior to the
      date it becomes a Restricted Subsidiary or is merged into or consolidated with
      FCX or any Restricted Subsidiary or the date that such Person’s assets are
      acquired by FCX or any Restricted Subsidiary. 

     

    Notwithstanding
      anything to the contrary contained herein, solely for purposes of calculating
      Consolidated EBITDA, Consolidated Net Income shall be (a) computed without
      deduction for minority interests and (b) subject to the final paragraph of
      the
      definition of “Consolidated EBITDA”.

     

    “Consolidated
      Revenues”
means,
      at any time, the revenues of FCX and the Restricted Subsidiaries, as set forth
      in the most recent consolidated statement of income of FCX and the Restricted
      Subsidiaries delivered pursuant to Section 5.01 (or, prior to any such delivery,
      referred to in Section 3.04(c)) on such date of determination, determined on
      a
      consolidated basis in accordance with GAAP.

     

    “Consolidated
      Total Assets”
means,
      at any time, the total assets of FCX and the Restricted Subsidiaries, as set
      forth in the most recent consolidated balance sheet of FCX and the Restricted
      Subsidiaries delivered pursuant to Section 5.01 (or (x) prior to any such
      delivery, the balance sheet referred to in Section 3.04(c), and (y) for purposes
      of determining compliance with the Collateral and Guarantee Minimum Requirement
      prior to the completion of purchase accounting allocations in respect of the
      Transactions, the balance sheets referred to in Section 3.04(a) and (b)) on
      or
      prior to such date of determination, determined on a consolidated basis in
      accordance with GAAP.

     

    “Contract
      of Work”
means
      the Contract of Work made December 30, 1991, between the Ministry of Mines
      of the Government of the Republic of Indonesia,

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    acting
      for
      and on behalf of the Government of the Republic of Indonesia, and PTFI, together
      with any related implementation agreement or Memorandum of Understanding with
      such Ministry of Mines acting on behalf of the Government of the Republic of
      Indonesia, after giving effect to the PT-Rio Tinto Indonesia COW
      Assignment.

     

    “Control”
means
      the possession, directly or indirectly, of the power to direct or cause the
      direction of the management or policies of a Person, whether through the ability
      to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto.

     

    “Credit
      Agents”
means,
      collectively, the Administrative Agent, the Collateral Agent and the Syndication
      Agent.

     

    “Credit
      Rating”
means
      a
      rating assigned by S&P or Moody’s to the credit facilities provided by the
      Parent Credit Agreement.

     

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

     

    “Designated
      Noncash Consideration”
means
      the fair market value of noncash consideration received by FCX or a Restricted
      Subsidiary in connection with an asset disposition pursuant to Section 6.05(b)
      that is designated as Designated Noncash Consideration pursuant to a certificate
      of a Financial Officer of FCX delivered to the Administrative Agent, setting
      forth the basis of such valuation (which amount will be reduced by the fair
      market value of the portion of the noncash consideration converted to cash
      within 180 days following the consummation of the applicable asset
      disposition).

     

    “Designation”
has
      the
      meaning assigned to such term in Section 6.13(a).

     

    “Disclosed
      Matters”
means
      the actions, suits and proceedings and the environmental matters disclosed
      in
      Schedule 1.01A.

     

    “Disqualified
      Stock”
means,
      with respect to any Person, any Equity Interests of such Person that, by its
      terms (or by the terms of any security or other Equity Interests into which
      it
      is convertible or for which it is redeemable or exchangeable either mandatorily
      or at the option of the holder thereof), or upon the happening of any event
      or
      condition (a) matures or is mandatorily redeemable (other than solely for
      Qualified Stock and cash in lieu of fractional shares of Qualified Stock),
      pursuant to a sinking fund obligation or otherwise (except as a result of a
      change of control or asset sale to the extent the terms of such Equity Interests
      provide that such Equity Interests shall not be required to be repurchased
      or
      redeemed until the repayment in full of the Loans and all other Obligations
      that
      are accrued and payable and the termination of the Commitments have occurred
      or
      such repurchase or redemption is otherwise permitted by this Agreement
      (including as a result of a waiver hereunder)), (b) is redeemable at the option
      of the holder thereof (other than solely for Qualified Stock and cash in lieu
      of
      fractional shares of Qualified Stock), in whole or in part, or (c) is or becomes
      convertible into or exchangeable for Indebtedness or any other Equity Interests
      that would constitute Disqualified Stock, in each case, prior to the date that
      is 91 days after the Tranche B Maturity Date; provided,
      however,
      that
      only the portion of the Equity Interests that so mature or are mandatorily
      redeemable, are so convertible or exchangeable or are so redeemable at the
      option of the holder thereof prior to such date shall be deemed to be
      Disqualified Stock; providedfurther,
      however,
      that if
      any Equity Interests are issued to any employee or to any plan for the benefit
      of employees of FCX or its Subsidiaries or by

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    any
      such
      plan to such employees, such Equity Interests shall not constitute Disqualified
      Stock solely because they may be required to be repurchased by FCX or a
      Subsidiary in order to satisfy applicable statutory or regulatory obligations
      or
      as a result of such employee’s termination, death or disability.

     

    “dollars”
or
      “$”
refers
      to lawful money of the United States of America.

     

    “Effective
      Date”
means
      the date on which the conditions specified in Section 4.01 are satisfied
      (or waived in accordance with Section 9.02).

     

    “Environmental
      Laws”
means
      all laws, rules, regulations, codes, ordinances, orders, decrees, judgments,
      injunctions, notices or binding agreements issued, promulgated or entered into
      by any Governmental Authority, relating in any way to the environment,
      preservation or reclamation of natural resources, the management, release or
      threatened release of or exposure to any hazardous or toxic substances,
      materials or wastes.

     

    “Environmental
      Liability”
means
      any liability, contingent or otherwise (including any liability for damages,
      costs of environmental remediation, fines, penalties or indemnities), of FCX
      or
      any Subsidiary directly or indirectly resulting from or based upon
      (a) violation of any Environmental Law, (b) the generation, use,
      handling, transportation, storage, treatment or disposal of any Hazardous
      Materials, (c) exposure to any Hazardous Materials, (d) the release or
      threatened release of any Hazardous Materials into the environment or
      (e) any contract, agreement or other consensual arrangement pursuant to
      which liability is assumed or imposed with respect to any of the
      foregoing.

     

    “Equity
      Interests”
means
      shares of capital stock, partnership interests, membership interests in a
      limited liability company, beneficial interests in a trust or other equity
      ownership interests in a Person, and any warrants, options or other rights
      entitling the holder thereof to purchase or acquire any such equity
      interest.

     

    “Equity
      Proceeds”
shall
      mean the Net Proceeds received by FCX from the issuance or sale by FCX of common
      stock of FCX or preferred stock (other than Disqualified Stock) of FCX (other
      than sales of such stock to directors, officers or employees of FCX or any
      Subsidiary in connection with employee compensation and incentive
      arrangements).

     

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

     

    “ERISA
      Affiliate”
means
      any trade or business (whether or not incorporated) that, together with FCX,
      is
      treated as a single employer under Section 414(b) or (c) of the Code
      or, solely for purposes of Section 302 of ERISA and Section 412 of the
      Code, is treated as a single employer under Section 414 of the
      Code.

     

    “ERISA
      Event”
means
      (a) any “reportable event”, as defined in Section 4043 of ERISA or the
      regulations issued thereunder with respect to a Plan (other than an event for
      which the 30-day notice period is waived); (b) the existence with respect
      to any Plan of an “accumulated funding deficiency” (as defined in
      Section 412 of the Code or Section 302 of ERISA), whether or not
      waived; (c) the filing pursuant to Section 412(d) of the Code or
      Section 303(d) of ERISA of an application for a waiver of the minimum
      funding standard with respect to any Plan; (d) the incurrence by FCX or any
      of its ERISA Affiliates of any liability under Title IV of ERISA with
      respect to the 

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    termination
      of any Plan; (e) the receipt by FCX or any ERISA Affiliate from the PBGC or
      a plan administrator of any notice relating to an intention to terminate any
      Plan or Plans or to appoint a trustee to administer any Plan; (f) the
      incurrence by FCX or any of its ERISA Affiliates of any liability with respect
      to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan;
      or
      (g) the receipt by FCX or any ERISA Affiliate of any notice, or the receipt
      by any Multiemployer Plan from FCX or any ERISA Affiliate of any notice,
      concerning the imposition of Withdrawal Liability or a determination that a
      Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
      within the meaning of Title IV of ERISA.

     

    “ERM
      Report”
means
      the Review of the Freeport McMoRan Copper and Gold Operation in Papua, Indonesia
      Report dated as of June 17, 2006 prepared by Environmental Resources
      Management.

     

    “Eurodollar”,
      when
      used in reference to any Loan or Borrowing, refers to whether such Loan, or
      the
      Loans comprising such Borrowing, are bearing interest at a rate determined
      by
      reference to the LIBO Rate.

     

    “Eurodollar
      Reserve Requirement”
means,
      with respect to Eurodollar Loans, the aggregate of the maximum reserve
      percentages (including any marginal, special, emergency or supplemental
      reserves) expressed as a decimal established by the Board for eurocurrency
      funding (currently referred to as “Eurocurrency Liabilities” in
      Regulation D of the Board). Such reserve percentages shall include those
      imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to
      constitute eurocurrency funding and to be subject to such reserve requirements
      without benefit of or credit for proration, exemptions or offsets that may
      be
      available from time to time to any Lender under such Regulation D or any
      comparable regulation. The Eurodollar Reserve Requirement shall be adjusted
      automatically on and as of the effective date of any change in any reserve
      percentage.

     

    “Event
      of Default”
has
      the
      meaning assigned to such term in Article VII.

     

    “Exchange
      Filing Requirements”
means
      (i) the monthly and semiannual foreign exchange transaction activities filing
      requirements under Bank Indonesia Regulation No. 4/2/PBI/2002 as amended by
      Bank
      Indonesia Regulation No. 5/1/PB1/2003 and Circular of Bank Indonesia No.
      5/24/DSM dated October 3, 2003, (ii) the offshore borrowings filing requirements
      with the Bank Indonesia, the Team for the Coordination and Management of
      Offshore Loans, the Republic of Indonesia, and the Ministry of Finance, the
      Republic of Indonesia, including in each case any successors thereto and (iii)
      any additional or subsequent regulations requiring any of the Indonesian Loan
      Parties to submit filings regarding offshore borrowings or foreign exchange
      transaction activities as they may relate to any of the Loan Documents, in
      each
      case as may be amended and in effect from time to time.

     

    “Excluded
      Guarantors”
means
      each of (a) for so long as the applicable contractual restrictions remain in
      effect, Phelps Dodge Morenci, Inc., PD Ojos del Salado, Inc. and PD Candelaria,
      Inc., (b) Phelps Dodge Katanga Corporation, Eastern Mining Company, FM Services
      Company and Overseas Service Company, (c) each Subsidiary included in the
      international wire and cable business of PD and set forth on Schedule 1.01E
      and
      (d) each other Permitted Guarantor formed or acquired after the Effective Date
      which the Administrative Agent shall have agreed in accordance with clause
      (C)(1), or FCX shall have determined in accordance with clause (C)(2), in each
      case of the definition of Collateral and Guarantee Requirement shall not be
      required to provide a guarantee.

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    “Excluded
      Pledgees”
means
      each of (a) at all times that an intercompany note representing substantially
      all its assets is pledged in accordance with the Collateral Agreement, Freeport
      Finance Company B.V., (b) for so long as the applicable contractual restrictions
      remain in effect, Cyprus Climax Metals Company and Sociedad Minera Cerro Verde
      S.A.A., (c) Phelps Dodge Katanga Corporation, Lundin Holdings Ltd., Tenke
      Fungurume, Sociedad Contractual Minera el Abra and Overseas Service Company,
      (d)
      each Subsidiary included in the international wire and cable business of PD
      and
      set forth on Schedule 1.01E and (e) each other Permitted Pledgee formed or
      acquired after the Effective Date the Equity Interests in which the
      Administrative Agent shall have agreed in accordance with clause (C)(1), or
      FCX
      shall have determined in accordance with clause (C)(2), in each case of the
      definition of Collateral and Guarantee Requirement shall not be required to
      be
      pledged.

     

    “Excluded
      Taxes”
means,
      with respect to the Administrative Agent, any Lender, any Issuing Bank or any
      other recipient of any payment to be made by or on account of any obligation
      of
      either Borrower hereunder, (a) income or franchise taxes imposed on (or
      measured by) its net income by the United States of America, or by the
      jurisdiction under the laws of which such recipient is organized or in which
      its
      principal office is located or, in the case of any Lender, in which its
      applicable lending office is located, (b) any branch profits taxes imposed
      by the United States of America or any similar tax imposed by any other
      jurisdiction described in clause (a) above and (c) in the case of a
      Foreign Lender (other than an assignee pursuant to a request by FCX under
      Section 2.18(b)), any withholding tax that (i) is in effect and would apply
      to amounts payable to such Foreign Lender at the time such Foreign Lender
      becomes a party to this Agreement (or designates a new lending office), except
      to the extent that such Foreign Lender (or its assignor, if any) was entitled,
      at the time of designation of a new lending office (or assignment), to receive
      additional amounts from either Borrower with respect to any withholding tax
      pursuant to Section 2.16(a) or (ii) is attributable to such Foreign
      Lender’s failure to comply with Section 2.16(f).

     

    “Existing
      Credit Agreement”
means
      the Amended and Restated Credit Agreement dated as of July 25, 2006, among
      FCX,
      PTFI, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative
      agent, issuing bank, security agent, JAA security agent and documentation agent
      and U.S. Bank National Association, as FI trustee, which amended and restated
      the Amended and Restated Credit Agreement dated as of September 30, 2003, which
      amended and restated the Amended and Restated Credit Agreement dated as of
      October 19, 2001, which amended and restated both the Credit Agreement
      originally dated as of October 27, 1989 and amended and restated as of June
      1,
      1993 and the Credit Agreement originally dated as of June 30, 1995.

     

    “Existing
      Indebtedness”
means
      the indebtedness for borrowed money set forth on Schedule 6.01.

     

    “Existing
      Letters of Credit”
means
      the existing letters of credit issued under the PD Credit Agreement or the
      Existing Credit Agreement and listed on Schedule 1.01B. FCX shall be deemed
      to
      have requested the issuance of each Existing Letter of Credit for purposes
      hereof.

     

    “FCX”
means
      Freeport-McMoRan Copper & Gold Inc., a Delaware corporation, and following
      any merger or consolidation permitted under Section 6.03(a) to which FCX is
      a
      party and is not the surviving Person, such surviving Person.

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    “FCX
      Assisted PTFI Sale”
means
      a
      Qualifying PTFI Sale Transaction in respect of which FCX and/or PTFI may, at
      its
      option, provide an unsecured Guarantee in accordance with the provisions of
      Section 6.01(a)(vii).

     

    “FCX
      Pledge Agreements”
means
      the Third Amended and Restated FCX Pledge Agreement (PTFI Shares), the Fourth
      Amended and Restated FCX Pledge Agreement (PTFI Shares) and the Third Amended
      and Restated FCX/ISI Pledge Agreement (PTII Shares).

     

    “Federal
      Funds Effective Rate”
means,
      for any day, the weighted average (rounded upwards, if necessary, to the next
      1/100 of 1%) 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 that is a Business Day, the
      average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
      quotations for such day for such transactions received by the Administrative
      Agent from three Federal funds brokers of recognized standing selected by
      it.

     

    “FI
      Collateral and Rights”
means
      the rights and remedies of the Administrative Agent, the FI Trustee, the FI
      Security Agent, the Security Agent, the JAA Security Agent and the Lenders
      under
      this Agreement and the Loan Documents or on the collateral provided under the
      FI
      Security Documents.

     

    “FI
      Creditors”
means
      the “FI Creditors”, as defined in the FI Trust Agreement and shall include the
      Lenders and the other holders of the Obligations identified in the FI Trust
      Agreement Financing Annexes.

     

    “FI
      Intercreditor Agreement”
means
      the Intercreditor Agreement dated as of October 11, 1996 among RTZ, PT Rio
      Tinto
      Indonesia, RTZIF and certain secured creditors of PTFI.

     

    “FI
      Intercreditor Agreement Creditor Annex”
means
      a
“Creditor Annex”, as defined in the FI Intercreditor Agreement, in form and
      substance satisfactory to the Administrative Agent, to be filed with the FI
      Trustee for purposes of identifying the holders of the Obligations as FI
      Creditors thereunder.

     

    “FI
      Lender Security Documents”
means
      the Lender Security Agreement, the Lender Security Agreement Amendments, the
      Fourth Amended and Restated Lender Surat Kuasa, the Fourth Amended and Restated
      Fiduciary Transfer and the Fourth Amended and Restated Lender Fiduciary
      Assignment.

     

    “FI
      Product”
means
      ores or minerals produced by the FI Project or otherwise obtained from the
      Mining Area (as defined in the Contract of Work) and any kinds of products,
      including, without limitation, concentrates, produced from such ores or
      minerals.

     

    “FI
      Project”
means
      the mining, concentrating and related operations conducted or to be conducted
      by
      PTFI in Papua, Indonesia, pursuant to the Contract of Work.

     

    “FI
      Security Agent”
means
      U.S. Bank National Association or any successor, not in its individual capacity,
      but as FI Security Agent for the Secured Parties under the Fiduciary Assignment
      of Accounts.

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    “FI
      Secured Parties”
means
      the Issuing Banks, the Security Agent, the JAA Security Agent, the Syndication
      Agent, the Lenders, the Collateral Agent, the Administrative Agent, the Parallel
      Creditor under the FI Security Documents and the Loan Documents and, for
      purposes of the Fiduciary Assignment of Accounts, the FI Trustee, and the
      successors and assigns of the foregoing. For the avoidance of doubt, while
      RTF
      is a secured party under each of the Fiduciary Assignment of Accounts and the
      Fiduciary Transfer of Joint Account Assets, RTF is not intended to be a
      beneficiary of any provision of any Loan Document, any Security Document or,
      except as expressly provided therein, any FI Security Document.

     

    “FI
      Security Documents”
means
      the FI Trust Agreement, the FI Trust Agreement Financing Annexes, the Operator
      Replacement Agreement, the Surat Kuasa, the Fourth Amended and Restated
      Fiduciary Transfer, the Fiduciary Assignment of Accounts, the Lender Security
      Agreement, the Lender Security Agreement Amendments, the Fourth Amended and
      Restated Lender Surat Kuasa, the Fourth Amended and Restated Lender Fiduciary
      Assignment, the Fiduciary Transfer of Joint Account Assets, the FI Intercreditor
      Agreement, the FI Intercreditor Agreement Creditor Annex, the Side Letter,
      the
      Side Letter Creditor Annex and each other agreement, instrument or document
      pertaining to assets of PTFI executed and delivered pursuant to Section 5.12
      or
      5.13 to secure any of the Obligations.

     

    “FI
      Security Documents Amendments”
means
      the FI Trust Agreement Financing Annexes, the Surat Kuasa, the Fourth Amended
      and Restated Fiduciary Transfer, the Fiduciary Assignment of Accounts, the
      Lender Security Agreement Fourth Amendment, the Fourth Amended and Restated
      Lender Surat Kuasa, the Fourth Amended and Restated Lender Fiduciary Assignment,
      the Fiduciary Transfer of Joint Account Assets, the FI Intercreditor Agreement
      Creditor Annex and the Side Letter Creditor Annex.

     

    “FI
      Trust Agreement”
means
      the Restated Trust Agreement dated as of October 11, 1996, among PTFI, PT-Rio
      Tinto Indonesia, The Chase Manhattan Bank, as the depositary, First Trust of
      New
      York, National Association, as FI trustee and certain other creditors of
      PTFI.

     

    “FI
      Trust Agreement Financing Annexes”
means
      “Creditor Annexes”, as defined in the FI Trust Agreement, in form and substance
      satisfactory to the Administrative Agent, to be filed with the FI Trustee for
      purposes of identifying the holders of the Obligations as FI Creditors
      thereunder.

     

    “FI
      Trustee”
means
      U.S. Bank National Association, or any successor trustee, as trustee for PTFI,
      PT-Rio Tinto Indonesia and the Secured Parties pursuant to the FI Trust
      Agreement and, in such capacity, also as party to the Operator Replacement
      Agreement, and as a party to the Surat Kuasa and the Fiduciary Assignment of
      Accounts.

     

    “Fiduciary
      Assignment of Accounts”
means
      a
      Fiduciary Assignment of Accounts substantially in the form of the Third Amended
      and Restated Fiduciary Assignment, with such modifications as may be necessary
      to reflect the amendment and restatement of the Existing Credit Agreement in
      the
      form of this Agreement and in form and substance satisfactory to the
      Administrative Agent, pursuant to which PTFI grants to secure the PTFI
      Obligations (as defined therein) and PT-Rio Tinto Indonesia grants to secure
      the
      PT-Rio Tinto Indonesia Obligations (as defined therein) a security interest
      in
      accounts receivable from Concentrate Sales Agreements of PTFI for the benefit
      of
      the FI Secured Parties.

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    “Fiduciary
      Transfer of Joint Account Assets”
means
      a
      Fiduciary Transfer of Joint Account Assets substantially in the form of the
      Third Amended and Restated JAA Fiduciary Transfer, with such modifications
      as
      may be necessary to reflect the amendment and restatement of the Existing Credit
      Agreement in the form of this Agreement and in form and substance satisfactory
      to the Administrative Agent, pursuant to which PTFI grants to secure the PTFI
      Obligations and PT-Rio Tinto Indonesia grants to secure the PT-Rio Tinto
      Indonesia Obligations a security interest in its interest in Joint Account
      Assets for the benefit of the FI Secured Parties.

     

    “Financial
      Covenants”
means
      the covenants set forth in Sections 6.14 and 6.15.

     

    “Financial
      Officer”
means
      the chief financial officer, principal accounting officer, treasurer or
      controller of FCX or PTFI, as applicable.

     

    “Foreign
      Lender”
means
      any Lender that is organized under the laws of a jurisdiction other than that
      in
      which either Borrower is located. For purposes of this definition, the United
      States of America, each State thereof and the District of Columbia shall be
      deemed to constitute a single jurisdiction. If a Borrower is located in more
      than one jurisdiction, a Lender’s status as a Foreign Lender shall be tested
      separately with respect to each jurisdiction.

     

    “Foreign
      Pledge Agreement”
means
      the FCX Pledge Agreements and a pledge or charge agreement with respect to
      each
      other portion of the Collateral that constitutes Equity Interests of a Foreign
      Subsidiary, in form and substance reasonably satisfactory to the Administrative
      Agent.

     

    “Foreign
      Subsidiary”
means
      any Subsidiary that is organized under the laws of a jurisdiction other than
      the
      United States of America, any State thereof or the District of
      Columbia.

     

    “Fourth
      Amended and Restated FCX Pledge Agreement (PTFI Shares)”
means
      an
      amended and restated pledge agreement delivered in satisfaction of the Full
      Stock Pledge Condition or the Partial Stock Pledge Condition, with such
      modifications as may be necessary to effect such satisfaction and in form and
      substance reasonably satisfactory to the Collateral Agent, pursuant to which
      FCX
      grants a perfected first priority security interest under Indonesian law in
      the
      Pledged PTFI Shares for the ratable benefit of the holders of the Obligations,
      the Ratable FCX Obligations and the Secured Obligations.

     

    “Fourth
      Amended and Restated Fiduciary Transfer”
means
      a
      Fourth Amended and Restated Fiduciary Transfer substantially in the form of
      the
      Third Amended and Restated Fiduciary Transfer, with such modifications as may
      be
      necessary to reflect the amendment and restatement of the Existing Credit
      Agreement in the form of this Agreement and in form and substance satisfactory
      to the Administrative Agent pursuant to which PTFI grants a security interest
      in
      its Indonesian assets (other than Joint Account Assets) for the ratable benefit
      of the holders of the Obligations.

     

    “Fourth
      Amended and Restated Lender Fiduciary Assignment”
means
      a
      Fourth Amended and Restated Lender Fiduciary Assignment substantially in the
      form of the Third Amended and Restated Lender Fiduciary Assignment, with such
      modifications as may be necessary to reflect the amendment and restatement
      of
      the Existing Credit Agreement in the form of this Agreement and in form and
      substance satisfactory to the Administrative Agent, pursuant to which PTFI
      grants a security interest in its accounts

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    receivable
      (other than those arising from Concentrate Sales Agreements of PTFI or Joint
      Account Assets) for the ratable benefit of the holders of the
      Obligations.

     

    “Fourth
      Amended and Restated Lender Surat Kuasa”
means
      a
      Fourth Amended and Restated Lender Surat Kuasa substantially in the form of
      the
      Third Amended and Restated Lender Surat Kuasa, with such modifications as may
      be
      necessary to reflect the amendment and restatement of the Existing Credit
      Agreement in the form of this Agreement and in form and substance satisfactory
      to the Administrative Agent, granted by PTFI with respect to the authorization
      to appoint a manager to carry out all acts and matters related to PTFI’s rights,
      titles and interest in, to and under the contract rights and other assets
      constituting Collateral (as defined in the Lender Security Agreement) upon
      the
      occurrence of an Event of Default.

     

    “Full
      Stock Pledge Condition”
means
      the pledge by FCX pursuant to the Fourth Amended and Restated FCX Pledge
      Agreement (PTFI Shares), to secure the Secured Obligations, the Ratable FCX
      Obligations and the Obligations, of a portion of the Equity Interests in PTFI
      not less than the greater of (a) all the Equity Interests it owns directly
      in
      PTFI and (b) at all times when the aggregate principal amount of the Revolving
      Commitments and the Term Loans and the revolving commitments under the Parent
      Credit Agreement shall be greater than or equal to $8,000,000,000, a percentage
      of all the Equity Interests in PTFI that, together with the Equity Interests
      in
      PTFI then held by PTII, equals 80%, and at all other times, a percentage of
      all
      Equity Interests in PTFI that, together with the Equity Interests in PTFI held
      by PTII, equals 70%. A sale of Equity Interests in PTFI in compliance with
      Section 6.05(c)(ii) that does not reduce the percentage of all the Equity
      Interests in PTFI held directly by FCX, taken together with the Equity Interests
      in PTFI then held by PTII, to less than 70% of all the Equity Interests in
      PTFI
      shall not cause the Full Stock Pledge Condition not to be satisfied, so long
      as
      all remaining Equity Interests in PTFI held directly by FCX (which, together
      with the Equity Interests in PTFI then held by PTII, shall be not less than
      the
      applicable percentage specified in clause (b) above of all the Equity Interests
      in PTFI) remain subject to the pledge under the FCX Pledge Agreements securing
      the Secured Obligations, the Ratable FCX Obligations and the
      Obligations.

     

    “Funded
      Debt”
of
      any
      Person means Indebtedness of such Person of the types referred to in clauses
      (a), (b), (c), (d), (e), (h), (j) and (k) of definition thereof and all
      Indebtedness of the types referred to in clauses (f), (g) and (i) of such
      definition relating to Indebtedness of others of the types referred to in such
      clauses (a), (b), (c), (d), (e), (h), (j) and (k).

     

    “GAAP”
means
      generally accepted accounting principles in the United States of
      America.

     

    “Governmental
      Authority”
means
      the government of the United States of America, any other nation or any
      political subdivision thereof, whether state or local, and any agency,
      authority, instrumentality, regulatory body, court, central bank or other entity
      exercising executive, legislative, judicial, taxing, regulatory or
      administrative powers or functions of or pertaining to government (including
      any
      supra-national bodies such as the European Union or the European Central
      Bank).

     

    “Guarantee”
of
      or by
      any Person (the “guarantor”)
      means
      any obligation, contingent or otherwise, of the guarantor guaranteeing or having
      the economic effect of guaranteeing any Indebtedness or other obligation of
      any
      other Person (the “primary
      obligor”)
      in any
      manner, whether directly or indirectly, and including any obligation of the
      guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
      funds for the

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    purchase
      or payment of) such Indebtedness or other obligation or to purchase (or to
      advance or supply funds for the purchase of) any security for the payment
      thereof in each case for the purpose of assuring the owner of such Indebtedness
      or other obligation of the payment thereof, (b) to purchase or lease
      property, securities or services for the purpose of assuring the owner of such
      Indebtedness or other obligation of the payment thereof, (c) to maintain
      working capital, equity capital or any other financial statement condition
      or
      liquidity of the primary obligor so as to enable the primary obligor to pay
      such
      Indebtedness or other obligation or (d) as an account party in respect of
      any letter of credit or letter of guaranty issued to support such Indebtedness
      or obligation; provided
      that the
      term Guarantee shall not include endorsements for collection or deposit in
      the
      ordinary course of business.

     

    “Hazardous
      Materials”
means
      all explosive or radioactive substances or wastes and all hazardous or toxic
      substances, wastes or other pollutants, including petroleum or petroleum
      distillates, asbestos or asbestos containing materials, polychlorinated
      biphenyls, radon gas, infectious or medical wastes and all other hazardous
      or
      toxic substances or wastes of any nature regulated pursuant to any Environmental
      Law.

     

    “Hedging
      Agreement”
means
      any interest rate protection agreement, foreign currency exchange agreement,
      commodity price protection agreement or other interest or currency exchange
      rate
      or commodity price hedging arrangement.

     

    “Holdco”
means
      each of (a) O&C Holdco; and (b) each intermediate holding company organized
      under the laws of the State of Delaware (or other jurisdiction reasonably
      satisfactory to the Administrative Agent) for the purpose of holding the Equity
      Interests of one or more Subsidiaries acquired or formed after the Effective
      Date (A) the Equity Interests in which are owned by FCX or PD but that is
      neither a Permitted Pledgee nor a Subsidiary Guarantor and (B) which conducts
      a
      material business or holds Equity Interests in a Subsidiary that (1) conducts
      a
      material business, (2) is not a Permitted Guarantor and (3) not all the Equity
      Interests in which are Collateral.

     

    “IFC
      Guidelines”
means
      the International Finance Corporation (IFC) Safeguard Policies, summarized
      and
      attached in Annex A to the ERM Report.

     

    “Immaterial
      Subsidiaries”
means
      the Subsidiaries, the combined assets and revenues of which, taken together
      with
      all the assets and revenues of their subsidiaries, represent less than 5% of
      Consolidated Total Assets and less than 5% of Consolidated
      Revenues.

     

    “Incurrence
      Test”
means,
      as of any date in connection with any proposed transaction, that immediately
      after giving effect to such transaction on a pro forma basis as if such
      transaction had occurred immediately prior to the first day of the period of
      four consecutive fiscal quarters most recently ended in respect of which
      financial statements have been delivered by FCX pursuant to Section 5.01 (or
      prior to such delivery, such period ended December 31, 2006), (a) the Total
      Leverage Ratio on the last day of such period shall not exceed 5.0 to 1.0,
      and
      (b) the Total Secured Leverage Ratio on the last day of such period shall not
      exceed 3.0 to 1.0. For purposes of the Incurrence Test, Total Debt and Total
      Secured Debt shall be increased or reduced, as applicable, to reflect all
      increases or decreases to the applicable Indebtedness following the applicable
      period.

     

    “Indebtedness”
of
      any
      Person means, without duplication, (a) all obligations of such Person for
      borrowed money, (b) all obligations of such Person evidenced by bonds,
      debentures, notes or similar instruments, (c) all Disqualified
      Stock,

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    (d) all
      obligations of such Person under conditional sale or other title retention
      agreements relating to property acquired by such Person, (e) all
      obligations of such Person in respect of the deferred purchase price of property
      or services (excluding trade accounts payable and other accrued expenses
      incurred in the ordinary course of business and deferred compensation),
      (f) all Indebtedness of others secured by (or for which the holder of such
      Indebtedness has an existing right, contingent or otherwise, to be secured
      by)
      any Lien on property owned or acquired by such Person, whether or not the
      Indebtedness secured thereby has been assumed (other than a Lien on Equity
      Interests of an Unrestricted Subsidiary securing obligations of such
      Unrestricted Subsidiary and its Subsidiaries), (g) all Guarantees by such
      Person of Indebtedness of others, (h) all Capital Lease Obligations of such
      Person, (i) all obligations, contingent or otherwise, of such Person as an
      account party (including reimbursement obligations to the issuer) in respect
      of
      letters of credit and letters of guaranty, which support or secure Indebtedness,
      (j) all obligations in respect of any Metalstream Transaction described
      under clause (a) of the definition thereof, all obligations in respect of any
      Receivables Facility and all other obligations in respect of prepaid production
      arrangements, prepaid forward sale arrangements or derivative contracts in
      respect of which such Person receives upfront payments in consideration of
      an
      obligation to deliver product or commodities (or make cash payments based on
      the
      value of product or commodities) at a future time, and (k) all obligations,
      contingent or otherwise, of such Person in respect of bankers’ acceptances;
provided,
      however,
      that no
      series of preferred stock other than Disqualified Stock shall in any event
      be
      deemed to be Indebtedness. The Indebtedness of any Person shall include the
      Indebtedness of any other entity (including any partnership in which such Person
      is a general partner) to the extent such Person is liable therefor as a result
      of such Person’s ownership interest in or other relationship with such entity,
      except to the extent the terms of such Indebtedness provide that such Person
      is
      not liable therefor. For purposes of determinations hereunder, the amount
      of

     

    
      	 	
              (A)

            	
              any
                Receivables Facility shall be deemed at any time to be (1) the aggregate
                principal or stated amount of the Indebtedness, fractional undivided
                interests (which stated amount may be described as a “net investment” or
                similar term reflecting the amount invested in such undivided interest)
                or
                other securities incurred or issued pursuant to such Permitted
                Securitization, in each case outstanding at such time, or (2) in
                the case
                of any Permitted Securitization in respect of which no such Indebtedness,
                fractional undivided interests or securities are incurred or issued,
                the
                cash purchase price paid by the buyer in connection with its purchase
                of
                Receivables less the amount of collections received in respect of
                such
                Receivables and paid to such buyer, excluding any amounts applied
                to
                purchase fees or discount or in the nature of interest;
                and

            

    

     

    
      	 	
              (B)
                

            	
              any
                other transaction of any Person included under clause (j) above,
                at any
                time, (1) the amount thereof that would appear on a balance sheet
                of such
                Person prepared as of such date in accordance with GAAP or (2) if
                such amount would not appear on such balance sheet, the amount that
                would
                appear on a balance sheet of such Person prepared as of such date
                in
                accordance with GAAP if such transaction were accounted for as a
                transaction that would appear on such balance sheet or (3) if such
                amount
                cannot be determined under clause (1) or (2), the amount reasonably
                agreed
                by FCX and the Administrative
                Agent.

            

    

     

    “Indemnified
      Taxes”
means
      Taxes other than Excluded Taxes.

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    “Indonesian
      Guarantee Agreement”
means
      the Indonesian Guarantee Agreement among the Indonesian Loan Parties and the
      Administrative Agent, substantially in the form of Exhibit E.

     

    “Indonesian
      Loan Party”
means
      PTFI, PTII, each Indonesian Subsidiary that Guarantees the obligations under
      the
      Existing Credit Agreement (other than PT Mitradaya Vulkanisindo and PT Irja
      Eastern Minerals) and each Indonesian Subsidiary formed or acquired after the
      Effective Date that is a Restricted Subsidiary.

     

    “Indonesian
      Subsidiary”
means
      PTFI, PTII and each other Subsidiary that is organized under the laws of
      Indonesia.

     

    “Indonesian
      Taxes”
means
      Taxes imposed, assessed, levied or collected by Indonesia or any political
      subdivision or taxing authority thereof or therein or any association or
      organization of which Indonesia may be a member (but excluding Taxes imposed
      upon the net income of, or any franchise taxes imposed on, the Administrative
      Agent, the FI Trustee, any Lender (or permitted assignee or Participant) or
      the
      Issuing Bank which, in each case, has its principal office in Indonesia or
      a
      branch office in Indonesia, unless and to the extent attributable to the
      enforcement of any rights hereunder or under any FI Security Document with
      respect to an Event of Default), together with interest thereon and penalties,
      fines and surcharges and other liabilities with respect thereto, if any, on
      or
      in respect of this Agreement, the Loans to PTFI, the Letters of Credit issued
      for the account of PTFI or any other Indonesian Restricted Subsidiary, the
      FI
      Security Documents, the Assigned Agreements or any promissory notes of PTFI
      issued hereunder, the execution, enforcement, registration, recordation,
      notarization or other formalization of any thereof, and any payments of
      principal, interest, charges, fees or other amounts made on, under or in respect
      of any thereof.

     

    “Interest
      Election Request”
means
      a
      request by either Borrower to convert or continue a Revolving Borrowing in
      accordance with Section 2.06.

     

    “Interest
      Payment Date”
means
      (a) with respect to any ABR Loan (including a Swingline Loan), the last day
      of each March, June, September and December and (b) with respect to any
      Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
      of which such Loan is a part and, in the case of a Eurodollar Borrowing with
      an
      Interest Period of more than three months’ duration, each day prior to the last
      day of such Interest Period that occurs at intervals of three months’ duration
      after the first day of such Interest Period.

     

    “Interest
      Period”
      means, with respect to any Eurodollar Borrowing, the period commencing on
      the date of such Borrowing and ending on the numerically corresponding day
      in
      the calendar month that is one, two, three, six or, to the extent made
      available by all the applicable Lenders, nine or twelve, months thereafter,
      as
      either Borrower may elect; provided
      that
      (a) if any Interest Period would end on a day other than a Business Day,
      such Interest Period shall be extended to the next succeeding Business Day
      unless such next succeeding Business Day would fall in the next calendar month,
      in which case such Interest Period shall end on the next preceding Business
      Day,
      and (b) any Interest Period that commences on the last Business Day of a
      calendar month (or on a day for which there is no numerically corresponding
      day
      in the last calendar month of such Interest Period) shall end on the last
      Business Day of the last calendar month of such Interest Period. For purposes
      hereof, the date of a Borrowing initially shall be the date on which such
      Borrowing is made and thereafter shall be the effective date of the most recent
      conversion or continuation of such Borrowing.

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    “International
      Support Inc.”
means
      International Support Inc., a corporation organized under the laws of Delaware
      and a wholly owned subsidiary of FCX.

     

    “Investment”
means
      purchasing, holding or acquiring (including pursuant to any merger with any
      Person that was not a Wholly Owned Subsidiary prior to such merger) any Equity
      Interests, evidences of indebtedness or other securities (including any option,
      warrant or other right to acquire any of the foregoing) of, or making or
      permitting to exist any capital contribution or loans or advances to,
      guaranteeing any obligations of, or making or permitting to exist any investment
      in, any other Person, or purchasing or otherwise acquiring (in one transaction
      or a series of transactions) any assets of any Person constituting a business
      unit. The amount, as of any date of determination, of any Investment shall
      be
      the original cost of such Investment (including any Indebtedness of a Person
      existing at the time such Person becomes a Subsidiary in connection with any
      Investment and any Indebtedness assumed in connection with any acquisition
      of
      assets), plus
      the cost
      of all additions, as of such date, thereto and minus
      the
      amount, as of such date, of any portion of such Investment repaid to the
      investor in cash as a repayment of principal or a return of capital, as the
      case
      may be, but without any other adjustments for increases or decreases in value,
      or write-ups, write-downs or write-offs with respect to such Investment. In
      determining the amount of any Investment involving a transfer of any property
      other than cash, such property shall be valued at its fair market value at
      the
      time of such transfer.

     

    "Investment
      Grade"
      means,
      at any time, that the Credit Ratings at such time are, respectively, Baa3 or
      better and BBB- or better.

     

    "Investment
      Grade Date"
      means
      the first day on which the Credit Ratings are Investment Grade.

     

    “Issuing
      Bank”
means
      each of JPMCB and each other Lender acceptable to the Administrative Agent
      and
      FCX that has entered into an Issuing Bank Agreement, in each case in its
      capacity as an issuer of Letters of Credit hereunder, and its successors in
      such
      capacity as provided in Section 2.05(i); provided
      that no
      Person shall at any time become an Issuing Bank if after giving effect thereto
      there would at such time be more than 5 Issuing Banks. Each Issuing Bank may,
      in
      its discretion but with the consent of FCX, arrange for one or more Letters
      of
      Credit to be issued by Affiliates of such Issuing Bank, in which case the term
      “Issuing Bank” shall include any such Affiliate with respect to Letters of
      Credit issued by such Affiliate.

     

    “Issuing
      Bank Agreement”
means
      an
      agreement in the form of Exhibit C, or in any other form reasonably satisfactory
      to the Administrative Agent, pursuant to which a Lender agrees to act as an
      Issuing Bank.

     

    “JAA
      Security Agent”
means
      JPMCB, not in its individual capacity, but as JAA Security Agent for the Lenders
      and RTF, in each case under the Fiduciary Transfer of Joint Account
      Assets.

     

    “JPMCB”
has
      the
      meaning assigned to such term in the preamble to this Agreement.

     

    “Joint
      Account Assets”
has
      the
      meaning assigned to such term in the Participation Agreement.

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    “LC
      Disbursement”
means
      a
      payment made by an Issuing Bank pursuant to a Letter of Credit.

     

    “LC
      Exposure”
means,
      at any time, the sum of (a) the aggregate undrawn amount of all outstanding
      Letters of Credit at such time plus (b) the aggregate amount of all
      LC Disbursements that have not yet been reimbursed by or on behalf of either
      Borrower at such time. The LC Exposure of any Lender at any time shall be its
      Applicable Percentage of the total LC Exposure at such time.

     

    “Lender
      Affiliate”
means
      (a) with respect to any Lender, (i) an Affiliate of such Lender or
      (ii) any entity (whether a corporation, partnership, trust or otherwise)
      that is engaged in making, purchasing, holding or otherwise investing in bank
      loans and similar extensions of credit in the ordinary course of its business
      and is administered or managed by a Lender or an Affiliate of such Lender and
      (b) with respect to any Lender that is a fund which invests in bank loans
      and similar extensions of credit, any other fund that invests in bank loans
      and
      similar extensions of credit and is managed by the same investment advisor
      as
      such Lender or by an Affiliate of such investment advisor.

     

    “Lender
      Security Agreement”
means
      the Bank Security Agreement dated as of October 11, 1996 between PTFI, First
      Trust of New York, National Association, as trustee and The Chase Manhattan
      Bank, as security agent pursuant to which PTFI granted a security interest
      in
      the Collateral (as defined therein) for the ratable benefit of the holders
      of
      the Obligations.

     

    “Lender
      Security Agreement Amendments”
means
      the Amendment to the Lender Security Agreement dated as of October 19, 2001,
      the
      Second Amendment to the Lender Security Agreement dated as of November 11,
      2003,
      the Third Amendment to the Lender Security Agreement dated as of July 26, 2006
      and the Lender Security Agreement Fourth Amendment.

     

    “Lender
      Security Agreement Fourth Amendment”
means
      a
      fourth amendment to the Lender Security Agreement containing such modifications
      to the Lender Security Agreement as may be necessary to reflect the amendment
      and restatement of the Existing Credit Agreement in the form of this Agreement
      and in form and substance satisfactory to the Administrative Agent.

     

    “Lenders”
means
      the Persons listed on Schedule 2.01 and any other Person that shall have
      become a lender hereunder pursuant to an Assignment and Assumption other than
      any person that ceases to be a party hereto pursuant to an Assignment and
      Assumption. Unless the context otherwise requires, the term “Lenders” includes
      the Swingline Lender.

     

    “Letter
      of Credit”
means
      (i) any letter of credit issued pursuant to this Agreement and
      (ii) the Existing Letters of Credit.

     

    “LIBO
      Rate”
means,
      with respect to any Eurodollar Borrowing for any Interest Period, the rate
      appearing on the Reuters “LIBOR01” screen displaying British Bankers’
Association Interest Settlement Rates (or on any successor or substitute page
      for such screen, or any successor to or substitute for such service, providing
      rate quotations comparable to those currently provided on such screen, as
      determined by the Administrative Agent from time to time for purposes of
      providing quotations of interest rates applicable to dollar deposits in the
      London interbank market) at approximately 11:00 a.m., London time, two Business
      Days prior to the commencement of such Interest Period, as the rate for dollar
      deposits with a maturity comparable to such Interest Period. 

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    In
      the
      event that such rate is not available at the time of determination for any
      other
      Interest Period for any reason, then the “LIBO
      Rate”
with
      respect to such Eurodollar Borrowing for such Interest Period shall be the
      rate
      at which dollar deposits of $5,000,000 and for a maturity comparable to such
      Interest Period are offered by the principal London office of the Administrative
      Agent in immediately available funds in the London interbank market at
      approximately 11:00 a.m., London time, two Business Days prior to the
      commencement of such Interest Period.

     

    “Lien”
means,
      with respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
      hypothecation, encumbrance, charge or security interest in, on or of such asset,
      and (b) the interest of a vendor or a lessor under any conditional sale
      agreement, capital lease or title retention agreement (or any financing lease
      having substantially the same economic effect as any of the foregoing) relating
      to such asset.

     

    “Loan
      Documents”
means
      this Agreement, the Collateral Agreement, the Indonesian Guarantee Agreement,
      the FCX Pledge Agreements and the other Security Documents.

     

    “Loan
      Parties”
means
      FCX, PTFI, each PCA Loan Party and each Indonesian Loan Party.

     

    “Loans”
means
      the loans made by the Lenders to the Borrowers pursuant to this
      Agreement.

     

    “Material
      Adverse Effect”
means
      a
      material adverse effect on (a) the business, operations or financial
      condition of FCX and its Restricted Subsidiaries, taken as a whole, (b) the
      ability of any Loan Party to perform its obligations under any Loan Document
      or
      (c) the rights of or benefits available to the Lenders under the Loan
      Documents.

     

    “Material
      Company”
has
      the
      meaning assigned to such term in clause (g) of Article VII.

     

    “Material
      Indebtedness”
means
      Indebtedness (other than the Loans and Letters of Credit and Indebtedness under
      the Parent Credit Agreement), Project Financings or obligations in respect
      of
      one or more Hedging Agreements, of FCX and/or any Restricted Subsidiary in
      an
      aggregate principal amount or amount of Attributable Debt exceeding
      $100,000,000. For purposes of determining Material Indebtedness, the “principal
      amount” of the obligations of FCX or any Restricted Subsidiary in respect of any
      Hedging Agreement at any time shall be the aggregate amount (giving effect
      to
      any netting agreements) that FCX or such Restricted Subsidiary would be required
      to pay if such Hedging Agreement were terminated at such time.

     

    “Memorandum
      of Understanding”
means
      the Memorandum of Understanding dated as of December 27, 1991, between the
      Ministry of Mines and Energy of the Government of the Republic of Indonesia,
      and
      PTFI.

     

    “Merger”
means
      the merger between PD and Panther Acquisition Corporation, a Wholly Owned
      Subsidiary of FCX, pursuant to the Merger Agreement, whereby PD will be the
      surviving entity of the Merger and will be a Wholly Owned Subsidiary of FCX
      upon
      the consummation thereof.

     

    “Merger
      Agreement”
means
      the Agreement and Plan of Merger, dated as of November 18, 2006, among FCX,
      PD
      and Panther Acquisition Corporation.

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    “Merger
      Consideration”
means
      a
      payment to shareholders of PD equal to $88.00 in cash plus
      0.67
      shares of common stock of FCX for each share of common stock of PD.

     

    “Merrill”
has
      the
      meaning assigned to such term in the preamble to this Agreement.

     

    “Metalstream
      Transaction”
means
      (a) a transaction in which FCX or any Restricted Subsidiary incurs obligations
      in respect of prepaid production arrangements, prepaid forward sale arrangements
      or derivative contracts in respect of which FCX or any such Restricted
      Subsidiary receives upfront payments in consideration of an obligation to
      deliver gold, copper or any other metal mined by FCX and its Restricted
      Subsidiaries (each, a “Qualified
      Metal”)
      (or
      make cash payments based on the value of any Qualified Metal) at a future time
      or (b) a transaction in which FCX issues Equity Interests (other than
      Disqualified Stock) providing for dividends based on the price of any Qualified
      Metal or otherwise designed to track the price of any Qualified Metal and/or
      FCX’s production of any Qualified Metal. For the avoidance of doubt, a
      Metalstream Transaction described under clause (a) shall for all purposes hereof
      constitute Indebtedness and Funded Debt and a Metalstream Transaction described
      under clause (b) hereof shall for all purposes hereof constitute Equity
      Interests and the Net Proceeds thereof shall constitute Equity
      Proceeds.

     

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

     

    “Morenci
      Business”
has
      the
      meaning assigned to such term in Section 6.03(d).

     

    “Mortgage”
means
      a
      mortgage, deed of trust, assignment of leases and rents, leasehold mortgage
      or
      other security document granting a Lien on any Mortgaged Property to secure
      the
      Secured Obligations and the Obligations. Each Mortgage shall be reasonably
      satisfactory in form and substance to the Administrative Agent.

     

    “Mortgaged
      Property”
means,
      initially, each parcel of real property and the improvements thereto owned
      by a
      PCA Loan Party and identified on Schedule 1.01D, and includes each other parcel
      of real property and the improvements thereto owned by a PCA Loan Party with
      respect to which a Mortgage is granted pursuant to Section 5.12 or
      5.13.

     

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

     

    “Net
      Proceeds”
means,
      with respect to any event (a) the cash proceeds received in respect of such
      event including (i) any cash received in respect of any non-cash proceeds,
      but only as and when received, (ii) in the case of a casualty, insurance
      proceeds, and (iii) in the case of a condemnation or similar event,
      condemnation awards and similar payments, net of (b) the sum of
      (i) all fees and out-of-pocket expenses paid by FCX or any Restricted
      Subsidiary to third parties in connection with such event, (ii) in the case
      of a sale, transfer or other disposition of an asset (including pursuant to
      a
      sale and leaseback transaction or a casualty or a condemnation or similar
      proceeding), (A) the amount of all payments required to be made by FCX or any
      Restricted Subsidiary as a result of such event to repay Indebtedness (other
      than Loans) secured by such asset or otherwise subject to mandatory prepayment
      as a result of such event and (B) if such sale, transfer or other disposition
      includes the sale of one or more operating businesses, divisions or operating
      units, the amount of all liabilities, including accounts
      payable,

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    directly
      arising from the operations of such business, division or operating unit that
      are retained by FCX and the Restricted Subsidiaries, (iii) the amount of
      all taxes paid (or reasonably estimated to be payable) (including, in the case
      of any such event in respect of any Foreign Subsidiary, taxes payable upon
      the
      repatriation of such proceeds to the United States) by FCX and the Restricted
      Subsidiaries, and (without duplication for the amount of any liability netted
      under clause (ii)(B) above) the amount of any reserves established by FCX and
      the Restricted Subsidiaries to fund contingent liabilities reasonably estimated
      to be payable, in each case during the year that such event occurred or the
      next
      succeeding year and that are directly attributable to such event (as determined
      reasonably and in good faith by the chief financial officer of FCX), and (iv)
      in
      the case of any such proceeds received by a Subsidiary that is not a Wholly
      Owned Subsidiary, the portion of such proceeds attributable to the minority
      interests in such Subsidiary.

     

    “Non-Recourse
      Indebtedness”
means,
      with respect to any Person and its assets, Indebtedness the obligees of which
      will not have, directly or indirectly, recourse (including by way of any
      Guarantee or other undertaking, agreement or instrument that would constitute
      Indebtedness) for repayment of any principal, premium (if any), or interest
      on
      such Indebtedness or any fees, indemnities, expense reimbursements or other
      amounts of whatever nature accrued or payable in connection with such
      Indebtedness against any assets of such Person other than pursuant to any pledge
      of specified assets of such Person and other than a completion Guarantee by
      FCX
      provided under Section 6.01(a)(xi).

     

    “O&C
      Holdco”
means
      PD
      Chile Finance Company, a Delaware corporation.

     

    “Obligations”
means
      the obligations of each of FCX
      and
      PTFI
      hereunder
      (the “RCA
      Obligations”)
      and of
      FCX and PTFI and the other Loan Parties under the other Loan Documents in
      respect of the RCA Obligations, including, without limitation, (a) the due
      and
      punctual payment by the Borrowers of (i) the principal of and interest
      (including interest accruing during the pendency of any bankruptcy, insolvency,
      receivership or similar proceeding, regardless of whether allowed or allowable
      in such proceeding) on the Loans, when and as due, whether at maturity, by
      acceleration, upon one or more dates set for prepayment or otherwise, (ii)
      each
      payment required to be made under this Agreement in respect of any Letter of
      Credit, when and as due, including payments in respect of reimbursement of
      disbursements, interest thereon, and any obligation to provide cash collateral,
      (iii) the Guarantee obligations of FCX under the Collateral Agreement and of
      PTFI under the Indonesian Guarantee Agreement in each case in respect of the
      RCA
      Obligations and (iv) all other monetary obligations of the Borrowers under
      this
      Agreement or any other Loan Document, including in respect of fees, costs,
      expenses and indemnities, whether primary, secondary, direct, contingent, fixed
      or otherwise (including any monetary obligations incurred during the pendency
      of
      any bankruptcy, insolvency, receivership or similar proceeding, regardless
      of
      whether allowed or allowable in such proceeding), in each case to the extent
      arising in connection with the RCA Obligations, (b) the due and punctual
      performance of all other obligations of the Borrowers under or pursuant to
      this
      Agreement and each other Loan Document, in each case to the extent arising
      in
      connection with the RCA Obligations, and (c) the due and punctual payment and
      performance of all of the obligations of each other Loan Party under or pursuant
      to each of the other Loan Documents, in each case to the extent arising in
      connection with the RCA Obligations.

     

    “Operator
      Replacement Agreement”
means
      the Operator Replacement Agreement dated as of October 11, 1996 among PTFI,
      PT
      Rio Tinto Indonesia, First

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    Trust
      of
      New York, National Association, as trustee and The Chase Manhattan Bank, as
      administrative agent (in its capacity as Operator Selection
      Representative).

     

    “Operator
      Selection Representative”
means
      the Administrative Agent acting as the Operator Selection Representative under
      the Operator Replacement Agreement, pursuant to its designation in Section
      10.16
      therein as Operator Selection Representative.

     

    “Other
      Taxes”
means
      any and all present or future recording, stamp, documentary, excise, transfer,
      sales, property or similar taxes, charges or levies arising from any payment
      made under any Loan Document or from the execution, delivery or enforcement
      of,
      or otherwise with respect to, any Loan Document.

     

    “parent”
has
      the
      meaning assigned thereto in the definition of “subsidiary”.

     

    “Parent
      Credit Agreement”
means
      the Credit Agreement dated as of March 19, 2007, among FCX, the lenders and
      issuing banks party thereto and JPMCB, as administrative agent and collateral
      agent thereunder, and Merrill, as syndication agent thereunder.

     

    “Partial
      Stock Pledge Condition”
means
      a
      pledge by FCX pursuant to the Fourth Amended and Restated FCX Pledge Agreement
      (PTFI Shares), to secure the Secured Obligations, the Ratable FCX Obligations
      and the Obligations, of a portion of the Equity Interests in PTFI that does
      not
      satisfy the Full Stock Pledge Condition but is not (together with the Equity
      Interest in PTFI held by PTII) less than 50.1% of all the Equity Interests
      in
      PTFI.

     

    “Participant”
has
      the
      meaning set forth in Section 9.04(c).

     

    “Participation
      Agreement”
means
      the Participation Agreement dated October 11, 1996 between PTFI and PT-Rio
      Tinto Indonesia, as amended by the First Amendment dated April 30,
      1999.

     

    “Patriot
      Act”
means
      the Uniting and Strengthening America by Providing Appropriate Tools Required
      to
      Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56
      (signed into law October 26, 2001)).

     

    “PBGC”
means
      the Pension Benefit Guaranty Corporation referred to and defined in ERISA and
      any successor entity performing similar functions.

     

    “PCA
      Loan Party”
means,
      at any time, each “Loan Party” under the Parent Credit Agreement at such
      time.

     

    “PD”
means
      Phelps Dodge Corporation, a New York corporation.

     

    “PD
      Credit Agreement”
means
      the Credit Agreement dated as of April 20, 2004, as amended, among PD, the
      lenders party thereto and Citibank, N.A., as administrative agent.

     

    “Perfection
      Certificate”
means
      the perfection certificate executed by each Borrower substantially in the form
      of Exhibit B-1.

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    “Permitted
      Encumbrances”
      means:

     

    (a)
      Liens
      for taxes, assessments and other governmental charges or levies not at the
      time
      delinquent or which are being contested in compliance with Section 5.05 or
      secure amounts that are not material to the value of the properties to which
      such Liens attach (it being understood that for purposes of this paragraph
      (a)
      all the Mortgaged Properties covered by a single Mortgage shall be deemed to
      be
      a single real property);

     

    (b)
      Liens
      imposed by law, including landlords’, carriers’, warehousemen’s, mechanics’,
      materialmen’s, repairmen’s and other like Liens imposed by law, arising in the
      ordinary course of business and securing obligations that are not overdue by
      more than 30 days or are being contested in compliance with Section 5.05 or
      secure amounts that are not material to the value of the properties to which
      such Liens attach (it being understood that for purposes of this paragraph
      (b)
      all the Mortgaged Properties covered by a single Mortgage shall be deemed to
      be
      a single real property);

     

    (c)
      pledges, deposits or Liens under workmen’s compensation laws, unemployment
      insurance laws, social security laws or similar legislation, or insurance
      related obligations (including pledges or deposits securing liability to
      insurance carriers under insurance or self-insurance arrangements), or in
      connection with bids, tenders, contracts (other than for borrowed money) or
      leases, or to secure utilities, licenses, public or statutory obligations,
      or to
      secure surety, indemnity, judgment, appeal or performance bonds, guarantees
      of
      government contracts (or other similar bonds, instruments or obligations),
      or as
      security for contested taxes or import or customs duties or for the payment
      of
      rent, or other obligations of like nature, in each case incurred in the ordinary
      course of business;

     

    (d)
      judgment liens in respect of judgments that do not constitute an Event of
      Default under clause (j) of Article VII;

     

    (e)
      Liens
      in favor of issuers of surety, performance or other bonds, guarantees or letters
      of credit or bankers’ acceptances (not issued to support Indebtedness or
      Attributable Debt) issued pursuant to the request of and for the account of
      FCX
      or any Restricted Subsidiary in the ordinary course of its
      business;

     

    (f)
      encumbrances, ground leases, easements (including reciprocal easement
      agreements), survey exceptions, or reservations of, or rights of others for,
      licenses, rights of way, sewers, canals, ditches, water rights, highways, roads,
      railroads, fences, oil and gas leases, electric lines, data communications
      and
      telephone lines and other similar purposes, or zoning, building codes or other
      restrictions (including minor defects or irregularities in title and similar
      encumbrances) as to the use of the real properties or Liens incidental to the
      conduct of the business of FCX and its Restricted Subsidiaries or to the
      ownership of its properties which do not in the aggregate materially adversely
      affect the value of said properties or materially impair their use in the
      operation of the business of FCX and its Restricted Subsidiaries (it being
      understood that for purposes of this paragraph (f) all the Mortgaged Properties
      covered by a single Mortgage shall be deemed to be a single real
      property);

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    (g)
      contractual Liens which arise in the ordinary course of business under operating
      agreements, joint venture agreements, partnership agreements, leases, area
      of
      mutual interest agreements, royalty agreements, marketing agreements, processing
      agreements, development agreements, and other agreements which are usual and
      customary in the mining business;

     

    (h)
      leases, licenses, subleases and sublicenses of assets (including real property
      and intellectual property rights), in each case entered into in the ordinary
      course of business;

     

    (i)
      Liens
      arising by virtue of any statutory or common law provisions relating to banker’s
      Liens, rights of set-off or similar rights and remedies as to deposit accounts
      or other funds maintained with a depositary or financial
      institution;

     

    (j)
      Liens
      arising from Uniform Commercial Code financing statement filings (or similar
      filings in other applicable jurisdictions) regarding operating leases entered
      into by FCX and its Restricted Subsidiaries in the ordinary course of
      business;

     

    (k)
      any
      interest or title of a lessor under any operating lease;

     

    (l)
      (i)
      mortgages, liens, security interests, restrictions, encumbrances or any other
      matters of record that have been placed by any government, statutory or
      regulatory authority, developer, landlord or other third party on property
      over
      which FCX or any Restricted Subsidiary has easement rights or on any leased
      property and subordination or similar arrangements relating thereto and (ii)
      any
      condemnation or eminent domain proceedings affecting any real
      property;

     

    (m)
      any
      encumbrance or restriction (including put and call arrangements) with respect
      to
      Equity Interests of any joint venture or similar arrangement pursuant to any
      joint venture or similar agreement;

     

    (n)
      Liens
      on property or assets under construction (and related rights) in favor of a
      contractor or developer or arising from progress or partial payments by a third
      party relating to such property or assets;

     

    (o)
      Liens
      securing or arising by reason of any netting or set-off arrangement entered
      into
      in the ordinary course of banking or other trading activities or Liens over
      cash
      accounts securing cash pooling arrangements; and

     

    (p)
      Liens
      arising out of conditional sale, title retention, hire purchase, consignment
      or
      similar arrangements for the sale of goods entered into in the ordinary course
      of business;

     

    provided
      that,
      except for Permitted Encumbrances referred to in clause (e) above, the term
      “Permitted Encumbrances” shall not include any Lien securing Indebtedness or
      Attributable Debt.

     

    “Permitted
      Guarantors”
means,
      at any time, PTII and each Wholly Owned Subsidiary other than (i) any Indonesian
      Subsidiary (other than PTII), (ii) CFCs and (iii) Subsidiaries that are
      precluded from providing a Guarantee by the terms of their organizational
      documents (including shareholders and similar agreements) or Project Financing
      Documents.

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    “Permitted
      Investments”
      means:

     

    (a)
      direct
      obligations of, or obligations the principal of and interest on which are
      unconditionally guaranteed by, the United States of America (or by any agency
      thereof to the extent such obligations are backed by the full faith and credit
      of the United States of America), in each case maturing within one year from
      the
      date of acquisition thereof;

     

    (b)
      Investments in commercial paper maturing within 270 days from the date of
      acquisition thereof and having, at such date of acquisition, a credit rating
      from S&P of A-2 or higher or from Moody’s of P-2 or higher;

     

    (c)
      Investments in certificates of deposit, banker’s acceptances and time deposits
      maturing within one year after the date of acquisition thereof issued or
      guaranteed by or placed with, and money market deposit accounts issued or
      offered by, any commercial bank which has a short term deposit rating issued
      by
      Moody’s of P-2 or higher or by S&P of A-2 or higher;

     

    (d)
      short-term tax exempt securities rated not lower than MIG-1/+1 by either Moody’s
      or S&P with provisions for liquidity or maturity accommodations of 183 days
      or less;

     

    (e)
      repurchase agreements relating to securities described in clause (a), (b),
      (c)
      and (d) above and maturity not less than one year thereafter;

     

    (f)
      Investments in money market or similar funds not less than 95% of the assets
      of
      which are comprised of assets of the types described in clause (a), (b), (c),
      (d) and (e) above; and

     

    (g)
      in the
      case of any Subsidiary organized or having its principal place of business
      outside the United States, investments denominated in the currency of the
      jurisdiction in which such Subsidiary is organized or has its principal place
      of
      business which are similar to the assets referred to in clauses (a), (b), (c),
      (d), (e) and (f) above.

     

    “Permitted
      Pledgee”
means,
      at any time, PTFI, PTII and each directly owned Restricted Subsidiary of any
      PCA
      Loan Party (or of any other Restricted Subsidiary (other than a CFC) that is
      not
      a PCA Loan Party but is not precluded from pledging Equity Interests) and each
      subsequently acquired or organized subsidiary of FCX or any Guarantor (or such
      a
      non-Guarantor), other than (i) any Indonesian Subsidiary (other than PTFI and
      PTII) and (ii) subsidiaries the Equity Interests in which are precluded from
      being pledged by the terms of their issuer’s (or such issuer’s subsidiary’s)
      organizational documents (including shareholders and similar agreements) or
      by
      applicable Project Financing Documents.

     

    “Permitted
      Refinancing”
means,
      with respect to any Indebtedness or Attributable Debt, any extensions, renewals
      and replacements of such Indebtedness or Attributable Debt that (a) do not
      constitute Indebtedness or Attributable Debt of an obligor that was not an
      obligor with respect to the Indebtedness or Attributable Debt being extended,
      renewed or replaced (or result in Non-Recourse Indebtedness ceasing to be
      Non-Recourse Indebtedness), (b) do not increase the outstanding principal amount
      thereof by more than the sum of all accrued and unpaid interest thereon at
      the
      time of such extension, renewal or replacement and any fees or premiums paid
      in
      connection with such extension, renewal or replacement, (c) do not result in
      an
      earlier maturity date

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

    that
      is
      prior to the date six months after the Tranche B Maturity Date or decreased
      weighted average life thereof and (d) are not secured by Liens on any assets
      other than the assets that secured the Indebtedness or Attributable Debt
      extended, renewed or replaced; provided
      that any
      such extending, renewing or replacing Indebtedness in respect of the Atlantic
      Copper Financing may be in an aggregate principal amount not to exceed
      $175,000,000.

     

    “Permitted
      Secured Hedge”
means
      any Hedging Agreement between FCX or any Restricted Subsidiary (a) if entered
      into prior to the date hereof, with a counterparty that is a Lender (or
      Affiliate of a Lender) under this Agreement or the Parent Credit Agreement
      on
      the date hereof or (b) if entered into on or after the date hereof, with a
      counterparty that is a Lender or Affiliate of a Lender under this Agreement
      or
      the Parent Credit Agreement at the time such Hedging Agreement is entered
      into.

     

    “Person”
means
      any natural person, corporation, limited liability company, trust, joint
      venture, association, company, partnership, Governmental Authority or other
      entity.

     

    “Plan”
means
      any employee pension benefit plan (other than a Multiemployer Plan) subject
      to
      the provisions of Title IV of ERISA or Section 412 of the Code or
      Section 302 of ERISA, and in respect of which either Borrower or any ERISA
      Affiliate is (or, if such plan were terminated, would under Section 4069 of
      ERISA be deemed to be) an “employer” as defined in Section 3(5) of
      ERISA.

     

    “Pledged
      PTFI Shares”
means
      all shares of capital stock of PTFI owned directly by FCX and pledged pursuant
      to, as applicable, the Third Amended and Restated FCX Pledge Agreement (PTFI
      Shares) or the Fourth Amended and Restated FCX Pledge Agreement (PTFI Shares).
      On the Effective Date, the Pledged PTFI Shares represent 50.1% of the issued
      and
      outstanding shares of PTFI.

     

    “Pledged
      PTII Shares”
means,
      prior to any merger of PTII into PTFI, all shares of the capital stock of PTII
      owned by FCX or any Subsidiary of FCX, all of which are required to be pledged
      pursuant to the Third Amended and Restated FCX/ISI Pledge Agreement (PTII
      Shares). On the Effective Date, the Pledged PTII shares represent 100% of the
      issued and outstanding shares of PTII.

     

    “Prime
      Rate”
means
      the rate of interest per annum publicly announced from time to time by JPMorgan
      Chase Bank, N.A., as its prime rate in effect at its principal office in New
      York City; each change in the Prime Rate shall be effective from and including
      the date such change is publicly announced as being effective.

     

    “Principal
      Issuing Bank”
means
      JPMCB and any other Issuing Bank whom FCX and the Administrative Agent agree
      will be a Principal Issuing Bank (or any of their Affiliates that shall act
      as
      Issuing Banks hereunder).

     

    “Project
      Financing”
means
      Indebtedness or a sale leaseback of assets of a Subsidiary the proceeds of
      which
      are applied to fund new acquisition, exploration, development or expansion
      by,
      or upgrades of the assets of, such Subsidiary that is secured by the assets
      of
      such Subsidiary or the incurrence of Attributable Debt in connection with a
      sale
      and leaseback transaction involving such assets; provided that (a)
“Project
      Financing”
shall
      not include any Indebtedness or Attributable Debt the proceeds of which are
      applied to acquire a going concern and (b) any Project Financing of PTFI shall
      be Non-Recourse Indebtedness.

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    “Project
      Financing Assets”
means,
      with respect to any Project Financing, the assets of the new acquisition,
      exploration, development or expansion, or the assets the upgrade of which is,
      funded by such Project Financing.

     

    “Project
      Financing Documents”
means
      each of the operative documents relating to any Project Financing, including
      asset purchase agreements, lease agreements, joint venture agreements, guarantee
      agreements and participation agreements, to which FCX, PTFI or any Restricted
      Subsidiary is a party.

     

    “Project
      Financing Subsidiary”
means,
      with respect to any Project Financing, the Subsidiary that is the primary
      obligor in respect of such Project Financing.

     

    “Proscribed
      Consolidation”
has
      the
      meaning assigned to such term in Section 6.03(a).

     

    “PTFI”
means
      PT
      Freeport Indonesia, a limited liability company organized under the laws of
      the
      Republic of Indonesia and domesticated under the laws of Delaware as a
      corporation.

     

    “PTFI
      Shares”
means
      capital stock of PTFI.

     

    “PTII”
means
      PT
      Indocopper Investama Tbk, a corporation organized under the laws of
      Indonesia.

     

    “PTII
      Shares”
means
      capital stock of PTII.

     

    “PT-Rio
      Tinto Indonesia”
means
      PT
      Rio Tinto Indonesia (formerly P.T. RTZ-CRA Indonesia), a limited liability
      company organized under the laws of Indonesia and a wholly owned subsidiary
      of
      RTZ.

     

    “PT-Rio
      Tinto Indonesia COW Assignment”
means
      the Assignment Agreement dated as of October 11, 1996 between PTFI and PT-Rio
      Tinto Indonesia pursuant to which PTFI assigned a partial undivided interest
      in
      the Contract of Work to PT-Rio Tinto Indonesia.

     

    “Purchasing
      Card Program”
means
      a
      Purchasing Card Program established for FCX by a Lender, a “Revolving Lender”
under the Parent Credit Agreement or an Affiliate of a Lender or such a
“Revolving Lender”, pursuant to which such Lender, “Revolving Lender” or
      Affiliate issues Purchasing Cards to employees and other accounts of FCX or
      any
      Restricted Subsidiary, with an aggregate credit limit not to exceed $5,000,000
      (including, without limitation, for purchases made in foreign currencies and
      converted into U.S. dollars).

     

    “Qualified
      Stock”
means,
      with respect to any Person, any Equity Interests of such Person that are not
      Disqualified Stock.

     

    “Qualifying
      PTFI Sale Transaction”
means
      (a) one or more sales of the Pledged PTII Shares and/or of shares of PTFI which
      are owned by FCX and do not constitute Collateral (after giving effect to any
      release contemplated by Section 6.05(c)(iii)) or owned by PTII or (b) the
      issuance from time to time by PTFI of shares of PTFI (in each case, the
“Transferred
      Shares”)
      which
      in the case of clause (a) and clause (b) satisfies the following
      requirements:

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    (i)
      the
      aggregate amount of shares of capital stock of PTFI which are, directly or
      indirectly, sold, issued or transferred in such transaction does not exceed
      9.36% of the outstanding shares of capital stock of PTFI (shares of PTFI owned
      by PTII being deemed transferred for purposes of the foregoing in the same
      proportion as the number of Pledged PTII Shares that are sold or transferred
      bears to the total number of PTII Pledged Shares immediately prior to such
      Qualifying PTFI Sale Transaction);

     

    (ii)
      such
      sale or issuance is made for fair market value to a Governmental Authority
      of
      the Republic of Indonesia (including a regional Governmental Authority), an
      investment vehicle majority owned and Controlled by such a Governmental
      Authority and/or Indonesian citizens or legal entities organized under the
      laws
      of Indonesia that are Controlled by Indonesian citizens, in each case which
      qualifies as an “Indonesian National” within the meaning of Article 24(2) of the
      Contract of Work and which is not an Affiliate of FCX; 

     

    (iii)
      the
      consideration for such sale or issuance consists of cash, a promissory note
      or a
      combination of cash and a promissory note; provided that any such promissory
      note shall be secured by, and payable with any dividends, distributions or
      proceeds on or in respect of, all the Transferred Shares (which promissory
      note
      may be nonrecourse to any such Governmental Authority);

     

    (iv)
      to
      the extent payable to FCX or, on or after the Additional Collateral Date, any
      other PCA Loan Party, any such promissory note and all proceeds thereof are
      pledged at the time any such sale is consummated to the Administrative Agent,
      for the benefit of the Secured Parties, pursuant to the Collateral Agreement
      or
      other pledge arrangements satisfactory to the Administrative Agent;
      and

     

    (v)
      the
      Administrative Agent shall have received such favorable opinions of outside
      counsel to FCX as it may reasonably request in connection with the
      foregoing.

     

    “Ratable
      Obligations”
means
      the Ratable FCX Obligations, the Ratable Cyprus Obligations and, on and after
      the Additional Collateral Date, the PD Ratable Obligations. “Ratable
      FCX Obligations”
means
      the Existing Indebtedness of FCX set forth on Schedule 1.01C-1. “Ratable
      Cyprus Obligations”
means
      the Existing Indebtedness of PD set forth on Schedule 1.01C-2. “Ratable
      PD Obligations”
means
      the Existing Indebtedness of PD set forth on Schedule 1.01C-3. A “Ratable
      Guarantee”
with
      respect to any Ratable Obligation shall mean a Guarantee of such Indebtedness
      provided by a PCA Loan Party specified opposite such Ratable Obligation on
      Schedule 1.01C in the column titled “Ratable Guarantees”. A “Ratable
      Lien”
with
      respect to any Ratable Obligation shall mean a Lien securing such Indebtedness
      created under a Loan Document encumbering assets specified opposite such Ratable
      Obligation on Schedule 1.01C in the column titled “Ratable Liens”.

     

    “Receivables
      Facility”
means
      any of one or more receivables financing facilities, as amended, supplemented,
      modified, extended, renewed, restated, refunded, replaced or refinanced from
      time to time, the Indebtedness of which is non-recourse (except for Standard
      Receivables Facility Undertakings) to FCX or any Restricted Subsidiary (other
      than any Receivables Subsidiary), pursuant to which FCX or any of the Restricted
      Subsidiaries sells its accounts, payment intangibles and related assets or
      interests therein to either (a) a Person that is not a Restricted Subsidiary
      or
      (b) a 

     

    
      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

    

     

    Receivables
      Subsidiary that in turn sells its accounts, payment intangibles and related
      assets to a Person that is not a Restricted Subsidiary.

     

    “Receivables
      Facility Repurchase Obligation”
means
      any obligation of FCX or a Restricted Subsidiary that is a seller of assets
      in a
      Receivables Facility to repurchase the assets it sold thereunder as a result
      of
      a breach of a representation, warranty or covenant or otherwise, including
      as a
      result of a receivable or portion thereof becoming subject to any asserted
      defense, dispute, offset or counterclaim of any kind as a result of any action
      taken by, any failure to take action by or any other event relating to the
      seller.

     

    “Receivables
      Subsidiary”
means
      any Subsidiary formed solely for the purpose of engaging, and that engages
      only,
      in one or more Receivables Facilities.

     

    “Related
      Parties”
means,
      with respect to any specified Person, such Person’s Affiliates and the
      respective directors, officers, employees, agents, trustees and advisors of
      such
      Person and such Person’s Affiliates.

     

    “Required
      Lenders”
means,
      at any time, Lenders having Revolving Exposures and unused Commitments (other
      than Swingline Commitments) representing more than 50% of the aggregate
      Revolving Exposures and unused Commitments (other than Swingline Commitments)
      at
      such time.

     

    “Restricted
      Indebtedness”
means
      any Indebtedness of FCX or any Restricted Subsidiary, the payment, prepayment,
      redemption, repurchase or defeasance of which is restricted under
      Section 6.08.

     

    “Restricted
      Payment”
means
      any dividend or other distribution (whether in cash, securities or other
      property) with respect to any Equity Interests in FCX or any Restricted
      Subsidiary, or any payment (whether in cash, securities or other property),
      including any sinking fund or similar deposit, on account of the purchase,
      redemption, retirement, acquisition, cancelation or termination of any Equity
      Interests (including any payment under a Synthetic Purchase Agreement related
      to
      any Equity Interests) in FCX or any Restricted Subsidiary or any option, warrant
      or other right to acquire any such Equity Interests in FCX or any Restricted
      Subsidiary.

     

    “Restricted
      Subsidiary”
means,
      at any time (a) PD, (b) PTFI and (c) each other Subsidiary of FCX that is not
      at
      such time an Unrestricted Subsidiary. As of the Effective Date, all the
      Subsidiaries are Restricted Subsidiaries.

     

    “Restricted
      Uses”
means,
      as of any date, (a) the portion of the Unrestricted Subsidiary Investment Amount
      that constituted Restricted Uses at the time of the applicable Investment or
      Designation (it being understood that reductions to the Unrestricted Subsidiary
      Investment Amount under clause (d) of the definition thereof shall be allocated
      to reduce Restricted Uses until the Unrestricted Subsidiary Investment Amount
      is
      reduced to 1% of Consolidated Total Assets); plus
      (b) the
      aggregate cumulative amount of all Restricted Payments made pursuant to Section
      6.08(a)(iv) and, to the extent expressly applied to the Restricted Uses Basket
      thereunder, Section 6.08(a)(iii); plus
      (c) the
      aggregate amount of payments of Indebtedness made pursuant to Section
      6.08(b)(vii); plus
      (d) the
      aggregate amount of Equity Proceeds applied to prepay Loans under Section
      2.10(c) of the Parent Credit Agreement; plus
      (e) for
      (i) each Synthetic Purchase Agreement that is outstanding, the amount of
      payments made thereunder on or prior to the time of determination plus the
      maximum amount of payments that may thereafter may be required to be made by
      FCX
      or any Restricted 

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    Subsidiary
      during the term of such Synthetic Purchase Agreement (determined for each
      Synthetic Purchase Agreement on the date upon which it is entered into and
      adjusted on each date upon which it is modified) and (ii) each Synthetic
      Purchase Agreement that has terminated and under which no further payment
      obligations exist, the amount of payments made thereunder during the term
      thereof.

     

    “Restricted
      Uses Basket”
means,
      at any time, the sum at such time of (a) $500,000,000; plus
      (b) 50%
      of cumulative Consolidated Adjusted Net Income (net of any negative amounts)
      for
      each fiscal quarter for which financial statements shall have been delivered
      pursuant to Section 5.01(a) or (b) (commencing with the fiscal quarter ending
      March 31, 2007); plus
      (c)
      Equity Proceeds; plus
      (d) the
      amount by which Indebtedness of FCX or its Restricted Subsidiaries is reduced
      on
      FCX’s balance sheet upon the conversion or exchange (other than by a Subsidiary)
      subsequent to the Effective Date of any Indebtedness of FCX or its Restricted
      Subsidiaries which is convertible or exchangeable for Equity Interests (other
      than Disqualified Stock) of FCX (less the amount of any cash or the fair market
      value of other property distributed by FCX or any Restricted Subsidiary upon
      such conversion or exchange).

     

    “Revolving
      Availability Period”
means
      the period from and including the Effective Date to but excluding the earlier
      of
      the Revolving Maturity Date and the date of termination of the Revolving
      Commitments.

     

    “Revolving
      Commitment”
means,
      with respect to each Lender, the commitment, if any, of such Lender to make
      Revolving Loans and to acquire participations in Letters of Credit and Swingline
      Loans hereunder, expressed as an amount representing the maximum possible
      aggregate amount of such Lender’s Revolving Exposure hereunder, as such
      commitment may be (a) reduced from time to time pursuant to Section 2.07 and
      (b)
      reduced or increased from time to time pursuant to assignments by or to such
      Lender pursuant to Section 9.04. The initial amount of each Lender’s Revolving
      Commitment is set forth on Schedule 2.01, or in the Assignment and Assumption
      pursuant to which such Lender shall have assumed its Revolving Commitment,
      as
      the case may be. The initial aggregate amount of the Lenders’ Revolving
      Commitments is $500,000,000.

     

    “Revolving
      Exposure”
means,
      with respect to any Lender at any time, the sum of the outstanding principal
      amount of such Lender’s Revolving Loans and its LC Exposure and Swingline
      Exposure at such time.

     

    “Revolving
      Lender”
means
      a
      Lender with a Revolving Commitment or, if the Revolving Commitments have
      terminated or expired, a Lender with Revolving Exposure.

     

    “Revolving
      Loan”
means
      a
      Loan made pursuant to clause (c) of Section 2.01.

     

    “Revolving
      Maturity Date”
means
      March 19, 2012.

     

    “RS
      Designation”
has
      the
      meaning assigned to such term in Section 6.13(b).

     

    “RTF”
means
      Rio Tinto Finance plc, a company organized under the laws of England and a
      wholly owned subsidiary of RTZ.

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    
      “RTZ”
means
        Rio Tinto plc (formerly RTZ Corporation PLC), a company organized under the
        laws
        of England.

       

    

    “RTZ
      Documents”
means
      the Participation Agreement (including the Financial and Accounting Procedures
      thereunder) and each other material agreement in connection
      therewith.

     

    “RTZIF”
means
      RTZ Indonesian Finance Limited, a company organized under the laws of England
      and a wholly owned subsidiary of RTZ.

     

    “RTZ
      Indonesia”
means
      RTZ Indonesia Limited, a company organized under the laws of England and a
      wholly owned subsidiary of RTZ.

     

    “RTZ
      Interests”
means
      the interests of PT Rio Tinto Indonesia in the Contract of Work and the Joint
      Account Assets pursuant to the Participation Agreement and in the Concentrate
      Sales Agreements of PTFI pursuant to the FI Trust Agreement.

     

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

     

    “Second
      Amended and Restated FCX Pledge Agreement (PTFI Shares)”
means
      the Second Amended and Restated FCX Pledge Agreement (PTFI Shares) stated in
      deed number 110 dated July 26, 2006, amending and restating the Amended and
      Restated FCX Pledge Agreement (PTFI Shares) stated in deed number 5 dated
      November 11, 2003, as amended by the First Amendment to the FCX Pledge
      Agreements stated in deed number 10 dated March 31, 2004 (which amended and
      restated the Pledge of Shares stated in deed number 42 dated October 19, 2001)
      pursuant to which FCX granted a perfected first priority security interest
      under
      Indonesian law in a portion of the Pledged PTFI Shares for the ratable benefit
      of the holders of the Obligations (as defined in the Existing Credit
      Agreement).

     

    “Second
      Amended and Restated FCX Pledge Agreement (PTII Shares)”
means
      the Second Amended and Restated FCX Pledge Agreement (PTII Shares) stated in
      deed number 111 dated July 26, 2006, amending and restating the Amended and
      Restated FCX Pledge Agreement (PTII Shares) stated in deed number 6 dated
      November 11, 2003, as amended by the First Amendment to the FCX Pledge
      Agreements stated in deed number 10 dated March 31, 2004 (which amended and
      restated the Pledge of Shares agreement in deed number 41 dated October 19,
      2001) pursuant to which FCX granted a perfected first priority security interest
      under Indonesian law in the Pledged PTII Shares for the ratable benefit of
      the
      holders of the Obligations (as defined in the Existing Credit
      Agreement).

     

    “Secured
      Obligations”
means
      (a) the “Obligations” as defined in the Parent Credit Agreement other than any
      such obligations in respect of the “Obligations” as defined herein, (b) the due
      and punctual payment and performance of all obligations of FCX or any Restricted
      Subsidiary under each Permitted Secured Hedge, (c) the due and punctual payment
      and performance of all obligations owed from time to time by FCX or any
      Restricted Subsidiary to JPMCB, a Lender under this Agreement or the Parent
      Credit Agreement or any of their Affiliates in respect of cash management
      services provided to FCX or any Restricted Subsidiary and (d) the due and
      punctual payment and performance of all obligations owed from time to time
      by
      FCX or any Restricted Subsidiary to Lenders, “Revolving Lenders” under the
      Parent Credit Agreement or Affiliates thereof in respect of any Purchasing
      Card
      Program, in each case including obligations in respect of overdrafts, temporary
      advances, interest and fees.

     

    
      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

    

    

    
      “Secured
        Parties”
has
        the
        meaning assigned to such term in the Collateral Agreement or, after the
        Additional Collateral Date, the Additional Collateral Agreement.

       

    

    “Security
      Agent”
means
      JPMCB, not in its individual capacity, but as Security Agent for the
      Lenders.

     

    “Security
      Documents”
means
      the Collateral Agreement, the Additional Collateral Agreement, the Indonesian
      Guarantee Agreement, the FI Security Documents, the Foreign Pledge Agreements,
      the Affiliate Subordination Agreement, the Mortgages, the other Additional
      Security Documents, each control agreement delivered pursuant to the Collateral
      Agreement or the Additional Collateral Agreement and each other security
      agreement or other instrument or document executed and delivered pursuant to
      Section 5.12 or 5.13 to secure any of the Obligations.

     

    “Senior
      Notes”
means
      (a) the $6,000,000,000 aggregate principal amount of unsecured senior notes
      due
      2015 and unsecured senior notes due 2017 issued by FCX on the Effective Date
      in
      a public offering or in a Rule 144A or other private placement and (b) any
      substantially identical senior notes that are registered under the Securities
      Act of 1933, as amended, and issued in exchange for the senior notes described
      in clause (a) of this definition.

     

    “Senior
      Notes Documents”
means
      the indenture under which the Senior Notes are issued and all other instruments,
      agreements and other documents evidencing or governing the Senior Notes,
      providing for any Guarantee or other right in respect thereof, affecting the
      terms of the foregoing or entered into in connection therewith and all
      schedules, exhibits and annexes to each of the foregoing.

     

    “Side
      Letter”
means
      the agreement dated as of October 11, 1996 between PTFI, RTZ, PT Rio Tinto
      Indonesia, RTZIF, RTZ Indonesian Investments Limited, First Trust of New York,
      National Association, as trustee, the JAA Security Agent and certain secured
      creditors of FI.

     

    “Side
      Letter Creditor Annex”
means
      a
“Creditor Annex”, as defined in the Side Letter, in form and substance
      satisfactory to the Administrative Agent, to be filed with the FI Trustee for
      purposes of identifying the holders of the Obligations as FI Creditors
      thereunder and any additional or separate “Creditor Annex” filed with the FI
      Trustee for purposes of identifying the holders of the Obligations as FI
      Creditors, in each case as amended and in effect from time to time.

     

    “Significant
      Subsidiary”
means
      any Subsidiary of FCX that satisfies the criteria for a “significant subsidiary”
set forth in Rule 1.02(w) of Regulation S-X under the Securities Exchange Act
      of
      1934, as amended.

     

    “Specified
      Representations”
means
      the representations of each Borrower contained in the Loan Documents relating
      to
      corporate power and authority to enter into the Loan Documents, due execution,
      delivery and enforceability of the Loan Documents, Federal Reserve margin
      regulations, the Investment Company Act and, subject to clause (F) of the
      definition of Collateral and Guarantee Requirement, the perfection and required
      priority of the security interests granted in the Collateral.

     

    “Standard
      Receivables Facility Undertakings”
means
      representations, warranties, covenants and indemnities entered into by FCX
      or
      any Restricted Subsidiary that FCX has determined in good faith to be customary
      in financings similar to a Receivables Facility, including, without limitation,
      those relating to the servicing of the 

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

    assets
      of
      a Receivables Facility Subsidiary, it being understood that any Receivables
      Facility Repurchase Obligation shall be deemed to be a Standard Receivables
      Facility Undertaking.

     

    “subsidiary”
means,
      with respect to any Person (the “parent”)
      at any
      date, any corporation, limited liability company, partnership, association
      or
      other entity the accounts of which would be consolidated with those of the
      parent in the parent’s consolidated financial statements if such financial
      statements were prepared in accordance with GAAP as of such date, as well as
      any
      other corporation, limited liability company, partnership, association or other
      entity of which securities or other ownership interests representing more than
      50% of the ordinary voting power or, in the case of a partnership, more than
      50%
      of the equity or more than 50% of the general partnership interests are, as
      of
      such date, owned, Controlled or held by the parent or one or more subsidiaries
      of the parent or by the parent and one or more subsidiaries of the
      parent.

     

    “Subsidiary”
means
      any subsidiary of FCX. For purposes of the representations and warranties made
      herein on (and the conditions to borrowing on) the date hereof and on the
      Effective Date, the term “Subsidiary” includes PD and its
      subsidiaries.

     

    “Subsidiary
      Guarantor”
means
      each Subsidiary that Guarantees the Obligations and the Secured Obligations
      under a Loan Document.

     

    “Surat
      Kuasa”
means
      a
      Surat Kuasa substantially in the form of the Third Amended and Restated Surat
      Kuasa, with such modifications as may be necessary to reflect the amendment
      and
      restatement of the Existing Credit Agreement in the form of this Agreement
      and
      in form and substance satisfactory to the Administrative Agent, granted by
      PTFI
      and PT-Rio Tinto Indonesia with respect to authorization to appoint a successor
      Operator (as defined in the Participation Agreement).

     

    “Swingline
      Commitment”
means
      the commitment of the Swingline Lender to make Swingline Loans.

     

    “Swingline
      Exposure”
means,
      at any time, the aggregate principal amount of all Swingline Loans outstanding
      at such time. The Swingline Exposure of any Lender at any time shall be its
      Applicable Percentage of the Swingline Exposure at such time.

     

    “Swingline
      Lender”
means
      JPMorgan Chase Bank, N.A., in its capacity as lender of Swingline Loans
      hereunder.

     

    “Swingline
      Loan”
means
      a
      Loan made pursuant to Section 2.19.

     

    “Syndication
      Agent”
means
      Merrill, in its capacity as syndication agent for the Lenders
      hereunder.

     

    “Synthetic
      Purchase Agreement”
means
      any swap, derivative or other agreement or combination of agreements pursuant
      to
      which FCX or any Restricted Subsidiary is or may become obligated to make
      (i) any payment in connection with a purchase by any third party from a
      Person other than FCX or any Restricted Subsidiary of any Equity Interest or
      Restricted Indebtedness or (ii) any payment (other than on account of a
      permitted purchase by it of any Equity Interest or any Restricted Indebtedness)
      the amount of which is determined by reference to the price or value at any
      time
      of any Equity Interest or Restricted Indebtedness; provided
      that no
      phantom stock or similar plan providing for payments only to current or former
      directors, officers or employees of 

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

    FCX
      or any
      Restricted Subsidiary (or to their heirs or estates) shall be deemed to be
      a
      Synthetic Purchase Agreement.

     

    “Taxes”
means
      any and all present or future taxes, levies, imposts, duties, deductions,
      charges or withholdings imposed by any Governmental Authority.

     

    “Term
      Loans”
has
      the
      meaning assigned to such term in the Parent Credit Agreement.

     

    “Third
      Amended and Restated FCX Pledge Agreement (PTFI Shares)”
means
      an
      amended and restated pledge agreement substantially in the form of the Second
      Amended and Restated FCX Pledge Agreement (PTFI Shares), with such modifications
      as may be necessary to reflect the amendment and restatement of the Existing
      Credit Agreement in the form of this Agreement and in form and substance
      satisfactory to the Administrative Agent and the Required Lenders, pursuant
      to
      which FCX grants a perfected first priority security interest under Indonesian
      law in the Pledged PTFI Shares for the ratable benefit of the holders of the
      Obligations.

     

    “Third
      Amended and Restated FCX/ISI Pledge Agreement (PTII Shares)”
means
      an
      amended and restated pledge agreement pursuant to which each of FCX and ISI
      grants a perfected first priority security interest under Indonesian law in
      the
      Pledged PTII Shares for the ratable benefit of the holders of the Obligations,
      the Ratable FCX Obligations and the Secured Obligations.

     

    “Third
      Amended and Restated Fiduciary Assignment”
means
      the Third Amended and Restated Fiduciary Assignment stated in deed number 107
      dated July 26, 2006, amending and restating the Second Amended and Restated
      Fiduciary Assignment stated in deed number 3 dated November 11, 2003, as amended
      by deed number 8 dated March 31, 2004 (which amended and restated the Amendment
      and Restatement of Fiduciary Assignment of Accounts (Penyerahan Hak Atas
      Tagihan) stated in deed number 39 dated October 19, 2001) granted by PTFI and
      PT-Rio Tinto Indonesia to the Secured Parties (as defined in the Existing Credit
      Agreement).

     

    “Third
      Amended and Restated Fiduciary Transfer”
means
      the Third Amended and Restated Fiduciary Transfer stated in deed number 108
      dated July 26, 2006, amending and restating the Second Amended and Restated
      Fiduciary Transfer stated in deed number 8 dated November 11, 2003, as amended
      by deed number 11 dated March 31, 2004 (which amended and restated the Amendment
      and Restatement of Fiduciary Transfer of Assets (Penyerahan Hak Secara Fidusia)
      stated in deed number 43 dated October 19, 2001) granted by PTFI to the Secured
      Parties (as defined in the Existing Credit Agreement).

     

    “Third
      Amended and Restated JAA Fiduciary Transfer”
means
      the Third Amended and Restated JAA Fiduciary Transfer stated in deed number
      106
      dated July 26, 2006, amending and restating the Second Amended and Restated
      JAA
      Fiduciary Transfer stated in deed number 2 dated November 11, 2003, as amended
      by deed number 7 dated March 31, 2004 (which amended and restated the Amendment
      and Restatement of Fiduciary Transfer of Assets (Penyerahan Hak Secara Fidusia)
      of Joint Account Assets stated in deed number 38 dated October 19, 2001) granted
      by PTFI and PT-Rio Tinto Indonesia to the Secured Parties (as defined in the
      Existing Credit Agreement).

     

    “Third
      Amended and Restated Lender Fiduciary Assignment”
means
      the Third Amended and Restated Lender Fiduciary Assignment stated in deed number
      109 dated July 26, 2006, amending and restating the Second Amended and Restated
      Lender 

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

    Fiduciary
      Assignment stated in deed number 12 dated March 31, 2004 (which amended and
      restated the Amendment and Restatement of Fiduciary Assignment of Accounts
      (the
      Penyerahan Hak Atas Tagihan) stated in deed number 44 dated October 19, 2001)
      granted by PTFI to the to the Secured Parties (as defined in the Existing Credit
      Agreement).

     

    “Third
      Amended and Restated Lender Surat Kuasa”
means
      the Third Amended and Restated Lender Surat Kuasa stated in deed number 114
      dated July 26, 2006, amending and restating the Second Amended and Restated
      Lender Surat Kuasa stated in deed number 10 dated November 11, 2003, as amended
      by deed number 13 dated March 31, 2004 (which amended and restated the Lender
      Surat Kuasa (Power of Attorney) Amendment and Restatement stated in deed number
      45 dated October 19, 2001) granted by PTFI to the Secured Parties (as defined
      in
      the Existing Credit Agreement).

     

    “Third
      Amended and Restated Surat Kuasa”
means
      the Third Amended and Restated Surat Kuasa stated in deed number 113 dated
      July
      26, 2006, amending and restating the Second Amended and Restated Surat Kuasa
      stated in deed number 4 dated November 11, 2003, as amended by deed number
      9
      dated March 31, 2004, which amended and restated the Surat Kuasa (Power of
      Attorney) Amendment and Restatement stated in deed number 40 dated October
      19,
      2001 granted by PTFI and PT-Rio Tinto Indonesia to the FI Trustee.

     

    “Total
      Debt”
means,
      as of any date, the sum as of such date of (a) the aggregate principal amount
      of
      Funded Debt of FCX and the Restricted Subsidiaries outstanding as of such date,
      in the amount that would be reflected as a liability on a balance sheet prepared
      as of such date on a consolidated basis in accordance with GAAP, plus
      (b),
      without duplication of amounts included in clause (a), the aggregate amount
      of
      Attributable Debt of FCX and the Restricted Subsidiaries outstanding as of
      such
      date, minus
      (c) the
      lesser as of such date of (i) $1,000,000,000 and (ii) the aggregate amount
      of
      Available Domestic Cash.

     

    “Total
      Leverage Ratio”
means,
      on any date, the ratio of (a) Total Debt as of the last day of the fiscal
      quarter of FCX ended on such date or most recently prior to such date to
      (b) Consolidated EBITDA for the period of four consecutive fiscal quarters
      of FCX ended on such date or most recently prior to such date.

     

    “Total
      Secured Debt”
means,
      as of any date, the sum as of such date of (a) the aggregate principal amount
      of
      Funded Debt of FCX and the Restricted Subsidiaries outstanding as of such date
      that is secured by any asset of FCX or any Restricted Subsidiary, in the amount
      that would be reflected as a liability on a balance sheet prepared as of such
      date on a consolidated basis in accordance with GAAP, plus
      (b),
      without duplication of amounts included in clause (a), the aggregate amount
      of
      Attributable Debt of FCX and the Restricted Subsidiaries outstanding as of
      such
      date, minus
      (c) the
      lesser as of such date of (i) $1,000,000,000 and (ii) the aggregate amount
      of
      Available Domestic Cash.

     

    “Total
      Secured Leverage Ratio”
means,
      on any date, the ratio of (a) Total Secured Debt as of the last day of the
      fiscal quarter of FCX ended on such date or most recently prior to such date
      to
      (b) Consolidated EBITDA for the period of four consecutive fiscal quarters
      of FCX ended on such date or most recently prior to such date.

     

    “Tranche
      B Maturity Date”
means
      March 19, 2014.

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

    
      “Tranche
        B Term Loans”
has
        the
        meaning assigned to such term in the Parent Credit Agreement.

       

    

    “Transaction
      Costs”
means
      all fees, costs and expenses (including fees paid for consulting and financial
      services) incurred or payable by FCX or any Subsidiary in connection with the
      Transactions.

     

    “Transactions”
means
      (a) the execution and delivery by each Loan Party of the Loan Documents to
      which
      it is to be a party, the creation of the Liens pursuant to the Security
      Documents, the borrowing of Loans on the Effective Date, the use of the proceeds
      thereof and the issuance of Letters of Credit on the Effective Date, (b) the
      consummation of the Merger as contemplated by the Merger Agreement, (c) the
      execution and delivery by FCX and each of its Subsidiaries party thereto of
      the
      Parent Credit Agreement and the borrowing of loans thereunder on the Effective
      Date and the use of the proceeds thereof, the issuance of letters of credit
      thereunder on the Effective Date, and the creation of the Liens pursuant to
      the
      Security Documents thereunder, (d) the execution and delivery by FCX of the
      Senior Notes Documents, the issuance of the Senior Notes and the use of proceeds
      thereof, (e) the provision of Ratable Guarantees and the Ratable Liens on the
      Effective Date, (f) the repayment in full of all obligations under the PD Credit
      Agreement, the termination of all commitments thereunder and the release of
      all
      Guarantees and liens in respect thereof and (g) the payment of the Transaction
      Costs.

     

    “Transferred
      Shares”
has
      the
      meaning set forth in the definition of “Qualifying PTFI Sale
      Transaction”.

     

    “Type”,
      when
      used in reference to any Loan or Borrowing, refers to whether the rate of
      interest on such Loan, or on the Loans comprising such Borrowing, is determined
      by reference to the LIBO Rate or the Alternate Base Rate.

     

    “Unrestricted
      Subsidiary”
means
      (i) any Subsidiary designated as an Unrestricted Subsidiary by FCX in
      accordance with Section 6.13 after the date of this Agreement,
      (ii) any Subsidiary of any Unrestricted Subsidiary, and (iii) any
      surviving corporation (other than PTFI, FCX, PD or a Restricted Subsidiary)
      into
      which any of such corporations referred to in clause (i) or (ii) is
      merged or consolidated, subject to Section 6.03. As of the Effective Date,
      no Subsidiary is an Unrestricted Subsidiary.

     

    “Unrestricted
      Subsidiary Investment Amount”
means
      at
      any time (a) the aggregate cumulative amount of Investments made in Unrestricted
      Subsidiaries on or after the Effective Date under Section 6.04; plus
      (b) the
      Unrestricted Subsidiary LC Exposure; plus
      (c) the
      aggregate cumulative amount of the existing Investments in Unrestricted
      Subsidiaries at the time of the Designations under Section 6.13(a); minus
      (d) the
      aggregate cumulative return of Investment in Unrestricted Subsidiaries deemed
      to
      have occurred upon RS Designations as determined under Section 6.13(b), the
      Net
      Proceeds received by FCX and the Restricted Subsidiaries in respect of
      dispositions of Investments in Unrestricted Subsidiaries and the aggregate
      amount of dividends and other distributions received by FCX and the Restricted
      Subsidiaries from Unrestricted Subsidiaries. For purposes of determining the
      Unrestricted Subsidiary Investment Amount at any time, any completion Guarantee
      by FCX or any Restricted Subsidiary of any Project Financing of any Unrestricted
      Subsidiary shall be deemed to be an Investment in such Unrestricted Subsidiary
      in an amount at any time equal to the lesser of (1) the maximum stated amount
      of
      the claim that may be made under such Guarantee, if any, and (2) the aggregate
      outstanding principal amount of such Project Financing at such
      time.

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

    
      “Unrestricted
        Subsidiary LC Exposure” means, at any time, the sum of (a) the aggregate
        undrawn amount of all outstanding Letters of Credit and “Letters of Credit”
under the Parent Credit Agreement issued for the account of Unrestricted
        Subsidiaries at such time plus (b) the aggregate amount of all LC Disbursements
        and “LC Disbursements” under the Parent Credit Agreement relating to such
        Letters of Credit and “Letters of Credit” that have not yet been reimbursed by
        or on behalf of the Borrowers at such time.

    

     

    “US
      Receivables Facility”
means
      a
      Receivables Facility in respect of accounts, payment intangibles and related
      assets or interests therein initially owned by, or generated pursuant to the
      operations of, any Guarantor that is not a Foreign Subsidiary.

     

    “Wholly
      Owned Subsidiary”
means
      a
      subsidiary of FCX of which securities or other ownership interests (except
      for
      directors’ qualifying shares and other de minimis amounts of outstanding
      securities or ownership interests) representing 100% of the ordinary voting
      power and 100% of equity or 100% of the general partnership interests are,
      at
      the time any determination is being made, owned, Controlled or held by FCX
      or
      one or more Wholly Owned Subsidiaries of FCX, or by FCX and one or more Wholly
      Owned Subsidiaries of FCX.

     

    “Withdrawal
      Liability”
means
      liability to a Multiemployer Plan as a result of a complete or partial
      withdrawal from such Multiemployer Plan, as such terms are defined in
      Part I of Subtitle E of Title IV of ERISA.

     

    “World
      Bank Guidelines”
means
      the World Bank Pollution Prevention and Abatement Handbook Guidelines,
      summarized and attached in Annex A to the ERM Report.

     

    SECTION
      1.02. Classification
      of Loans and Borrowings.
      For
      purposes of this Agreement, Loans may be classified and referred to by Class
      (e.g., a “Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class
      and Type (e.g., a “Eurodollar Revolving Loan”). Borrowings also may be
      classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type
      (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar
      Revolving Borrowing”). Commitments also may be classified and referred to by
      Class (e.g., a “Revolving Commitment”).

     

    SECTION
      1.03. Terms
      Generally.
      The
      definitions of terms herein shall apply equally to the singular and plural
      forms
      of the terms defined. Whenever the context may require, any pronoun shall
      include the corresponding masculine, feminine and neuter forms. The words
“include”, “includes” and “including” shall be deemed to be followed by the
      phrase “without limitation”. The word “will” shall be construed to have the same
      meaning and effect as the word “shall”. Unless the context requires otherwise
      (a) any definition of or reference to any agreement, instrument or other
      document herein shall be construed as referring to such agreement, instrument
      or
      other document as from time to time amended, amended and restated, supplemented
      or otherwise modified (subject to any restrictions on such amendments,
      supplements or modifications set forth herein), (b) any reference to any
      law shall include all statutory and regulatory provisions consolidating,
      amending, replacing or interpreting such law and any reference to any law or
      regulation shall, unless otherwise specified, refer to such law or regulation
      as
      amended, modified or supplemented from time to time and to any successor law
      or
      regulation, (c) any reference herein to any Person shall be construed to include
      such Person’s successors and assigns, (d) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
      Agreement in its entirety and not to any particular provision hereof, (e) all
      references herein to Articles, Sections, 

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

    Exhibits
      and Schedules shall be construed to refer to Articles and Sections of, and
      Exhibits and Schedules to, this Agreement and (f) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
      to any and all tangible and intangible assets and properties, including cash,
      securities, accounts and contract rights.

     

    SECTION
      1.04. Accounting
      Terms; GAAP.
      Except as
      otherwise expressly provided herein, all terms of an accounting or financial
      nature shall be construed in accordance with GAAP, as in effect from time to
      time; provided
      that, if
      FCX notifies the Administrative Agent that FCX requests an amendment to any
      provision hereof (other than Section 5.01(a) or 5.01(b)) to eliminate the effect
      of any change occurring after the date hereof in GAAP or in the application

      thereof on the operation of such provision (or if the Administrative Agent
      notifies FCX that the Required Lenders request an amendment to any provision
      hereof (other than Section 5.01(a) or 5.01(b)) for such purpose), regardless
      of
      whether any such notice is given before or after such change in GAAP or in
      the
      application thereof, then such provision shall be interpreted on the basis
      of
      GAAP as in effect and applied immediately before such change shall have become
      effective until such notice shall have been withdrawn or such provision amended
      in accordance herewith; provided further
      that if
      at any time of delivery of financial statements under Section 5.01(a) or 5.01(b)
      GAAP as applied under the other provisions hereof shall as a result of the
      operation of this Section 1.04 be different from that used in such financial
      statements, FCX shall deliver together with such financial statements a
      reconciliation in reasonable detail of such financial statements to such
      different GAAP.

     

    ARTICLE
      II

     

    The
      Credits

     

    SECTION
      2.01. Revolving
      Commitments.
      Subject
      to the terms and conditions set forth herein, each Lender agrees to make
      Revolving Loans to the Borrowers from time to time during the Revolving
      Availability Period in an aggregate principal amount that will not result in
      such Lender’s Revolving Exposure exceeding such Lender’s Revolving Commitment.
      Within the foregoing limits and subject to the terms and conditions set forth
      herein, the Borrowers may borrow, prepay and reborrow Revolving
      Loans.

     

    SECTION
      2.02. Loans
      and Borrowings. (a)
      Each
      Loan
      (other than a Swingline Loan) shall be made as part of a Borrowing consisting
      of
      Loans of the same Type made by the Lenders ratably in accordance with their
      respective Commitments. The failure of any Lender to make any Loan required
      to
      be made by it shall not relieve any other Lender of its obligations hereunder,
      provided
      that the
      Commitments of the Lenders are several and no Lender shall be responsible for
      any other Lender’s failure to make Loans as required.

     

    (b)
      Subject to Section 2.13, each Revolving Borrowing shall be comprised
      entirely of ABR Loans or Eurodollar Loans as the applicable Borrower may request
      in accordance herewith, provided
      that all
      Borrowings made on the Effective Date must be made as ABR Borrowings unless
      the
      applicable Borrower shall have provided an indemnity satisfactory to the
      Administrative Agent extending the benefits of Section 2.15 to Lenders in
      respect of such Borrowings. Each Swingline Loan shall be an ABR Loan. Each
      Lender at its option may make any Eurodollar Loan by causing any domestic or
      foreign branch or Affiliate of such Lender to make such Loan, provided
      that any
      exercise 

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

    of
      such
      option shall not affect the obligation of the applicable Borrower to repay
      such
      Loan in accordance with the terms of this Agreement.

     

    (c)
      At the
      commencement of each Interest Period for any Eurodollar Borrowing, such
      Borrowing shall be in an aggregate amount that is an integral multiple of
      $1,000,000 and not less than $5,000,000. At the time that each ABR Borrowing
      is
      made, such Borrowing shall be in an aggregate amount that is an integral
      multiple of $1,000,000 and not less than $5,000,000. Each Swingline Loan shall
      be in an amount that is an integral multiple of $1,000,000 and not less than
      $1,000,000. Borrowings of more than one Type and Class may be outstanding at
      the
      same time, provided
      that
      there shall not at any time be more than a total of 15 Eurodollar Borrowings
      outstanding. Notwithstanding anything to the contrary herein, an ABR Revolving
      Borrowing or a Swingline Loan may be in an aggregate amount that is equal to
      the
      entire unused balance of the aggregate Revolving Commitments or that is required
      to finance the reimbursement of an LC Disbursement as contemplated by Section
      2.05(e).

     

    (d)
      Notwithstanding any other provision of this Agreement, neither Borrower shall
      be
      entitled to request, or to elect to convert or continue, any Borrowing if the
      Interest Period requested with respect thereto would end after the Revolving
      Maturity Date.

     

    SECTION
      2.03. Requests
      for Borrowings.
      To
      request a Revolving Borrowing, a Borrower shall notify the Administrative Agent
      of such request by telephone (a) in the case of a Eurodollar Borrowing, not
      later than 1:00 p.m., New York City time, three Business Days before
      the date of the proposed Borrowing or (b) in the case of an ABR Borrowing,
      including to finance the reimbursement of an LC Disbursement as contemplated
      by
      Section 2.05(e), not later than 12:00 noon, New York City time, on the
      date of the proposed Borrowing. Each such telephonic Borrowing Request shall
      be
      irrevocable and shall be confirmed promptly by hand delivery or telecopy (or
      by
      electronic transmission with telephonic confirmation of receipt thereof) to
      the
      Administrative Agent of a written Borrowing Request in a form approved by the
      Administrative Agent and signed by the applicable Borrower. Each such telephonic
      and written Borrowing Request shall specify the following information in
      compliance with Section 2.02:

     

    (i)
      the
      aggregate amount of such Borrowing;

     

    (ii)
      the
      date of such Borrowing, which shall be a Business Day;

     

    (iii)
      whether such Borrowing is to be an ABR Borrowing or a Eurodollar
      Borrowing;

     

    (iv)
      in
      the case of a Eurodollar Borrowing, the initial Interest Period to be applicable
      thereto, which shall be a period contemplated by the definition of the term
      “Interest Period”; and

     

    (v)
      the
      location and number of the Borrower’s account to which funds are to be
      disbursed, which shall comply with the requirements of
      Section 2.04.

     

    If
      no
      election as to the Type of Borrowing is specified, then the requested Borrowing
      shall be an ABR Borrowing. If no Interest Period is specified with respect
      to
      any requested Eurodollar Borrowing, then the Borrower shall be deemed to have
      selected an Interest Period of one month’s duration. Promptly following receipt
      of a Borrowing Request in accordance with this Section, the Administrative
      Agent
      shall advise each 

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

    Lender
      of
      the details thereof and of the amount of such Lender’s Loan to be made as part
      of the requested Borrowing.

     

    SECTION
      2.04. Funding
      of Borrowings. (a)
      Each
      Lender shall make each Loan to be made by it hereunder on the proposed date
      thereof by wire transfer of immediately available funds by 1:00 p.m., New York
      City time, to the account of the Administrative Agent most recently designated
      by it for such purpose by notice to the Lenders, provided
      that
      Swingline Loans shall be made as provided in Section 2.19. The Administrative
      Agent will make such funds transferred to it available to the applicable
      Borrower by promptly crediting the amounts so received, in like funds, to an
      account of such Borrower maintained with the Administrative Agent in New York
      City and designated by such Borrower in the applicable Borrowing Request;
provided
      that ABR
      Loans made to finance the reimbursement of an LC Disbursement as provided in
      Section 2.05(e) shall be remitted by the Administrative Agent to the applicable
      Issuing Bank or, to the extent that Revolving Lenders have made payments
      pursuant to Section 2.05(e) to reimburse such Issuing Bank, then to such Lenders
      and such Issuing Bank as their interests may appear.

     

    (b)
      Unless
      the Administrative Agent shall have received notice from a Lender prior to
      the
      proposed time of any Borrowing that such Lender will not make available to
      the
      Administrative Agent such Lender’s share of such Borrowing, the Administrative
      Agent may assume that such Lender has made such share available at such time
      in
      accordance with paragraph (a) of this Section and may, in reliance upon
      such assumption and in its sole discretion, make available to the applicable
      Borrower a corresponding amount. In such event, if a Lender has not in fact
      made
      its share of the applicable Borrowing available to the Administrative Agent,
      then the applicable Lender and the applicable Borrower severally agree to pay
      to
      the Administrative Agent forthwith on demand such corresponding amount with
      interest thereon, for each day from and including the date such amount is made
      available to such Borrower to but excluding the date of payment to the
      Administrative Agent, at (i) in the case of such Lender, the greater of the
      Federal Funds Effective Rate and a rate determined by the Administrative Agent
      in accordance with banking industry rules on interbank compensation or
      (ii) in the case of such Borrower, the interest rate applicable to ABR
      Loans. If such Lender pays such amount to the Administrative Agent, then such
      amount shall constitute such Lender’s Loan included in such
      Borrowing.

     

    SECTION
      2.05. Letters
      of Credit. (a)
      General. (i)
      Subject
      to the terms and conditions set forth herein, (A) either Borrower may request
      the issuance of Letters of Credit for its own account, (B) FCX may request
      the
      issuance of Letters of Credit for the account of any Restricted Subsidiary
      (other than PTFI) and (C) subject to Section 6.04 and to the last sentence
      of this paragraph, FCX may request the issuance of Letters of Credit for the
      account of Unrestricted Subsidiaries, in any case in a form reasonably
      acceptable to the Administrative Agent and the applicable Issuing Bank, at
      any
      time and from time to time during the Revolving Availability Period. The
      issuance of any Letter of Credit for the account of an Unrestricted Subsidiary
      shall be deemed to constitute an Investment in an Unrestricted Subsidiary
      pursuant to Section 6.04 in the stated amount of such Letter of
      Credit.

     

    (ii)
      On
      the Effective Date, each Issuing Bank that has issued an Existing Letter of
      Credit shall be deemed, without further action by any party hereto, to have
      granted to each Lender and each Lender shall be deemed to have purchased from
      such Issuing Bank a participation in such Existing Letter of Credit in
      accordance with paragraph (d) below. The applicable Issuing Banks and the
      Lenders that are also party to the PD Credit Agreement and the Existing Credit
      Agreement agree that concurrently with 

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

    such
      grant, the participations in the Existing Letters of Credit granted to such
      lenders under the PD Credit Agreement or the Existing Credit Agreement, as
      applicable, shall be automatically canceled without further action by any of
      the
      parties thereto. On and after the Effective Date each Existing Letter of Credit
      shall constitute a Letter of Credit for all purposes hereof. Any Lender that
      issued an Existing Letter of Credit but shall not have entered into an Issuing
      Bank Agreement shall have the rights of an Issuing Bank as to such Letter of
      Credit for purposes of this Section 2.05.

     

    (iii)
      The
      Lenders hereby agree that upon the effectiveness of any redesignation of a
      Letter of Credit under Section 2.05(a)(iii) of the Parent Credit Agreement
      (a
“PA
      Letter of Credit”)
      as a
      Letter of Credit, the Issuing Bank that issued such Letter of Credit shall
      be
      deemed, without further action by any party hereto, to have granted to each
      Lender, and each Lender shall be deemed to have purchased from such Issuing
      Bank, a participation in such Letter of Credit in accordance with paragraph
      (d)
      below, and on and after the effectiveness of any such redesignation, such Letter
      of Credit shall constitute a Letter of Credit for all purposes hereof;
provided
      in each
      case that (A) the applicable Borrower shall by notice to the Administrative
      Agent identify the PA Letters of Credit to be redesignated and certify that
      the
      conditions to such redesignation set forth in the following clause (B) are
      satisfied and that no Default shall have occurred and be continuing; and (B)
      no
      redesignation of a Letter of Credit shall become effective hereunder unless
      after giving effect to such redesignation the conditions precedent to the
      issuance, amendment, renewal or extension of a Letter of Credit under this
      Agreement shall be satisfied (or waived in accordance with Section
      9.02).

     

    (iv)
      Upon
      the Effective Date, the
      holders
      immediately prior to the Effective Date of participations in any outstanding
      letters of credit under the Existing Credit Agreement shall be deemed to release
      their participations in such letters of credit and concurrently, each Revolving
      Lender shall be deemed to acquire a participation in such letters of credit
      under this Agreement in an amount equal to such Lender’s Applicable Percentage
      of the aggregate amount available to be drawn under such Letter of Credit.
      

     

    (b)
      Notice
      of Issuance, Amendment, Renewal, Extension; Certain Conditions.
      To
      request the issuance of a Letter of Credit (or the amendment, renewal or
      extension of an outstanding Letter of Credit), a Borrower shall hand deliver
      or
      telecopy (or transmit by electronic communication, if arrangements for doing
      so
      have been approved by the applicable Issuing Bank) to the applicable Issuing
      Bank and the Administrative Agent (reasonably in advance of the requested date
      of issuance, amendment, renewal or extension) a notice requesting the issuance
      of a Letter of Credit, or identifying the Letter of Credit to be amended,
      renewed or extended, and specifying the date of issuance, amendment, renewal
      or
      extension (which shall be a Business Day), the date on which such Letter of
      Credit is to expire (which shall comply with paragraph (c) of this
      Section), the amount of such Letter of Credit, the name and address of the
      beneficiary thereof and such other information as shall be necessary to prepare,
      amend, renew or extend such Letter of Credit. If requested by an Issuing Bank,
      the applicable Borrower also shall submit a letter of credit application on
      such
      Issuing Bank’s standard form in connection with any request to it for a Letter
      of Credit. A Letter of Credit shall be issued, amended, renewed or extended
      only
      if (and upon issuance, amendment, renewal or extension of each Letter of Credit
      the Borrower shall be deemed to represent and warrant that), after giving effect
      to such issuance, amendment, renewal or extension (i) the LC Exposure shall
      not, taken together with the “LC Exposure” under the Parent Credit Agreement,
      exceed $1,000,000,000, (ii) the Unrestricted Subsidiary LC Exposure shall
      not exceed $150,000,000 and (iii) the total Revolving Exposures shall not
      exceed the total Revolving Commitments. The Borrower shall certify at the time
      of each 

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

    such
      request in respect of a Letter of Credit for the account of an Unrestricted
      Subsidiary that an Investment in such Unrestricted Subsidiary would be permitted
      at such time in the amount of such Letter of Credit under Section
      6.04.

     

    (c)
      Expiration
      Date.
      Each
      Letter of Credit shall expire at or prior to the close of business on the
      earlier of (i) the date one year after the date of the issuance of such
      Letter of Credit (or, in the case of any renewal or extension thereof, one
      year
      after such renewal or extension) and (ii) the date that is five Business
      Days prior to the Revolving Maturity Date; provided,
      however,
      that a
      Letter of Credit may, upon the request of the Borrower that shall have requested
      such Letter of Credit (a “Requesting
      Borrower”),
      include a provision whereby such Letter of Credit shall be renewed automatically
      for additional consecutive periods of one year or less (but not beyond the
      date
      that is five Business Days prior to the Revolving Maturity Date) unless the
      applicable Issuing Bank notifies the beneficiary thereof at least 30 days prior
      to the then-applicable expiration date that such Letter of Credit will not
      be
      renewed.

     

    (d)
      Participations.
      By the
      issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing
      the amount thereof) and without any further action on the part of the applicable
      Issuing Bank or the Lenders, the applicable Issuing Bank hereby grants to each
      Revolving Lender, and each Revolving Lender hereby acquires from such Issuing
      Bank, a participation in such Letter of Credit equal to such Lender’s Applicable
      Percentage of the aggregate amount available to be drawn under such Letter
      of
      Credit. In consideration and in furtherance of the foregoing, each Revolving
      Lender hereby absolutely and unconditionally agrees to pay to the Administrative
      Agent, for the account of such Issuing Bank, such Lender’s Applicable Percentage
      of each LC Disbursement made by such Issuing Bank and not reimbursed by the
      Borrowers on the date due as provided in paragraph (e) of this Section, or
      of
      any reimbursement payment required to be refunded to either Borrower for any
      reason. Each Revolving Lender acknowledges and agrees that its obligation to
      acquire participations pursuant to this paragraph in respect of Letters of
      Credit is absolute and unconditional and shall not be affected by any
      circumstance whatsoever, including any amendment, renewal or extension of any
      Letter of Credit or the occurrence and continuance of a Default or reduction
      or
      termination of the Commitments, and that each such payment shall be made without
      any offset, abatement, withholding or reduction whatsoever.

     

    (e)
      Reimbursement.
      If an
      Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit,
      the Requesting Borrower shall reimburse such LC Disbursement by paying to the
      Administrative Agent an amount equal to such LC Disbursement not later than
      2:00
      p.m., New York City time, on the date that such LC Disbursement is made, if
      such
      Requesting Borrower shall have received notice of such LC Disbursement prior
      to
      10:00 a.m., New York City time, on such date, or, if such notice has not been
      received by such Requesting Borrower prior to such time on such date, then
      not
      later than (i) 2:00 p.m., New York City time, on the Business Day that such
      Requesting Borrower receives such notice, if such notice is received prior
      to
      10:00 a.m., New York City time on the day of receipt, or (ii) 12:00 noon, New
      York City time, on the Business Day immediately following the day that such
      Requesting Borrower receives such notice, if such notice is not received prior
      to 10:00 a.m., New York City time, on the day of receipt; provided
      that such
      Requesting Borrower may, subject to the conditions to borrowing set forth
      herein, request in accordance with Section 2.03 or 2.19 that such payment be
      financed with a Borrowing in an equivalent amount and, to the extent so
      financed, such Requesting Borrower’s obligation to make such payment shall be
      discharged and replaced by the resulting Borrowing. If a Requesting Borrower
      fails to make such a payment when due, the Administrative Agent shall notify
      each Revolving Lender of the applicable LC Disbursement, the payment then due
      from such Requesting 

     

    
      
        
          
          

        

        
          52

          
            

          

        

        
          
          

        

      

    

    

    Borrower
      in respect thereof and such Lender’s Applicable Percentage thereof. Promptly
      following receipt of such notice, each Revolving Lender shall pay to the
      Administrative Agent its Applicable Percentage of the payment then due from
      such
      Requesting Borrower, in the same manner as provided in Section 2.04 with
      respect to Loans made by such Lender (and Section 2.04 shall apply,
mutatis mutandis,
      to the
      payment obligations of the Revolving Lenders), and the Administrative Agent
      shall promptly pay to the applicable Issuing Bank the amounts so received by
      it
      from the Revolving Lenders. Promptly following receipt by the Administrative
      Agent of any payment from a Requesting Borrower pursuant to this paragraph,
      the
      Administrative Agent shall distribute such payment to the applicable Issuing
      Bank or, to the extent that the Lenders have made payments pursuant to this
      paragraph to reimburse such Issuing Bank, then to such Lenders and such Issuing
      Bank as their interests may appear. Any payment made by a Lender pursuant to
      this paragraph to reimburse an Issuing Bank for any LC Disbursement (other
      than
      the funding of Revolving Loans or a Swingline Loan as contemplated above) shall
      not constitute a Loan and shall not relieve the applicable Requesting Borrower
      of its obligation to reimburse such LC Disbursement.

     

    (f)
      Obligations
      Absolute.
      The
      Borrowers’ obligation to reimburse LC Disbursements as provided in
      paragraph (e) of this Section shall be absolute, unconditional and
      irrevocable, and shall be performed strictly in accordance with the terms of
      this Agreement under any and all circumstances whatsoever and irrespective
      of
      (i) any lack of validity or enforceability of any Letter of Credit or this
      Agreement, or any term or provision therein, (ii) any draft or other document
      presented under a Letter of Credit proving to be forged, fraudulent or invalid
      in any respect or any statement therein being untrue or inaccurate in any
      respect, (iii) payment by an Issuing Bank under a Letter of Credit against
      presentation of a draft or other document that does not comply with the terms
      of
      such Letter of Credit, or (iv) any other event or circumstance whatsoever,
      whether or not similar to any of the foregoing, that might, but for the
      provisions of this Section, constitute a legal or equitable discharge of, or
      provide a right of setoff against, the Borrowers’ obligations hereunder. Neither
      the Administrative Agent, the Lenders nor the Issuing Banks, nor any of their
      Related Parties, shall have any liability or responsibility by reason of or
      in
      connection with the issuance or transfer of any Letter of Credit or any payment
      or failure to make any payment thereunder (irrespective of any of the
      circumstances referred to in the preceding sentence), or any error, omission,
      interruption, loss or delay in transmission or delivery of any draft, notice
      or
      other communication under or relating to any Letter of Credit (including any
      document required to make a drawing thereunder), any error in interpretation
      of
      technical terms or any consequence arising from causes beyond the control of
      the
      applicable Issuing Bank; provided
      that the
      foregoing shall not be construed to excuse an Issuing Bank from liability to
      the
      Borrowers to the extent of any direct damages (as opposed to consequential
      damages, claims in respect of which are hereby waived by the Borrowers to the
      extent permitted by applicable law) suffered by the Borrowers that are caused
      by
      such Issuing Bank’s failure to exercise care when determining whether drafts and
      other documents presented under a Letter of Credit comply with the terms
      thereof. The parties hereto expressly agree that, in the absence of gross
      negligence or wilful misconduct on the part of an Issuing Bank (as finally
      determined by a court of competent jurisdiction), such Issuing Bank shall be
      deemed to have exercised care in each such determination. In furtherance of
      the
      foregoing and without limiting the generality thereof, the parties agree that,
      with respect to documents presented which appear on their face to be in
      substantial compliance with the terms of a Letter of Credit, an Issuing Bank
      may, in its sole discretion, either accept and make payment upon such documents
      without responsibility for further investigation, regardless of any notice
      or
      information to the contrary, or refuse to accept and make payment upon such
      documents if such documents are not in strict compliance with the terms of
      such
      Letter of Credit.

    

      
        
          
          

        

        
          53

          
            

          

        

        
          
          

        

      

    

    
       

      
        (g)
          Disbursement
          Procedures.
          Each
          Issuing Bank shall, promptly following its receipt thereof, examine all
          documents purporting to represent a demand for payment under a Letter of
          Credit
          and shall promptly notify the Administrative Agent and the Requesting Borrower
          by telephone (confirmed by telecopy) of such demand for payment and whether
          such
          Issuing Bank has made or will make an LC Disbursement thereunder; provided
          that any
          failure to give or delay in giving such notice shall not relieve the Requesting
          Borrower of its obligation to reimburse such Issuing Bank and the Revolving
          Lenders with respect to any such LC Disbursement.

         

        (h)
          Interim
          Interest.
          If an
          Issuing Bank shall make any LC Disbursement, then, unless the Requesting
          Borrower shall reimburse such LC Disbursement in full on the date such
          LC
          Disbursement is made, the unpaid amount thereof shall bear interest, for
          each
          day from and including the date such LC Disbursement is made to but excluding
          the date that the Requesting Borrower reimburses such LC Disbursement,
          at the
          rate per annum then applicable to ABR Loans; provided
          that, if
          the Requesting Borrower fails to reimburse such LC Disbursement when due
          pursuant to paragraph (e) of this Section, then Section 2.12(c) shall
          apply. Interest accrued pursuant to this paragraph shall be for the account
          of
          the applicable Issuing Bank, except that interest accrued on and after
          the date
          of payment by any Lender pursuant to paragraph (e) of this Section to reimburse
          such Issuing Bank shall be for the account of such Revolving Lender to
          the
          extent of such payment.

         

        (i)
          Replacement
          of an Issuing Bank.
          An
          Issuing Bank may be replaced at any time by written agreement among the
          Borrowers, the Administrative Agent, the replaced Issuing Bank and the
          successor
          Issuing Bank. The Administrative Agent shall notify the Lenders of any
          such
          replacement of an Issuing Bank. At the time any such replacement shall
          become
          effective, the Borrowers shall pay all unpaid fees accrued for the account
          of
          the replaced Issuing Bank pursuant to Section 2.11(b). From and after the
          effective date of any such replacement, (i) the successor Issuing Bank
          shall
          have all the rights and obligations of an Issuing Bank under this Agreement
          with
          respect to Letters of Credit to be issued by it thereafter and (ii) references
          herein to the term “Issuing Bank” shall be deemed to refer to such successor or
          to any previous Issuing Bank, or to such successor and all previous Issuing
          Banks, as the context shall require. After the replacement of an Issuing
          Bank
          hereunder, the replaced Issuing Bank shall remain a party hereto and shall
          continue to have all the rights and obligations of an Issuing Bank under
          this
          Agreement with respect to Letters of Credit issued by it prior to such
          replacement, but shall not be required to issue additional Letters of
          Credit.

         

        (j)
          Cash
          Collateralization.
          If any
          Event of Default shall occur and be continuing or if the Borrowers are
          required
          to provide cash collateral pursuant to Section 2.10(b) or if FCX gives
          written notice to the Administrative Agent that it elects to provide cash
          collateral for purposes of Section 6.14 and 6.15, on the Business Day on
          which
          the Borrowers receive notice from the Administrative Agent or the Required
          Lenders (or, if the maturity of the Loans has been accelerated, Revolving
          Lenders with LC Exposure representing greater than 50% of the total LC
          Exposure)
          demanding the deposit of cash collateral pursuant to this paragraph, or
          on the
          date FCX provides notice of such election, as applicable, the Borrowers
          shall
          deposit in an account with the Administrative Agent, in the name of the
          Administrative Agent and for the benefit of the Lenders, an amount in cash
          equal
          to the LC Exposure as of such date plus any accrued and unpaid interest
          thereon;
provided
          that the
          obligation to deposit such cash collateral shall become effective immediately,
          and such deposit shall become immediately due and payable, without demand
          or
          other notice of any kind, (i) upon the occurrence of any Event of Default
          with
          respect to either Borrower described in clause (g) or (h) of
          Article VII or (ii) upon the occurrence of the circumstances described in
          Section 2.10(b). 

         

        
          
            
            

          

          
            54

            
              

            

          

          
            
            

          

        

         

        Each
          such
          deposit shall be held by the Administrative Agent as collateral for the
          payment
          and performance of the obligations of the Borrowers under this Agreement,
          and
          the Borrowers hereby grant the Lenders a security interest in all funds
          and
          investments in such account to secure such obligations. The Administrative
          Agent
          shall have exclusive dominion and control, including the exclusive right
          of
          withdrawal, over such account. Other than any interest earned on the investment
          of such deposits, which investments shall be made at the option and sole
          discretion of the Administrative Agent and at the Borrowers’ risk and expense,
          such deposits shall not bear interest. Interest or profits, if any, on
          such
          investments shall accumulate in such account. Moneys in such account shall
          be
          applied by the Administrative Agent to reimburse the Issuing Banks for
          LC
          Disbursements for which they have not been reimbursed and, to the extent
          not so
          applied, shall be held for the satisfaction of the reimbursement obligations
          of
          the Borrower for the LC Exposure at such time or, if the maturity of the
          Loans
          has been accelerated (but subject to the consent of Revolving Lenders with
          LC
          Exposure representing greater than 50% of the total LC Exposure), be applied
          to
          satisfy other obligations of the Borrowers under this Agreement. If the
          Borrowers are required to provide an amount of cash collateral hereunder
          as a
          result of the occurrence of an Event of Default or FCX elects to provide
          such
          collateral for purposes of Section 6.14 and 6.15, such amount (to the extent
          not
          applied as aforesaid) shall be returned to the Borrowers (i) in the case
          of any
          Event of Default, within three Business Days after all Events of Default
          have
          been cured or waived, or (ii) in the case of any such election, after the
          delivery of financial statements showing compliance with the financial
          ratio
          requirements set forth in Sections 6.14 and 6.15 or after receipt of written
          consent to such release from the Required Lenders.

         

        (k)
          Issuing
          Bank Agreements.
          Unless
          otherwise requested by the Administrative Agent, each Issuing Bank shall
          report
          in writing to the Administrative Agent (i) on the first Business Day of
          each
          week, the daily activity (set forth by day) in respect of Letters of Credit
          during the immediately preceding week, including all issuances, extensions,
          amendments and renewals, all expirations and cancelations and all disbursements
          and reimbursements, (ii) on or prior to each Business Day on which such
          Issuing
          Bank expects to issue, amend, renew or extend any Letter of Credit, the
          date of
          such issuance, amendment, renewal or extension, and the aggregate face
          amount of
          the Letters of Credit to be issued, amended, renewed or extended by it
          and
          outstanding after giving effect to such issuance, amendment, renewal or
          extension occurred (and whether the amount thereof changed), it being understood
          that such Issuing Bank shall not permit any issuance, renewal, extension
          or
          amendment resulting in an increase in the amount of any Letter of Credit
          to
          occur without first obtaining written confirmation from the Administrative
          Agent
          that it is then permitted under this Agreement, (iii) on each Business
          Day on
          which such Issuing Bank makes any LC Disbursement, the date of such LC
          Disbursement and the amount of such LC Disbursement, (iv) on any Business
          Day on
          which the Requesting Borrower fails to reimburse an LC Disbursement required
          to
          be reimbursed to such Issuing Bank on such day, the date of such failure
          and the
          amount of such LC Disbursement and (v) on any other Business Day, such
          other
          information as the Administrative Agent shall reasonably request.

         

        SECTION
          2.06. Interest
          Elections. (a)
          Each
          Borrowing initially shall be of the Type specified in the applicable Borrowing
          Request or deemed by Section 2.03, and, in the case of a Eurodollar Borrowing,
          shall have an initial Interest Period as specified in such Borrowing Request
          or
          deemed by Section 2.03. Thereafter, the applicable Borrower may elect to
          convert
          such Borrowing to a different Type or to continue such Borrowing and, in
          the
          case of a Eurodollar Borrowing, may elect Interest Periods therefor, all
          as
          provided in this Section. A Borrower may elect different options with respect
          to
          different portions of the affected Borrowing, in which case each such portion
          shall be allocated ratably among the Lenders holding the Loans comprising
          such

         

        
          
            
            

          

          
            55

            
              

            

          

          
            
            

          

        

         

        Borrowing,
          and the Loans comprising each such portion shall be considered a separate
          Borrowing. This Section shall not apply to Swingline Borrowings, which
          may not
          be converted or continued.

         

        (b)
          To
          make an election pursuant to this Section, the applicable Borrower shall
          notify
          the Administrative Agent of such election by telephone by the time that
          a
          Borrowing Request would be required under Section 2.03 if such Borrower
          were requesting a Revolving Borrowing of the Type resulting from such election
          to be made on the effective date of such election. Each such telephonic
          Interest
          Election Request shall be irrevocable and shall be confirmed promptly by
          hand
          delivery or telecopy to the Administrative Agent of a written Interest
          Election
          Request in a form approved by the Administrative Agent and signed by the
          applicable Borrower.

         

        (c)
          Each
          telephonic and written Interest Election Request shall specify the following
          information in compliance with Section 2.02 (including with respect to
          minimum amounts and borrowing multiples relating to any resulting
          Borrowing):

         

        (i)
          the
          Borrowing to which such Interest Election Request applies and, if different
          options are being elected with respect to different portions thereof, the
          portions thereof to be allocated to each resulting Borrowing (in which
          case the
          information to be specified pursuant to clauses (iii) and (iv) below
          shall be specified for each resulting Borrowing);

         

        (ii)
          the
          effective date of the election made pursuant to such Interest Election
          Request,
          which shall be a Business Day;

         

        (iii)
          whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar
          Borrowing; and

         

        (iv)
          if
          the resulting Borrowing is a Eurodollar Borrowing, the Interest Period
          to be
          applicable thereto after giving effect to such election, which shall be
          a period
          contemplated by the definition of the term “Interest Period”.

         

        If
          any
          such Interest Election Request requests a Eurodollar Borrowing but does
          not
          specify an Interest Period, then the applicable Borrower shall be deemed
          to have
          selected an Interest Period of one month’s duration.

         

        (d)
          Promptly following receipt of an Interest Election Request with respect
          to a
          Borrowing, the Administrative Agent shall advise each Lender of the details
          thereof and of such Lender’s portion of each resulting Borrowing.

         

        (e)
          If the
          applicable Borrower fails to deliver a timely Interest Election Request
          with
          respect to a Eurodollar Borrowing prior to the end of the Interest Period
          applicable thereto, then, unless such Borrowing is repaid as provided herein,
          at
          the end of such Interest Period such Borrowing shall be converted to an
          ABR
          Borrowing. Notwithstanding any contrary provision hereof, if an Event of
          Default
          has occurred and is continuing and the Administrative Agent, at the request
          of
          the Required Lenders, so notifies the Borrowers, then, so long as an Event
          of
          Default is continuing (i) no outstanding Borrowing may be converted to or
          continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
          Borrowing shall be converted to an ABR Borrowing at the end of the Interest
          Period applicable thereto.

         

        
          
            
            

          

          
            56

            
              

            

          

          
            
            

          

        

         

        SECTION
          2.07. Termination
          and Reduction of Commitments. (a)
          Unless
          previously terminated, the Revolving Commitments shall terminate on the
          Revolving Maturity Date.

         

        (b)
          FCX
          may at any time terminate, or from time to time reduce, the Commitments
          of any
          Class; provided
          that
          (i) each reduction of the Commitments of any Class shall be in an amount
          that is an integral multiple of $1,000,000 and not less than $5,000,000,
          (ii) FCX shall not terminate or reduce the Revolving Commitments if, after
          giving effect to any concurrent prepayment of Loans and provision of cash
          collateral, in each case in accordance with Section 2.10(b), the aggregate
          Revolving Exposures (excluding the LC Exposure with respect to which cash
          collateral has been provided in accordance with Section 2.10(b)) would
          exceed
          the total Revolving Commitments, and (iii) FCX shall not terminate or reduce
          the
          Revolving Commitments unless it has obtained the prior approval required
          therefor under Section 6.11(b) of the Parent Credit Agreement.

         

        (c)
          FCX
          shall notify the Administrative Agent of any election to terminate or reduce
          the
          Commitments under paragraph (b) of this Section, at least three Business
          Days prior to the effective date of such termination or reduction, specifying
          such election or reduction and the effective date thereof. Promptly following
          receipt of any notice, the Administrative Agent shall advise the Lenders
          of the
          contents thereof. Each notice delivered by FCX pursuant to this Section
          shall be
          irrevocable; provided
          that a
          notice of termination of the Revolving Commitments delivered by FCX may
          state
          that such notice is conditioned upon the effectiveness of other financings
          or of
          asset dispositions, in which case such notice may be revoked by FCX (by
          notice
          to the Administrative Agent on or prior to the specified effective date)
          if such
          condition is not satisfied. Any termination or reduction of the Commitments
          of
          any Class shall be permanent. Each reduction of the Commitments of any
          Class
          shall be made ratably among the Lenders in accordance with the amounts
          of their
          Commitments of such Class.

         

        SECTION
          2.08. Repayment of
          Loans; Evidence of Debt. (a)
          Each
          Borrower hereby unconditionally promises to pay (i) to the Administrative
          Agent
          for the account of each Lender the then unpaid principal amount of each
          Revolving Loan of such Lender on the Revolving Maturity Date, and (ii)
          to the
          Swingline Lender the then unpaid principal amount of each Swingline Loan
          on the
          earlier of the Revolving Maturity Date and the first date after such Swingline
          Loan is made that is the 15th or last day of a calendar month and is at
          least
          two Business Days after such Swingline Loan is made, provided
          that on
          each date that a Revolving Borrowing is made, the Borrower shall repay
          all
          Swingline Loans that were outstanding on the date such Borrowing was
          requested.

         

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

         

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

         

        (d)
          The
          entries made in the accounts maintained pursuant to paragraph (b)
          or (c) of this Section shall be prima facie
          evidence
          of the existence and amounts of the 

         

        
          
            
            

          

          
            57

            
              

            

          

          
            
            

          

        

         

        obligations
          recorded therein; provided
          that the
          failure of any Lender or the Administrative Agent to maintain such accounts
          or
          any error therein shall not in any manner affect the obligation of either
          Borrower to repay the Loans in accordance with the terms of this
          Agreement.

         

        (e)
          Any
          Lender may request that Loans of any Class made by it be evidenced by a
          promissory note. In such event, the Borrowers shall prepare, execute and
          deliver
          to such Lender a promissory note payable to the order of such Lender (or,
          if
          requested by such Lender, to such Lender and its registered assigns) and
          in a
          form approved by the Administrative Agent. Thereafter, the Loans evidenced
          by
          such promissory note and interest thereon shall at all times (including
          after
          assignment pursuant to Section 9.04) be represented by one or more
          promissory notes in such form payable to the order of the payee named therein
          (or, if such promissory note is a registered note, to such payee and its
          registered assigns).

         

        SECTION
          2.09. [intentionally omitted]

         

        SECTION
          2.10. Prepayment
          of Loans. (a)
          The
          Borrowers shall have the right at any time and from time to time to prepay
          any
          Borrowing in whole or in part, without premium or penalty, subject to the
          requirements of this Section and to the making of any payment required
          under
          Section 2.15.

         

        (b)
          In the
          event and on each occasion on or prior to the Revolving Maturity Date that
          the
          sum of the Revolving Exposures exceeds the total Revolving Commitments,
          the
          Borrowers shall prepay Revolving Borrowings in an aggregate amount equal
          to such
          excess; provided
          that if
          no Revolving Borrowings are outstanding and the LC Exposure exceeds the
          total
          Revolving Commitments, the Borrowers shall provide cash collateral in an
          aggregate amount equal to such excess in accordance with Section
          2.05(j).

         

        (c)
          Prior
          to any prepayment of Borrowings hereunder, the Borrowers shall select the
          Borrowing or Borrowings to be prepaid and shall specify such selection
          in the
          notice of such prepayment pursuant to paragraph (d) of this
          Section.

         

        (d)
          The
          applicable Borrower shall notify the Administrative Agent (and, in the
          case of
          prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed
          by
          telecopy) of any prepayment hereunder (i) in the case of prepayment of a
          Eurodollar Borrowing, not later than 12:00 noon, New York City time, three
          Business Days before the date of prepayment or (ii) in the case of
          prepayment of an ABR Borrowing, not later than 12:00 noon, New York City
          time,
          on the date of prepayment. Each such notice shall be irrevocable and shall
          specify the prepayment date and the principal amount of each Borrowing
          or
          portion thereof to be prepaid; provided
          that if a
          notice of optional voluntary prepayment is given in connection with a
          conditional notice of termination of the Commitments as contemplated by
          Section 2.07(c), then such notice of prepayment may be revoked if such
          notice of termination is revoked in accordance with Section 2.07(c).
          Promptly following receipt of any such notice (other than a notice relating
          solely to Swingline Loans), the Administrative Agent shall advise the Lenders
          of
          the contents thereof. Each partial prepayment of any Borrowing shall be
          in an
          amount that would be permitted in the case of an advance of a Borrowing
          of the
          same Type as provided in Section 2.02. Each prepayment of a Borrowing shall
          be applied ratably to the Loans included in the prepaid Borrowing. Prepayments
          shall be accompanied by accrued interest to the extent required by
          Section 2.12.

         

        
          
            
            

          

          
            58

            
              

            

          

          
            
            

          

        

         

        SECTION
          2.11. Fees. (a)
          The
          Borrowers agree to pay to the Administrative Agent for the account of each
          Lender a commitment fee, which shall accrue at the Applicable Rate on the
          daily
          average unused amount of the Revolving Commitment of such Lender during
          the
          period from and including the Effective Date, to but excluding the date
          on which
          the Revolving Commitments terminate. Accrued commitment fees shall be payable
          in
          arrears on the last day of March, June, September and December of each
          year, and
          on the date on which the Revolving Commitments terminate, commencing on
          the
          first such date to occur after the date hereof. All commitment fees shall
          be
          computed on the basis of a year of 360 days and shall be payable for the
          actual
          number of days elapsed (including the first day but excluding the last
          day). For
          purposes of computing commitment fees, a Revolving Commitment of a Lender
          shall
          be deemed to be used to the extent of the outstanding Loans and LC Exposure
          of
          such Lender (and the Swingline Exposure of such Lender shall be disregarded
          for
          such purpose).

         

        (b)
          Each
          Borrower agrees to pay (i) to the Administrative Agent for the account of
          each Revolving Lender a participation fee with respect to such Lender’s
          participation in Letters of Credit requested by such Borrower, which shall
          accrue at the same Applicable Rate used to determine the interest rate
          applicable to Eurodollar Revolving Loans on the average daily amount of
          such
          Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed
          LC Disbursements) during the period from and including the Effective Date
          to but
          excluding the later of the date on which such Lender’s Revolving Commitment
          terminates and the date on which such Lender ceases to have any LC Exposure,
          and
          (ii) to each Issuing Bank a fronting fee, which shall accrue at the rate or
          rates per annum separately agreed upon between the Borrowers and such Issuing
          Bank on the average daily amount of the LC Exposure attributable to Letters
          of
          Credit issued by such Issuing Bank (excluding any portion thereof attributable
          to unreimbursed LC Disbursements) during the period from and including
          the
          Effective Date to but excluding the later of the date of termination of
          the
          Revolving Commitments and the date on which there ceases to be any LC Exposure,
          as well as each Issuing Bank’s standard fees with respect to the issuance,
          amendment, renewal or extension of any Letter of Credit or processing of
          drawings thereunder. Participation fees and fronting fees accrued through
          and
          including the last day of March, June, September and December of each year
          shall
          be payable on the third Business Day following such last day, commencing
          on the
          first such date to occur after the Effective Date; provided
          that all
          such fees shall be payable on the date on which the Revolving Commitments
          terminate (and, if later, the date on which there ceases to be any Revolving
          Exposure) and any such fees accruing after the date on which the Revolving
          Commitments terminate shall be payable on demand. Any other fees payable
          to an
          Issuing Bank pursuant to this paragraph shall be payable within 10 days
          after
          demand. All participation fees and fronting fees shall be computed on the
          basis
          of a year of 360 days and shall be payable for the actual number of days
          elapsed
          (including the first day but excluding the last day).

         

        (c)
          The
          Borrowers agree to pay to the Administrative Agent, for its own account,
          fees
          payable in the amounts and at the times separately agreed upon between
          the
          Borrowers and the Administrative Agent.

         

        (d)
          All
          fees payable hereunder shall be paid on the dates due, in immediately available
          funds, to the Administrative Agent (or to an Issuing Bank, in the case
          of fees
          payable to it) for distribution, in the case of commitment fees and
          participation fees, to the Lenders. Fees paid shall not be refundable under
          any
          circumstances.

         

        
          
            
            

          

          
            59

            
              

            

          

          
            
            

          

        

         

        SECTION
          2.12. Interest. (a)
          The
          Loans
          comprising each ABR Borrowing (including each Swingline Loan) shall bear
          interest at the Alternate Base Rate plus the Applicable Rate and plus,
          at all
          times during a Collateral Shortfall Period, 1.00%.

         

        (b)
          The
          Loans comprising each Eurodollar Borrowing shall bear interest at the LIBO
          Rate
          for the Interest Period in effect for such Borrowing plus the Applicable
          Rate
          and plus, at all times during a Collateral Shortfall Period, 1.00%.

         

        (c)
          Notwithstanding the foregoing, if any principal of or interest on any Loan
          or
          any fee or other amount payable by either Borrower hereunder is not paid
          when
          due, whether at stated maturity, upon acceleration or otherwise, such overdue
          amount shall, on and after the date the Required Lenders so request, bear
          interest, after as well as before judgment, at a rate per annum equal to
          (i) in the case of overdue principal of any Loan, 2% plus the rate
          otherwise applicable to such Loan as provided in the preceding paragraphs
          of
          this Section or (ii) in the case of any other amount, 2% plus the rate
          applicable to ABR Revolving Loans as provided in paragraph (a) of this
          Section.

         

        (d)
          Accrued interest on each Loan made to a Borrower shall be payable by such
          Borrower in arrears on each Interest Payment Date for each such Loan and,
          in the
          case of Revolving Loans, upon termination of the Revolving Commitments;
          provided
          that
          (i) interest accrued pursuant to paragraph (c) of this Section shall
          be payable on demand, (ii) in the event of any repayment or prepayment of
          any Loan (other than a prepayment of an ABR Revolving Loan prior to the
          end of
          the Revolving Availability Period), accrued interest on the principal amount
          repaid or prepaid shall be payable on the date of such repayment or prepayment
          and (iii) in the event of any conversion of any Eurodollar Loan prior to
          the end of the current Interest Period therefor, accrued interest on such
          Loan
          shall be payable on the effective date of such conversion.

         

        (e)
          All
          interest hereunder shall be computed on the basis of a year of 360 days,
          except
          that interest computed by reference to the Alternate Base Rate at times
          when the
          Alternate Base Rate is based on the Prime Rate shall be computed on the
          basis of
          a year of 365 days (or 366 days in a leap year), and in each case shall
          be
          payable for the actual number of days elapsed (including the first day
          but
          excluding the last day). The applicable Alternate Base Rate or LIBO Rate
          shall
          be determined by the Administrative Agent, and such determination shall
          be
          conclusive absent manifest error.

         

        SECTION
          2.13. Alternate
          Rate of Interest.
          If prior
          to the commencement of any Interest Period for a Eurodollar
          Borrowing:

         

        (a)
          the
          Administrative Agent determines (which determination shall be conclusive
          absent
          manifest error) that adequate and reasonable means do not exist for ascertaining
          the LIBO Rate for such Interest Period; or

         

        (b)
          the
          Administrative Agent is advised by the Required Lenders that the LIBO Rate
          for
          such Interest Period will not adequately and fairly reflect the cost to
          such
          Lenders of making or maintaining their Loans included in such Borrowing
          for such
          Interest Period;

         

        then
          the
          Administrative Agent shall give notice thereof to the Borrowers and the
          Lenders
          by telephone or telecopy as promptly as practicable thereafter and, until
          the
          Administrative Agent notifies the Borrowers and the Lenders that the
          circumstances giving rise to such notice no longer exist, (i) any Interest
          Election Request that requests the conversion of any Borrowing to, or
          continuation of any Borrowing as, a Eurodollar 

         

        
          
            
            

          

          
            60

            
              

            

          

          
            
            

          

        

         

        Borrowing
          shall be ineffective and (ii) if any Borrowing Request requests a
          Eurodollar Borrowing, such Borrowing shall be made as an ABR
          Borrowing.

         

        SECTION
          2.14. Increased
          Costs. (a)
          If
          any
          Change in Law shall:

         

        (i)
          impose, modify or deem applicable any reserve, special deposit or similar
          requirement against assets of, deposits with or for the account of, or
          credit
          extended by, any Lender (except any such reserve requirement reflected
          in
          Eurodollar Reserve Requirements) or any Issuing Bank; or

         

        (ii)
          impose on any Lender or any Issuing Bank or the London interbank market
          any
          other condition affecting this Agreement or Eurodollar Loans made by such
          Lender
          or any Letter of Credit or participation therein;

         

        and
          the
          result of any of the foregoing shall be to increase the cost to such Lender
          of
          making or maintaining any Eurodollar Loan (or of maintaining its obligation
          to
          make any such Loan) or to increase the cost to such Lender or such Issuing
          Bank
          of participating in, issuing or maintaining any Letter of Credit or to
          reduce
          the amount of any sum received or receivable by such Lender or such Issuing
          Bank
          hereunder (whether of principal, interest or otherwise), in each case by
          or in
          an amount which such Lender in its sole judgment deems material in the
          context
          of this Agreement and its Loans or participations in Letters of Credit
          hereunder, then the relevant Borrower will pay to such Lender or such Issuing
          Bank, as the case may be, such additional amount or amounts as will compensate
          such Lender or such Issuing Bank, as the case may be, for such additional
          costs
          incurred or reduction suffered.

         

        (b)
          If any
          Lender shall give notice to the Administrative Agent and the Borrowers
          at any
          time to the effect that Eurodollar Reserve Requirements are, or are scheduled
          to
          become, effective and that such Lender is or will be generally subject
          to such
          Eurodollar Reserve Requirements as a result of which such Lender will incur
          additional costs, then such Lender shall, for each day from the later of
          the
          date of such notice and the date on which such Eurodollar Reserve Requirements
          become effective, be entitled to additional interest on each Eurodollar
          Loan
          made by it at a rate per annum determined for such day (rounded upward,
          if
          necessary, to the nearest 100th of 1%) equal to the remainder obtained
          by
          subtracting (i) the LIBO Rate for such Eurodollar Loan from (ii) the
          rate obtained by dividing such LIBO Rate by a percentage equal to 100%
          minus the
          then-applicable Eurodollar Reserve Requirements. Such additional interest
          will
          be payable in arrears to the Administrative Agent, for the account of such
          Lender, on each Interest Payment Date relating to such Eurodollar Loan
          and on
          any other date when interest is required to be paid hereunder with respect
          to
          such Loan. Any Lender which gives notice under this paragraph (b) shall
          promptly
          withdraw such notice (by written notice of withdrawal given to the
          Administrative Agent and the Borrowers) in the event Eurodollar Reserve
          Requirements cease to apply to it or the circumstances giving rise to such
          notice otherwise cease to exist.

         

        (c)
          If any
          Lender or any Issuing Bank determines that any Change in Law regarding
          capital
          requirements has or would have the effect of reducing the rate of return
          on such
          Lender’s or such Issuing Bank’s capital or on the capital of such Lender’s or
          such Issuing Bank’s holding company, if any, as a consequence of this Agreement
          or the Loans made by, or participations in Letters of Credit held by, such
          Lender or the Letters of Credit issued by such Issuing Bank, to a level
          below
          that which such Lender or such Issuing Bank or such Lender’s or such Issuing
          Bank’s holding company could have achieved but for such Change in Law (taking
          into consideration such Lender’s or such Issuing Bank’s policies and the
          policies of such Lender’s or such Issuing Bank’s holding 

         

        
          
            
            

          

          
            61

            
              

            

          

          
            
            

          

        

         

        company
          with respect to capital adequacy), by an amount which such Lender in its
          sole
          judgment deems to be material in the context of this Agreement and its
          Loans,
          Commitments and participations in Letters of Credit hereunder, then from
          time to
          time the Borrowers will pay to such Lender or such Issuing Bank, as the
          case may
          be, such additional amount or amounts as will compensate such Lender or
          such
          Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any
          such reduction suffered.

         

        (d)
          A
          certificate of a Lender or an Issuing Bank setting forth the amount or
          amounts
          necessary to compensate such Lender or such Issuing Bank or its holding
          company,
          as the case may be, as specified in paragraph (a) or (c) of this
          Section shall be delivered to the Borrowers and shall be conclusive absent
          manifest error. The Borrowers (or the Borrower in respect of the Loan or
          Letter
          of Credit, if any, to which such compensation request is attributable)
          shall pay
          such Lender or such Issuing Bank the amount shown as due on any such certificate
          within 10 days after receipt thereof.

         

        (e)
          Failure or delay on the part of any Lender or any Issuing Bank to demand
          compensation pursuant to this Section shall not constitute a waiver of
          such
          Lender’s or such Issuing Bank’s right to demand such compensation; provided
          that the
          Borrowers shall not be required to compensate a Lender or an Issuing Bank
          pursuant to this Section for any increased costs or reductions incurred
          more
          than 180 days prior to the date that such Lender or such Issuing Bank, as
          the case may be, notifies the Borrower of the Change in Law giving rise
          to such
          increased costs or reductions and of such Lender’s or such Issuing Bank’s
          intention to claim compensation therefor; provided further
          that, if
          the Change in Law giving rise to such increased costs or reductions is
          retroactive, then the 180-day period referred to above shall be extended
          to
          include the period of retroactive effect thereof.

         

        SECTION
          2.15. Break
          Funding Payments.
          In the
          event of (a) the payment of any principal of any Eurodollar Loan to a
          Borrower other than on the last day of an Interest Period applicable thereto
          (including as a result of an Event of Default), (b) the conversion of any
          Eurodollar Loan to a Borrower other than on the last day of the Interest
          Period
          applicable thereto, (c) the failure by a Borrower to borrow, convert,
          continue or prepay any Eurodollar Loan on the date specified in any notice
          delivered pursuant hereto (regardless of whether such notice may be revoked
          under Section 2.10(f) and is revoked in accordance therewith), or (d) the
          assignment of any Eurodollar Loan of a Borrower other than on the last
          day of
          the Interest Period applicable thereto as a result of a request by FCX
          pursuant
          to Section 2.18, then, in any such event, such Borrower shall compensate
          each Lender for the loss, cost and expense attributable to such event.
          Such
          loss, cost or expense to any Lender shall be deemed to include an amount
          determined by such Lender to be the excess, if any, of (i) the amount of
          interest which would have accrued on the principal amount of such Loan
          had such
          event not occurred, at the LIBO Rate that would have been applicable to
          such
          Loan, for the period from the date of such event to the last day of the
          then
          current Interest Period therefor (or, in the case of a failure to borrow,
          convert or continue, for the period that would have been the Interest Period
          for
          such Loan), over (ii) the amount of interest which would accrue on such
          principal amount for such period at the interest rate which such Lender
          would
          bid were it to bid, at the commencement of such period, for dollar deposits
          of a
          comparable amount and period from other banks in the eurodollar market.
          A
          certificate of any Lender setting forth any amount or amounts that such
          Lender
          is entitled to receive pursuant to this Section shall be delivered to the
          Borrowers and shall be conclusive absent manifest error. The relevant Borrower
          shall pay such Lender the amount shown as due on any such certificate within
          10
          days after receipt thereof.

         

        
          
            
            

          

          
            62

            
              

            

          

          
            
            

          

        

         

        SECTION
          2.16. Taxes. (a)
          Any
          and
          all payments by or on account of any obligation of either Borrower or any
          other
          Loan Party hereunder or under any other Loan Document shall be made free
          and
          clear of and without deduction for any Indemnified Taxes or Other Taxes;
          provided
          that if
          either Borrower shall be required to deduct any Indemnified Taxes or Other
          Taxes
          from such payments, then (i) the sum payable shall be increased as
          necessary so that after making all required deductions (including deductions
          applicable to additional sums payable under this Section) the Administrative
          Agent, Lender or Issuing Bank (as the case may be) receives an amount equal
          to
          the sum it would have received had no such deductions been made, (ii) such
          Borrower shall make such deductions and (iii) such Borrower shall pay the
          full amount deducted to the relevant Governmental Authority in accordance
          with
          applicable law.

         

        (b)
          In
          addition, each Borrower shall pay any Other Taxes to the relevant Governmental
          Authority in accordance with applicable law.

         

        (c)
          Each
          Borrower shall indemnify the Administrative Agent, each Lender and each
          Issuing
          Bank, within 10 days after written demand therefor, for the full amount
          of any
          Indemnified Taxes or Other Taxes paid by the Administrative Agent, such
          Lender
          or such Issuing Bank, as the case may be, on or with respect to any payment
          by
          or on account of any obligation of a Borrower hereunder or under any other
          Loan
          Document (including Indemnified Taxes or Other Taxes imposed or asserted
          on or
          attributable to amounts payable under this Section) and any penalties,
          interest
          and reasonable expenses arising therefrom or with respect thereto, whether
          or
          not such Indemnified Taxes or Other Taxes were correctly or legally imposed
          or
          asserted by the relevant Governmental Authority, provided,
          however,
          that the
          Borrowers shall not be obligated to make payment to the Administrative
          Agent or
          any Lender or Issuing Bank pursuant to this Section in respect of penalties,
          interest and other liabilities attributable to any Indemnified Taxes or
          Other
          Taxes if such penalties, interest and other liabilities are attributable
          to the
          gross negligence or wilful misconduct of the Administrative Agent, Lender
          or
          Issuing Bank. A certificate as to the amount of such payment or liability
          delivered to a Borrower by a Lender or an Issuing Bank, or by the Administrative
          Agent on its own behalf or on behalf of a Lender or an Issuing Bank, shall
          be
          conclusive absent manifest error.

         

        (d)
          As
          soon as practicable after any payment of Indemnified Taxes or Other Taxes
          by
          either Borrower to a Governmental Authority, such Borrower shall deliver
          to the
          Administrative Agent the original or a certified copy of a receipt issued
          by
          such Governmental Authority evidencing such payment, a copy of the return
          reporting such payment or other evidence of such payment reasonably satisfactory
          to the Administrative Agent.

         

        (e)
          If the
          Administrative Agent, a Lender or an Issuing Bank determines, in its sole
          discretion, that it has received a refund of any Taxes or Other Taxes as
          to
          which it has been indemnified by the Borrowers or with respect to which
          the
          Borrowers have paid additional amounts pursuant to this Section 2.16, it
          shall
          pay over such refund to the Borrower (but only to the extent of indemnity
          payments made, or additional amounts paid, by the Borrowers under this
          Section
          2.16 with respect to the Taxes or Other Taxes giving rise to such refund),
          net
          of all out-of-pocket expenses of the Administrative Agent, such Lender
          or such
          Issuing Bank and without interest (other than any interest paid by the
          relevant
          Governmental Authority with respect to such refund); provided, that the
          Borrowers, upon the request of the Administrative Agent, such Lender or
          such
          Issuing Bank, agrees to repay the amount paid over to the Borrowers (plus
          any
          penalties, interest or other charges imposed by the relevant Governmental
          Authority) to the Administrative Agent, such Lender or such Issuing Bank
          in the
          event the 

         

        
          
            
            

          

          
            63

            
              

            

          

          
            
            

          

        

         

        Administrative
          Agent, such Lender or such Issuing Bank is required to repay such refund
          to such
          Governmental Authority.

         

        (f)
          Any
          Foreign Lender that is entitled to an exemption from or reduction of withholding
          tax under the law of the jurisdiction in which either Borrower is located,
          or
          any treaty to which such jurisdiction is a party, with respect to payments
          under
          this Agreement shall deliver to the applicable Borrower (with a copy to
          the
          Administrative Agent), at the time or times prescribed by applicable law,
          such
          properly completed and executed documentation prescribed by applicable
          law or
          reasonably requested by such Borrower or the Administrative Agent as will
          permit
          such payments to be made without withholding or at a reduced rate, provided
          that such
          Foreign Lender has received written notice from such Borrower or the
          Administrative Agent, as the case may be, advising it of the availability
          of
          such exemption or reduction and supplying all applicable
          documentation.

         

        (g)
          Nothing contained in this Section 2.16 shall require the Administrative
          Agent,
          the FI Trustee, the Collateral Agent, the Security Agent, any Issuing Bank
          or
          any Lender (or permitted assignee or Participant) to make available any
          of its
          income tax returns or any other information that it deems to be confidential
          or
          proprietary.

         

        (h)
          PTFI
          shall pay to the relevant Governmental Authority when due all Indonesian
          Taxes
          in accordance with applicable law.

         

        (i)
          PTFI
          shall indemnify the Administrative Agent, the FI Trustee, the Collateral
          Agent,
          the Security Agent, each Lender (or permitted assignee or Participant)
          and each
          Issuing Bank against, and shall reimburse the Administrative Agent, the
          FI
          Trustee, the Collateral Agent, the Security Agent, each Lender (or permitted
          assignee or Participant) and each Issuing Bank upon demand for, the full
          amount
          of any Indonesian Taxes paid by the Administrative Agent, the FI Trustee,
          the
          Collateral Agent, the Security Agent, such Lender (or permitted assignee
          or
          Participant) or such Issuing Bank, and any loss, liability, claim or expense
          (including interest, penalties, fines, surcharges and legal fees) which
          the
          Administrative Agent, the FI Trustee, the Collateral Agent, the Security
          Agent,
          such Lender (or permitted assignee or Participant) or such Issuing Bank
          may
          incur at any time arising out of or in connection with any failure of PTFI
          to
          make any payments of Indonesian Taxes, whether or not such Indonesian Taxes
          were
          correctly or legally imposed or asserted by the relevant Governmental Authority;
          provided,
          however,
          that
          PTFI shall not be obligated to make payment to the Administrative Agent,
          the FI
          Trustee, the Collateral Agent, the Security Agent, each Lender (or permitted
          assignee or Participant) or any Issuing Bank pursuant to this Section in
          respect
          of penalties, interest and other liabilities attributable to any Indonesian
          Taxes if such penalties, interest and other liabilities are attributable
          to the
          gross negligence or wilful misconduct of the Administrative Agent, FI Trustee,
          the Collateral Agent, the Security Agent, any Lender or any Issuing Bank;
          providedfurther,
          that no
          permitted assignee or Participant of any Lender shall be entitled to receive
          any
          greater payment under this Section than such Lender would have been entitled
          to
          receive with respect to the rights assigned, participated or otherwise
          transferred unless such assignment, participation or transfer shall have
          been
          made at a time when the circumstances giving rise to such greater payment
          did
          not exist. A certificate as to the amount of such payment or liability
          delivered
          to PTFI by a Lender (or permitted assignee or Participant), the FI Trustee,
          the
          Collateral Agent, the Security Agent, an Issuing Bank or the Administrative
          Agent on its behalf, absent manifest error, shall be final, conclusive
          and
          binding for all purposes. Such indemnification shall be made within 30 days
          after the date such Lender (or permitted assignee or Participant), the
          FI
          Trustee, the Collateral Agent, the Security 

         

        
          
            
            

          

          
            64

            
              

            

          

          
            
            

          

        

         

        Agent,
          such Issuing Bank or the Administrative Agent, as the case may be, makes
          written
          demand therefor.

         

        (j)
          Except
          as otherwise expressly provided in paragraph (m) below, all payments on
          account
          of the principal of or interest on the Loans made to PTFI, any promissory
          notes
          of PTFI issued hereunder and all other amounts payable by PTFI to or for
          the
          account of any Lender (or permitted assignee or Participant), an Issuing
          Bank,
          the Collateral Agent, the Security Agent or the Administrative Agent hereunder
          (including amounts payable under Section 2.16(h) or 2.16(i)) or to or for
          the FI Trustee under the FI Security Documents and to any of them under
          any
          other Loan Document shall be made free and clear of and without reduction
          by
          reason of any Indonesian Taxes all of which shall be for the account of
          and paid
          in full when due by PTFI. In the event that PTFI is required by any applicable
          law, decree or regulation to deduct or withhold Indonesian Taxes from any
          amounts payable on, under or in respect of this Agreement, any other Loan
          Document or any promissory note issued hereunder, PTFI shall make the required
          deduction or withholding, promptly pay the amount of such Indonesian Taxes
          to
          the appropriate taxing authorities and pay to the Administrative Agent
          such
          additional amounts as may be required, after the deduction or withholding
          of
          Indonesian Taxes (including deductions applicable to additional sums payable
          under this Section 2.16), to enable each Lender (or permitted assignee or
          Participant), each Issuing Bank, the FI Trustee, the Collateral Agent,
          the
          Security Agent or the Administrative Agent to receive from PTFI on the
          due date
          thereof, an amount equal to the full amount stated to be payable to such
          Lender
          (or permitted assignee or Participant), such Issuing Bank, the FI Trustee,
          the
          Collateral Agent, the Security Agent or the Administrative Agent under
          this
          Agreement, any other applicable Loan Document or any promissory note issued
          hereunder.

         

        (k)
          Without in any way affecting PTFI’s obligations under the other provisions of
          this Section 2.16, PTFI shall furnish to the Administrative Agent the
          originals or certified copies of all tax receipts issued by the relevant
          taxing
          authority in respect of each payment, deduction or withholding of Indonesian
          Taxes required to be made by applicable laws or regulations, as soon as
          practicable and in any event not later than 90 days after the date on which
          such payment is made, and PTFI shall, at the request of any Lender (or
          permitted
          assignee or Participant), the Issuing Bank, the FI Trustee or the Administrative
          Agent, promptly furnish to such Lender (or permitted assignee or Participant),
          the Issuing Bank, the Collateral Agent, the Security Agent, the FI Trustee
          or
          the Administrative Agent any other information, documents and receipts
          that such
          Lender (or permitted assignee or Participant), the Issuing Bank, the Collateral
          Agent, the Security Agent, the FI Trustee or the Administrative Agent may
          require to establish to its satisfaction that full and timely payment has
          been
          made of all Indonesian Taxes required to be paid hereunder.

         

        (l)
          PTFI
          will notify the Lenders (through the Administrative Agent) promptly upon
          becoming aware of the application or imposition, or scheduled future application
          or imposition, of Indonesian Taxes; and each Lender (if not theretofore
          notified
          by PTFI) will notify PTFI of any such application or imposition which becomes
          known to its officers then supervising the Loans of such Lender hereunder
          as
          part of their normal duties, and of any change of its lending office or
          establishment or closing of a branch in Indonesia by such Lender which
          would
          give rise to the application or imposition of Indonesian Taxes.

         

        (m)
          Each
          Lender (or permitted assignee or Participant) having its principal office
          and
          applicable lending office outside of Indonesia (a “Non-Indonesian
          Lender”)
          shall
          use reasonably diligent efforts to deliver to PTFI appropriate forms, duly
          

         

        
          
            
            

          

          
            65

            
              

            

          

          
            
            

          

        

         

        completed,
          evidencing such Non-Indonesian Lender’s entitlement (if any) under any
          applicable tax treaty to a reduced rate of withholding of Indonesian Taxes with
          respect to payments of interest on Loans of such Non-Indonesian Lender
          (which,
          in the case of any Non-Indonesian Lender that is organized under the laws
          of the
          United States or any State thereof including the District of Columbia,
          shall be
          Internal Revenue Service Form 6166 (or any successor form thereto)) on or
          prior to the 90th day following (A) the date hereof or (B) in the case
          of any such Non-Indonesian Lender that is a permitted assignee or Participant,
          the date such Non-Indonesian Lender becomes a permitted assignee or Participant;
          provided
          that in
          the event a Non-Indonesian Lender is a disregarded entity for United States
          federal income tax purposes, such Form 6166 shall be delivered by such
          Lender’s
          parent. Following delivery by a Non-Indonesian Lender to PTFI of the appropriate
          form referenced in the preceding sentence of this Section 2.16(m), duly
          completed, PTFI is authorized to file such form with the appropriate Indonesian
          taxing authorities in order to obtain a reduced rate of withholding of
          Indonesian Taxes with respect to payments of interest on Loans of such
          Non-Indonesian Lender.

         

        Each
          Non-Indonesian Lender shall use reasonably diligent efforts to deliver
          to PTFI
          such certificates, forms or other documents as may be necessary under any
          other
          provision of applicable law (including any amendment, modification or supplement
          to Form 6166 or such analogous form referred to in the second preceding
          sentence) to reduce the withholding rate of Indonesian Taxes with respect
          to
          payments of interest on Loans of such Non-Indonesian Lender on or by the
          90th
          day following the date on which PTFI shall have delivered to such Non-Indonesian
          Lender written notice of the existence of such provision of applicable
          law
          together with a copy thereof (accompanied by a verified English translation
          if
          such provision of applicable law is not in English); provided,
          however,
          that
          such Non-Indonesian Lender shall not be required to deliver any such
          certificate, form or other document that would, in the reasonable judgment
          of
          such Non-Indonesian Lender, be otherwise disadvantageous to such Non-Indonesian
          Lender; and provided further
          that such
          Non-Indonesian Lender shall have no obligation to deliver any such certificates,
          forms or other documents that it is not legally able to deliver or with
          respect
          to information deemed by such Non-Indonesian Lender to be confidential
          or
          proprietary.

         

        If
          any
          Non-Indonesian Lender shall have failed to comply with the requirements
          of this
          Section 2.16(m) and the effect of such failure is to cause the rate of
          withholding of Indonesian Taxes with respect to payments of interest on
          such
          Non-Indonesian Lender’s Loans to be higher than that which would have been
          applicable had such certificates, forms or other documents been delivered
          to the
          applicable Indonesian taxing authority, then any withholding tax indemnity
          payment to any such Non-Indonesian Lender by PTFI pursuant to this
          Section 2.16 shall be computed as if such certificates, forms or other
          documents had been so delivered.

         

        SECTION
          2.17. Payments
          Generally; Pro Rata Treatment; Sharing of Set-offs. (a)
          Each
          Borrower shall make each payment required to be made by it hereunder or
          under
          any other Loan Document (whether of principal, interest, fees or reimbursements
          of LC Disbursements, or of amounts payable under Section 2.14, 2.15 or 2.16
          or otherwise) prior to the time expressly required hereunder or under such
          other
          Loan Document for such payment (or, if no such time is expressly required,
          prior
          to 12:00 noon, New York City time), on the date when due, in immediately
          available funds, without set-off or counterclaim. Any amounts received
          after
          such time on any date may, in the discretion of the Administrative Agent,
          be
          deemed to have been received on the next succeeding Business Day for purposes
          of
          calculating interest thereon. All such payments shall be made to the
          Administrative Agent at its offices at 270 Park Avenue, New York, New York,
          except payments to be made directly to an Issuing Bank or 

         

        
          
            
            

          

          
            66

            
              

            

          

          
            
            

          

        

         

        Swingline
          Lender as expressly provided herein and except that payments pursuant to
          Sections 2.14 (other than paragraph (b) thereof), 2.15, 2.16 and 9.03
          shall be made directly to the Persons entitled thereto and payments pursuant
          to
          other Loan Documents shall be made to the Persons specified therein. The
          Administrative Agent shall distribute any such payments received by it
          for the
          account of any other Person to the appropriate recipient promptly following
          receipt thereof. If any payment under any Loan Document shall be due on
          a day
          that is not a Business Day, the date for payment shall be extended to the
          next
          succeeding Business Day, and, in the case of any payment accruing interest,
          interest thereon shall be payable for the period of such extension. All
          payments
          under each Loan Document shall be made in dollars.

         

        (b)
          If at
          any time insufficient funds are received by and available to the Administrative
          Agent to pay fully all amounts of principal, unreimbursed LC Disbursements,
          interest and fees then due hereunder, such funds shall be applied
          (i) first, towards payment of interest and fees then due hereunder, ratably
          among the parties entitled thereto in accordance with the amounts of interest
          and fees then due to such parties, and (ii) second, towards payment of
          principal and unreimbursed LC Disbursements then due hereunder, ratably
          among
          the parties entitled thereto in accordance with the amounts of principal
          and
          unreimbursed LC Disbursements then due to such parties.

         

        (c)
          If any
          Lender shall, by exercising any right of set-off or counterclaim or otherwise,
          obtain payment in respect of any principal of or interest on any of its
          Revolving Loans or participations in LC Disbursements or Swingline Loans
          resulting in such Lender receiving payment of a greater proportion of the
          aggregate amount of its Revolving Loans and participations in LC Disbursements
          and Swingline Loans and accrued interest thereon than the proportion received
          by
          any other Lender, then the Lender receiving such greater proportion shall
          purchase (for cash at face value) participations in the Revolving Loans
          and
          participations in LC Disbursements and Swingline Loans of other Lenders
          to the
          extent necessary so that the benefit of all such payments shall be shared
          by the
          Lenders ratably in accordance with the aggregate amount of principal of
          and
          accrued interest on their respective Revolving Loans and participations
          in LC
          Disbursements and Swingline Loans; provided
          that
          (i) if any such participations are purchased and all or any portion of the
          payment giving rise thereto is recovered, such participations shall be
          rescinded
          and the purchase price restored to the extent of such recovery, without
          interest, and (ii) the provisions of this paragraph shall not be construed
          to apply to any payment made by either Borrower pursuant to and in accordance
          with the express terms of this Agreement or any payment obtained by a Lender
          as
          consideration for the assignment of or sale of a participation in any of
          its
          Loans or participations in LC Disbursements to any assignee or participant,
          other than to such Borrower or any Subsidiary or Affiliate thereof (as
          to which
          the provisions of this paragraph shall apply). Each Borrower consents to
          the
          foregoing and agrees, to the extent it may effectively do so under applicable
          law, that any Lender acquiring a participation pursuant to the foregoing
          arrangements may exercise against either Borrower rights of set-off and
          counterclaim with respect to such participation as fully as if such Lender
          were
          a direct creditor of such Borrower in the amount of such
          participation.

         

        (d)
          Unless
          the Administrative Agent shall have received notice from a Borrower prior
          to the
          date on which any payment is due to the Administrative Agent for the account
          of
          the Lenders or an Issuing Bank hereunder that such Borrower will not make
          such
          payment, the Administrative Agent may assume that such Borrower has made
          such
          payment on such date in accordance herewith and may, in reliance upon such
          assumption and in its sole discretion, distribute to the Lenders or such
          Issuing
          Bank, as the case may be, the amount due. In such event, if such Borrower
          has
          not in fact made such payment, then each of the Lenders or such Issuing
          Bank, as

         

        
          
            
            

          

          
            67

            
              

            

          

          
            
            

          

        

         

        the
          case
          may be, severally agrees to repay to the Administrative Agent forthwith
          on
          demand the amount so distributed to such Lender or such Issuing Bank with
          interest thereon, for each day from and including the date such amount
          is
          distributed to it to but excluding the date of payment to the Administrative
          Agent, at the greater of the Federal Funds Effective Rate and a rate determined
          by the Administrative Agent in accordance with banking industry rules on
          interbank compensation.

         

        (e)
          If any
          Lender shall fail to make any payment required to be made by it pursuant
          to
          Section 2.04, 2.05(d) or (e), 2.17(d), 2.19(c) or 9.03(c), then the
          Administrative Agent may, in its discretion (notwithstanding any contrary
          provision hereof), apply any amounts thereafter received by the Administrative
          Agent for the account of such Lender to satisfy such Lender’s obligations under
          such Sections until all such unsatisfied obligations are fully
          paid.

         

        SECTION
          2.18. Mitigation
          Obligations; Replacement of Lenders. (a)If
          any
          Lender requests compensation under Section 2.14 (other than paragraph (b)
          thereof), or if either Borrower is required to pay any additional amount to
          any Lender or any Governmental Authority for the account of any Lender
          pursuant
          to Section 2.16, then such Lender shall use reasonable efforts to designate
          a different lending office for funding or booking its Loans hereunder or
          to
          assign its rights and obligations hereunder to another of its offices,
          branches
          or affiliates, if, in the judgment of such Lender, such designation or
          assignment (i) would eliminate or reduce amounts payable pursuant to
          Section 2.14 (other than paragraph (b) thereof) or 2.16, as the case may
          be, in the future and (ii) would not subject such Lender to any
          unreimbursed cost or expense and would not otherwise be disadvantageous
          to such
          Lender. Each Borrower hereby agrees to pay all reasonable costs and expenses
          incurred by any Lender in connection with any such designation or
          assignment.

         

        (b)
          If any
          Lender requests compensation under Section 2.14 (other than
          paragraph (b) thereof), or if either Borrower is required to pay any
          additional amount to any Lender or any Governmental Authority for the account
          of
          any Lender pursuant to Section 2.16, or if any Lender defaults in its
          obligation to fund Loans hereunder, or if any Lender has failed to consent
          to a
          proposed amendment, waiver, discharge or termination which pursuant to
          the terms
          of Section 9.02 requires the consent of all of the Lenders affected and
          with
          respect to which the Required Lenders shall have granted their consent,
          then FCX
          may, at its sole expense and effort, upon notice to such Lender and the
          Administrative Agent, require such Lender to assign and delegate, without
          recourse (in accordance with and subject to the restrictions contained
          in
          Section 9.04), all its interests, rights and obligations under this
          Agreement to an assignee that shall assume such obligations (which assignee
          may
          be another Lender, if a Lender accepts such assignment); provided
          that
          (i) the Borrowers shall have received the prior written consent of the
          Administrative Agent (and, if a Revolving Commitment is being assigned,
          each
          Principal Issuing Bank and the Swingline Lender), which consent shall not
          unreasonably be withheld, (ii) such Lender shall have received payment of
          an amount equal to the outstanding principal of its Loans and participations
          in
          LC Disbursements and Swingline Loans, accrued interest thereon, accrued
          fees and
          all other amounts payable to it hereunder, from the assignee (to the extent
          of
          such outstanding principal and accrued interest and fees) or the Borrowers
          (in
          the case of all other amounts), (iii) in the case of any such assignment
          resulting from a claim for compensation under Section 2.14 or payments
          required to be made pursuant to Section 2.16, such assignment will result
          in a material reduction in such compensation or payments, and (iv) in the
          case
          of any such assignment resulting from the failure to provide a consent,
          the
          assignee shall have given 

         

        
          
            
            

          

          
            68

            
              

            

          

          
            
            

          

        

         

        such
          consent and the fee required under Section 9.04(b)(ii)(C) shall have been
          paid
          by such assignee or by a Borrower. A Lender shall not be required to make
          any
          such assignment and delegation if, prior thereto, as a result of a waiver,
          consent or approval by such Lender or otherwise, the circumstances entitling
          the
          Borrowers to require such assignment and delegation cease to apply.

         

        SECTION
          2.19. Swingline
          Loans. (a)
          Subject
          to
          the terms and conditions set forth herein, the Swingline Lender agrees
          to make
          Swingline Loans to the Borrowers from time to time during the Revolving
          Availability Period, in an aggregate principal amount at any time outstanding
          that will not result in (i) the aggregate principal amount of outstanding
          Swingline Loans exceeding $50,000,000 or (ii) the aggregate Revolving Exposures
          exceeding the aggregate Revolving Commitments, provided
          that the
          Swingline Lender shall not be required to make a Swingline Loan to refinance
          an
          outstanding Swingline Loan. Within the foregoing limits and subject to
          the terms
          and conditions set forth herein, the Borrowers may borrow, prepay and reborrow
          Swingline Loans.

         

        (b)
          To
          request a Swingline Loan, a Borrower shall notify the Administrative Agent
          of
          such request by telephone (confirmed by telecopy), not later than 2:00
          p.m., New
          York City time, on the day of such proposed Swingline Loan. Each such notice
          shall be irrevocable and shall specify the requested date (which shall
          be a
          Business Day) and amount of the requested Swingline Loan. The Administrative
          Agent will promptly advise the Swingline Lender of any such notice received
          from
          a Borrower. The Swingline Lender shall make each Swingline Loan available
          to the
          Borrower that shall have requested such Swingline Loan by means of a credit
          to
          the general deposit account of such Borrower maintained with the Swingline
          Lender (or, in the case of a Swingline Loan made to finance the reimbursement
          of
          an LC Disbursement as provided in Section 2.05(e), by remittance to the
          applicable Issuing Bank or, to the extent that the Revolving Lenders have
          made
          payments pursuant to Section 2.05(e) to reimburse an Issuing Bank, to such
          Lenders and such Issuing Bank as their interests may appear) by 3:00 p.m.,
          New
          York City time, on the requested date of such Swingline Loan.

         

        (c)
          The
          Swingline Lender may by written notice given to the Administrative Agent
          not
          later than 12:00 noon, New York City time, on any Business Day require
          the
          Revolving Lenders to acquire participations on such Business Day in all
          or a
          portion of the Swingline Loans outstanding. Such notice shall specify the
          aggregate amount of Swingline Loans in which Revolving Lenders will participate.
          Promptly upon receipt of such notice, the Administrative Agent will give
          notice
          thereof to each Revolving Lender, specifying in such notice such Lender’s
          Applicable Percentage of such Swingline Loan or Swingline Loans. Each Revolving
          Lender hereby absolutely and unconditionally agrees, upon receipt of notice
          as
          provided above, to pay to the Administrative Agent, for the account of
          the
          Swingline Lender, such Lender’s Applicable Percentage of such Swingline Loan or
          Swingline Loans. Each Revolving Lender acknowledges and agrees that its
          obligation to acquire participations in Swingline Loans pursuant to this
          paragraph is absolute and unconditional and shall not be affected by any
          circumstance whatsoever, including the occurrence and continuance of a
          Default
          or reduction or termination of the Commitments, and that each such payment
          shall
          be made without any offset, abatement, withholding or reduction whatsoever.
          Each
          Revolving Lender shall comply with its obligation under this paragraph
          by wire
          transfer of immediately available funds, in the same manner as provided
          in
          Section 2.04 with respect to Loans made by such Lender (and Section 2.04
          shall
          apply, mutatis mutandis,
          to the
          payment obligations of the Revolving Lenders), and the Administrative Agent
          shall promptly pay to the Swingline Lender the amounts so received by it
          from
          the Revolving Lenders. The Administrative Agent shall notify the Borrowers
          of
          any participations in 

         

        
          
            
            

          

          
            69

            
              

            

          

          
            
            

          

        

         

        any
          Swingline Loan acquired pursuant to this paragraph, and thereafter (i)
          each
          participation so acquired in such Swingline Loan shall be deemed to be
          a
          Revolving Loan and (ii) payments in respect of such Swingline Loan shall
          be made
          to the Administrative Agent and not to the Swingline Lender. Any amounts
          received by the Swingline Lender from the Borrowers (or other party on
          behalf of
          the Borrowers) in respect of a Swingline Loan after receipt by the Swingline
          Lender of the proceeds of a sale of participations therein shall be promptly
          remitted to the Administrative Agent; any such amounts received by the
          Administrative Agent shall be promptly remitted by the Administrative Agent
          to
          the Revolving Lenders that shall have made their payments pursuant to this
          paragraph and to the Swingline Lender, as their interests may appear,
provided
          that any
          such payment so remitted shall be repaid to the Swingline Lender or the
          Administrative Agent, as the case may be, if and to the extent such payment
          is
          required to be refunded to the Borrowers for any reason. The failure of
          any
          Revolving Lender to purchase any participation in a Swingline Loan pursuant
          to
          this paragraph shall not relieve the Borrowers of any default in the payment
          thereof.

         

        ARTICLE
          III

         

        Representations
          and Warranties

         

        Each
          of
          FCX and PTFI represents and warrants to the Lenders on the date hereof,
          on the
          Effective Date and on each other date on which representations and warranties
          are made or deemed made hereunder that:

         

        SECTION
          3.01. Organization;
          Powers.
          Each
          Borrower, each Loan Party and each of FCX’s other Restricted Subsidiaries is
          duly organized and validly existing (except to the extent that the failure
          of
          such other Restricted Subsidiaries to be duly organized and validly existing
          would not, individually or in the aggregate, be expected to result in a
          Material
          Adverse Effect) and, to the extent applicable, except where the failure
          to do
          so, individually or in the aggregate, would not reasonably be expected
          to result
          in a Material Adverse Effect in good standing under the laws of the jurisdiction
          of its organization, has, except where the failure to do so, individually
          or in
          the aggregate, would not reasonably be expected to result in a Material
          Adverse
          Effect, all requisite power and authority to carry on its business as now
          conducted and to execute, deliver and perform its obligations under each
          Loan
          Document to which it is a party and, except where the failure to do so,
          individually or in the aggregate, would not reasonably be expected to result
          in
          a Material Adverse Effect, is qualified to do business in, and is, to the
          extent
          applicable, in good standing in, every jurisdiction where such qualification
          is
          required.

         

        SECTION
          3.02. Authorization;
          Enforceability.
          The
          performance by each Loan Party of the Loan Documents to which it is to
          be party,
          the Borrowings and the issuances of Letters of Credit hereunder and the
          Transactions to be entered into by each Loan Party are within such Loan
          Party’s
          corporate powers and have been duly authorized by all necessary corporate
          and,
          if required, stockholder action. This Agreement has been duly executed
          and
          delivered by each Borrower and constitutes, and each other Loan Document
          to
          which any Loan Party is to be a party, when executed and delivered by such
          Loan
          Party, will constitute, a valid and binding obligation of such Loan Party,
          enforceable in accordance with its terms, subject to applicable bankruptcy,
          insolvency, reorganization, moratorium or other laws affecting creditors’ rights
          generally, concepts of reasonableness and general principles of equity,
          regardless of whether considered in a proceeding in equity or at
          law.

         

        
          
            
            

          

          
            70

            
              

            

          

          
            
            

          

        

         

        SECTION
          3.03. Governmental
          Approvals; No Conflicts.
          Except as
          set forth in Schedule 3.03, the performance by each Loan Party of the Loan
          Documents to which it is to be party, the Borrowings and the issuances
          of
          Letters of Credit hereunder and the Transactions (a) do not require any
          consent or approval of, registration or filing with, or any other action
          by, any
          Governmental Authority, except (i) such as have been obtained or made and
          are in
          full force and effect, (ii) filings necessary to perfect Liens created
          under the
          Loan Documents, (iii) certain consents and approvals that may be required
          in
          order to provide certain guarantees or to grant certain Liens, in each
          case
          contemplated by the Collateral and Guarantee Requirement or Section 5.12
          or 5.13
          hereof, (iv) the filing of a certificate of merger with the Delaware Secretary
          of State to effect the Merger, (v) the filing of information in respect
          thereof
          with the Securities and Exchange Commission and (vi) other consents, approvals,
          registrations, filings or actions the failure of which to obtain or make,
          individually or in the aggregate, would not reasonably be expected to result
          in
          a Material Adverse Effect, (b) will not violate the charter, by-laws or
          other
          organizational documents of either Borrower or any of the Loan Parties,
          (c) except to the extent that any such violations or defaults would not,
          individually or in the aggregate, reasonably be expected to result in a
          Material
          Adverse Effect, (i) will not violate any applicable law or regulation or
          any
          order of any Governmental Authority and (ii) will not violate or result
          in a
          default under any indenture, agreement or other instrument binding upon
          either
          Borrower or any of its Restricted Subsidiaries or its assets and (d) will
          not result in the creation or imposition of any Lien on any asset of either
          Borrower or any of its Restricted Subsidiaries, except Liens created under
          the
          Loan Documents (including Ratable Liens securing Ratable FCX Obligations
          and
          Ratable Cyprus Obligations and, on and after the Additional Collateral
          Date,
          Ratable PD Obligations). All applicable waiting periods and appeal periods
          in
          respect of the Transactions under the Hart-Scott-Rodino Antitrust Improvements
          Act of 1976 have expired, in each case without the imposition of burdensome
          conditions.

         

        SECTION
          3.04. Financial
          Condition; No Material Adverse Change. (a)
          FCX
          has
          heretofore furnished to the Lenders FCX’s consolidated balance sheet and
          consolidated statements of income, stockholders’ equity and cash flows as of and
          for the fiscal year ended December 31, 2006, reported on by Ernst & Young
          LLP, independent registered public accountants. Such financial statements
          present fairly, in all material respects, the consolidated financial position
          and consolidated results of operations and cash flows of FCX and its
          consolidated Subsidiaries as of such date and for such period in accordance
          with
          GAAP. 

         

        (b)
          FCX
          has heretofore furnished to the Lenders PD’s consolidated balance sheet and
          consolidated statements of income, shareholders’ equity and cash flows as of and
          for the fiscal year ended December 31, 2006, reported on by
          PricewaterhouseCoopers LLP, independent registered public accountants.
          Such
          financial statements present fairly, in all material respects, the consolidated
          financial position and consolidated results of operations and cash flows
          of PD
          and its consolidated subsidiaries as of such date and for such period in
          accordance with GAAP.

         

        (c)
          FCX
          has heretofore furnished to the Lenders its pro forma consolidated balance
          sheet
          as of December 31, 2006, prepared giving effect to the Transactions as
          if the
          Transactions had occurred on such date. Such pro forma consolidated balance
          sheet (i) has been prepared in good faith based on the same assumptions
          used to
          prepare the pro forma financial statements filed on Form 8-K with the Securities
          and Exchange Commission on March 1, 2007 (which assumptions are believed
          by FCX
          to be reasonable), (ii) based on the information available at the time
          of
          preparation thereof, reasonably reflects the adjustments appropriate to
          give pro
          forma 

         

        
          
            
            

          

          
            71

            
              

            

          

          
            
            

          

        

         

        effect
          to
          the Transactions and (iii) is derived from the historical financial statements
          referred to in Sections 3.04(a) and 3.04(b) above.

         

        (d)
          Except
          as disclosed in the financial statements referred to above or the notes
          thereto
          or in the Confidential Information Materials and except for the Disclosed
          Matters, after giving effect to the Transactions, neither Borrower nor
          any of
          the Restricted Subsidiaries has, as of the Effective Date, any material
          contingent liabilities, unusual long-term commitments or unrealized losses
          that
          would reasonably be expected to give rise to a Material Adverse
          Effect.

         

        (e)
          Except
          on the date hereof and on the Effective Date (as to which the condition
          set
          forth in Section 4.01(t) shall apply), except as set forth in Schedule
          3.04(e),
          since December 31, 2006, there has been no material adverse change in (i)
          the business, operations or financial condition of FCX and its Subsidiaries,
          taken as a whole, (ii) the ability of any Loan Party to perform its
          obligations under any Loan Document or (iii) the rights of or benefits
          available to the Lenders under the Loan Documents.

         

        SECTION
          3.05. Properties. (a)
          Except
          to
          the extent that any failure to do so individually or in the aggregate would
          not
          reasonably be expected to result in a Material Adverse Effect, FCX and
          each of
          the Restricted Subsidiaries has good title to, or valid leasehold interests
          in,
          all of its real and personal property material to its business (including
          the
          Mortgaged Properties), except for Liens permitted by Section 6.02.

         

        (b)
          Except
          to the extent that any such failure or infringement, individually or in
          the
          aggregate, would not reasonably be expected to result in a Material Adverse
          Effect, FCX and each of the Restricted Subsidiaries owns, or is licensed
          to use,
          all trademarks, tradenames, copyrights, patents and other intellectual
          property
          material to its business, and the use thereof by FCX and the Restricted
          Subsidiaries does not infringe upon the rights of any other Person.

         

        (c)
          Except
          to the extent that any such condemnation proceedings, individually or in
          the
          aggregate, would not reasonably be expected to result in a Material Adverse
          Effect, as of the Effective Date, none of FCX or any Restricted Subsidiary
          has
          received notice of, or has knowledge of, any pending or contemplated
          condemnation proceeding affecting any Mortgaged Property or any sale or
          disposition thereof in lieu of condemnation.

         

        SECTION
          3.06. Litigation
          and Environmental Matters. (a)
          Except
          for
          the Disclosed Matters, there are no actions, suits or proceedings by or
          before
          any Governmental Authority pending against or, to the knowledge of FCX,
          threatened against or affecting FCX or any of its Restricted Subsidiaries
          that
          would reasonably be expected, individually or in the aggregate, to result
          in a
          Material Adverse Effect.

         

        (b)
          Except
          for the Disclosed Matters and except for any other matters that, individually
          or
          in the aggregate, would not reasonably be expected to result in a Material
          Adverse Effect, neither FCX nor any of its Restricted Subsidiaries (i) has
          failed to comply with any applicable Environmental Law or to obtain, maintain
          or
          comply with any permit, license or other approval required for its operations
          or
          properties under any applicable Environmental Law, (ii) is obligated to
          remediate contamination resulting from releases of Hazardous Materials
          or
          (iii) has received written notice of any claim with respect to any
          Environmental Liability.

         

        
          
            
            

          

          
            72

            
              

            

          

          
            
            

          

        

         

        (c)
          Since
          the date of this Agreement, there has been no change in the status of the
          Disclosed Matters that, individually or in the aggregate, has resulted
          in a
          Material Adverse Effect.

         

        SECTION
          3.07. Compliance
          with Laws and Agreements.
          FCX and
          its Restricted Subsidiaries are in compliance in all material respects
          with all
          laws, regulations and orders of any Governmental Authority applicable to
          them or
          their properties and all indentures, agreements (including without limitation,
          in the case of PTFI, the Contract of Work) and other instruments binding
          upon
          them or their properties, except where the failure to do so, individually
          or in
          the aggregate, would not reasonably be expected to result in a Material
          Adverse
          Effect. No Default has occurred and is continuing.

         

        SECTION
          3.08. Investment
          Company Status.
          No Loan
          Party is an “investment company” under the Investment Company Act of
          1940.

         

        SECTION
          3.09. Taxes.
          FCX and
          its Subsidiaries have timely filed or caused to be filed all Tax returns
          and
          reports required to have been filed by them and have paid or caused to
          be paid
          all Taxes required to have been paid by them, except (i) any Taxes that
          are
          being contested in good faith by appropriate proceedings and for which
          FCX or
          such Subsidiary, as applicable, has, to the extent required by GAAP, set
          aside
          on its books adequate reserves and (ii) returns and reports the non-filing
          of
          which, and Taxes the non-payment of which, individually or in the aggregate,
          would not reasonably be expected to result in a Material Adverse
          Effect.

         

        SECTION
          3.10. ERISA.
          No ERISA
          Event has occurred or is reasonably expected to occur that, when taken
          together
          with all other such ERISA Events for which liability is reasonably expected
          to
          occur, would reasonably be expected to result in a Material Adverse Effect.
          Except as would not reasonably be expected to result in a Material Adverse
          Effect, the present value of all accumulated benefit obligations under
          all
          underfunded Plans (based on the assumptions used for purposes of Statement
          of
          Financial Accounting Standards No. 87) did not, as of the date of the most
          recent financial statements reflecting such amounts, exceed the fair market
          value of the assets of all such underfunded Plans.

         

        SECTION
          3.11. Disclosure.
          The
          Confidential Information Materials and the other reports, financial statements,
          certificates and other information furnished in writing by the Loan Parties
          or
          on behalf of, and with the authorization of, the Loan Parties to the
          Administrative Agent or any Lender in connection with the negotiation of
          this
          Agreement or any other Loan Document or delivered hereunder or thereunder
          (as
          modified or supplemented by other information so furnished), taken as a
          whole,
          do not contain any material misstatement of fact or omit to state any material
          fact necessary to make the statements therein, in the light of the circumstances
          under which they were made, not misleading; provided
          that,
          with respect to projected financial information, each Borrower represents
          only
          that (i) such information was prepared in good faith based upon assumptions
          believed to be reasonable at the time delivered and (ii) if such projected
          financial information was delivered prior to the Effective Date, such projected
          financial information has not been modified by FCX as of the Effective
          Date in
          any respect material and adverse to the Lenders.

         

        SECTION
          3.12. Subsidiaries.
          Schedule
          3.12 sets forth the name of, and the ownership interest of FCX and each
          Subsidiary in, each Subsidiary of FCX (other than Immaterial Subsidiaries)
          and
          specifies whether each such Subsidiary is a Loan Party, in each case as
          of the
          Effective Date.

         

        
          
            
            

          

          
            73

            
              

            

          

          
            
            

          

        

         

        SECTION
          3.13. Insurance.
          Schedule
          3.13 sets forth a description of all material insurance maintained by or
          on
          behalf of FCX and its Restricted Subsidiaries as of the Effective Date.
          As of
          the Effective Date, all material premiums in respect of such insurance
          are
          current and such insurance is in full force and effect. FCX believes that
          the
          insurance maintained by or on behalf of FCX and its Restricted Subsidiaries
          is
          adequate.

         

        SECTION
          3.14. Labor
          Matters.
          As of the
          Effective Date, there are no strikes, lockouts or slowdowns against FCX
          or any
          Subsidiary pending or, to the knowledge of FCX, threatened, that would
          reasonably be expected to result, individually or in the aggregate, in
          a
          Material Adverse Effect. The consummation of the Transactions will not
          give rise
          to any right of termination or right of renegotiation on the part of any
          union
          under any collective bargaining agreement to which FCX or any Subsidiary
          is
          party that would reasonably be expected to result, individually or in the
          aggregate, in a Material Adverse Effect.

         

        SECTION
          3.15. Security
          Documents.
          At all
          times on and after the Effective Date, 

         

        (a)
          (i)
          The Collateral Agreement shall be effective to create in favor of the Collateral
          Agent for the ratable benefit of the Secured Parties (as defined in the
          Collateral Agreement) a valid and enforceable security interest in the
          Collateral (as defined therein) and the proceeds thereof and (i) when the
          Collateral (as defined therein) constituting certificated securities (as
          defined
          in the Uniform Commercial Code (as defined in the Collateral Agreement))
          is
          delivered to the Collateral Agent thereunder together with instruments
          of
          transfer duly endorsed in blank, the security interest of the Collateral
          Agent
          therein will constitute a perfected Lien on, and security interest in,
          all
          right, title and interest of the Grantors (as defined in the Collateral
          Agreement) in such Collateral, prior and superior in right to any other
          Person
          (subject only to Liens permitted under Section 6.02) (it being understood
          that
          no representation is made under this clause (i) as to (A) any such Collateral
          that is subject to a Foreign Pledge Agreement or (B) the perfection or
          priority
          of any Lien to the extent that such perfection or priority is determined
          under
          the law of a jurisdiction outside the United States, which are covered
          by
          paragraph (b) below), and (ii) when financing statements in appropriate
          form are
          filed in the offices specified in the Perfection Certificate, the security
          interest of the Collateral Agent will constitute a perfected Lien on and
          security interest in all right, title and interest of the Grantors (as
          defined
          in the Collateral Agreement) in the Collateral (as defined therein) and
          the
          proceeds thereof to the extent perfection can be obtained by filing Uniform
          Commercial Code financing statements, prior and superior to the rights
          of any
          other Person (subject only to Liens permitted under Section 6.02).

         

        (ii)
          On
          and after the Additional Collateral Date, the Additional Collateral Agreement
          shall be effective to create in favor of the Collateral Agent for the ratable
          benefit of the Secured Parties (as defined in the Additional Collateral
          Agreement) a valid and enforceable security interest in the Collateral
          (as
          defined therein) and the proceeds thereof and (i) when the Collateral (as
          defined therein) constituting certificated securities (as defined in the
          Uniform
          Commercial Code (as defined in the Additional Collateral Agreement)) is
          delivered to the Collateral Agent thereunder together with instruments
          of
          transfer duly endorsed in blank, the security interest of the Collateral
          Agent
          therein will constitute a perfected Lien on, and security interest in,
          all
          right, title and interest of the Grantors (as defined in the Additional
          Collateral Agreement) in such Collateral, prior and superior in right to
          any
          other Person (subject only to Liens permitted under Section 6.02) (it being
          understood that no representation is made under this clause (i) as to (A)
          any
          such Collateral that is subject to a Foreign Pledge Agreement or (B) the
          perfection or priority of any Lien to the extent that such perfection or
          priority is determined under the law of a 

         

        
          
            
            

          

          
            74

            
              

            

          

          
            
            

          

        

         

        jurisdiction
          outside the United States, which are covered by paragraph (b) below), and
          (ii)
          when financing statements in appropriate form are filed in the offices
          specified
          in the Additional Perfection Certificate, the security interest of the
          Collateral Agent will constitute a perfected Lien on and security interest
          in
          all right, title and interest of the Grantors (as defined in the Additional
          Collateral Agreement) in the Collateral (as defined therein) and the proceeds
          thereof to the extent perfection can be obtained by filing Uniform Commercial
          Code financing statements, prior and superior to the rights of any other
          Person
          (subject only to Liens permitted under Section 6.02).

         

        (b)
          After
          taking the actions specified for perfection therein, each Foreign Pledge
          Agreement, when executed and delivered, will be effective under applicable
          law
          to create in favor of the Collateral Agent or the Security Agent, as applicable,
          for the ratable benefit of the Secured Parties a valid and enforceable
          security
          interest in the Collateral subject thereto, and will constitute a perfected
          Lien
          on and security interest in all right, title and interest of the PCA Loan
          Parties in the Collateral subject thereto, prior and superior to the rights
          of
          any other Person (subject only to Liens permitted under Section 6.02).
          Without
          limiting the foregoing, upon execution thereof and upon service of notice
          of the
          pledge on the party against whom the pledged rights must be exercised,
          each FCX
          Pledge Agreement, when executed and delivered, will be in full force and
          effect
          and will constitute first priority, perfected security interests in favor
          of the
          Collateral Agent or the Security Agent, as applicable, in the Pledged PTFI
          Shares and the Pledged PTII Shares, as applicable (i) in the case of each
          of the
          FCX Pledge Agreements, for the ratable benefit of the holders of the
          Obligations, and (ii) in the case of each of the Third Amended and Restated
          FCX/ISI Pledge Agreement (PTII Shares) and the Fourth Amended and Restated
          FCX
          Pledge Agreement (PTFI Shares), in addition for the ratable benefit of
          the
          holders of the Secured Obligations and the holders of the Ratable FCX
          Obligations (subject only to Permitted Encumbrances).

         

        (c)
          When
          the Additional Collateral Agreement or a summary thereof is properly filed
          in
          the United States Patent and Trademark Office and the United States Copyright
          Office, and, with respect to Collateral in which a security interest cannot
          be
          perfected by such filings, upon the proper filing of the financing statements
          referred to in paragraph (a) above, the Additional Collateral Agreement
          and such
          financing statements shall constitute a perfected Lien on, and security
          interest
          in, all right, title and interest of the grantors thereunder in the Material
          US
          Patents, Material US Copyrights and Material US Trademarks (as defined
          in the
          Additional Collateral Agreement), in each case prior and superior in right
          to
          any other Person (subject only to Liens permitted under Section 6.02) (it
          being
          understood that subsequent recordings in the United States Patent and Trademark
          Office and the United States Copyright Office may be necessary to perfect
          a lien
          on Material US Patents, Material US Copyrights and Material US Trademarks
          acquired by the grantors after the date hereof).

         

        (d)
          Each
          Mortgage, upon execution and delivery by the parties thereto, will create
          in
          favor of the Administrative Agent, for the ratable benefit of the Secured
          Parties, a legal, valid and enforceable Lien on all the applicable mortgagor’s
          right, title and interest in and to the Mortgaged Properties (other than
          immaterial portions thereof) subject thereto and the proceeds thereof,
          and when
          the Mortgages have been recorded in the jurisdictions specified in the
          Additional Perfection Certificate, the Mortgages will constitute a perfected
          Lien on all right, title and interest of the mortgagors in the Mortgaged
          Properties (other than immaterial portions thereof) and the proceeds thereof,
          prior and superior in right to any other Person (but subject to Liens permitted
          under Section 6.02) (it being understood that for purposes of this paragraph
          (d)
          all the Mortgaged Properties covered by a single Mortgage shall be deemed
          to be
          a single real property).

         

        
          
            
            

          

          
            75

            
              

            

          

          
            
            

          

        

         

        (e)
          The
          Liens created by the FI Security Documents will be in full force and effect
          and
          constitute first priority (except for Liens expressly permitted by Section
          6.02), (i) upon execution of the FI Security Documents Amendments (and,
          in the
          case of the Fourth Amended and Restated Fiduciary Transfer, the Fiduciary
          Assignment of Accounts, the Fiduciary Transfer of Joint Account Assets
          and the
          Fourth Amended and Restated Lender Fiduciary Assignment, upon registration
          thereof at the Fiduciary Registration Office - Jakarta Region), perfected
          security interests in favor of the FI Trustee, the FI Security Agent, the
          Security Agent or the JAA Security Agent, as the case may be, for the ratable
          benefit of the FI Secured Parties (other than RTF), in the property and
          assets
          stated to be subject to each such FI Security Document, and (ii) upon execution
          thereof and registration thereof at the Fiduciary Registration Office -
          Jakarta
          Region, the Fourth Amended and Restated Lender Fiduciary Assignment will
          be in
          full force and effect and will constitute first priority (except for Liens
          expressly permitted by Section 6.02), perfected security interests in favor
          of
          the Security Agent for the ratable benefit of the FI Secured Parties (other
          than
          RTF) in the Indebtedness owing to PTFI pledged thereunder.

         

        (f)
          At all
          times on and after the Effective Date, the Collateral and Guarantee Requirement
          is satisfied.

         

        SECTION
          3.16. Federal
          Reserve Regulations.
          No part
          of the proceeds of the Loans will be used, whether directly or indirectly,
          for
          any purpose which entails a violation (including on the part of any Lender)
          Regulation U or X of the Board.

         

        SECTION
          3.17. Solvency.
          Immediately after the consummation of the Transactions to occur on the
          Effective
          Date and immediately following the making of each Loan made on the Effective
          Date and after giving effect to the application of the proceeds of such
          Loans
          and to all rights of reimbursement, contribution and subrogation, (a) the
          fair
          value of the consolidated assets of FCX, at a fair valuation, will exceed
          its
          consolidated debts and liabilities, subordinated, contingent or otherwise;
          (b)
          the present fair saleable value of the consolidated property of FCX will
          be
          greater than the amount that will be required to pay the probable liability
          of
          its consolidated debts and other liabilities, subordinated, contingent
          or
          otherwise, as such consolidated debts and other liabilities become absolute
          and
          matured; (c) FCX and its Subsidiaries, on a consolidated basis, will be
          able to
          pay their consolidated debts and liabilities, subordinated, contingent
          or
          otherwise, as such consolidated debts and liabilities become absolute and
          matured; and (d) FCX will not have unreasonably small capital with which
          to
          conduct the business in which it is engaged as such business is now conducted
          and is proposed to be conducted following the Effective Date.

         

        SECTION
          3.18. Senior
          Indebtedness.
          Each of
          the Obligations constitutes “senior indebtedness” (however such concept is
          denominated) under and in respect of each indenture or other agreement
          or
          instrument under which any indebtedness that is junior or subordinated
          to the
          Obligations is outstanding.

         

         

        ARTICLE
          IV

         

        Conditions

         

        SECTION
          4.01. Effective
          Date.
          The
          amendment and restatement of the Existing Credit Agreement in the form
          of this
          Agreement and the obligations of the Lenders to make Loans and of the Issuing
          Banks to issue, amend, renew or extend any 

         

        
          
            
            

          

          
            76

            
              

            

          

          
            
            

          

        

         

        Letter
          of
          Credit hereunder, and the incorporation of the Existing Letters of Credit
          as
          Letters of Credit hereunder, shall not become effective until the date
          on which
          each of the following conditions is satisfied (or waived in accordance
          with
          Section 9.02):

         

        (a)
          The
          Administrative Agent (or its counsel) shall have received from each party
          hereto
          either (i) a counterpart of this Agreement signed on behalf of such party
          or (ii) written evidence satisfactory to the Administrative Agent (which
          may include telecopy or electronic transmission of a signed signature page
          of
          this Agreement) that such party has signed a counterpart of this
          Agreement.

         

        (b)
          The
          Administrative Agent shall have received such documents and certificates
          as the
          Administrative Agent or its counsel may reasonably request relating to
          the
          organization, existence and, to the extent applicable, good standing of
          the Loan
          Parties, the authorization of the Transactions and any other legal matters
          relating to the Loan Parties, the Loan Documents or the Transactions, all
          in
          form and substance reasonably satisfactory to the Administrative Agent
          and its
          counsel.

         

        (c)
          The
          Administrative Agent shall have received a certificate, dated the Effective
          Date
          and signed by the President, a Vice President or a Financial Officer of
          each
          Borrower, confirming compliance with the conditions set forth in paragraphs
          (a)
          and (b) of Section 4.02.

         

        (d)
          The
          Borrowers shall have repaid in full (i) the principal amount of all loans
          outstanding under the Existing Credit Agreement, together with interest
          thereon
          and all other amounts due in respect of such loans, (ii) all unreimbursed
          letter
          of credit disbursements in respect of letters of credit issued under the
          Existing Credit Agreement, (iii) all commitment fees accrued prior to the
          Effective Date in respect of the commitments under the Existing Credit
          Agreement, (iv) all fees separately agreed to be payable to J.P. Morgan
          Securities Inc. by the Borrowers in respect of the Existing Credit Agreement
          and
          (v) to the extent invoiced, reimbursement or payment of all out-of-pocket
          expenses (including fees, charges and disbursements of counsel) required
          to be
          reimbursed or paid by either Borrower under the Existing Credit Agreement.
          

         

        (e)
          The
          Administrative Agent shall have received all fees and other amounts due
          and
          payable on or prior to the Effective Date under this Agreement, including
          (i) all fees separately agreed to be payable to the Credit Agents, J.P.
          Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith
          Incorporated by the Borrower in respect of this Agreement and (ii) to the
          extent invoiced at least one Business Day prior to the Effective Date,
          reimbursement or payment of all out-of-pocket expenses (including fees,
          charges
          and disbursements of counsel) required to be reimbursed or paid by the
          Borrower
          under this Agreement or any other Loan Document.

         

        (f)
          The
          Administrative Agent shall have received evidence that the insurance required
          by
          Section 5.07 is in effect.

         

        (g)
          All
          consents and approvals required to be obtained from any Governmental Authority
          or other Person in connection with the execution of this Agreement shall
          have
          been obtained.

         

        
          
            
            

          

          
            77

            
              

            

          

          
            
            

          

        

         

        (h)
          The
          Lenders shall have received projections (broken down by quarter for the
          first
          year and by year thereafter) of FCX and its Subsidiaries, after giving
          effect to
          the Transactions, through the fifth anniversary of the Effective
          Date.

         

        (i)
          The
          Lenders shall have received a satisfactory update to the ERM
          Report.

         

        (j)
          The
          Administrative Agent shall have received a favorable written opinion (addressed
          to the Administrative Agent and the Lenders and dated the Effective Date)
          of
          each of (i) Davis Polk & Wardwell, New York, counsel for the Borrowers and
          the Subsidiaries, substantially in the form of Exhibit G-1, (ii) Jones,
          Walker,
          Waechter, Poitevant, Carrère & Denègre, L.L.P., U.S. counsel for the
          Borrowers and the Subsidiaries, substantially in the form of Exhibit G-2,
          (iii)
          local counsel in each jurisdiction where a Subsidiary Guarantor, a Subsidiary
          Grantor (as defined in the Collateral Agreement) or a Permitted Pledgee
          the
          Equity Interests in which are being pledged pursuant to the Collateral
          Agreement
          or any Foreign Pledge Agreement is organized, in each case in form and
          substance
          reasonably satisfactory to the Administrative Agent, (iv) Indonesian counsel
          for
          the Borrowers, substantially in the form of Exhibit G-3, and (v) Indonesian
          counsel for the Lenders, substantially in the form of Exhibit G-4.

         

        (k)
          The
          Administrative Agent shall have received (i) a completed Perfection Certificate
          dated the Effective Date and signed by the President, a Vice President
          or a
          Financial Officer of each Borrower and (ii) the results of a lien search
          with
          respect to each PCA Loan Party in the jurisdiction where such PCA Loan
          Party is
          located (within the meaning of Section 9-307 of the Uniform Commercial
          Code as
          in effect in the State of New York) and evidence reasonably satisfactory
          to the
          Administrative Agent that the Liens indicated by such search are permitted
          by
          Section 6.02 or have been (or, substantially simultaneous with the initial
          funding of Loans on the Effective Date, will be) released.

         

        (l)
          The
          Collateral and Guarantee Requirement shall have been satisfied.

         

        (m)
          The
          Administrative Agent shall have received a customary certificate from the
          chief
          financial officer of FCX, certifying as to the solvency (within the meaning
          of
          Section 3.17) of FCX and its Subsidiaries on a consolidated basis after
          giving
          effect to the Transactions.

         

        (n)
          The
          Merger shall have been consummated or shall be consummated substantially
          simultaneously with the initial funding of Loans on the Effective Date
          in
          accordance with applicable law and the Merger Agreement (and no provision
          of the
          Merger Agreement shall have been waived, amended, supplemented or otherwise
          modified from the form thereof provided to the Credit Agents on November
          18,
          2006, in a manner material and adverse to the Lenders without the consent
          of the
          Credit Agents). The Credit Agents shall have received copies of the Merger
          Agreement and all certificates and other documents delivered thereunder,
          certified by the President, a Vice President or a Financial Officer of
          FCX as
          being complete and correct. The terms of any other agreements that are
          material
          to the interests of the Lenders entered into in connection with the Merger
          shall
          not be inconsistent in any material respect with the terms of the Term
          Sheet
          (including the annexes thereto) contained in the Confidential Information
          Materials and the Merger Agreement.

         

        
          
            
            

          

          
            78

            
              

            

          

          
            
            

          

        

         

        (o)
          All
          commitments under the PD Credit Agreement shall have been (or, substantially
          simultaneous with the initial funding of Loans on the Effective Date, shall
          be)
          terminated, and all loans, interest and other amounts accrued or owing
          thereunder shall have been repaid in full (except that the Existing Letters
          of
          Credit shall remain outstanding as Letters of Credit hereunder or under
          the
          Parent Credit Agreement) and all guarantees and liens granted in respect
          thereof
          shall have been (or, substantially simultaneous with the initial funding
          of
          Loans on the Effective Date, will be) released. The Administrative Agent
          shall
          have received a payoff and release letter with respect to the PD Credit
          Agreement in form and substance reasonably satisfactory to the Administrative
          Agent.

         

        (p)
          After
          giving effect to the Transactions, the Borrowers and the Subsidiaries shall
          have
          outstanding no Indebtedness or preferred Equity Interests other than (i)
          the
          Loans and Letters of Credit under this Agreement, (ii) the Senior Notes,
          (iii)
          credit extensions under the Parent Credit Agreement, (iv) the Existing
          Indebtedness, (v) Capital Lease Obligations incurred in the ordinary course
          of
          business, (vi) up to $100,000,000 of credit facilities or other Indebtedness
          incurred after November 18, 2006, (vii) $1,100,000,000 of existing perpetual
          preferred stock of the Borrower, (viii) Indebtedness owed to the Borrower
          or any
          Subsidiary that is in compliance with the Collateral and Guarantee Requirement
          and Section 6.01(a)(iii) and (ix) letters of credit issued in connection
          with
          environmental assurances and reclamation or issued for the account of Foreign
          Subsidiaries in an aggregate face amount not exceeding
          $700,000,000.

         

        (q)
          The
          Lenders shall have received (the receipt of which is hereby acknowledged)
          audited consolidated balance sheets and consolidated statements of income,
          stockholders’ equity and cash flows of each of FCX and PD as of and for each of
          the three most recently completed fiscal years ended on or prior to December
          31,
          2006, and the related notes thereto, reported on by independent registered
          public accountants (without a “going concern” or like qualification or exception
          and without any qualification or exception as to the scope of such
          audit).

         

        (r)
          The
          Administrative Agent shall have received (the receipt of which is hereby
          acknowledged) a pro forma consolidated balance sheet of the Borrower as
          of the
          date of the most recent consolidated balance sheet delivered pursuant to
          paragraph (q) above and a pro forma statement of operations for the most
          recent
          fiscal year, adjusted to give effect to the Transactions, the other transactions
          related thereto and any other transactions that would be required to be
          given
          pro forma effect by Regulation S-X promulgated under the Securities Act
          of 1933,
          as amended, and such other adjustments as are customary for similar financings
          or as otherwise agreed between the Borrower and the Administrative
          Agent.

         

        (s)
          After
          giving effect to the Transactions on the Effective Date, the aggregate
          unused
          available amount of Revolving Commitments and unused available revolving
          commitments under the Parent Credit Agreement shall be not less than
          $1,000,000,000.

         

        (t)
          There
          shall not have occurred a “Material Adverse Effect” (as defined in the Merger
          Agreement) in respect of PD and its subsidiaries.

         

        (u)
          The FI
          Trustee shall have received opinions to the effect that it does not have
          to
          qualify to do business in Louisiana or Indonesia by virtue of the Loan
          Documents
          or the activities contemplated thereby.

         

        
          
            
            

          

          
            79

            
              

            

          

          
            
            

          

        

         

        The
          Administrative Agent shall promptly notify the Borrowers and the Lenders
          of the
          Effective Date, and such notice shall be conclusive and binding. 

         

        SECTION
          4.02. Each
          Credit Event.
          The
          obligation of each Lender to make a Loan, and of any Issuing Bank to issue,
          amend, extend or renew a Letter of Credit, is subject to receipt of the
          request
          therefor in accordance herewith and to the satisfaction of the following
          conditions:

         

        (a)
          (i)
          With respect to any credit event following the Effective Date, the
          representations and warranties of each Loan Party set forth in the Loan
          Documents shall be true and correct in all material respects on and as
          of the
          date of such Borrowing or the date of issuance, amendment, renewal or extension
          of such Letter of Credit, as applicable, except where such representations
          and
          warranties expressly relate to an earlier date, in which case such
          representations and warranties shall have been true and correct in all
          material
          respects as of such earlier date and (ii) with respect to any credit event
          on
          the Effective Date, (A) such of the representations made by or with respect
          to
          FCX, PD or their respective subsidiaries in the Merger Agreement as are
          material
          to the interests of the Lenders (but only to the extent that FCX has the
          right
          to terminate its obligations under the Merger Agreement as a result of
          a breach
          of such representations in the Merger Agreement (determined without regard
          to
          any waiver, amendment or other modification of the Merger Agreement)) and
          (B)
          the Specified Representations shall be true and correct in all material
          respects
          on and as of the Effective Date.

         

        (b)
          At the
          time of and immediately after giving effect to such Borrowing or issuance
          of
          such Letter of Credit, as applicable, the Incurrence Test shall be satisfied
          and
          no Default shall have occurred and be continuing.

         

        Each
          making of a Loan and each issuance, amendment, renewal or extension of
          a Letter
          of Credit shall be deemed to constitute a representation and warranty by
          the
          Borrower on the date thereof as to the matters specified in paragraphs (a)
          and (b) of this Section.

         

         

        ARTICLE
          V

         

        Affirmative
          Covenants

         

        Until
          the
          Commitments have expired or been terminated and the principal of and interest
          on
          each Loan and all fees payable hereunder shall have been paid in full,
          and all
          Letters of Credit shall have expired or terminated and all LC Disbursements
          shall have been reimbursed, each Borrower covenants and agrees with the
          Lenders
          and the Administrative Agent that:

         

        SECTION
          5.01. Financial
          Statements and Other Information.
          FCX will
          furnish to the Administrative Agent and each Lender for each of FCX and
          PTFI
          (for purposes of this Section 5.01, each of FCX and PTFI is referred to
          as a
“Reporting
          Person”):

         

        (a)
          within
          95 days after the end of each fiscal year of such Reporting Person, beginning
          with fiscal year 2007, an audited consolidated balance sheet of such Reporting
          Person and its consolidated Subsidiaries and related consolidated statements
          of
          income, stockholders’ equity and cash flows as of the end of and for

         

        
          
            
            

          

          
            80

            
              

            

          

          
            
            

          

        

         

        such
          year,
          setting forth in each case in comparative form the figures for the previous
          fiscal year, all reported on by Ernst & Young LLP or other registered
          independent public accountants of recognized national standing (without
          a “going
          concern” or like qualification or exception and without any qualification or
          exception as to the scope of such audit) to the effect that such consolidated
          financial statements present fairly in all material respects the financial
          condition and results of operations of such Reporting Person and its
          consolidated Subsidiaries on a consolidated basis in accordance with GAAP
          consistently applied; provided
          that PTFI
          shall only be required to furnish such audited reports for any fiscal year
          to
          the extent otherwise available, and if such audited reports are not otherwise
          available for any fiscal year, PTFI shall instead within 95 days after
          the end
          of such fiscal year, furnish an unaudited consolidated balance sheet of
          PTFI and
          its consolidated Subsidiaries and related unaudited consolidated statements
          of
          income, stockholders’ equity and cash flows as of the end of and for such year,
          setting forth in each case in comparative form the figures for the previous
          fiscal year, all certified by one of its Financial Officers as presenting
          fairly
          in all material respects the financial condition and results of operations
          of
          PTFI and its consolidated Subsidiaries on a consolidated basis in accordance
          with GAAP consistently applied, subject to normal year-end audit adjustments
          and
          the absence of footnotes;

         

        (b)
          within
          50 days after the end of each of the first three fiscal quarters of each
          fiscal
          year of such Reporting Person, an unaudited consolidated balance sheet
          of such
          Reporting Person and its consolidated Subsidiaries and related consolidated
          statements of income as of the end of and for such fiscal quarter and related
          consolidated statements of income and cash flows for the then elapsed portion
          of
          the fiscal year, setting forth in each case in comparative form the figures
          for
          the corresponding period or periods of (or, in the case of the balance
          sheet, as
          of the end of) the previous fiscal year, all certified by one of its Financial
          Officers as presenting fairly in all material respects the financial condition
          and results of operations of such Reporting Person and its consolidated
          Subsidiaries on a consolidated basis in accordance with GAAP consistently
          applied, subject to normal year-end audit adjustments and the absence of
          footnotes;

         

        (c)
          concurrently with any delivery of financial statements of FCX under clause
          (a)
          or (b) above, a certificate of a Financial Officer of FCX (i) certifying
          as to
          whether a Default has occurred and, if a Default has occurred, specifying
          the
          details thereof and any action taken or proposed to be taken with respect
          thereto, (ii) at any time that any Revolving Exposure is outstanding (other
          than
          outstanding Letters of Credit that have been fully cash collateralized
          in
          accordance with Section 2.05(j)), setting forth reasonably detailed calculations
          demonstrating compliance with the Financial Covenants, (iii) setting forth
          reasonably detailed calculations of Consolidated Net Income, Consolidated
          Adjusted Net Income, Consolidated EBITDA, Consolidated Total Assets,
          Consolidated Revenues, Equity Proceeds, Restricted Uses and the Restricted
          Uses
          Basket as at the end of and for the applicable fiscal period, (iv) stating
          whether any change in GAAP or in the application thereof has occurred since
          the
          date of the audited financial statements referred to in Section 3.04 and,
          if any
          such change has occurred, specifying the effect of such change on the financial
          statements accompanying such certificate, (v) identifying all Subsidiaries
          (other than Immaterial Subsidiaries) formed or acquired since the end of
          the
          previous fiscal quarter and indicating whether each such Subsidiary is
          a
          Restricted Subsidiary or an Unrestricted Subsidiary, and (vi) certifying
          as to
          compliance 

         

        
          
            
            

          

          
            81

            
              

            

          

          
            
            

          

        

         

        with
          all
          Exchange Filing Requirements or specifying the details of any noncompliance
          and
          any action taken or proposed to be taken with respect thereto;

         

        (d)
          concurrently with any delivery of financial statements under clause (a)
          above, a
          certificate of the accountants that reported on such financial statements
          stating whether they obtained knowledge during the course of their examination
          of such financial statements of any Event of Default under Section 6.14
          or 6.15
          (which certificate may be limited to the extent required by accounting
          rules or
          guidelines);

         

        (e)
          at
          least 30 days prior to the commencement of each fiscal year of FCX, a detailed
          consolidated budget for such fiscal year (including a projected consolidated
          balance sheet and related consolidated statements of projected income and
          cash
          flow, in each case as of the end of and for such fiscal year, and setting
          forth
          the material underlying assumptions applicable thereto);

         

        (f)
          promptly after the same become publicly available, copies of all periodic
          and
          other reports, proxy statements and other materials publicly filed by either
          Borrower with the Securities and Exchange Commission or any Governmental
          Authority succeeding to any or all of the functions of said Commission
          (other
          than amendments to any registration statement (to the extent such registration
          statement, in the form it became effective, is delivered), exhibits to
          any
          registration statement and, if applicable, any registration statement on
          Form
          S-8) and in any case not otherwise required to be delivered to the
          Administrative Agent pursuant hereto; 

         

        (g)
          in the
          case of PTFI, (x) copies to the Administrative Agent of all notices alleging
          or
          claiming a breach or default or with respect to any matter which could
          reasonably be expected to have a material adverse effect upon the FI Collateral
          and Rights (i) by or to Indonesian Governmental Authorities in connection
          with
          the FI Project or pursuant to the Contract of Work or the Memorandum of
          Understanding or (ii) by or to or from its stockholders alleging or claiming
          a
          breach or default relating to their shareholding in PTFI or with respect
          to any
          other matter, and (y) a copy of any proposed amendment to the Contract
          of Work
          or Memorandum of Understanding prior to execution and delivery thereof;
          and

         

        (h)
          promptly following any request therefor, such other information regarding
          the
          operations, business affairs and financial condition of such Borrower or
          any
          Restricted Subsidiary, or compliance with the terms of any Loan Document,
          as the
          Administrative Agent or any Lender may reasonably request.

         

        SECTION
          5.02. Notices
          of Material Events.
          Promptly
          after any Financial Officer obtains knowledge thereof, FCX will furnish
          to the
          Administrative Agent and each Lender written notice of the
          following:

         

        (a)
          the
          occurrence of any Default;

         

        (b)
          the
          filing or commencement of any action, suit or proceeding by or before any
          arbitrator or Governmental Authority against or affecting FCX or any Subsidiary
          thereof that would reasonably be expected to result in a Material Adverse
          Effect;

         

        
          
            
            

          

          
            82

            
              

            

          

          
            
            

          

        

         

        (c)
          the
          occurrence of any ERISA Event that, alone or together with any other ERISA
          Events that have occurred, would reasonably be expected to result in a
          Material
          Adverse Effect; and

         

        (d)
          any
          other development that results in, or would reasonably be expected to result
          in,
          a Material Adverse Effect.

         

        Each
          notice delivered under this Section shall be accompanied by a statement
          of a
          Financial Officer or other executive officer of FCX setting forth the details
          of
          the event or development requiring such notice and any action taken or
          proposed
          to be taken with respect thereto.

         

        SECTION
          5.03. Information
          Regarding Collateral.
          FCX will
          furnish to the Administrative Agent and the Collateral Agent prompt written
          notice of any change (i) in any PCA Loan Party’s legal name, (ii) in any PCA
          Loan Party’s Federal Taxpayer Identification Number or identification number, if
          any, issued to it by the jurisdiction under the laws of which it is organized
          or
          (iii) in the jurisdiction of any PCA Loan Party’s organization. FCX agrees not
          to effect or permit any change referred to in the preceding sentence unless
          all
          filings have been made under the Uniform Commercial Code or otherwise that
          are
          required in order for the Administrative Agent or Collateral Agent, as
          applicable, to continue, to the extent existing prior to such change, at
          all
          times following such change to have a valid, legal and perfected security
          interest in all the Collateral.

         

        SECTION
          5.04. Existence;
          Conduct of Business.
          Each
          Borrower will, and will cause each Restricted Subsidiary to, do or cause
          to be
          done all things necessary to preserve, renew and keep in full force and
          effect
          (i) its legal existence, except in the case of any Subsidiary other than
          PD or
          PTFI , to the extent the failure to do so would not reasonably be expected
          to
          have a Material Adverse Effect, and (ii) the rights, licenses, permits,
          privileges, franchises, patents, copyrights, trademarks and trade names
          material
          to the conduct of its business, except to the extent the failure to do
          so would
          not reasonably be expected to have a Material Adverse Effect; provided
          that the
          foregoing shall not prohibit any merger, consolidation, liquidation or
          dissolution permitted under Section 6.03 and is in the case of PTFI subject
          to Section 9.18(c).

         

        SECTION
          5.05. Payment
          of Obligations.
          Each
          Borrower will, and will cause each Restricted Subsidiary to, pay all Tax
          liabilities, before the same shall become delinquent or in default, except
          where
          (a)(i) the validity or amount thereof is being contested in good faith by
          appropriate proceedings and (ii) such Borrower or such Restricted
          Subsidiary has set aside on its books adequate reserves with respect thereto
          in
          accordance with GAAP or (b) the failure to make any such payments, individually
          or in the aggregate, would not reasonably be expected to result in a Material
          Adverse Effect.

         

        SECTION
          5.06. Maintenance
          of Properties.
          Except
          where a failure individually or in the aggregate to do so would not reasonably
          be expected to result in a Material Adverse Effect, each Borrower will,
          and will
          cause each Restricted Subsidiary to, keep and maintain all property material
          to
          the conduct of its business in good working order and condition, ordinary
          wear
          and tear excepted.

         

        SECTION
          5.07. Insurance.
          Each
          Borrower will, and will cause each Restricted Subsidiary to, maintain,
          with
          financially sound and reputable insurance companies (a) insurance in such
          amounts and against such risks as are customarily maintained by companies
          of
          established repute engaged in the same or similar businesses operating
          in the
          same or similar locations (after giving effect to any self-insurance

         

        
          
            
            

          

          
            83

            
              

            

          

          
            
            

          

        

         

        reasonable
          and customary for similarly situated companies). On and after the Additional
          Collateral Date, all such policies of insurance covering physical loss
          or damage
          to Collateral shall be endorsed or otherwise amended to include the Collateral
          Agent and Security Agent as loss payee as their interests may appear, in
          customary form and otherwise in accordance with Section 4.03(h) of the
          Additional Collateral Agreement. The Borrower will furnish to the Lenders,
          upon
          request of the Administrative Agent, information in reasonable detail as
          to the
          insurance so maintained.

         

        SECTION
          5.08. Casualty
          and Condemnation.
          On and
          after the Additional Collateral Date, FCX will furnish to the Administrative
          Agent prompt written notice of any casualty or other insured damage to
          any
          material portion of any Collateral or the commencement of any action or
          proceeding for the taking of any material portion of the Collateral under
          power
          of eminent domain or by condemnation or similar proceeding.

         

        SECTION
          5.09. Books
          and Records; Inspection and Audit Rights.
          Each
          Borrower will, and will cause each Restricted Subsidiary to, keep proper
          books
          of record and account sufficient to permit the preparation of financial
          statements in accordance with GAAP. Each Borrower will, and will cause
          each
          Restricted Subsidiary to, permit any representatives designated by the
          Administrative Agent or any Lender, upon reasonable prior notice and during
          normal business hours, to visit and inspect its properties, to examine
          and make
          extracts from its books and records, and to discuss its affairs, finances
          and
          condition with its officers and independent accountants; provided
          that,
          excluding any such visits and inspections during the continuation of an
          Event of
          Default, only the Administrative Agent on behalf of the Lenders may exercise
          rights under this Section 5.09 and the Administrative Agent shall not exercise
          such rights more than two times during any calendar year absent the existence
          of
          an Event of Default and for one such time the reasonable expenses of the
          Administrative Agent in connection with such visit or inspection shall
          be for
          the Borrowers’ account; provided, further, that when an Event of
          Default exists, the Administrative Agent or any Lender (or any of their
          respective representatives) may do any of the foregoing at the reasonable
          expense of the Borrowers at any time during normal business hours and upon
          reasonable advance notice. The Administrative Agent and the Lenders shall
          give
          each Borrower the opportunity to participate in any discussions with such
          Borrower’s independent accountants.

         

        SECTION
          5.10. Compliance
          with Laws; Environmental Reports. (a)
          Each
          Borrower will, and will cause each Subsidiary to, (i) comply with all laws,
          rules, regulations and orders of any Governmental Authority applicable
          to it or
          its property, except where the failure to do so, individually or in the
          aggregate, would not reasonably be expected to result in a Material Adverse
          Effect and (ii) comply with all Exchange Filing Requirements.

         

        (b)
          Except
          where the failure to do so, individually or in the aggregate, would not
          reasonably be expected to result in a Material Adverse Effect, each Borrower
          will, and will cause each Subsidiary to, (i) comply, in all material respects
          with all Environmental Laws applicable to its operations and properties,
          (ii)
          obtain and renew all permits required by Environmental Laws necessary for
          its
          operations and properties, and (iii) conduct any remedial actions in compliance
          with applicable Environmental Laws; provided,
          however,
          that the
          Borrowers and the Subsidiaries shall not be required to undertake any remedial
          action or obtain or renew any environmental permit, or comply with any
          Environmental Law to the extent that its obligation to do so is being contested
          in good faith and by proper proceedings and appropriate reserves, in accordance
          with GAAP, are maintained in connection therewith. If either Borrower is
          in
          default of its obligations under this paragraph, the Borrowers will, at
          the
          request of the Required 

         

        
          
            
            

          

          
            84

            
              

            

          

          
            
            

          

        

         

        Lenders
          through the Administrative Agent, provide to the Lenders within 60 days
          after
          such request, at the expense of the Borrowers, an environmental site assessment
          report for the properties to which such default relates, prepared by an
          environmental consulting firm reasonably acceptable to the Administrative
          Agent
          and evaluating whether or not Hazardous Materials are likely to have been
          released at or to have adversely affected the property, or otherwise resulted
          in
          Environmental Liability and the estimated cost of any compliance or remedial
          action in connection with such matters.

         

        (c)
          Each
          Borrower will in good faith and with commercially reasonable efforts, and
          will
          similarly cause each Subsidiary to, in all material respects, operate its
          future
          major new mining projects (including the Tenke Fungurume project) and related
          activities in accordance with applicable IFC Guidelines and World Bank
          Guidelines in existence on December 31, 2006, and as referenced in Annex
          A to
          the ERM Report, as appropriate to the nature of such new major project,
          including with respect to the Otomona River at closure; provided,
          however,
          that
          such requirement will not apply to future major new mining projects that
          are
          located in the United States or in other jurisdictions where the applicable
          rules with respect to environmental issues are generally equivalent or
          more
          stringent than the IFC and World Bank Guidelines referenced above. With
          respect
          to existing operations in Indonesia, PTFI will maintain majority compliance
          with
          applicable World Bank Guidelines and IFC Guidelines in existence on December
          31,
          2006, except where noted and accepted in the ERM Report. In addition, PTFI
          will
          conduct its operations in accordance with the current International Council
          on
          Mining and Metals’ (ICMM) principles referenced in Schedule 5.10A, and adhere to
          ICMM current commitments on World Heritage properties included in Schedule
          5.10B. In addition, FCX will participate in the Extractive Industries
          Transparency Initiative dated as of June 16, 2003.

         

        (d)
          Each
          Borrower will, and will cause each Restricted Subsidiary to, in good faith,
          use
          commercially reasonable efforts to work to satisfactorily address the open
          regulatory issues with the Government of Indonesia identified in the ERM
          Report
          (see pages 11 to 14 thereof) and to comply with the commitments made by
          FCX in
          response to the ICCA Phase One Social Audit dated July 2005 as indicated
          in
          Schedule 5.10C.

         

        (e)
          At
          the request of the Administrative Agent and the Syndication Agent, FCX
          will, at
          the Borrowers’ expense, have ERM or another consultant reasonably acceptable to
          the Administrative Agent and the Syndication Agent review the Tenke Fungurume
          project and complete a report (the “TFM
          Report”)
          in respect thereof in scope and detail appropriate for a newly developed
          mining
          project based on the applicable World Bank Guidelines and IFC performance
          standards in existence on December 31, 2006. Each Borrower will, and will
          cause
          each Restricted Subsidiary to, in good faith, use commercially reasonable
          efforts to work to satisfactorily address any open regulatory issues (consistent
          with the Amended and Restated Mining Convention dated September 28, 2005)
          with
          any Governmental Authority identified in the TFM Report.

         

        (f)
          The
          Lenders shall have the right, at Borrower’s expense, to have ERM or another
          consultant reasonably acceptable to the Borrower update each of the ERM
          Report
          and the TFM Report once during the term of this facility. The Borrower
          will
          promptly and in good faith report to the Credit Agents and the Lenders
          any
          unanticipated material adverse environmental, social or health and safety
          developments.

         

        SECTION
          5.11. Use
          of
          Proceeds and Letters of Credit.
          The
          proceeds of Revolving Loans may be used to (A) pay a portion of the cash
          portion
          of the Merger Consideration and (B) pay a portion of the Transaction Costs.
          Letters of Credit and the proceeds of other Revolving Loans and Swingline
          Loans
          drawn on and after the Effective 

         

        
          
            
            

          

          
            85

            
              

            

          

          
            
            

          

        

         

        Date
          will
          be used for working capital and other general corporate purposes of the
          Borrowers and their Subsidiaries. No part of the proceeds of any Loan will
          be
          used, whether directly or indirectly, for any purpose that entails a violation
          (including on the part of any Lender) of Regulation U or X of the Board.
          FCX
          shall ensure that at all times not more than 25% of the value of the assets
          subject to the provisions of Sections 6.02 and 6.05 will consist of Margin
          Stock
          (as defined in Regulation U of the Board); provided that FCX may permit
          such Margin Stock to exceed 25% of the value of the assets subject to the
          provisions of Sections 6.02 and 6.05 if FCX shall have otherwise put into
          place
          currently effective arrangements to ensure compliance with Regulation U
          and X
          and the Administrative Agent shall have received an opinion satisfactory
          to it
          as to such compliance from a law firm satisfactory to the Administrative
          Agent.

         

        SECTION
          5.12. Additional
          Subsidiaries.
          If any
          additional Restricted Subsidiary is formed or acquired during any fiscal
          quarter
          after the Effective Date, FCX will, within 60 days (or such longer period
          as the
          Administrative Agent may agree in writing) after the end of such fiscal
          quarter,
          notify the Administrative Agent, the Collateral Agent, the Security Agent
          and
          the Lenders thereof and cause the Collateral and Guarantee Requirement
          to be
          satisfied to the extent applicable with respect to such Restricted Subsidiary
          and any intercompany Indebtedness owed by such Subsidiary to a Borrower
          or,
          after the Additional Collateral Date, any other PCA Loan Party.

         

        SECTION
          5.13. Further
          Assurances. (a)
          On
          and
          after the Effective Date, the Borrower will execute any and all further
          documents, financing statements, agreements and instruments, and take all
          such
          further actions (including the filing and recording of financing statements,
          fixture filings, mortgages, deeds of trust and other documents), which
          may be
          required under any applicable law, or which the Administrative Agent, the
          Security Agent, the Collateral Agent or the Required Lenders may reasonably
          request, to cause the Collateral and Guarantee Requirement to be and remain
          satisfied, all at the expense of the Loan Parties. Each Borrower also agrees
          to
          provide to the Administrative Agent, the Security Agent or the Collateral
          Agent,
          from time to time upon reasonable request, evidence reasonably satisfactory
          to
          the Collateral Agent or Security Agent, as applicable, as to the perfection
          and
          priority of the Liens created or intended to be created by the Security
          Documents or the FI Security Documents.

         

        (b)
          If any
          material assets (including any real property or improvements thereto or
          any
          interest therein) are acquired by PTFI after the Effective Date (other
          than (i)
          assets constituting Collateral under the Security Documents that become
          subject
          to the Lien of the Security Documents upon acquisition thereof and (ii)
          assets
          that are subject to a Lien permitted by Section 6.02(c), (d), (e), (f),
          (g),
          (j), (k), (o) or (p) hereof (or to the extent relating to Liens permitted
          by
          such Sections, Section 6.02(i) hereof), but only so long as such assets
          are
          subject to such Liens), PTFI will notify the Administrative Agent, the
          Security
          Agent and the Lenders thereof, and, if requested by the Administrative
          Agent,
          the Security Agent or the Required Lenders, PTFI will cause such assets
          to be
          subjected to a Lien securing the Obligations and will take such actions
          as shall
          be necessary or reasonably requested by the Administrative Agent or the
          Security
          Agent to grant and perfect such Liens, including actions described in
          paragraph (a) of this Section, all at the expense of the Loan
          Parties.

         

        (c)
          PTFI
          at all times will comply with the provisions of the FI Security Documents
          and
          maintain in full force and effect all the rights, powers and benefits of
          the FI
          Trustee, the FI Security Agent, the Security Agent and the JAA Security
          Agent,
          as applicable, under the FI Security Documents in accordance with their
          terms,
          including (i) the validity and effectiveness of the powers of attorney
          granted
          by the Surat Kuasa, the 

         

        
          
            
            

          

          
            86

            
              

            

          

          
            
            

          

        

         

        Fourth
          Amended and Restated Lender Surat Kuasa and the fiduciary transfers effectuated
          by the Fourth Amended and Restated Fiduciary Transfer, the Fiduciary Assignment
          of Accounts, the Fourth Amended and Restated Lender Fiduciary Assignment
          and the
          Fiduciary Transfer of Joint Account Assets and (ii) maintenance of the
          security
          interest of the FI Trustee, the Security Agent and the JAA Security Agent,
          as
          applicable, in the collateral required to be subjected to the Liens created
          by
          the FI Security Documents as a perfected first priority security interest
          as
          provided therein, subject only to Liens expressly permitted by Section
          6.02.

         

        SECTION
          5.14. Source
          of Interest.
          PTFI
          (a) will conduct its business so that interest paid on the Loans by PTFI to
          any Lender (or permitted assignee or Participant) which is not a “related
          person” to PTFI within the meaning of Section 861(c)(2)(B) of the Code as
          in effect on the Effective Date will be deemed to be income from sources
          without
          the United States within the meaning of Sections 861(a)(1)(A) and 861(c) of
          the Code as in effect on the Effective Date and (b) will use its best
          efforts (without undue cost) to conduct its business so that interest paid
          on
          the Loans of PTFI to any Lender (or permitted assignee or Participant)
          which is
          not a related person to PTFI within the meaning of Section 861(c)(2)(B) of
          the Code (as it may be amended or substituted after the Effective Date)
          will be
          deemed to be income from sources without the United States within the meaning
          of
          Sections 861(a)(1)(A) and 861(c) of the Code (as it may be amended or
          substituted for after the Effective Date).

         

         

        ARTICLE
          VI

         

        Negative
          Covenants

         

        Until
          the
          Commitments have expired or terminated and the principal of and interest
          on each
          Loan and all fees payable hereunder have been paid in full, and all Letters
          of
          Credit shall have expired or terminated and all LC Disbursements shall
          have been
          reimbursed, each Borrower covenants and agrees with the Lenders, the Agents
          and
          the FI Trustee that:

         

        SECTION
          6.01. Indebtedness;
          Certain Equity Securities. (a)
          Each
          Borrower will not, and will not permit any Restricted Subsidiary to, create,
          incur, assume or permit to exist any Indebtedness or Attributable Debt,
          except:

         

        (i)
          (A)
          Indebtedness created under the Loan Documents, (B) Indebtedness created
          under
          the Parent Credit Agreement and the “Loan Documents” thereunder, and (C) (1)
          Ratable Guarantees of Ratable FCX Obligations by the PCA Loan Parties and
          (2)
          Indebtedness arising pursuant to Ratable Liens securing Ratable
          Obligations;

         

        (ii)
          Indebtedness, including Guarantees, existing on the date hereof and set
          forth in
          Schedule 6.01;

         

        (iii)
          Indebtedness of FCX to any Restricted Subsidiary and of any Restricted
          Subsidiary to FCX or any other Restricted Subsidiary; provided that any
          such Indebtedness (A) owing to FCX or, at any time on and after the Additional
          Collateral Date, owing to any PCA Loan Party, shall, to the extent that
          any such
          Indebtedness from any single obligor to any single obligee exceeds $25,000,000
          in aggregate principal amount, be evidenced by a promissory note and shall
          have
          been pledged pursuant to the Collateral Agreement or the 

         

        
          
            
            

          

          
            87

            
              

            

          

          
            
            

          

        

         

        Additional
          Collateral Agreement, as applicable, and (B) owing to PTFI, shall, to the
          extent
          that any such Indebtedness from any single obligor to any single obligee
          exceeds
          $25,000,000 in aggregate principal amount, be evidenced by a promissory
          note
          that shall have been pledged pursuant to the Fourth Amended and Restated
          Lender
          Fiduciary Assignment and/or the Lender Security Agreement Fourth Amendment,
          as
          applicable;

         

        (iv)
          secured or unsecured Indebtedness of FCX or any Restricted Subsidiary and
          Attributable Debt in respect of sale and leaseback transactions permitted
          by
          Section 6.06(a), in each case incurred to finance the acquisition,
          construction or improvement of any fixed or capital assets, including Capital
          Lease Obligations and any Indebtedness assumed in connection with the
          acquisition of any such assets or secured by a Lien on any such assets
          prior to
          the acquisition thereof but excluding Project Financings; provided
          that
          (A) any such Indebtedness or Attributable Debt is incurred within 180 days
          prior to or within 180 days after such acquisition or the completion of
          such construction or improvement and (B) any such Attributable Debt is
          incurred in accordance with Section 6.06; and provided further
          in each
          case that (1) no Event of Default shall have occurred and be continuing
          or would
          result therefrom and (2) immediately after giving effect to the incurrence
          thereof, the Incurrence Test would be satisfied;

         

        (v)
          Project Financings and Guarantees thereof in each case by the direct or
          indirect
          parent or parents of the applicable Project Financing Subsidiary; provided
          in each
          case that (A) no Event of Default shall have occurred and be continuing
          or would
          result therefrom and (B) immediately after giving effect to the incurrence
          thereof, the Incurrence Test would be satisfied;

         

        (vi)
          in
          the case of FCX, the Senior Notes;

         

        (vii)
          unsecured Guarantees of FCX or PTFI of obligations of a purchaser in an
          FCX
          Assisted PTFI Sale to lenders providing financing for such sale in an aggregate
          amount not at any time in excess of (x) the aggregate amount of cash
          consideration received by FCX or any Restricted Subsidiary for such FCX
          Assisted
          PTFI Sale minus
          (y) the
          aggregate amount of payments theretofore made in respect of principal
          obligations under such Guarantee;

         

        (viii)
          letters of credit in connection with environmental assurances and reclamation
          in
          an aggregate face amount not exceeding $700,000,000 at any time
          outstanding;

         

        (ix)
          unsecured Indebtedness of FCX or any Loan Party; provided
          that all
          the Net Proceeds thereof are applied promptly to prepay Term Loans in accordance
          with Section 2.10 of the Parent Credit Agreement;

         

        (x)
          other
          Indebtedness of FCX; provided
          that (A)
          no Event of Default shall have occurred and be continuing or would result
          therefrom and (B) immediately after giving effect to the incurrence thereof,
          the
          Incurrence Test would be satisfied;

         

        (xi)
          other
          Indebtedness of the Restricted Subsidiaries and Attributable Debt in respect
          of
          sale and leaseback transactions permitted pursuant to Section 6.06(c) in
          an
          aggregate principal amount at any time outstanding, taken together with
          all
          outstanding secured Indebtedness of FCX incurred under clause (x), (A)
          

         

        
          
            
            

          

          
            88

            
              

            

          

          
            
            

          

        

         

        not
          in
          excess of the greater of $1,500,000,000 and 3.5% (or (A) at any time when
          the
          aggregate principal amount of the Revolving Commitments and the Term Loans
          and
          the revolving commitments under the Parent Credit Agreement shall be less
          than
          $8,000,000,000 but greater than or equal to $5,000,000,000, 6% or (B) at
          any
          time when FCX is Investment Grade and the aggregate principal amount of
          the
          Revolving Commitments and the Term Loans and the revolving commitments
          under the
          Parent Credit Agreement shall be less than $5,000,000,000, 8%) of Consolidated
          Total Assets; provided
          that (1)
          no Event of Default shall have occurred and be continuing or would result
          therefrom and (2) immediately after giving effect to the incurrence thereof,
          the
          Incurrence Test would be satisfied; and 

         

        (xii)
          Permitted Refinancings of Indebtedness or Attributable Debt outstanding
          under
          clauses (i)(C) (in connection with a Permitted Refinancing of the related
          Indebtedness), (ii), (iv), (v), (vi), (vii), (ix) and (x).

         

        Notwithstanding
          the foregoing or any other provision hereof, (1) no Restricted Subsidiary
          shall
          Guarantee the Senior Notes, (2) no US Receivables Facility shall be established
          unless an intercreditor agreement reasonably satisfactory to the Administrative
          Agent shall be effective between the Administrative Agent (the substantive
          provisions of which shall not require any action by such financing parties
          or
          their representatives other than in connection with and following the occurrence
          of the Additional Collateral Date other than to accommodate potential security
          interests under the Additional Security Documents, including in connection
          with
          lock-box procedures) and the financing parties for such Receivables Facility
          or
          their representative (and each Lender hereby authorizes and directs the
          Administrative Agent to enter into such intercreditor agreement), and (3)
          no
          Receivables Facility shall be established under which assets of PTFI or
          its
          subsidiaries are included.

         

        (b)
          FCX
          will not permit PTFI nor any other Restricted Subsidiary to issue any preferred
          stock or other preferred Equity Interests; provided
          that PTFI
          and any Restricted Subsidiary may issue preferred stock or other preferred
          Equity Interests in an aggregate stated amount not in excess of $500,000,000;
          provided
          that no
          such preferred stock or preferred Equity Interests shall be subject to
          any
          redemption, repurchase or defeasance requirement prior to the date six
          months
          after the Tranche B Maturity Date.

         

        SECTION
          6.02. Liens.
          Each
          Borrower will not, and will not permit any Restricted Subsidiary to, create,
          incur, assume or permit to exist any Lien on any property or asset now
          owned or
          hereafter acquired by it, or assign or sell any income or revenues (including
          accounts receivable) or rights in respect of any thereof, except:

         

        (a)
          Liens
          created under or specifically required by the Loan Documents securing some
          or
          all of the Obligations and the Secured Obligations; and Ratable Liens created
          under or specifically required by the Loan Documents securing some or all
          of the
          Ratable FCX Obligations and Ratable Cyprus Obligations and, on and after
          the
          Additional Collateral Date, some or all of the Ratable PD Obligations
          (provided that each such Ratable Lien on any asset shall by its terms
          automatically be released upon the release of the Lien on such asset securing
          the Secured Obligations); 

         

        (b)
          Permitted Encumbrances;

         

        (c)
          any
          Lien on any property or asset of FCX or any Restricted Subsidiary existing
          on
          the date hereof and set forth in Schedule 6.02; provided
          that
          (i) such Lien shall not apply to any other property or asset of FCX or any
          Restricted 

         

        
          
            
            

          

          
            89

            
              

            

          

          
            
            

          

        

         

        Subsidiary
          and (ii) such Lien shall secure only those obligations which it secures on
          the date hereof and extensions, renewals and replacements thereof that
          do not
          increase the outstanding principal amount thereof by more than the amount
          of
          accrued interest thereon and fees, expenses and premiums paid in connection
          with
          such extension, renewal or replacement;

         

        (d)
          Liens
          on fixed or capital assets acquired, constructed or improved by FCX or
          any
          Restricted Subsidiary; provided
          that
          (A) such Liens secure Indebtedness or Attributable Debt permitted by
          clause (iv) of Section 6.01(a) or extensions, renewals or replacements
          thereof permitted by Section 6.01(a)(xii), (B) such Liens (or the Liens
          securing the Indebtedness or Attributable Debt so extended, renewed or
          replaced)
          and the Indebtedness secured thereby are incurred within 180 days prior
          to or
          within 180 days after such acquisition or the completion of such
          acquisition, construction or improvement, (C) the Indebtedness or
          Attributable Debt secured thereby does not exceed by more than a deminimis amount the cost of acquiring, constructing or improving
          such
          fixed or capital assets and (D) such Liens shall not apply to any other
          property or assets of FCX or any Restricted Subsidiary;

         

        (e)
          Liens
          securing any Project Financing or any Guarantee thereof by any direct or
          indirect parent of the applicable Project Financing Subsidiary; provided
          that (A)
          such Liens secure only Indebtedness or Attributable Debt permitted by Section
          6.01(a)(v) or extensions, renewals or replacements thereof permitted by
          Section
          6.01(a)(xii) and (B) such Liens do not apply to any property or assets
          of FCX or
          any Restricted Subsidiaries other than the assets of the applicable Project
          Financing Subsidiary and Equity Interests in the applicable Project Financing
          Subsidiary or any direct or indirect parent thereof that holds no significant
          assets other than direct or indirect ownership interests in such Project
          Financing Subsidiary or assets related to, or ownership interests in
          Subsidiaries that hold assets related to, the operations of such Project
          Financing Subsidiary;

         

        (f)
          required margin deposits on, and other Liens on assets (other than Equity
          Interests) of FCX or any Restricted Subsidiary securing obligations under,
          Hedging Agreements permitted hereunder;

         

        (g)
          Liens
          on property, other assets or shares of stock of a Person at the time such
          Person
          becomes a Restricted Subsidiary (or at the time FCX or a Restricted Subsidiary
          acquires such property, other assets or shares of stock, including any
          acquisition by means of a merger, consolidation or other business combination
          transaction with or into any Restricted Subsidiary); provided,
          however,
          that
          such Liens are not created, incurred or assumed in anticipation of or in
          connection with such other Person becoming a Restricted Subsidiary (or
          such
          acquisition of such property, other assets or stock); and providedfurther,
          that
          such Liens are limited to all or part of the same property, other assets
          or
          stock (plus improvements, accession, proceeds or dividends or distributions
          in
          connection with the original property, other assets or stock) that secured
          the
          obligations to which such Liens relate;

         

        (h)
          Liens
          on assets or property of any Restricted Subsidiary (other than any Loan
          Party)
          securing Indebtedness or other obligations of such Restricted Subsidiary
          owing
          to FCX or another Restricted Subsidiary;

         

        (i)
          Liens
          securing any Permitted Refinancing of Indebtedness or Attributable Debt
          that was
          previously so secured, and permitted to be secured 

         

        
          
            
            

          

          
            90

            
              

            

          

          
            
            

          

        

         

        under
          this
          Agreement; provided
          that any
          such Lien is limited to all or part of the same property or assets (plus
          improvements and accessions thereto) that secured the Indebtedness or
          Attributable Debt being refinanced at the time of such refinancing;

         

        (j)
          Liens
          incurred in the ordinary course of business with respect to obligations
          (other
          than Indebtedness for borrowed money) which do not exceed $100,000,000
          at any
          one time outstanding;

         

        (k)
          Liens
          on Equity Interests or other securities or assets of any Unrestricted Subsidiary
          that secure Indebtedness of such Unrestricted Subsidiary;

         

        (l)
          Liens
          on amounts not to exceed the sum of up to three years of regularly scheduled
          interest payments in respect of Indebtedness of FCX permitted hereby, which
          amounts shall have been placed in interest reserve accounts in connection
          with
          the issuance of such Indebtedness to secure the obligations under, such
          Indebtedness;

         

        (m)
          the
          RTZ Interests;

         

        (n)
          Liens
          on cash, Permitted Investments and other assets securing (i) letters of
          credit
          permitted pursuant to Section 6.01(a)(viii) and (ii) environmental assurance
          and
          reclamation claims; provided
          that the
          aggregate amount of cash, Permitted Investments and other assets subject
          to such
          Liens under this paragraph (n) shall not at any time exceed
          $700,000,000;

         

        (o)
          Liens
          not expressly permitted by clauses (a) through (n) securing Indebtedness
          permitted pursuant to Section 6.01(a)(x) or (xi) and Attributable Debt
          in
          respect of sale and leaseback transactions permitted pursuant to
          Section 6.06(c); provided
          that such
          Liens are created in connection with the incurrence of such Indebtedness;
          and

         

        (p)
          Liens
          on the receivables, metals and related assets subject to any Receivables
          Facility, Metalstream Transaction or other Indebtedness included in clause
          (j)
          of the definition of “Indebtedness”. 

         

        SECTION
          6.03. Fundamental
          Changes. (a)
          Each
          Borrower will not, and will not permit any Restricted Subsidiary to, effect
          any
          Proscribed Consolidation. “Consolidation”
means
          the merger, consolidation, liquidation or dissolution of any Person with
          or into
          any other Person or the sale, transfer, lease or other disposition of all
          or
          substantially all the assets of any Person to another Person. “Proscribed
          Consolidation”
means
          any Consolidation of (i) PD and FCX or (ii) any of (A) on the one hand,
          PTFI, PD
          Morenci, Cyprus Climax Metals Company, Phelps Dodge Exploration Company,
          O&C
          Holdco or any of their subsidiaries, and (B) on the other hand, FCX or
          PD.
“Proscribed
          Consolidation”
shall
          also mean any merger or consolidation involving FCX in which FCX is not
          the
          surviving Person (the “Successor
          Company”)
          unless
          (1) the Successor Company will be a corporation organized and existing
          under the
          laws of the United States of America, any State thereof or the District
          of
          Columbia and the Successor Company will expressly assume, by an agreement
          executed and delivered to the Administrative Agent, in form reasonably
          satisfactory to the Administrative Agent, all the obligations of FCX under
          the
          Loan Documents; and (2) immediately after giving effect to such transaction
          (and
          treating any Indebtedness which becomes an obligation of the Successor
          Company
          or any Restricted Subsidiary as a result of such transaction as having
          been
          incurred by the Successor Company or such Restricted Subsidiary at the
          

         

        
          
            
            

          

          
            91

            
              

            

          

          
            
            

          

        

         

        time
          of
          such transaction), (A) no Event of Default shall have occurred and be continuing
          or would result therefrom and (B) immediately after giving effect to such
          incurrence, the Incurrence Test would be satisfied.

         

        (b)
          Each
          Borrower will not, and will not permit any Restricted Subsidiary to, merge
          into
          or consolidate with any other Person, or permit any other Person to merge
          into
          or consolidate with it, or liquidate or dissolve, except that, if at the
          time
          thereof and immediately after giving effect thereto no Event of Default
          shall
          have occurred and be continuing, (i) any Restricted Subsidiary may merge
          into
          any other Restricted Subsidiary in a transaction in which the surviving
          entity
          is a Restricted Subsidiary, (ii) any Restricted Subsidiary that is not
          owned directly by FCX, any Immaterial Subsidiary and any Subsidiary engaged
          primarily in exploration activities may liquidate or dissolve if FCX determines
          in good faith that such liquidation or dissolution is in the best interests
          of
          FCX and is not materially disadvantageous to the Lenders, (iii) any Restricted
          Subsidiary may merge into PTFI in a transaction in which the surviving
          entity is
          PTFI and (iv) PTFI may engage in a transaction permitted under Section
          9.18(c);
provided
          that such
          transaction shall not constitute a Proscribed Consolidation and the surviving
          corporation in any merger involving a Loan Party shall be a Loan
          Party.

         

        (c)
          FCX
          will not engage in any business or activity other than (i) the ownership
          of (A)
          outstanding Equity Interests in Subsidiaries that are pledged as Collateral
          to
          the extent required by the Collateral and Guarantee Requirement (subject
          to the
          Collateral and Guarantee Minimum Requirement), (B) Indebtedness owed by
          Subsidiaries that is pledged as Collateral, (C) cash and Permitted Investments
          that with de minimis
          exceptions is pledged as Collateral and held in accounts subject to control
          agreements for the benefit of the Secured Parties, (D) other cash and Permitted
          Investments securing letters of credit permitted pursuant to Section
          6.01(a)(viii), and (E) other assets the aggregate book value of which is
          not in
          excess of $100,000,000; (ii) the issuance of Equity Interests, the making
          of
          Restricted Payments, the incurrence of Indebtedness and the making of
          Investments in Subsidiaries, in each case to the extent not otherwise prohibited
          hereunder; and (iii) corporate maintenance activities associated with being
          a
          public company and with being a holding company for a consolidated group
          and
          other de minimis
          activities as are customary for public holding companies that are similarly
          situated (including, without limitation, the employment of certain
          employees).

         

        (d)
          Phelps
          Dodge Morenci, Inc. will not engage in any business or activity other than
          the
          ownership, operation and financing of the mining interests and business
          in
          Morenci, Arizona, which it owns and engages in on the Effective Date and
          extensions, expansions, improvements and modifications thereof in locations
          in
          which Phelps Dodge Morenci, Inc. has interests on the Effective Date and
          interests contiguous or in reasonable proximity thereto (collectively,
          the
“Morenci
          Property”)
          (the
“Morenci
          Business”).
          For
          the avoidance of doubt, the Morenci Business includes the mining, milling
          and
          leaching of mineral bearing material and the production of copper and molybdenum
          concentrates, copper precipitates and electrowon copper cathode at the
          Morenci
          Property, any exploration, development or other capital programs relating
          to the
          Morenci Property and any activities incidental to any of the foregoing.
          Phelps
          Dodge Morenci, Inc. will not own or acquire any assets (other than the
          Morenci
          Business and assets incidental thereto, including cash and Permitted
          Investments) or incur any liabilities (other than liabilities imposed by
          law,
          including tax liabilities, and other liabilities incidental to its existence
          and
          the Morenci Business (including Indebtedness to fund the operation, development,
          expansion, improvement or enhancement of the Morenci Business).

         

        
          
            
            

          

          
            92

            
              

            

          

          
            
            

          

        

         

        (e)
          For
          the avoidance of doubt, the limitations set forth in paragraphs (a) through
          (d)
          above shall not limit the sale, transfer, lease or other disposition of
          equipment between Restricted Subsidiaries in the ordinary course of business
          or
          sales, transfers, leases or other dispositions of assets (other than in
          the case
          of a Proscribed Consolidation) (i) from Subsidiary Guarantors to Subsidiary
          Guarantors, (ii) from non-Subsidiary Guarantors to Subsidiary Guarantors,
          (iii)
          from Subsidiary Guarantors to Restricted Subsidiaries and joint ventures
          of
          Subsidiary Guarantors or (iv) from non-Subsidiary Guarantors to non-Subsidiary
          Guarantors, so long as, in the case of sales, transfers, leases or other
          dispositions to non-Subsidiary Guarantors, a Subsidiary other than PD that
          directly or indirectly holds such transferee as a subsidiary is a Guarantor
          or
          the Equity Interests in which are pledged as Collateral to the extent required
          under clause (b) or (d), as applicable, of the definition of Collateral
          and
          Guarantee Requirement.

         

        (f)
          Each
          Borrower will not, and will not permit any Restricted Subsidiary to, engage
          to
          any material extent in any business other than businesses of the type conducted
          by FCX and its Restricted Subsidiaries on the Effective Date and businesses
          reasonably related thereto.

         

        SECTION
          6.04. Investments
          in Unrestricted Subsidiaries.
          Each
          Borrower will not, and will not permit any Restricted Subsidiary to, purchase,
          hold, make or acquire (including pursuant to any merger and including each
          increase to the Unrestricted Subsidiary LC Exposure) any Investment in
          any
          Unrestricted Subsidiary, except to the extent that after giving effect
          to any
          such Investment, (A) the Incurrence Test would be satisfied and (B) either
          (x)
          the Unrestricted Subsidiary Investment Amount shall not exceed 1% of
          Consolidated Total Assets, or (y) if the Unrestricted Subsidiary Investment
          Amount shall exceed 1% of Consolidated Total Assets, or to the extent resulting
          in the Unrestricted Subsidiary Investment Amount exceeding 1% of Consolidated
          Total Assets, such Investment shall constitute a Restricted Use and the
          Restricted Uses shall not exceed the Restricted Uses Basket. In connection
          with
          each such Investment that exceeds $25,000,000, FCX shall deliver to the
          Administrative Agent (x) written notice of such Investment and (y) a
          certificate, dated the effective date of such Investment, of a Financial
          Officer
          of FCX stating that no Event of Default has occurred and is continuing,
          specifying whether such Investment is made in reliance on clause (x) or
          (y) of
          the immediately preceding sentence and setting forth reasonably detailed
          calculations demonstrating compliance with the requirements of clauses
          (A) and
          (B) of such sentence.

         

        SECTION
          6.05. Asset
          Sales. (a)
          Each
          Borrower will not, and will not permit any Restricted Subsidiary to, sell,
          transfer, lease or otherwise dispose of all or substantially all the assets
          of
          FCX and the Restricted Subsidiaries.

         

        (b)
          Each
          Borrower will not, and will not permit any Restricted Subsidiary to, sell,
          transfer, lease or otherwise dispose of any asset, including any Equity
          Interest
          owned by it, nor will FCX permit any of its Restricted Subsidiaries to
          issue any
          additional Equity Interest in such Restricted Subsidiary, except:

         

        (i)
          sales
          of inventory, used or surplus equipment and Permitted Investments in the
          ordinary course of business;

         

        (ii)
          sales, transfers and dispositions to a Borrower or a Restricted Subsidiary;
          provided
          that any
          such sales, transfers or dispositions between a Loan Party and a Subsidiary
          that
          is not a Loan Party shall be made in compliance with Section 6.03;

         

        
          
            
            

          

          
            93

            
              

            

          

          
            
            

          

        

         

        (iii)
          any
          sale or issuance of Transferred Shares in a Qualifying PTFI Sale
          Transaction;

         

        (iv)
          sales
          of assets as part of a sale and leaseback transaction permitted by
          Section 6.06;

         

        (v)
          any
          sale of Equity Interests in Restricted Subsidiaries to PT-Rio Tinto Indonesia;
          provided
          that such
          sale is made pursuant to Section 3.6 of the Participation Agreement;
provided further
          that any
          such Restricted Subsidiary shall continue to comply with the Collateral
          and
          Guarantee Requirement;

         

        (vi)
          any
          sale of Equity Interests in Unrestricted Subsidiaries;

         

        (vii)
          sales, transfers and other dispositions of assets that are not permitted
          by any
          other clause of this paragraph (b), subject to the Incurrence Test and
          to
          compliance with Section 2.10(c) of the Parent Credit Agreement; and

         

        (viii)
          dispositions of receivables, metals and related assets subject to any
          Receivables Facility, Metalstream Transaction or other Indebtedness included
          in
          clause (j) of the definition of “Indebtedness”;

         

        provided
          that:

         

        
          	 	
                  (A)
                    

                	
                  except
                    as permitted under Section 6.05(c), no such sale, transfer, lease
                    or other
                    disposition of any Equity Interests in any PCA Loan Party (subject
                    in the
                    case of PTFI to clause (iii) above) or any Wholly Owned Subsidiary
                    of FCX
                    the Equity Interests in which are pledged under a Security Document
                    shall
                    be permitted unless such Equity Interests constitute all the
                    Equity
                    Interests in such Subsidiary held by FCX and the Restricted Subsidiaries;
                    and

                

        

         

        
          	 	
                  (B)
                    

                	
                  all
                    sales, transfers, leases and other dispositions permitted hereby
                    (other
                    than those permitted by clauses (i), (ii) and (iii) above) shall be
                    made for fair value and for (I) 100% cash consideration in the case
                    of transactions permitted by clause (iv), and (II) at least 75%
                    cash
                    consideration in the case of transactions permitted by clauses
                    (v), (vi)
                    and (vii); provided,
                    however,
                    that for the purposes of this paragraph (B), (1) any Permitted
                    Investments
                    received as consideration, (2) any liabilities (as shown on the
                    most
                    recent consolidated balance sheet of FCX provided hereunder or
                    in the
                    footnotes thereto) of FCX or the applicable Restricted Subsidiary,
                    other
                    than with respect to Indebtedness that is not secured by the
                    assets
                    disposed of, that are assumed by the transferee with respect
                    to the
                    applicable disposition and for which FCX and all of the Restricted
                    Subsidiaries shall have been validly released by all applicable
                    creditors,
                    (3) any securities received by FCX or such Restricted Subsidiary
                    from such
                    transferee that are converted by FCX or such Restricted Subsidiary
                    into
                    cash (to the extent of the cash received) within 180 days following
                    the
                    closing of the applicable disposition and (4) any Designated
                    Noncash
                    Consideration received by FCX or such Restricted Subsidiary in
                    respect of
                    such disposition having an aggregate fair market value, taken
                    together
                    with all other Designated Noncash Consideration received pursuant
                    to this
                    clause (4) that is at that time outstanding, not in excess of
                    the greater
                    of $500,000,000 and 1.5% of Consolidated Total Assets at the
                    time of the
                    receipt of such Designated Noncash Consideration, with the fair
                    market
                    

                

        

         

        
          
            
            

          

          
            94

            
              

            

          

          
            
            

          

        

         

        
          
            	 	
                     

                  	
                    value
                      of each item of Designated Noncash Consideration being measured
                      at the
                      time received and without giving effect to subsequent changes
                      in value,
                      shall in each case of clauses (1), (2), (3) and (4) be deemed
                      to be
                      cash.

                  

          

           

        

        (c)
          Notwithstanding any other provision of this Agreement or any other Loan
          Document:

         

        (i)
          PTFI
          will not sell, transfer, lease or otherwise dispose of the Contract of
          Work or
          any rights thereunder, and PTFI will not, and will not permit any of its
          subsidiaries (other than Unrestricted Subsidiaries) to, sell, transfer,
          lease or
          otherwise dispose of any significant operating assets, or (except in connection
          with a Project Financing or sale and leaseback transaction permitted by
          Section
          6.06 that is Non-Recourse Indebtedness) any assets subject to any Lien
          under any
          of the FI Security Documents to any other Person;

         

        (ii)
          FCX
          or PTII may not sell, transfer or otherwise dispose of Equity Interests
          in PTFI,
          and PTFI may not issue additional Equity Interests (each a “PTFI
          Share Sale”),
          except
          that:

         

        
          	 	
                  (A)

                	
                  this
                    clause (ii) shall not prohibit any PTFI Share Sale if after giving
                    effect
                    thereto FCX holds, directly or indirectly, PTFI Shares representing
                    at
                    least 80% of all the Equity Interests in
                    PTFI;

                

        

         

        
          	 	
                  (B)

                	
                  at
                    any time when the aggregate principal amount of the Revolving
                    Commitments
                    and the Term Loans and the revolving commitments under the Parent
                    Credit
                    Agreement shall be less than $8,000,000,000, this clause (ii)
                    shall not
                    prohibit any PTFI Share Sale if after giving effect thereto FCX
                    holds,
                    directly or indirectly, PTFI Shares representing at least 70%
                    of all the
                    Equity Interests in PTFI; and

                

        

         

        
          	 	
                  (C)

                	
                  this
                    clause (ii) shall not prohibit any PTFI Share Sale that results
                    in FCX
                    holding, directly or indirectly, PTFI Shares representing less
                    than 70% of
                    all the Equity Interests in PTFI if after giving effect thereto
                    (1) FCX
                    holds, directly or indirectly, PTFI Shares representing at least
                    50.1% of
                    all the Equity Interests in PTFI, (2) the Additional Collateral
                    Date shall
                    have occurred on or prior to the date on which such sale, transfer
                    or
                    other disposition is consummated, (3) the consideration for the
                    PTFI
                    Shares included in such transaction that reduce FCX’s holdings below 70%
                    of all the Equity Interests in PTFI (the “Core
                    Shares”)
                    shall be 100% cash and all the Net Proceeds received in respect
                    of the
                    Core Shares (the “Core
                    Net Proceeds”)
                    shall be applied promptly to the prepayment of Term Loans (it
                    being
                    understood in the event that PTFI Shares other than the Core
                    Shares are
                    also included in such transaction, (x) the application of the
                    Net Proceeds
                    of such other PTFI Shares shall be governed by the provisions
                    of Section
                    2.10(c) of the Parent Credit Agreement and (y) the expenses of
                    the entire
                    transaction shall be allocated ratably between the Core Shares
                    and such
                    other PTFI Shares), and (4) after giving effect to any such transaction
                    and the related prepayment of Term Loans, the aggregate principal
                    amount
                    of the Revolving Commitments and the Term Loans and the revolving
                    commitments under the Parent Credit Agreement shall be no greater
                    than the
                    amount equal to $8,000,000,000 minus
                    the
                    Core Net Proceeds; and

                

        

         

        
          
            
            

          

          
            95

            
              

            

          

          
            
            

          

        

         

        (iii)
          no
          Pledged PTFI Shares shall be sold in any transaction under clause (ii)
          unless
          all the capital stock of PTFI then held by FCX and not constituting Pledged
          PTFI
          Shares, if any, is sold in such transaction. Each of the Collateral Agent
          and
          the Security Agent is hereby authorized and directed in the case of any
          sale of
          Pledged PTFI Shares together with all unpledged PTFI Shares in compliance
          with
          Section 6.05(b)(iii) or this Section 6.05(c) to release any and all Liens
          of the
          Secured Parties and the FI Secured Parties therein.

         

        SECTION
          6.06. Sale
          and Leaseback Transactions.
          Each
          Borrower will not, and will not permit any Restricted Subsidiary to, enter
          into
          any arrangement, directly or indirectly, whereby it shall sell or transfer
          any
          property, real or personal, used or useful in its business, whether now
          owned or
          hereinafter acquired, and thereafter rent or lease such property or other
          property that it intends to use for substantially the same purpose or purposes
          as the property sold or transferred, except for (a) any such sale and leaseback
          of any fixed or capital assets that is made for cash consideration in an
          amount
          not less than the cost of such fixed or capital asset and is consummated
          within
          180 days after such Borrower or such Restricted Subsidiary acquires or
          completes
          the construction of such fixed or capital asset; (b) any such sale and
          leaseback
          of Project Financing Assets as part of a Project Financing; provided
          in each
          case that such sale and leaseback is solely for cash; and (c) any sale and
          leaseback of fixed or capital assets; provided
          that the
          aggregate amount of the Attributable Debt in respect of such sale and leaseback
          transactions under this clause (c) at any time outstanding, taken together
          with
          all outstanding secured Indebtedness of FCX incurred under Section 6.01(a)(x)
          and all Indebtedness incurred pursuant to Section 6.01(a)(xi), shall not
          exceed the greater of $1,500,000,000 and 3.5% (or (x) at any time when
          the
          aggregate principal amount of the Revolving Commitments and the Term Loans
          and
          the revolving commitments under the Parent Credit Agreement shall be less
          than
          $8,000,000,000 but greater than or equal to $5,000,000,000, 6% or (y) at
          any
          time when FCX is Investment Grade and the aggregate principal amount of
          the
          Revolving Commitments and the Term Loans and the revolving commitments
          under the
          Parent Credit Agreement shall be less than $5,000,000,000, 8%) of Consolidated
          Total Assets; provided
          in each
          case under clauses (a), (b) and (c) that (A) no Event of Default shall
          have
          occurred and be continuing or would result therefrom and (B) immediately
          after
          giving effect to the incurrence thereof, the Incurrence Test would be
          satisfied.

         

        SECTION
          6.07. Hedging
          Agreements.
          Each
          Borrower will not, and will not permit any Restricted Subsidiary to, enter
          into
          any Hedging Agreement, other than Hedging Agreements entered into in the
          ordinary course of business to hedge or protect against actual or reasonably
          anticipated risks to which FCX or any Restricted Subsidiary is exposed
          in the
          conduct and financing of its business, and not in any event for
          speculation.

         

        SECTION
          6.08. Restricted
          Payments; Certain Payments of Indebtedness. (a)
          FCX
          will
          not, nor will it permit any Restricted Subsidiary to, declare or make,
          or agree
          to pay or make, directly or indirectly, any Restricted Payment, or incur
          any
          obligation (contingent or otherwise) to do so, except 

         

        (i)
          Restricted Subsidiaries may declare and pay dividends ratably with respect
          to
          their capital stock (A) to shareholders other than FCX, (B) to FCX to the
          extent
          the proceeds of such dividends are applied to pay operating expenses in
          the
          ordinary course of business, and (C) to FCX so long as (1) no Event of
          Default
          under clause (a) or (b) of Article VII shall have occurred and be continuing
          and
          (2) if any Event of Default other than under clause (a) or (b) of Article
          VII
          shall have occurred and be continuing (or shall result from the payment
          thereof), so long as the Required Lenders shall not have given notice to
          

         

        
          
            
            

          

          
            96

            
              

            

          

          
            
            

          

        

         

        FCX
          that
          such dividends shall not be permitted to be paid during the pendency of
          such
          Event of Default, 

         

        (ii)
          so
          long as no Event of Default shall have occurred and be continuing (or shall
          result from the payment thereof), FCX may pay regularly scheduled quarterly
          dividends in respect of its preferred stock issued and outstanding on the
          Effective Date and effect regularly scheduled mandatory redemptions of
          its
          preferred stock issued and outstanding on the Effective Date, in each case,
          to
          the extent and in the amounts required by the terms of such preferred stock
          as
          in effect on the Effective Date, 

         

        (iii)
          so
          long as no Event of Default shall have occurred and be continuing (or shall
          result from the payment thereof), FCX may, consistent with its dividend
          practices as of the Effective Date, and subject to the Incurrence Test,
          declare
          and pay dividends on its shares of common stock (and on shares of common
          stock
          issued upon the conversion of or in exchange for shares of FCX’s 51⁄2% Convertible
          Perpetual Preferred Stock outstanding on the Effective Date) in an amount
          in
          respect of any fiscal quarter not to exceed $0.3125 per share of FCX’s common
          stock (adjusted as applicable to eliminate the effect of stock dividends,
          stock
          splits, reverse stock splits and other transactions in respect of such
          shares of
          common stock, and payable in respect of any shares of common stock received
          pursuant to any such stock dividend, stock split, reverse stock split or
          other
          transaction) (it being understood that Restricted Payments made in reliance
          on
          this clause (iii) in respect of shares of FCX’s common stock issued or sold
          after the Effective Date (or in respect of shares received in stock dividends,
          stock splits, reverse stock splits or other transactions in respect of
          such
          shares of common stock) involving either (x) a receipt of cash proceeds
          that
          increased the Restricted Uses Basket or (y) the receipt of assets in
          consideration for such common stock shall constitute Restricted Uses and
          shall
          reduce the Restricted Uses Basket (which reduction may be to less than
          zero)),
          and

         

        (iv)
          so
          long as no Event of Default shall have occurred and be continuing (or shall
          result from the payment thereof), and subject to the Incurrence Test, FCX
          may
          make Restricted Payments in cash in any amounts to the extent that, immediately
          after giving effect thereto (and to any expenditure of cash required thereby),
          the Restricted Uses would not be greater than the Restricted Uses
          Basket.

         

        (b)
          Each
          Borrower will not, and will not permit any Restricted Subsidiary to, make,
          directly or indirectly, any voluntary payment or other voluntary distribution
          (whether in cash, securities (other than common stock of FCX) or other
          property)
          of, or in respect of, principal of or interest on any Indebtedness, or
          any
          voluntary payment or other voluntary distribution (whether in cash, securities
          (other than common stock of FCX) or other property), including any sinking
          fund
          or similar deposit, on account of the purchase, redemption, retirement,
          acquisition, cancelation or termination of any Indebtedness,
          except:

         

        (i)
          payment of Indebtedness created under the Loan Documents and payment of
          Ratable
          FCX Obligations, Ratable Cyprus Obligations and Ratable PD
          Obligations;

         

        (ii)
          payment of regularly scheduled interest and principal payments as and when
          due
          in respect of any Indebtedness, other than payments in respect of Indebtedness
          prohibited by the subordination provisions thereof;

         

        
          
            
            

          

          
            97

            
              

            

          

          
            
            

          

        

         

        (iii)
          refinancings of Indebtedness to the extent permitted by Section 6.01(a)
          (including, without limitation, the refinancing of any Indebtedness, other
          than
          the Senior Notes, with Indebtedness permitted under Section
          6.01(a)(xi));

         

        (iv)
          payment of secured Indebtedness that becomes due as a result of the sale
          or
          transfer of the property or assets securing such Indebtedness;

         

        (v)
          prepayments of Indebtedness owed to FCX by a Restricted Subsidiary or owed
          to a
          Restricted Subsidiary by FCX or another Restricted Subsidiary; provided
          that
          prepayments of Indebtedness owed to a Restricted Subsidiary that is not
          a PCA
          Loan Party shall be permitted only to the extent no Event of Default has
          occurred and is continuing at the time of such prepayment, except that
          such
          prepayments shall be permitted (A) to the extent the proceeds of such
          prepayments are applied to pay operating expenses or to make Capital
          Expenditures in the ordinary course of business, and (B) to the extent
          the
          proceeds of such prepayments are applied to pay scheduled debt service
          of such
          Restricted Subsidiary so long as (1) no Event of Default under clause (a)
          or (b)
          of Article VII shall have occurred and be continuing and (2) if any Event
          of
          Default other than under clause (a) or (b) of Article VII shall have occurred
          and be continuing (or shall result from the payment thereof), so long as
          the
          Required Lenders shall not have given notice to FCX that such prepayments
          shall
          not be permitted to be paid during the pendency of such Event of
          Default;

         

        (vi)
          prepayments of any Project Financing to the extent made by the applicable
          Project Financing Subsidiary with cash from the operations of such Project
          Financing Subsidiary;

         

        (vii)
          payments of Indebtedness (other than Indebtedness referred to in clause
          (viii)
          below) that are not permitted by clauses (i)-(vi) of this Section 6.08(b)
          if and to the extent that after giving effect to any such payments, the
          Restricted Uses would not be greater than the Restricted Uses Basket;
          and

         

        (viii)
          payments of Indebtedness created under the Parent Credit Agreement and
          the “Loan
          Documents” thereunder.

         

        SECTION
          6.09. Transactions
          with Affiliates. (a)
          Each
          Borrower will not, and will not permit any Restricted Subsidiary to, sell,
          lease
          or otherwise transfer any property or assets to, or purchase, lease or
          otherwise
          acquire any property or assets from, or otherwise engage in any other
          transactions with, any of its Affiliates, except (i) transactions in the
          ordinary course of business at prices and on terms and conditions not less
          favorable to such Borrower or such Restricted Subsidiary than could be
          obtained
          on an arm’s-length basis from unrelated third parties; provided
          that
          transactions involving payments or transfers having a cumulative aggregate
          value
          of not more than $50,000,000 may be other than on an arm’s-length basis so long
          as the board of directors of FCX has determined the transaction is in the
          best
          interests of FCX, (ii) transactions among FCX and its Restricted
          Subsidiaries and (iii) any Restricted Payment permitted by
          Section 6.08.

         

        (b)
          PTFI
          will not make any contribution or transfer of any substantial portion of
          its
          assets, the Contract of Work or any rights thereunder to FCX, any Restricted
          Subsidiary or any other Affiliate other than (i) cash dividends permitted
          to be
          paid to FCX pursuant to Section 6.08(a), and (ii) transfers of Block B
          Assets in
          permitted Project Financings.

         

        
          
            
            

          

          
            98

            
              

            

          

          
            
            

          

        

         

        SECTION
          6.10. Restrictive
          Agreements.
          Each
          Borrower will not, and will not permit any Restricted Subsidiary to, directly
          or
          indirectly, enter into, incur or permit to exist any agreement or other
          arrangement that prohibits, restricts or imposes any condition upon (a) the
          ability of the Borrowers or any Restricted Subsidiary to create, incur
          or permit
          to exist any Lien to secure the Obligations and the Secured Obligations
          (or any
          refinancing, restructuring or replacement thereof (other than with subordinated
          Indebtedness)) upon any of its property or assets, or (b) the ability of
          any Restricted Subsidiary to pay dividends or other distributions with
          respect
          to any shares of its capital stock or to make or repay loans or advances
          to the
          Borrowers or any other Restricted Subsidiary or to Guarantee Indebtedness
          of the
          Borrowers or any other Restricted Subsidiary; provided
          that
          (i) the foregoing shall not apply to restrictions and conditions (A)
          imposed by applicable laws, rules or regulations, (B) under the Loan Documents,
          (C) existing on the date hereof under the Parent Credit Agreement (or the
“Loan
          Documents” thereunder) or under the Senior Notes Documents (or to restrictions
          and conditions contained in the documentation for Indebtedness permitted
          to be
          incurred hereunder at the time incurred that are no more restrictive than
          such
          restrictions and conditions contained in the Senior Notes Documents) or
          (D)
          identified on Schedule 6.10 (but shall apply to any amendment or modification
          expanding the scope of, any such restriction or condition), (ii) the
          foregoing shall not apply to customary restrictions and conditions contained
          in
          agreements relating to the sale of any asset or a Restricted Subsidiary
          pending
          such sale; provided
          such
          restrictions and conditions apply only to the asset or Restricted Subsidiary
          that is to be sold and such sale is permitted hereunder, (iii)  the
          foregoing shall not apply to restrictions and conditions imposed (A) by
          any
          agreement relating to any Indebtedness permitted hereunder of any Restricted
          Subsidiary that is a Foreign Subsidiary (other than PTFI or any PCA Loan
          Party)
          to the extent applicable to the assets of such Foreign Subsidiary or any
          of its
          Foreign Subsidiaries, (B) by any joint venture, partnership or similar
          arrangement to which any Restricted Subsidiary is a party to the extent
          applicable to such joint venture, partnership or similar arrangement or
          direct
          or indirect interests therein, (C) by any Indebtedness permitted under
          Section
          6.01(a)(ii) and any refinancing thereof (but shall in the case of this
          clause
          (C) apply to any amendment or modification expanding the scope of any such
          restriction or condition) or (D) in connection with any Receivables Facility
          to
          the extent determined by the Borrower to be necessary or desirable in connection
          with the implementation thereof, (iv) clause (a) of the foregoing shall not
          apply to (A) restrictions or conditions imposed by any agreement relating
          to secured Indebtedness permitted by this Agreement if such restrictions
          or
          conditions apply only to the property or assets securing such Indebtedness,
          (B) restrictions or conditions imposed by any agreement relating to secured
          Indebtedness permitted by Section 6.01(a)(iv), (v), (xi) or (xii), or
          refinancings thereof, if such restrictions or conditions apply only to
          the fixed
          or capital assets the acquisition, construction or improvement of which
          was
          financed with such Indebtedness (or the Indebtedness refinanced with such
          Indebtedness), (C) customary provisions in leases restricting the
          assignment thereof, and (D) restrictions imposed by Sections 7.2.5 and 7.3
          of the Participation Agreement, and (v) clause (b) of the foregoing shall
          not
          apply to restrictions on Restricted Payments by Project Financing Subsidiaries
          (or any direct or indirect parent thereof that holds no significant assets
          other
          than direct or indirect ownership interests in such Project Financing Subsidiary
          or assets related to, or ownership interests in Subsidiaries that hold
          assets
          related to, the operations of such Project Financing Subsidiary) imposed
          by the
          applicable Project Financing Documents or customary restrictions in the
          financing documents therefor.

         

        SECTION
          6.11. Amendment
          of Material Documents.
          Each
          Borrower will not, and will not permit any Restricted Subsidiary to, amend,
          modify or waive any of its rights under, or terminate, suspend or enter
          into any
          agreement relating to, (i) its certificate of incorporation, by laws or
          other
          organizational documents, (ii) the Senior 

         

        
          
            
            

          

          
            99

            
              

            

          

          
            
            

          

        

         

        Notes
          Documents or (iii) the Contract of Work, in each case that could reasonably
          be
          expected to be adverse in any significant respect to the interests or rights
          of
          the Lenders or to have an adverse effect in any significant respect upon
          the FI
          Collateral and Rights.

         

        SECTION
          6.12. Fiscal
          Year.
          FCX will
          not change its fiscal year to end on any date other than
          December 31. 

         

        SECTION
          6.13. Designation
          of Unrestricted Subsidiaries. (a)
          FCX
          may
          designate a Restricted Subsidiary (other than PD or PTFI) as an Unrestricted
          Subsidiary (a “Designation”)
          only
          if:

         

        (i)
          such
          Subsidiary does not own any Equity Interests of any Restricted
          Subsidiary;

         

        (ii)
          no
          Event of Default shall have occurred and be continuing at the time of or
          after
          giving effect to such Designation;

         

        (iii)
          after giving effect to such Designation and any related Investment to be
          made in
          such designated Subsidiary by FCX or any Restricted Subsidiary (which shall
          in
          any event include an existing Investment in such Subsidiary deemed to be
          equal
          to the net book value of such Subsidiary at the time it is designated as
          an
          Unrestricted Subsidiary), (A) the Incurrence Test would be satisfied and
          (B) either (x) the Unrestricted Subsidiary Investment Amount shall not
          exceed 1% of Consolidated Total Assets, or (y) if the Unrestricted Subsidiary
          Investment Amount shall exceed 1% of Consolidated Total Assets, or to the
          extent
          resulting in the Unrestricted Subsidiary Investment Amount exceeding 1%
          of
          Consolidated Total Assets, such Designation and any related Investment
          shall
          constitute a Restricted Use and the Restricted Uses shall not exceed the
          Restricted Uses Basket; and

         

        (iv)
          FCX
          has delivered to the Administrative Agent (x) written notice of such
          Designation and (y) a certificate, dated the effective date of such
          Designation, of a Financial Officer of FCX stating that no Event of Default
          has
          occurred and is continuing, specifying whether such Designation is made
          in
          reliance on clause (x) or (y) of clause (B) of paragraph (iii) above and
          setting forth reasonably detailed calculations demonstrating compliance
          with the
          requirements of clauses (A) and (B) of paragraph (iii) above.

         

        Upon
          the
          designation of any Restricted Subsidiary as an Unrestricted Subsidiary
          pursuant
          to the terms hereof; provided
          after
          giving effect thereto no Default or Event of Default shall have occurred
          and be
          continuing, the Guarantee of such Subsidiary shall automatically be released
          without any consent of the Required Lenders; provided
          further,
          however,
          that no
          such Guarantee by a PCA Loan Party shall be released unless each Ratable
          Guarantee by such PCA Loan Party shall be released upon the release of
          such PCA
          Loan Party’s Guarantee of the Secured Obligations.

         

        (b)
          FCX
          may designate any Unrestricted Subsidiary as a Restricted Subsidiary under
          this
          Agreement (an “RS
          Designation”)
          only
          if:

         

        (i)
          no
          Event of Default shall have occurred and be continuing at the time of or
          after
          giving effect to such RS Designation and, after giving effect thereto,
          the
          Incurrence Test would be satisfied; and

         

        
          
            
            

          

          
            100

            
              

            

          

          
            
            

          

        

         

        (ii)
          all
          Liens on assets of such Unrestricted Subsidiary and all Indebtedness of
          such
          Unrestricted Subsidiary outstanding immediately following the RS Designation
          would, if initially incurred at such time, have been permitted to be incurred
          pursuant to Sections 6.01 and 6.02 without reliance on
          Section 6.01(a)(ii) or Section 6.02(c) or (g).

         

        Upon
          any
          such RS Designation with respect to an Unrestricted Subsidiary (i) FCX and
          the Restricted Subsidiaries shall be deemed to have received a return of
          their
          Investment in such Unrestricted Subsidiary equal to the lesser of (x) the
          amount
          of the net book value of such Subsidiary immediately prior to such RS
          Designation and (y) the fair market value (as reasonably determined by
          FCX) of
          the net assets of such Subsidiary at the time of such RS Designation and
          (ii) FCX and the Restricted Subsidiaries shall be deemed to have a
          permanent Investment in an Unrestricted Subsidiary equal to the excess,
          if
          positive, of the amount referred to in clause (i)(x) above over the amount
          referred to in clause (i)(y) above.

         

        (c)
          Neither FCX nor any Restricted Subsidiary shall at any time (x) provide a
          Guarantee of any Indebtedness of any Unrestricted Subsidiary, (y) be
          directly or indirectly liable for any Indebtedness of any Unrestricted
          Subsidiary or (z) be directly or indirectly liable for any other
          Indebtedness which provides that the holder thereof may (upon notice, lapse
          of
          time or both) declare a default thereon (or cause such Indebtedness or
          the
          payment thereof to be accelerated, payable or subject to repurchase prior
          to its
          final scheduled maturity) upon the occurrence of a default with respect
          to any
          other Indebtedness that is Indebtedness of an Unrestricted Subsidiary,
          except in
          the case of clause (x) or (y) to the extent permitted under
          Section  6.01 and Section 6.04 hereof. Except as provided in clause (b)
          above, each Designation shall be irrevocable, and no Unrestricted Subsidiary
          may
          become a Restricted Subsidiary, be merged with or into the Borrower or
          a
          Restricted Subsidiary or liquidate into or transfer substantially all its
          assets
          to the Borrower or a Restricted Subsidiary.

         

        SECTION
          6.14. Total
          Leverage Ratio.
          At any
          time when there is any outstanding Revolving Exposure (other than outstanding
          Letters of Credit that have been fully cash collateralized in accordance
          with
          Section 2.05(j)), FCX will not, without the approval of the Required Lenders,
          permit the Total Leverage Ratio on the last day of any fiscal quarter to
          exceed
          5.0 to 1.0.

         

        SECTION
          6.15. Total
          Secured Leverage Ratio.
          At any
          time when there is any outstanding Revolving Exposure (other than outstanding
          Letters of Credit that have been fully cash collateralized in accordance
          with
          Section 2.05(j)), FCX will not, without the approval of the Required Lenders,
          permit the Total Secured Leverage Ratio on the last day of any fiscal quarter
          to
          exceed 3.0 to 1.0.

         

        SECTION
          6.16. Covenants
          with Respect to PTII.
          FCX will
          not, except with the prior written consent of the Required Lenders, cause
          or
          permit PTII to:

         

        (a)
          create, incur, assume or permit to exist any Indebtedness or Attributable
          Debt;

         

        (b)
          issue
          any Equity Interests other than Equity Interests pledged to the Secured
          Parties
          as represented by the Collateral Agent to secure the Obligations and the
          Secured
          Obligations pursuant to a pledge agreement satisfactory to the Collateral
          Agent;

         

        
          
            
            

          

          
            101

            
              

            

          

          
            
            

          

        

         

        (c)
          create, incur, assume or permit to exist any Lien (other than nonconsensual
          Permitted Encumbrances) on any property or asset now owned or hereafter
          acquired
          by it, or assign or sell any income or revenues or rights in respect of
          any
          thereof, except Liens created under or specifically required by the Loan
          Documents securing some or all of the Obligations;

         

        (d)
          purchase, hold, make or acquire any Investment in any other Person, or
          purchase
          or otherwise acquire any assets of any other Person, except Investments
          existing
          on the Effective Date;

         

        (e)
          sell,
          transfer, lease or otherwise dispose of any PTFI Shares other than in a
          Qualifying PTFI Sale Transaction permitted hereby or a sale otherwise permitted
          under Section 6.05(c)(ii);

         

        (f)
          conduct any business or operations other than acting as a holding company
          for
          Investments owned by it on the Effective Date; or

         

        (g)
          liquidate, dissolve or merge or consolidate with or into any other Person
          (other
          than PTFI);

         

        provided,
          however,
          that
          this Section 6.16 shall cease to be applicable at such time, if any, as
          PTII merges with and into PTFI.

         

        SECTION
          6.17. Covenants
          Relating to the RTZ Transactions.
          Neither
          Borrower will, directly or indirectly enter into any amendment or modification
          of (i) the Participation Agreement (including the Financial and Accounting
          Procedures thereunder) in each case from and after the Effective Date or
          (ii) any other material agreement in connection therewith, at any time, in
          each case other than pursuant to documents approved by the Required Lenders
          which would (or could reasonably be expected to) have an adverse effect
          upon the
          FI Collateral and Rights or impair the ability of either Borrower or any
          Restricted Subsidiary to perform all of their respective obligations under
          the
          Loan Documents (including under this Section 6.17). Without the prior
          written approval of the Required Lenders, PTFI shall not (a) consent to (I)
          any “Closedown” (as such term is defined in the Participation Agreement) or any
          amendment or modification of such term, (II) any amendment, modification
          or
          waiver of Section 7.5.1.1, 7.5.1.3 or 10.5 or Annex A of the Participation
          Agreement, or (III) any amendment, modification or waiver of any RTZ Document
          that could, directly or indirectly, result in a significant reduction of
          Block A
          Base Production in any annual period (other than any adjustments to Block
          A Base
          Production effected in accordance with Section 16.4.2 of the Participation
          Agreement as in effect on the date hereof as a result of the occurrence
          of any
          of the causes referred to in Section 16.4.1 of the Participation Agreement
          as in
          effect on the date hereof or similar force majeure events), (b) consent to
          any assignment by RTZ or PT-Rio Tinto Indonesia of the RTZ Documents or
          their
          respective obligations thereunder, (c) waive any material default by RTZ
          under the RTZ Documents, (d) agree to any reduction in annual production
          from
          Contract Block A (as defined in the Contract of Work), other than annual
          production from Greenfield Projects and Sole Risk Ventures (as such terms
          are
          defined in the Participation Agreement), which might foreseeably result
          in PTFI
          receiving cashflow after payment of all Operating Costs attributable to
          it which
          would not be sufficient to pay in full all its obligations, including under
          the
          Privatization Agreements (as such term is defined in the Participation
          Agreement) and the Loan Documents, as and when they are likely to come
          due, (e)
          amend or agree to any amendment of any agreement to which the Administrative
          Agent has not also agreed if, as a result of such amendment, a term defined
          in
          the FI Intercreditor Agreement or the Side Letter by reference to a term
          defined
          in such amended agreement would be changed 

         

        
          
            
            

          

          
            102

            
              

            

          

          
            
            

          

        

         

        or
          (f)
          resign as the Operator under the Participation Agreement. Subject to the
          penultimate sentence of this Section 6.17, PTFI and its Restricted
          Subsidiaries shall not cause or permit any assets of it or its Restricted
          Subsidiaries to be or become Joint Account Assets under the Participation
          Agreement for other than full fair market compensation, nor shall either
          Borrower grant or provide (or permit any Restricted Subsidiary to grant
          or
          provide) any additional security or collateral to secure any obligation
          to RTZ
          or its Affiliates other than the transfer of the RTZ Interests as required
          by the Participation Agreement, in each case subject to the terms of the
          FI Intercreditor Agreement and the FI Trust Agreement. PTFI and its
          Restricted Subsidiaries shall not engage in any transaction (other than
          the RTZ
          Transactions) or dealing with, or assign or transfer any assets to, PT-Rio
          Tinto
          Indonesia or any of its Affiliates other than on an arm’s-length basis. PTFI
          shall promptly provide to the Administrative Agent copies of (i) all amendments,
          modifications, waivers and supplements to the RTZ Documents, (ii) all annual
          financial reports and budgets pursuant to the Participation Agreement and
          (iii)
          all other material notices and reports under the RTZ Documents. PTFI shall
          also conduct Joint Operations (as defined in the Participation Agreement)
          in a
          manner which does not prevent or adversely affect, and at all times shall
          retain
          rights under the Contract of Work and tangible assets sufficient for, Block
          A
          Base Production pledged to the Lenders.

         

         

        ARTICLE
          VII

         

        Events
          of Default

         

        If
          any of
          the following events (“Events
          of Default”)
          shall
          occur:

         

        (a)
          either
          Borrower shall fail to pay any principal of any Loan or any reimbursement
          obligation in respect of any LC Disbursement when and as the same shall
          become
          due and payable, whether at the due date thereof or at a date fixed for
          prepayment thereof or otherwise;

         

        (b)
          either
          Borrower shall fail to pay any interest on any Loan or any fee or any other
          amount (other than an amount referred to in clause (a) of this Article)
          payable under this Agreement or any other Loan Document, when and as the
          same
          shall become due and payable, and such failure shall continue unremedied
          for a
          period of three Business Days;

         

        (c)
          any
          representation or warranty made or deemed made by or on behalf of either
          Borrower or any Restricted Subsidiary in or in connection with any Loan
          Document
          or any amendment or modification thereof or waiver thereunder, or in any
          report,
          certificate, financial statement or other document furnished pursuant to
          or in
          connection with any Loan Document or any amendment or modification thereof
          or
          waiver thereunder, shall prove to have been incorrect in any material respect
          when made or deemed made;

         

        (d)
          either
          Borrower shall fail to observe or perform any covenant, condition or agreement
          contained in Section 5.02(a) or 5.04 (with respect to the existence of
          either Borrower) or in Article VI or Section 9.15;

         

        (e)
          any
          Loan Party shall fail to observe or perform any covenant, condition or
          agreement
          contained in any Loan Document (other than those specified in clause (a),
          (b) or (d) of this Article), and such failure shall continue
          unremedied 

         

        
          
            
            

          

          
            103

            
              

            

          

          
            
            

          

        

         

        for
          a
          period of 30 days after notice thereof from the Administrative Agent to FCX
          (which notice will be given at the request of any Lender);

         

        (f)
          (i) an
“Event of Default” shall exist under the Parent Credit Agreement; (ii) default
          shall be made with respect to any Material Indebtedness if the effect of
          any
          such default shall be to accelerate, or to permit the holder or obligee
          of any
          such Material Indebtedness (or any trustee on behalf of such holder or
          obligee)
          to accelerate, the stated maturity of such Material Indebtedness or, in
          the case
          of Hedging Agreements, require the payment of any net termination value
          in
          respect thereof or, in the case of Project Financings, permit foreclosure
          upon,
          or require FCX, PTFI or any Restricted Subsidiary to repurchase the related
          Project Financing Assets; or (iii) any amount of principal or interest
          of any
          Material Indebtedness or any payment under a Hedging Agreement constituting
          Material Indebtedness, in each case regardless of amount, shall not be
          paid when
          due, whether at maturity, by acceleration or otherwise (after giving effect
          to
          any period of grace specified in the instrument evidencing or governing
          such
          Material Indebtedness);

         

        (g)
          an
          involuntary proceeding shall be commenced or an involuntary petition shall
          be
          filed seeking (i) liquidation, reorganization or other relief in respect
          of
          either Borrower, any Subsidiary Guarantor or any other Restricted Subsidiary
          that is a Significant Subsidiary (each, a “Material
          Company”)
          or its
          debts, or of a substantial part of its assets, under any Federal, state
          or
          foreign bankruptcy, insolvency, receivership or similar law now or hereafter
          in
          effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
          conservator or similar official for any Material Company or for a substantial
          part of its assets, and, in any such case, such proceeding or petition
          shall
          continue undismissed for 60 days or an order or decree approving or ordering
          any
          of the foregoing shall be entered;

         

        (h)
          any
          Material Company shall (i) voluntarily commence any proceeding or file
          any
          petition seeking liquidation, reorganization or other relief under any
          Federal,
          state or foreign bankruptcy, insolvency, receivership or similar law now
          or
          hereafter in effect, (ii) consent to the institution of, or fail to contest
          in a
          timely and appropriate manner, any proceeding or petition described in
          clause
          (g) of this Article, (iii) apply for or consent to the appointment of a
          receiver, trustee, custodian, sequestrator, conservator or similar official
          for
          any Material Company or for a substantial part of its assets, (iv) file
          an
          answer admitting the material allegations of a petition filed against it
          in any
          such proceeding, or (v) make a general assignment for the benefit of
          creditors;

         

        (i)
          any
          Material Company shall become unable, admit in writing its inability or
          fail
          generally to pay its debts as they become due;

         

        (j)
          one or
          more judgments for the payment of money in an aggregate amount in excess
          of
          $100,000,000 shall be rendered against either Borrower, any Restricted
          Subsidiary or any combination thereof and the same shall remain undischarged
          for
          a period of 45 consecutive days during which execution shall not be
          effectively stayed, or any action shall be legally taken by a judgment
          creditor
          to attach or levy upon any assets of either Borrower or any Restricted
          Subsidiary to enforce any such judgment;

         

        
          
            
            

          

          
            104

            
              

            

          

          
            
            

          

        

         

        (k)
          an
          ERISA Event shall have occurred that, when taken together with all other
          ERISA
          Events that have occurred, would reasonably be expected to result in a
          Material
          Adverse Effect;

         

        (l)
          any
          Lien purported to be created under any Security Document or FI Security
          Document
          shall cease to be, or shall be asserted by any Loan Party not to be, a
          valid
          and, to the extent contemplated by the applicable Security Document, perfected
          Lien on any material amount of Collateral or on any material amount of
          “Collateral” under any FI Security Document, with the priority required by the
          applicable Security Document or FI Security Document, as the case may be,
          except
          (i) as a result of the sale or other disposition of the applicable asset
          in a
          transaction permitted under the Loan Documents or (ii) as a result of the
          failure of the Collateral Agent or Security Agent to maintain possession
          of any
          stock certificates, promissory notes or other instruments delivered to
          it under
          any Security Document;

         

        (m)
          any
          Guarantee under any Loan Document shall cease to be, or shall be asserted
          by any
          Loan Party in writing not to be, a valid and enforceable Guarantee;

         

        (n)
          any
          Governmental Authority shall condemn, seize, nationalize, assume the management
          of, or appropriate any material portion of the property, assets or revenues
          of
          the Borrower or any Restricted Subsidiary (either with or without payment
          of
          compensation); 

         

        (o)
          neither the Full Stock Pledge Condition nor the Additional Collateral
          Requirement shall be satisfied on September 15, 2007; 

         

        (p)
          the
          security interest in the Contract of Work granted in the FI Trust Agreement
          or
          under any FI Security Document shall be deemed to be invalid or fail to
          be in
          full force and effect or the Contract of Work shall be terminated or otherwise
          fail to be in full force and effect or shall be amended without the consent
          of
          the Required Lenders in any manner which materially and adversely affects
          the
          rights and benefits granted to the FI Trustee and the Lenders under the
          FI
          Security Documents; or the Ministry of Mines and Energy of Indonesia (or
          any
          successor entity) or the Government of Indonesia shall have taken any action
          in
          contravention of the Contract of Work which materially adversely affects
          PTFI’s
          ability to perform its obligations under this Agreement or the rights and
          benefits granted to the FI Trustee under any FI Security Document; 

         

        (q)
          PTFI
          shall resign as “Operator” under the Participation Agreement or an “Event of
          Resignation” under the Participation Agreement (or any event or condition which
          with or without the passage of time or the giving of notice would constitute
          such an “Event of Resignation” (other than any event or condition that is an
          Event of Default hereunder)) shall occur and be continuing; or

         

        (r)
          a
          Change in Control shall occur;

         

        then,
          and
          in every such event (other than an event with respect to either Borrower
          described in clause (g) or (h) of this Article), and at any time
          thereafter during the continuance of such event, the Administrative Agent
          may,
          and at the request of the Required Lenders shall, by notice to the Borrowers,
          take any or all of the following actions, at the same or different
          times:  (i) terminate the Commitments, and thereupon the
          Commitments shall terminate immediately, (ii) declare the Loans then
          outstanding to be 

         

        
          
            
            

          

          
            105

            
              

            

          

          
            
            

          

        

         

        due
          and
          payable in whole (or in part, in which case any principal not so declared
          to be
          due and payable may thereafter be declared to be due and payable), and
          thereupon
          the principal of the Loans so declared to be due and payable, together
          with
          accrued interest thereon and all fees and other obligations of the Borrowers
          accrued hereunder, shall become due and payable immediately, without
          presentment, demand, protest or other notice of any kind, all of which
          are
          hereby waived by each Borrower and (iii) exercise any or all the remedies
          then available under the Security Documents; and in case of any event with
          respect to either Borrower described in clause (g) or (h) of this
          Article, the Commitments shall automatically terminate and the principal
          of the
          Loans then outstanding, together with accrued interest thereon and all
          fees and
          other obligations of the Borrowers accrued hereunder, shall automatically
          become
          due and payable, without presentment, demand, protest or other notice of
          any
          kind, all of which are hereby waived by each Borrower.

         

         

        ARTICLE
          VIII

         

        The
          Agents and the FI Trustee

         

        Each
          of
          the Lenders, the Agents and the Issuing Banks hereby irrevocably appoints
          (a)
          JPMCB as Administrative Agent under this Agreement and the other Loan Documents
          (including in its capacity as Operator Selection Representative under the
          Operator Replacement Agreement), (b) JPMCB as Collateral Agent for the
          Lenders,
          the Agents and the Issuing Banks under this Agreement and the other Loan
          Documents, (c) JPMCB as Security Agent for the Lenders, the Agents and
          the
          Issuing Banks under this Agreement and the other Loan Documents, (d) JPMCB
          as
          JAA Security Agent for the Lenders, the Agents and the Issuing Banks under
          this
          Agreement and the other Loan Documents, (e) Merrill as the Syndication
          Agent for
          the Lenders, the Agents and the Issuing Banks under this Agreement and
          the other
          Loan Documents, and (f) U.S. Bank National Association to act as FI Trustee
          for
          the Lenders under the FI Trust Agreement and the Operator Replacement Agreement
          and as FI Security Agent for the Lenders under the Surat Kuasa and the
          Fiduciary
          Assignment of Accounts. Each Lender, each Agent and each Issuing Bank (x)
          confirms and agrees to be bound by the terms of the FI Trust Agreement,
          the FI
          Intercreditor Agreement, the Side Letter and the other Loan Documents and
          (y)
          agrees that the FI Trustee in accepting its appointment and in acting under
          the
          FI Trust Agreement, the Operator Replacement Agreement, the Surat Kuasa
          and the
          Fiduciary Assignment of Accounts shall be entitled to all the rights,
          immunities, privileges, protections, exculpations, indemnifications, liens
          and
          other benefits applicable to its acting as trustee under the FI Trust Agreement.
          Each Lender, each Agent and each Issuing Bank authorizes the Agents to
          take such
          actions on its behalf and to exercise such powers as are delegated to the
          applicable Agent by the terms of the applicable Loan Documents, together
          with
          such actions and powers as are reasonably incidental thereto. Neither the
          Syndication Agent nor any Documentation Agent, in its capacity as such,
          shall
          have any responsibilities or authority under this Agreement or the other
          Loan
          Documents.

         

        Each
          of
          the Lenders serving as the Administrative Agent, the Collateral Agent,
          the
          Security Agent, the JAA Security Agent, the Syndication Agent and the FI
          Trustee
          shall have the same rights and powers in its capacity as a Lender as any
          other
          Lender and may exercise the same as though it were not the applicable Agent
          or
          FI Trustee, and each of such Lenders and its Affiliates may accept deposits
          from, lend money to and generally engage in any kind of business with the
          Borrowers or any Subsidiary or other Affiliate thereof as if it were not
          an
          Agent or the FI Trustee.

         

        
          
            
            

          

          
            106

            
              

            

          

          
            
            

          

        

         

        No
          Agent
          shall have any duties or obligations except those expressly set forth in
          the
          applicable Loan Documents. Without limiting the generality of the foregoing,
          (a)
          no Agent shall be subject to any fiduciary or other implied duties, regardless
          of whether a Default has occurred and is continuing, (b) no Agent shall
          have any
          duty to take any discretionary action or exercise any discretionary powers,
          except discretionary rights and powers expressly contemplated by the Loan
          Documents that the Administrative Agent is required to exercise in writing
          as
          directed by the Required Lenders (or such other number or percentage of
          the
          Lenders or Secured Parties as shall be necessary under the circumstances
          as
          provided in Section 9.02 or the applicable Loan Document), and (c) except
          as
          expressly set forth in the Loan Documents, no Agent shall have any duty
          to
          disclose, or shall be liable for the failure to disclose, any information
          relating to either Borrower or any of its Subsidiaries that is communicated
          to
          or obtained by the bank serving as such Agent or any of its Affiliates
          in any
          capacity under the Loan Documents, the Parent Credit Agreement or the Loan
          Documents thereunder. No Agent shall not be liable for any action taken
          or not
          taken by it with the consent or at the request of the Required Lenders
          (or such
          other number or percentage of the Lenders as shall be necessary under the
          circumstances as provided in Section 9.02) or in the absence of its own
          gross
          negligence or wilful misconduct. No Agent shall be deemed to have knowledge
          of
          any Default unless and until written notice thereof is given to the
          Administrative Agent by either Borrower or a Lender, and no Agent shall
          not be
          responsible for or have any duty to ascertain or inquire into (i) any statement,
          warranty or representation made in or in connection with any Loan Document,
          (ii)
          the contents of any certificate, report or other document delivered thereunder
          or in connection therewith, (iii) the performance or observance of any
          of the
          covenants, agreements or other terms or conditions set forth in any Loan
          Document, (iv) the validity, enforceability, effectiveness or genuineness
          of any
          Loan Document or any other agreement, instrument or document, or (v) the
          satisfaction of any condition set forth in Article IV or elsewhere in any
          Loan
          Document, other than to confirm receipt of items expressly required to
          be
          delivered to such Agent.

         

        Without
          limiting the generality of the foregoing, the Administrative Agent, the
          Collateral Agent, the Security Agent, the FI Security Agent and the JAA
          Security
          Agent are hereby expressly authorized to execute any and all documents
          (including releases) with respect to the collateral under the Security
          Documents
          and to carry out the rights of the secured parties with respect thereto,
          as
          contemplated by and in accordance with the provisions of this Agreement
          and the
          Security Documents, including, specifically with respect to the Pledged
          PTFI
          Shares and the Pledged PTII Shares, upon the occurrence of an Event of
          Default,
          to exercise the rights of the Pledgors under the FCX Pledge Agreements
          as owners
          of such shares in accordance with the terms of the FCX Pledge Agreements
          and
          otherwise applicable law. In addition, each Lender, each Agent and each
          Issuing
          Bank hereby irrevocably authorizes and directs the Administrative Agent,
          the
          Collateral Agent, the Security Agent, the FI Security Agent and the JAA
          Security
          Agent to enter, on behalf of each of them, into the Security Documents
          and
          agrees to be bound by the terms of the Security Documents. Each Lender,
          each
          Agent and each Issuing Bank hereby irrevocably authorizes and directs the
          Administrative Agent, the Collateral Agent, the Security Agent, the FI
          Security
          Agent and the JAA Security Agent, as applicable, to enter into amendments
          from
          time to time to the Security Documents or take any other action for the
          purpose
          of naming as Secured Parties thereunder (i) Lenders that become parties
          to this
          Agreement after the Effective Date and/or (ii) Lender Affiliates that become
          counterparties to Hedging Agreements, the obligations under which are secured
          by
          the Security Documents.

         

        Each
          Agent
          shall be entitled to rely upon, and shall not incur any liability for relying
          upon, any notice, request, certificate, consent, statement, instrument,
          

         

        
          
            
            

          

          
            107

            
              

            

          

          
            
            

          

        

         

        document
          or other writing believed by it to be genuine and to have been signed or
          sent by
          the proper Person. Each Agent also may rely upon any statement made to
          it orally
          or by telephone and believed by it to be made by the proper Person, and
          shall
          not incur any liability for relying thereon. Each Agent may consult with
          legal
          counsel (who may be counsel for the Borrowers), independent accountants
          and
          other experts selected by it, and shall not be liable for any action taken
          or
          not taken by it in accordance with the advice of any such counsel, accountants
          or experts.

         

        Each
          Agent
          may perform any and all its duties and exercise its rights and powers by
          or
          through any one or more sub-agents appointed by the applicable Agent. Each
          Agent
          and any such sub-agent may perform any and all its duties and exercise
          its
          rights and powers through their respective Related Parties. The exculpatory
          provisions of the preceding paragraphs shall apply to any such sub-agent
          and to
          the Related Parties of each Agent and any such sub-agent, and shall apply
          to
          their respective activities in connection with the syndication of the credit
          facilities provided for herein as well as activities as Agent.

         

        No
          Agent
          shall commence any litigation in the name of, or on behalf of, any Lender
          without the prior consent of such Lender; provided, however, that
          notwithstanding the foregoing, in the event that any Agent commences any
          litigation at the direction of the Required Lenders, any Lender that shall
          not
          have consented thereto shall remain liable for its pro rata share of the
          costs
          and expenses of such Agent pursuant to the provisions of this
          Agreement.

         

        The
          Syndication Agent and, subject to the appointment and acceptance of a successor
          as provided in this paragraph, any other Agent may resign at any time by
          notifying the Lenders and the Borrowers. Upon any such resignation by the
          Administrative Agent or the Collateral Agent, the Required Lenders shall
          have
          the right, in consultation with the Borrowers, to appoint a successor
          Administrative Agent or Collateral Agent (subject to the approval of the
          Required Lenders under the Parent Credit Agreement), Security Agent or
          JAA
          Security Agent, as the case may be. If no successor shall have been so
          appointed
          by the Required Lenders and shall have accepted such appointment within
          30 days
          after the retiring Agent gives notice of its resignation, then the retiring
          Agent may, on behalf of the Lenders, appoint a successor Administrative
          Agent,
          Collateral Agent, Security Agent or JAA Security Agent, as the case may
          be,
          which shall be a bank with an office in New York, New York, or an Affiliate
          of
          any such bank. Upon the acceptance of its appointment as Administrative
          Agent,
          the Collateral Agent, the Security Agent or the JAA Security Agent, as
          the case
          may be, hereunder by a successor, such successor Administrative Agent,
          Collateral Agent, Security Agent or JAA Security Agent, as applicable,
          shall
          succeed to and become vested with all the rights, powers, privileges and
          duties
          of the retiring Agent, and the retiring Agent shall be discharged from
          its
          duties and obligations hereunder. The fees payable by the Borrowers to
          a
          successor Agent shall be the same as those payable to its predecessor unless
          otherwise agreed between the Borrowers and such successor. After any Agent’s
          resignation hereunder, the provisions of this Article and Section 9.03
          shall
          continue in effect for the benefit of such retiring Agent, its sub-agents
          and
          their respective Related Parties in respect of any actions taken or omitted
          to
          be taken by any of them while it was acting as an Agent.

         

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

         

        
          
            
            

          

          
            108

            
              

            

          

          
            
            

          

        

         

        information
          as it shall from time to time deem appropriate, continue to make its own
          decisions in taking or not taking action under or based upon this Agreement,
          any
          other Loan Document or related agreement or any document furnished hereunder
          or
          thereunder.

         

        The
          obligations of the Administrative Agent, Collateral Agent, Security Agent,
          JAA
          Security Agent, the FI Trustee, the FI Security Agent and the Syndication
          Agent
          shall be separate and several and none of them shall be responsible or
          liable
          for the acts or omissions of any other, except, to the extent that any
          such
          Agent serves in more than one agency capacity, such Agent shall be responsible
          for the acts and omissions relating to each such agency function.

         

        Without
          the prior written consent of the Required Lenders but subject to Section
          9.02(b), the Administrative Agent, the Collateral Agent, Security Agent
          and the
          JAA Security Agent will not, except as contemplated by this paragraph,
          consent
          to any modification, supplement or waiver of any Security Document and
          the FI
          Trustee will not consent to any modification, supplement or waiver of the
          FI
          Trust Agreement, the Operator Replacement Agreement, the Surat Kuasa or
          the
          Fiduciary Assignment of Accounts. Notwithstanding the foregoing, the Collateral
          Agent is authorized and directed to enter into such amendments as it may
          deem
          appropriate to the Third Amended and Restated FCX Pledge Agreement (PTFI
          Shares)
          in connection with the satisfaction of the Full Stock Pledge Condition
          or the
          Partial Stock Pledge Condition. Notwithstanding any other provision of
          this
          Article VIII, the Administrative Agent, the Collateral Agent, the Security
          Agent, the JAA Security Agent, the FI Security Agent and the FI Trustee
          will, at
          the request of FCX or PTFI, release (or subordinate such interest) from
          the
          Security Documents (and enter into an amendment to any applicable Security
          Document and execute such other instruments as may be necessary in connection
          therewith), any interest of the Administrative Agent, the Collateral Agent,
          the
          Security Agent, the JAA Security Agent, the FI Security Agent or the FI
          Trustee,
          as applicable, upon receipt by the Administrative Agent of a certificate
          from a
          Financial Officer of FCX specifying the asset to be released and the related
          transaction and certifying that after giving effect thereto, no Event of
          Default
          shall occur or be continuing, specific assets (which may either be released
          from
          the Lien of the Security Documents or excluded from the after-acquired
          property
          clauses of the Security Documents) as required to be released to allow
          sales,
          transfers or other dispositions, secured financings, capital leases and
          sale
          leaseback transactions and pledges of assets expressly permitted hereby.
          In
          addition, upon consummation of a Project Financing by a Project Financing
          Subsidiary, to the extent releases are requested in a certificate from
          a
          Financial Officer of FCX, which certificate shall certify that after giving
          effect to such releases no Event of Default shall occur or be continuing
          and
          that such releases are in conformity with clause (D) of the Collateral
          and
          Guarantee Requirement, such Project Financing Subsidiary and, if applicable,
          its
          parent shall automatically be released from its Guarantee and the pledge
          of the
          Equity Interests in such Project Financing Subsidiary shall be released.
          It is
          understood and agreed that releases in connection with this paragraph shall
          not
          require any further consent of the Required Lenders.

         

        The
          Administrative Agent is hereby authorized to, and to instruct the FI Trustee
          and
          the JAA Security Agent to, enter into or consent to an amendment to the
          Participation Agreement or other RTZ Documents permitting PTFI to incur
          Indebtedness of the type permitted by Section 6.01(a)(iv) or Section 6.01(a)(v)
          hereof without the necessity of the holders of such Indebtedness becoming
          party
          to the Side Letter. Such amendment or consent will not require any further
          consent of the Required Lenders.

         

        
          
            
            

          

          
            109

            
              

            

          

          
            
            

          

        

         

        By
          acceptance of the benefits of the Security Documents, the holders of the
          Secured
          Obligations (as defined in the Atlantic Copper Pledge Agreement referred
          to
          below) hereby expressly and irrevocably appoint JPMCB as Collateral Agent
          under
          the Atlantic Copper Pledge Agreement and such holders hereby expressly
          and
          irrevocably authorize the Collateral Agent to accept and cancel, in their
          name
          and on their behalf, a pledge (including its novations) over the shares
          representing 65% of the share capital of Atlantic Copper S.A. (“Atlantic
          Copper”),
          a
          company (sociedad
          anónima)
          incorporated and existing under the laws of the Kingdom of Spain, having
          its
          registered office at Avenida Francisco Montenegro s/n, 21007, Huelva, Spain,
          and
          Tax Identification Number (C.I.F.) A-79110482, as security for the Secured
          Obligations (as so defined) (the “Pledge
          of Atlantic Copper Shares”),
          and,
          in particular, but not exclusively, (i) to execute one or more pledge agreements
          (collectively, the “Atlantic
          Copper Pledge Agreement”),
          as
          well as any subsequent novations thereof, inter alia, over the shares of
          Atlantic Copper owned by Freeport-McMoRan Spain Inc. representing, from
          time to
          time, 65% of the share capital of Atlantic Copper on the terms and conditions
          that the Collateral Agent may deem appropriate; (ii) to appear before a
          Notary
          Public and execute, on the terms the Collateral Agent deems appropriate,
          the
          granting of any ratification, amendment, confirmation, supplement, novation
          or
          cancellation of the document or documents by virtue of which the Pledge
          of
          Atlantic Copper Shares is created; (iii) to carry out whatever actions
          and legal
          proceedings the Collateral Agent may deem appropriate for the enforcement
          of the
          Pledge of Atlantic Copper Shares in accordance with the terms of the applicable
          Loan Documents; (iv) to carry out, as well, all related or complementary
          acts
          needed in order to fully execute the mandate received, and in particular,
          grant
          amendment documents and to do all other things, to enter into all other
          agreements and to make all other statements necessary or useful in connection
          with the above mentioned performances; and (v) to make any payment of any
          reasonable expenses and fees, including legal and notarial fees.

         

         

        ARTICLE
          IX

         

        Miscellaneous

         

        SECTION
          9.01. Notices. (a)
          Except
          in
          the case of notices and other communications expressly permitted to be
          given by
          telephone (and subject to paragraph (b) below), all notices and other
          communications provided for herein shall be in writing and shall be delivered
          by
          hand or overnight courier service, mailed by certified or registered mail
          or
          sent by telecopy, as follows:

         

        (i)
          if to
          either Borrower, to it at Freeport-McMoRan Copper & Gold Inc., One N.
          Central Avenue, Phoenix, AZ 85004, Attention of Treasurer (Telecopy No.
          (602)
          366-7322);

         

        (ii)
          if to
          the Administrative Agent or the Collateral Agent, to JPMorgan Chase Bank,
          N.A.,
          Loan and Agency Services Group, 1111 Fannin Street, 10th Floor, Houston,
          Texas
          77002, Attention of Ms. Sylvia Trevino (Telecopy No. (713) 750-2932), with
          a
          copy to JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, New York
          10017,
          Attention of James Ramage (Telecopy No. (212) 270-5100);

         

        (iii)
          if
          to the Swingline Lender, to JPMorgan Chase Bank, N.A., Loan and Agency
          Services
          Group, 1111 Fannin Street, 10th Floor, Houston, Texas 77002, 

         

        
          
            
            

          

          
            110

            
              

            

          

          
            
            

          

        

         

        Attention
          of Ms. Sylvia Trevino (Telecopy No. (713) 750-2932), with a copy to the
          Administrative Agent as provided under clause (ii) above;

         

        (iv)
          if to
          any Issuing Bank, to it at the address most recently specified by it in
          a notice
          delivered to the Administrative Agent and the Borrower, with a copy to
          the
          Administrative Agent as provided under clause (ii) above; and

         

        (v)
          if to
          any other Lender, to it at its address (or telecopy number) set forth in
          its
          Administrative Questionnaire.

         

        (b)
          Notices and other communications to the Lenders hereunder may be delivered
          pursuant to procedures approved by the Administrative Agent; provided
          that the
          foregoing shall not apply to notices pursuant to Article II unless
          otherwise agreed by the Administrative Agent and the applicable Lender.
          The
          Administrative Agent or a Borrower may, in its discretion, agree to accept
          notices and other communications to it hereunder by electronic communication
          pursuant to procedures approved by it; provided
          that
          approval of such procedures may be limited to particular notices or
          communications.

         

        (c)
          Any
          party hereto may change its address or telecopy number for notices and
          other
          communications hereunder by notice to the other parties hereto. All notices
          and
          other communications given to any party hereto in accordance with the provisions
          of this Agreement shall be deemed to have been given on the date of receipt.
          Any
          notice delivered to FCX shall be deemed also to have been given to PTFI,
          and
          such notice shall be deemed to have been given to PTFI on the day it is
          deemed
          to have been given to FCX.

         

        SECTION
          9.02. Waivers;
          Amendments. (a)
          No
          failure
          or delay by any Agent, the FI Trustee, any Lender or any Issuing Bank in
          exercising any right or power hereunder or under any other Loan Document
          shall
          operate as a waiver thereof, nor shall any single or partial exercise of
          any
          such right or power, or any abandonment or discontinuance of steps to enforce
          such a right or power, preclude any other or further exercise thereof or
          the
          exercise of any other right or power. The rights and remedies of the Agents,
          the
          FI Trustee, the Lenders and the Issuing Banks hereunder and under the other
          Loan
          Documents are cumulative and are not exclusive of any rights or remedies
          that
          they would otherwise have. No waiver of any provision of any Loan Document
          or
          consent to any departure by any Loan Party therefrom shall in any event
          be
          effective unless the same shall be permitted by paragraph (b) of this
          Section, and then such waiver or consent shall be effective only in the
          specific
          instance and for the purpose for which given. Without limiting the generality
          of
          the foregoing, the making of a Loan or the issuance, amendment, extension
          or
          renewal of a Letter of Credit shall not be construed as a waiver of any
          Default,
          regardless of whether any Agent, the FI Trustee, any Lender or any Issuing
          Bank
          may have had notice or knowledge of such Default at the time.

         

        (b)
          Neither this Agreement nor any other Loan Document nor any provision hereof
          or
          thereof may be waived, amended or modified except, in the case of this
          Agreement, pursuant to an agreement or agreements in writing entered into
          by
          each Borrower and the Required Lenders or, in the case of any other Loan
          Document, pursuant to an agreement or agreements in writing entered into
          by the
          Administrative Agent and the Loan Party or Loan Parties that are parties
          thereto, in each case with the consent of the Required Lenders; provided
          that no
          such agreement shall (i) increase the Commitment of any Lender without the
          written consent of such Lender, (ii) reduce or forgive the principal amount
          of any Loan or LC Disbursement or reduce the rate of interest thereon,
          or reduce
          any fees payable hereunder, without the written consent of each Lender
          affected
          thereby (provided that only the consent of the Required Lenders 

         

        
          
            
            

          

          
            111

            
              

            

          

          
            
            

          

        

         

        shall
          be
          necessary to amend the dates set forth in the definition of “Collateral
          Shortfall Period”), (iii) postpone the maturity of any Loan, or the
          required date of reimbursement of any LC Disbursement under Section 2.05,
          or any date for the payment of any interest or fees payable hereunder,
          or reduce
          the amount of, waive or excuse any such payment, or postpone the scheduled
          date
          of expiration of any Commitment, without the written consent of each Lender
          affected thereby, (iv) change Section 2.17(b) or (c) in a manner
          that would alter the pro rata sharing of payments required thereby, without
          the written consent of each Lender, (v) change any of the provisions of
          this
          Section or the percentage set forth in the definition of “Required Lenders” or
          any other provision of any Loan Document specifying the number or percentage
          of
          Lenders (or Lenders of any Class) required to waive, amend or modify any
          rights
          thereunder or make any determination or grant any consent thereunder, without
          the written consent of each Lender (or each Lender of such Class, as the
          case
          may be) (it being understood that, with the consent of the Required Lenders,
          additional extensions of credit or revolving commitments pursuant to this
          Agreement may be included in the determination of the Required Lenders
          on
          substantially the same basis as the Revolving Commitments on the date hereof),
          (vi) release all or substantially all the Guarantors from their Guarantee
          under the Loan Documents or limit the liability of all or substantially
          all the
          Guarantors in respect of such Guarantees, without the written consent of
          each
          Lender, (vii) release all or substantially all the Collateral from the
          Liens of
          the Security Documents, without the written consent of each Lender, or
          (viii)
          change any provisions of any Loan Document in a manner that by its terms
          adversely affects the rights in respect of Collateral or payments due to
          Lenders
          holding Loans of any Class differently than those holding Loans of any
          other
          Class, without the written consent of Lenders holding a majority in interest
          of
          the outstanding Loans and unused Commitments of each affected Class;
provided
          further
          that (A)
          no such agreement shall amend, modify or otherwise affect the rights or
          duties
          of any Agent, the FI Trustee, any Issuing Bank or the Swingline Lender
          without
          the prior written consent of such Agent, the FI Trustee, such Issuing Bank
          or
          the Swingline Lender, as the case may be; (B) any waiver, amendment or
          modification of this Agreement that by its terms affects the rights or
          duties
          under this Agreement of Lenders holding Loans or Commitments of a particular
          Class (but not the Lenders holding Loans or Commitments of any other Class)
          may
          be effected by an agreement or agreements in writing entered into by the
          Borrower and the requisite percentage in interest of the affected Class
          of
          Lenders that would be required to consent thereto under this Section if
          such
          Class of Lenders were the only Class of Lenders hereunder at the time;
          and (C)
          if the terms of any waiver, amendment or modification of any Loan Document
          provide that any Class of Loans (together with all accrued interest thereon
          and
          all accrued fees payable with respect to the Commitments of such Class)
          will be
          repaid or paid in full, and the Commitments of such Class (if any) terminated,
          as a condition to the effectiveness of such waiver, amendment or modification,
          then so long as the Loans of such Class (together with such accrued interest
          and
          fees) are in fact repaid or paid and such Commitments are in fact terminated,
          in
          each case prior to or substantially simultaneously with the effectiveness
          of
          such amendment, then such Loans and Commitments shall not be included in
          the
          determination of the Required Lenders with respect to such amendment.
          Notwithstanding the foregoing, any provision of this Agreement may be amended
          by
          an agreement in writing entered into by the Borrowers, the Required Lenders
          and
          the Administrative Agent if (i) by the terms of such agreement any remaining
          Commitment and/or Revolving Exposure of each Lender not consenting to the
          amendment provided for therein shall terminate upon the effectiveness of
          such
          amendment and (ii) at the time such amendment becomes effective, each Lender
          not
          consenting thereto receives payment in full of the principal of and interest
          accrued on each Loan made by it and all other amounts owing to it or accrued
          for
          its account under this Agreement.

         

        
          
            
            

          

          
            112

            
              

            

          

          
            
            

          

        

         

        SECTION
          9.03. Expenses;
          Indemnity; Damage Waiver. (a)
          Each
          Borrower agrees to pay (i) all reasonable out-of-pocket expenses incurred
          by each Agent and its Affiliates and the FI Trustee, including the reasonable
          fees, charges and disbursements of counsel for each Agent, in connection
          with
          the syndication of the credit facilities provided for herein, the preparation
          and administration of the Loan Documents or any amendments, modifications
          or
          waivers of the provisions thereof (whether or not the transactions contemplated
          hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket
          expenses incurred by each Issuing Bank in connection with the issuance,
          amendment, extension or renewal of any Letter of Credit or any demand for
          payment thereunder and (iii) all out-of-pocket expenses incurred by any
          Agent, the FI Trustee, any Issuing Bank or any Lender, including the fees,
          charges and disbursements of any counsel for any Agent, any Issuing Bank
          or any
          Lender, in connection with the enforcement or protection of its rights
          in
          connection with the Loan Documents, including its rights under this Section,
          or
          in connection with the Loans made or Letters of Credit issued hereunder,
          including all such out-of-pocket expenses incurred during any workout,
          restructuring or negotiations in respect of such Loans or Letters of
          Credit.

         

        (b)
          Each
          Borrower agrees to indemnify each Agent, each Lender and each Issuing Bank,
          the
          FI Trustee and each Related Party of any of the foregoing Persons (each
          such
          Person being called an “Indemnitee”)
          against, and hold each Indemnitee harmless from, any and all losses, claims,
          damages, liabilities and related expenses, including the fees, charges
          and
          disbursements of any counsel for any Indemnitee, incurred by or asserted
          against
          any Indemnitee arising out of, in connection with, or as a result of
          (i) the execution or delivery of any Loan Document or any other agreement
          or instrument contemplated hereby, the performance by the parties to the
          Loan
          Documents of their respective obligations thereunder or the consummation
          of the
          Transactions or any other transactions contemplated hereby, (ii) any Loan
          or Letter of Credit or the use of the proceeds therefrom (including any
          refusal
          by any Issuing Bank to honor a demand for payment under a Letter of Credit
          if
          the documents presented in connection with such demand do not strictly
          comply
          with the terms of such Letter of Credit), (iii) any actual or alleged
          presence or release of Hazardous Materials on or from any property currently
          or
          formerly owned or operated by either Borrower or any of its Subsidiaries,
          or any
          Environmental Liability related in any way to either Borrower or any of
          its
          Subsidiaries, other than losses, claims, damages, liabilities and related
          costs
          and expenses arising from a release of Hazardous Materials or Environmental
          Liability (except releases of Hazardous Materials or Environmental Liabilities
          actually caused by either Borrower or any of its Subsidiaries or any of
          their
          respective tenants, contractors or agents) to the extent (and only to the
          extent) first occurring and first existing after title to the relevant
          real
          property or facility is vested in any Agent or Lender or other party after
          the
          completion of foreclosure proceedings or the granting of a deed-in-lieu
          of
          foreclosure or similar transfer of title, or (iv) any actual or prospective
          claim, litigation, investigation or proceeding relating to any of the foregoing,
          whether based on contract, tort or any other theory and regardless of whether
          any Indemnitee is a party thereto; provided
          that such
          indemnity shall not, as to any Indemnitee, be available to the extent that
          such
          losses, claims, damages, liabilities or related expenses are determined
          by a
          court of competent jurisdiction by final and nonappealable judgment to
          have
          resulted from the gross negligence or wilful misconduct of such
          Indemnitee.

         

        (c)
          To the
          extent that either Borrower fails to pay any amount required to be paid
          by it to
          any Agent, the FI Trustee or any Issuing Bank under paragraph (a) or
          (b) of this Section (but without affecting such Borrower’s obligations
          thereunder), each Lender severally agrees to pay to the applicable Agent,
          the FI
          Trustee or the applicable Issuing Bank, as the case may be, such Lender’s pro
          rata share (determined as of the time that the applicable unreimbursed
          expense
          or indemnity payment is sought) of such unpaid 

         

        
          
            
            

          

          
            113

            
              

            

          

          
            
            

          

        

         

        amount;
          provided
          that the
          unreimbursed expense or indemnified loss, claim, damage, liability or related
          expense, as the case may be, was incurred by or asserted against such Agent,
          the
          FI Trustee or such Issuing Bank, as the case may be, in its capacity as
          such.
          For purposes hereof, a Lender’s “pro rata share” shall be determined based upon
          its share of the sum of the total Revolving Exposures and unused Revolving
          Commitments at the time. The obligations of the Lenders under this paragraph
          (c)
          are subject to the last sentence of Section 2.02(a) (which shall apply
          mutatis mutandis
          to the
          Lenders’ obligations under this paragraph (c)). If any action, suit or
          proceeding arising from any of the foregoing is brought against any Lender,
          any
          Agent, the FI Trustee, any Issuing Bank or other Person indemnified or
          intended
          to be indemnified pursuant to this Section 9.03, PTFI and FCX, to the
          extent and in the manner directed by such indemnified party, will resist
          and
          defend such action, suit or proceeding or cause the same to be resisted
          and
          defended by counsel designated by PTFI and FCX (which counsel shall be
          satisfactory to such Lender, such Agent, the FI Trustee, such Issuing Bank
          or
          other Person indemnified or intended to be indemnified). If PTFI or FCX
          shall
          fail to do any act or thing which it has covenanted to do hereunder or
          any
          representation or warranty on the part of PTFI or FCX contained in this
          Agreement shall be breached, any Lender, the FI Trustee, any Issuing Bank
          or any
          Agent may (but shall not be obligated to) do the same or cause it to be
          done or
          remedy any such breach, and may expend its funds for such purpose. Any
          and all
          amounts so expended by any Lender, the FI Trustee, any Issuing Bank or
          any Agent
          shall be repayable to it by PTFI and FCX immediately upon such Person’s demand
          therefor.

         

        (d)
          To the
          extent permitted by applicable law, neither Borrower shall assert, and
          each
          hereby waives, any claim against any Indemnitee, on any theory of liability,
          for
          special, indirect, consequential or punitive damages (as opposed to direct
          or
          actual damages) arising out of, in connection with, or as a result of,
          this
          Agreement or any agreement or instrument contemplated hereby, the Transactions,
          any Loan or Letter of Credit or the use of the proceeds thereof.

         

        (e)
          All
          amounts due under this Section shall be payable not later than 10 days
          after
          written demand therefor.

         

        SECTION
          9.04. Successors
          and Assigns. (a)
          The
          provisions of this Agreement shall be binding upon and inure to the benefit
          of
          the parties hereto and their respective successors and assigns permitted
          hereby
          (including any Affiliate of any Issuing Bank that issues any Letter of
          Credit),
          except that (i) a Borrower may not assign or otherwise transfer any of
          its
          rights or obligations hereunder without the prior written consent of each
          Lender
          (and any attempted assignment or transfer by a Borrower without such consent
          shall be null and void) and (ii) no Lender may assign or otherwise transfer
          its
          rights or obligations hereunder except in accordance with this Section;
          provided
          that a
          rejurisdictioning transaction permitted by Section 9.18(c) shall not require
          the
          consent of any Lender under this Section 9.04 Nothing in this Agreement,
          expressed or implied, shall be construed to confer upon any Person (other
          than
          the parties hereto, their respective successors and assigns permitted hereby
          (including any Affiliate of any Issuing Bank that issues any Letter of
          Credit),
          Participants (to the extent provided in paragraph (c) of this Section)
          and, to
          the extent expressly contemplated hereby, the Related Parties of each of
          the
          Agents, the FI Trustee, the Issuing Banks and the Lenders) any legal or
          equitable right, remedy or claim under or by reason of this
          Agreement.

         

        (b)
          (i)
          Subject to the conditions set forth in paragraph (b)(ii) below, any Lender
          may
          assign to one or more assignees all or a portion of its rights and obligations
          under this Agreement (including all or a portion of its Commitment or LC
          Exposure and the Loans at the time owing to it) with the prior consent
          (such
          consent not to be 

         

        
          
            
            

          

          
            114

            
              

            

          

          
            
            

          

        

         

        unreasonably
          withheld or delayed, it being understood that the Borrowers may withhold
          their
          consent to an assignment to a Lender that would, as of the effective date
          of
          such assignment, be entitled to claim compensation under Section 2.14 (other
          than paragraph (b) thereof) which the assignor Lender would not be entitled
          to
          claim as of that date) of:

         

        (A)
          in the
          case of assignments of Revolving Commitments or Revolving Exposures, the
          Borrowers, the Swingline Lender and each Principal Issuing Bank; provided
          that no
          consent of either Borrower shall be required for an assignment to a Revolving
          Lender or to an Affiliate of a Revolving Lender having credit ratings equal
          to
          or better than the credit ratings of such Revolving Lender, or, if an Event
          of
          Default under clause (a), (b), (g) or (h) of Article VII has occurred
          and is continuing, any other assignee; and

         

        (B)
          the
          Administrative Agent. 

         

        (ii)
          Assignments shall be subject to the following additional
          conditions:

         

        (A)
          except
          in the case of an assignment to a Lender or an Affiliate of a Lender or
          an
          Approved Fund, or an assignment of the entire remaining amount of the assigning
          Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans
          of the assigning Lender subject to each such assignment (determined as
          of the
          date the Assignment and Assumption with respect to such assignment is delivered
          to the Administrative Agent) shall not be less than $5,000,000 unless each
          of
          the Borrowers and the Administrative Agent otherwise consent; provided
          that no
          such consent of either Borrower shall be required if an Event of Default
          under
          clause (a), (b), (g) or (h) of Article VII has occurred and is
          continuing; and provided further
          that
          simultaneous assignments in respect of a Lender and its Approved Funds
          shall be
          aggregated for purposes of such requirement;

         

        (B)
          each
          partial assignment shall be made as an assignment of a proportionate part
          of all
          the assigning Lender’s rights and obligations under this Agreement, provided
          that this
          clause (B) shall not be construed to prohibit assignment of a proportionate
          part
          of all the assigning Lender’s rights and obligations in respect of one Class of
          Commitments or Loans;

         

        (C)
          the
          parties to each assignment shall execute and deliver to the Administrative
          Agent
          an Assignment and Assumption, together with a processing and recordation
          fee of
          $3,500, payable by either the assignee or the assignor (provided
          that only
          one such fee shall be payable in respect of simultaneous assignments by
          a Lender
          and its Approved Funds); and

         

        (D)
          the
          assignee, if it shall not be a Lender, shall deliver to the Administrative
          Agent
          an Administrative Questionnaire and any tax forms required by Section
          2.16(f).

         

        For
          purposes of this Section 9.04(b), the terms “Approved Fund” and “CLO” have the
          following meanings:

         

        “Approved
          Fund”
means
          (a) a CLO and (b) with respect to any Lender that is a fund that invests
          in bank
          loans and similar extensions of credit, any other fund that invests in
          bank
          loans and similar extensions of credit and is managed by the same investment
          advisor as such Lender or by an Affiliate of such investment
          advisor.

         

        
          
            
            

          

          
            115

            
              

            

          

          
            
            

          

        

         

        “CLO”
means
          an
          entity (whether a corporation, partnership, trust or otherwise) that is
          engaged
          in making, purchasing, holding or otherwise investing in bank loans and
          similar
          extensions of credit in the ordinary course and is administered or managed
          by a
          Lender or an Affiliate of such Lender.

         

        (iii)
          Subject to acceptance and recording thereof pursuant to paragraph (b)(iv)
          of this Section, from and after the effective date specified in each Assignment
          and Assumption, the assignee thereunder shall be a party hereto and, to
          the
          extent of the interest assigned by such Assignment and Assumption, have
          the
          rights and obligations of a Lender under this Agreement, and the assigning
          Lender thereunder shall, to the extent of the interest assigned by such
          Assignment and Assumption, be released from its obligations under this
          Agreement
          (and, in the case of an Assignment and Assumption covering all of the assigning
          Lender’s rights and obligations under this Agreement, such Lender shall cease
          to
          be a party hereto but shall continue to be entitled to the benefits of
          Sections 2.14, 2.15, 2.16 and 9.03). Any assignment or transfer by a Lender
          of rights or obligations under this Agreement that does not comply with
          this
          Section 9.04 shall be treated for purposes of this Agreement as a sale
          by such
          Lender of a participation in such rights and obligations in accordance
          with
          paragraph (c) of this Section.

         

        (iv)
          The
          Administrative Agent, acting for this purpose as an agent of the Borrowers,
          shall maintain at one of its offices a copy of each Assignment and Assumption
          delivered to it and a register for the recordation of the names and addresses
          of
          the Lenders, and the Commitment of, and principal amount of the Loans and
          LC
          Disbursements owing to, each Lender pursuant to the terms hereof from time
          to
          time (the “Register”).
          The
          entries in the Register shall be conclusive, and the Borrowers, the Agents,
          the
          FI Trustee, the Issuing Banks and the Lenders may treat each Person whose
          name
          is recorded in the Register pursuant to the terms hereof as a Lender hereunder
          for all purposes of this Agreement, notwithstanding notice to the contrary.
          The
          Register shall be available for inspection by the Borrowers, any Agent,
          the FI
          Trustee, any Issuing Bank and any Lender, at any reasonable time and from
          time
          to time upon reasonable prior notice.

         

        (v)
          Upon
          its receipt of a duly completed Assignment and Assumption executed by an
          assigning Lender and an assignee, the assignee’s completed Administrative
          Questionnaire (unless the assignee shall already be a Lender hereunder),
          the
          processing and recordation fee referred to in paragraph (b) of this Section
          and any written consent to such assignment required by paragraph (b) of
          this Section, the Administrative Agent shall accept such Assignment and
          Assumption and record the information contained therein in the Register.
          No
          assignment shall be effective for purposes of this Agreement unless it
          has been
          recorded in the Register as provided in this paragraph.

         

        (vi)
          At
          the request of either Borrower, the Administrative Agent or the assignee
          under
          an Assignment and Assumption, each of the Borrowers, each applicable Agent
          and
          such assignee shall enter into any amendments to the Security Documents
          or take
          any other actions for the purpose of naming such assignee as a Secured
          Party
          thereunder.

         

        (c)
          (i)
          Any Lender may, without the consent of, or notice to, the Borrowers, the
          Administrative Agent, the Issuing Banks or the Swingline Lender, sell
          participations to one or more banks or other entities (a “Participant”)
          in all
          or a portion of such Lender’s rights and obligations under this Agreement
          (including all or a portion of its Commitment or LC Exposure and the Loans
          owing
          to it); provided
          that
          (A) such 

         

        
          
            
            

          

          
            116

            
              

            

          

          
            
            

          

        

         

        Lender’s
          obligations under this Agreement shall remain unchanged, (B) such Lender
          shall remain solely responsible to the other parties hereto for the performance
          of such obligations, (C) the Borrowers, the Agents, the FI Trustee, the
          Issuing Banks and the other Lenders shall continue to deal solely and directly
          with such Lender in connection with such Lender’s rights and obligations under
          this Agreement and (D) such Lender will continue to give prompt attention
          to and process (including, if required, through discussions with Participants)
          requests for waivers or amendments hereunder. Any agreement or instrument
          pursuant to which a Lender sells such a participation shall provide that
          such
          Lender shall retain the sole right to enforce the Loan Documents and to
          approve
          any amendment, modification or waiver of any provision of the Loan Documents;
          provided
          that such
          agreement or instrument may provide that such Lender will not, without
          the
          consent of the Participant, agree to any amendment, modification or waiver
          described in the first proviso to Section 9.02(b) that affects such
          Participant. Subject to paragraph (c)(ii) of this Section, the Borrowers
          agree that each Participant shall be entitled to the benefits of
          Sections 2.14, 2.15 and 2.16 to the same extent as if it were a Lender and
          had acquired its interest by assignment pursuant to paragraph (b) of this
          Section. To the extent permitted by law, each Participant also shall be
          entitled
          to the benefits of Section 9.08 as though it were a Lender, provided
          such
          Participant agrees to be subject to Section 2.17(c) as though it were a
          Lender.

         

        (ii)
          A
          Participant shall not be entitled to receive any greater payment under
          Section 2.14 (other than paragraph (b) thereof) or 2.16 than the applicable
          Lender would have been entitled to receive with respect to the participation
          sold to such Participant, unless the sale of the participation to such
          Participant is made with the Borrowers’ prior written consent. A Participant
          that would be a Foreign Lender if it were a Lender shall not be entitled
          to the
          benefits of Section 2.16 unless the Borrowers are notified of the
          participation sold to such Participant and such Participant agrees, for
          the
          benefit of the Borrowers, to comply with Section 2.16(f) as though it were
          a Lender.

         

        (d)
          Any
          Lender may, without the consent of the Borrowers or the Administrative
          Agent, at
          any time pledge or assign a security interest in all or any portion of
          its
          rights under this Agreement to secure obligations of such Lender, including
          any
          pledge or assignment to secure obligations to a Federal Reserve Bank, and
          this
          Section shall not apply to any such pledge or assignment of a security
          interest;
provided
          that no
          such pledge or assignment of a security interest shall release a Lender
          from any
          of its obligations hereunder or substitute any such pledgee or assignee
          for such
          Lender as a party hereto.

         

        SECTION
          9.05. Survival.
          All
          covenants, agreements, representations and warranties made by the Loan
          Parties
          in the Loan Documents and in the certificates or other instruments delivered
          in
          connection with or pursuant to this Agreement or any other Loan Document
          shall
          be considered to have been relied upon by the other parties hereto and
          shall
          survive the execution and delivery of the Loan Documents and the making
          of any
          Loans and issuance of any Letters of Credit, regardless of any investigation
          made by any such other party or on its behalf and notwithstanding that
          any
          Agent, the FI Trustee, any Issuing Bank or any Lender may have had notice
          or
          knowledge of any Default or incorrect representation or warranty at the
          time any
          credit is extended hereunder, and shall continue in full force and effect
          as
          long as the principal of or any accrued interest on any Loan or any fee
          or any
          other amount payable under this Agreement is outstanding and unpaid or
          any
          Letter of Credit is outstanding and so long as the Commitments have not
          expired
          or terminated. The provisions of Sections 2.14, 2.15, 2.16 and 9.03 and
          Article VIII shall survive and remain in full force and effect regardless
          of the
          consummation of the transactions contemplated hereby, the repayment of
          the
          Loans, the 

         

        
          
            
            

          

          
            117

            
              

            

          

          
            
            

          

        

         

        expiration
          or termination of the Letters of Credit and the Commitments or the termination
          of this Agreement or any provision hereof.

         

        SECTION
          9.06. Counterparts;
          Integration; Effectiveness.
          This
          Agreement may be executed in counterparts (and by different parties hereto
          on
          different counterparts), each of which shall constitute an original, but
          all of
          which when taken together shall constitute a single contract. This Agreement,
          the other Loan Documents and any separate letter agreements with respect
          to fees
          payable to any Agent constitute the entire contract among the parties relating
          to the subject matter hereof and (subject to Section 9.22(A)) supersede
          any and
          all previous agreements and understandings, oral or written, relating to
          the
          subject matter hereof. Except as provided in Section 4.01 and 9.22(A), this
          Agreement shall become effective when it shall have been executed by the
          Administrative Agent and when the Administrative Agent shall have received
          counterparts hereof which, when taken together, bear the signatures of
          each of
          the other parties hereto, and thereafter shall be binding upon and inure
          to the
          benefit of the parties hereto and their respective successors and assigns.
          Delivery of an executed counterpart of a signature page of this Agreement
          by
          telecopy or electronic transmission shall be effective as delivery of a
          manually
          executed counterpart of this Agreement.

         

        SECTION
          9.07. Severability.
          Any
          provision of this Agreement held to be invalid, illegal or unenforceable
          in any
          jurisdiction shall, as to such jurisdiction, be ineffective to the extent
          of
          such invalidity, illegality or unenforceability without affecting the validity,
          legality and enforceability of the remaining provisions hereof; and the
          invalidity of a particular provision in a particular jurisdiction shall
          not
          invalidate such provision in any other jurisdiction.

         

        SECTION
          9.08. Right
          of Setoff.
          If an
          Event of Default shall have occurred and be continuing, each Lender, each
          Issuing Bank and each of its Affiliates is hereby authorized at any time
          and
          from time to time, to the fullest extent permitted by law, to set off and
          apply
          any and all deposits (general or special, time or demand, provisional or
          final,
          in whatever currency) at any time held and other obligations at any time
          owing
          (although such obligations may be unmatured) by such Lender or Issuing
          Bank or
          Affiliate to or for the credit or the account of either Borrower against
          any of
          and all the obligations then due of either Borrower now or hereafter existing
          under this Agreement. The applicable Lender or Issuing Bank shall notify
          the
          Borrowers and the Administrative Agent of such setoff and application,
          provided
          that any
          failure to give or any delay in giving such notice shall not affect the
          validity
          of any such setoff and application under this Section. The rights of each
          Lender, each Issuing Bank and its Affiliates under this Section are in
          addition
          to other rights and remedies (including other rights of setoff) that such
          Lender, Issuing Bank and Affiliates may have.

         

        SECTION
          9.09. Governing
          Law; Jurisdiction; Consent to Service of Process; Sovereign
          Immunity. (a)This
          Agreement shall be construed in accordance with and governed by the law
          of the
          State of New York.

         

        (b)
          Each
          Borrower hereby irrevocably and unconditionally submits, for itself and
          its
          property, to the nonexclusive jurisdiction of the Supreme Court of the
          State of
          New York sitting in New York County and of the United States District Court
          of
          the Southern District of New York, and any appellate court from any thereof,
          in
          any action or proceeding arising out of or relating to any Loan Document,
          or for
          recognition or enforcement of any judgment, and each of the parties hereto
          hereby irrevocably and unconditionally agrees that all claims in respect
          of any
          such action or proceeding may be heard and determined in such New York
          State or, to the extent permitted by law, in such Federal court. Each of
          the
          parties hereto agrees that a final judgment in any such action 

         

        
          
            
            

          

          
            118

            
              

            

          

          
            
            

          

        

         

        or
          proceeding shall be conclusive and may be enforced in other jurisdictions
          by
          suit on the judgment or in any other manner provided by law. Nothing in
          this
          Agreement or any other Loan Document shall affect any right that any Agent,
          the
          FI Trustee, any Issuing Bank or any Lender may otherwise have to bring
          any
          action or proceeding relating to this Agreement or any other Loan Document
          against either Borrower or its properties in the courts of any
          jurisdiction.

         

        (c)
          Each
          Borrower hereby irrevocably and unconditionally waives, to the fullest
          extent it
          may legally and effectively do so, any objection which it may now or hereafter
          have to the laying of venue of any suit, action or proceeding arising out
          of or
          relating to this Agreement or any other Loan Document in any court referred
          to
          in paragraph (b) of this Section. Each of the parties hereto hereby
          irrevocably waives, to the fullest extent permitted by law, the defense
          of an
          inconvenient forum to the maintenance of such action or proceeding in any
          such
          court.

         

        (d)
          Each
          party to this Agreement irrevocably consents to service of process in the
          manner
          provided for notices in Section 9.01. Nothing in this Agreement or any
          other Loan Document will affect the right of any party to this Agreement to
          serve process in any other manner permitted by law.

         

        (e)
          To the
          extent that PTFI may now or hereafter be entitled, in any jurisdiction
          in which
          judicial proceedings may at any time be commenced with respect to any Loan
          Document, to claim for itself or its property, assets or revenues any immunity
          (whether by reason of sovereignty or otherwise) from suit, jurisdiction
          of any
          court, attachment prior to judgment, setoff, execution of a judgment or
          from any
          other legal process or remedy, and to the extent that there may be attributed
          to
          PTFI such an immunity (whether or not claimed), PTFI hereby irrevocably
          agrees
          not to claim and hereby irrevocably waives such immunity.

         

        SECTION
          9.10. WAIVER
          OF JURY TRIAL.
          EACH
          PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
          LAW,
          ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
          OR
          INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
          DOCUMENT
          OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT,
          TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
          REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
          OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
          SEEK
          TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
          PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
          OTHER
          THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

         

        SECTION
          9.11. Headings.
          Article
          and Section headings and the Table of Contents used herein are for convenience
          of reference only, are not part of this Agreement and shall not affect
          the
          construction of, or be taken into consideration in interpreting, this
          Agreement.

         

        SECTION
          9.12. Confidentiality.
          Each of
          the Agents, the FI Trustee, the Issuing Banks and the Lenders agrees to
          maintain
          the confidentiality of the Information (as defined below), except that
          Information may be disclosed (a) to its and its Affiliates’ directors,
          officers, employees and agents, including accountants, legal counsel and
          other
          advisors (it being understood that the Persons to whom such disclosure
          is made
          will be 

         

        
          
            
            

          

          
            119

            
              

            

          

          
            
            

          

        

         

        informed
          of the confidential nature of such Information and instructed to keep such
          Information confidential), (b) to the extent requested by any regulatory
          authority, (c) to the extent required by applicable laws or regulations or
          by any subpoena or similar legal process, (d) to any other party to this
          Agreement, (e) in connection with the exercise of any remedies hereunder or
          any suit, action or proceeding relating to this Agreement or any other
          Loan
          Document or the enforcement of rights hereunder or thereunder, (f) subject
          to an agreement containing provisions substantially the same as those of
          this
          Section, to (i) any actual or prospective assignee of or Participant in any
          of its rights or obligations under this Agreement or (ii) any actual or
          prospective counterparty (or its advisors) to any swap or derivative transaction
          relating to either Borrower or any other Loan Party and its obligations,
          (g) with the consent of the Borrowers or (h) to the extent such
          Information (i) becomes publicly available other than as a result of a
          breach of this Section or (ii) becomes available to any Agent, any Issuing
          Bank or any Lender on a nonconfidential basis from a source other than
          either
          Borrower. For the purposes of this Section, “Information”
means
          all information received from or on behalf of either Borrower relating
          to either
          Borrower or its business, other than any such information that is available
          to
          any Agent, the FI Trustee, any Issuing Bank or any Lender on a nonconfidential
          basis prior to disclosure by either Borrower. Any Person required to maintain
          the confidentiality of Information as provided in this Section shall be
          considered to have complied with its obligation to do so if such Person
          has
          exercised the same degree of care to maintain the confidentiality of such
          Information as such Person would accord to its own confidential
          information.

         

        SECTION
          9.13. Interest
          Rate Limitation.
          Notwithstanding anything herein to the contrary, if at any time the interest
          rate applicable to any Loan or participation in any LC Disbursement, together
          with all fees, charges and other amounts which are treated as interest
          on such
          Loan or LC Disbursement or participation therein under applicable law
          (collectively the “Charges”),
          shall
          exceed the maximum lawful rate (the “Maximum
          Rate”)
          which
          may be contracted for, charged, taken, received or reserved by the Lender
          holding such Loan or LC Disbursement or participation therein in accordance
          with
          applicable law, the rate of interest payable in respect of such Loan or
          LC
          Disbursement or participation therein hereunder, together with all Charges
          payable in respect thereof, shall be limited to the Maximum Rate and, to
          the
          extent lawful, the interest and Charges that would have been payable in
          respect
          of such Loan or LC Disbursement or participation therein but were not payable
          as
          a result of the operation of this Section shall be cumulated and the interest
          and Charges payable to such Lender in respect of other Loans or LC Disbursements
          or participations therein or periods shall be increased (but not above
          the
          Maximum Rate therefor) until such cumulated amount, together with interest
          thereon at the Federal Funds Effective Rate to the date of repayment, shall
          have
          been received by such Lender.

         

        SECTION
          9.14. Judgment
          Currency.
          The
          specification of payment in dollars and in New York City, New York, with
          respect
          to amounts payable to any Lender (or permitted assignee or Participant),
          any
          Agent, the FI Trustee or any Issuing Bank hereunder and under the other
          Loan
          Documents is of the essence, and dollars shall be the currency of account
          in all
          events. The payment obligations of a Borrower under this Agreement or any
          other
          Loan Document shall not be discharged by an amount paid by such Borrower
          in
          another currency or in another place, whether pursuant to a judgment or
          otherwise, to the extent that the amount so paid on conversion to dollars
          and
          transfer to New York City under normal banking procedures does not yield
          the
          amount of dollars in New York City due hereunder. If for the purpose of
          obtaining judgment in any court it is necessary to convert a sum due hereunder
          in dollars into another currency (the “second
          currency”),
          the
          rate of exchange which shall be applied shall be that at which in accordance
          with normal banking procedures the Administrative Agent could purchase
          

         

        
          
            
            

          

          
            120

            
              

            

          

          
            
            

          

        

         

        dollars
          with the second currency on the Business Day next preceding that on which
          such
          judgment is rendered. The obligation of a Borrower in respect of any such
          sum
          due from such Borrower to any Agent, the FI Trustee, any Issuing Bank or
          any
          Lender (or permitted assignee or Participant) hereunder or under any other
          Loan
          Document (an “entitled
          person”)
          shall,
          notwithstanding the rate of exchange actually applied in rendering such
          judgment, be discharged only to the extent that on the Business Day following
          receipt by such entitled person of any sum adjudged to be due hereunder
          or under
          any other Loan Document in the second currency such entitled person may
          in
          accordance with normal banking procedures purchase in the free market and
          transfer to New York City dollars with the amount of the second currency
          so
          adjudged to be due; and each Borrower hereby agrees, as a separate obligation
          and notwithstanding any such judgment, to indemnify such entitled person
          against, and to pay such entitled person on demand, in dollars in New York
          City,
          the difference between the sum originally due to such entitled person from
          such
          Borrower in dollars and the amount of dollars so purchased and
          transferred.

         

        SECTION
          9.15. RTZ
          Transactions.
          PTFI has
          appointed the Administrative Agent to be the Operator Selection Representative
          for all purposes of the FI Trust Agreement, the Operator Replacement Agreement
          and the Surat Kuasa and has irrevocably and unconditionally agreed that
          upon the
          occurrence of an Event of Default, the Administrative Agent may, in addition
          to
          any other remedy available thereunder or under any other Loan Document
          thereunder, remove PTFI as Operator under the Contract of Work and appoint
          a
          replacement Operator, which shall be PT Rio Tinto Indonesia or an Affiliate
          of
          PT Rio Tinto Indonesia designated by PT Rio Tinto Indonesia if PT Rio Tinto
          Indonesia timely elects to exercise its designation rights provided in
          Section
          2(a) of the Operator Replacement Agreement and meets the other conditions
          to
          such designation right set forth in such Section 2(a). PTFI has also irrevocably
          and unconditionally agreed that the Administrative Agent, acting as the
          Operator
          Selection Representative under the FI Trust Agreement, the Operator Replacement
          Agreement and the Surat Kuasa, shall also have the right to designate a
          successor Operator under the circumstances provided in Section 2(b) of
          the
          Operator Replacement Agreement. PTFI has further agreed that it will not
          appoint
          any other Operator Selection Representative other than the Administrative
          Agent
          (or, except as provided to PT Rio Tinto Indonesia in the Participation
          Agreement, grant any other Person the right to remove PTFI (or any successor
          operator for the Project) as Operator under any circumstances) and that
          it will
          not approve or enter into any management agreement with a successor Operator
          appointed under the Operator Replacement Agreement unless and until the
          Administrative Agent has approved the terms of such management agreement.
          PTFI
          has also agreed that the Administrative Agent shall be entitled to exercise
          PTFI’s rights under the Participation Agreement (including the financial and
          accounting procedures) referred to in Section 6(c) of the FI Intercreditor
          Agreement to the exclusion of PTFI after the occurrence of an Event of
          Default,
          in addition to the other rights and remedies available to the Administrative
          Agent and the Lenders under the Loan Documents thereunder and applicable
          law.
          Each of the Agents, the Lenders, PTFI and FCX acknowledges and agrees that
          the
          FI Trust Agreement will not terminate prior to termination of the Participation
          Agreement

         

        SECTION
          9.16. Patriot
          Act.
          Each
          Lender and the Administrative Agent (for itself and not on behalf of any
          Lender)
          hereby notifies each Borrower that pursuant to the requirements of the
          Patriot
          Act, it is required to obtain, verify and record information that identifies
          each Borrower, which information includes the name and address of each
          Borrower
          and other information that will allow such Lender or the Administrative
          Agent,
          as applicable, to identify the Borrower in accordance with the Patriot
          Act. Each
          Borrower agrees to provide the Lenders, upon request, with all 

         

        
          
            
            

          

          
            121

            
              

            

          

          
            
            

          

        

         

        documentation
          and other information required from time to time to be obtained by the
          Lenders
          pursuant to applicable “know your customer” and anti-money laundering rules and
          regulations, including the Patriot
          Act.

         

        SECTION
          9.17. No
          Fiduciary Relationship.
          The
          Borrowers, on behalf of themselves and the Subsidiaries, agree that in
          connection with all aspects of the transactions contemplated hereby and
          any
          communications in connection therewith, the Borrowers, the Subsidiaries
          and
          their Affiliates, on the one hand, and the Agents, the Lenders, the Issuing
          Banks and their Affiliates, on the other hand, will have a business relationship
          that does not create, by implication or otherwise, any fiduciary duty on
          the
          part of the Agents, the Lenders, the Issuing Banks or their Affiliates,
          and no
          such duty will be deemed to have arisen in connection with any such transactions
          or communications.

         

        SECTION
          9.18. Release
          of Liens and Guarantees; Rejurisdictioning of PTFI. (a)
          A
          Subsidiary Guarantor shall automatically be released from its obligations
          under
          the Loan Documents and all security interests in the Collateral of such
          Subsidiary Guarantor, and in the Equity Interests in such Subsidiary Guarantor,
          shall be automatically released upon the consummation of any transaction
          permitted by this Agreement as a result of which such Subsidiary Guarantor
          ceases to be a Subsidiary; provided
          that, if
          so required by this Agreement, the Required Lenders (or such greater number
          of
          Lenders as may be required under Section 9.02) shall have consented to
          such
          transaction and the terms of such consent did not provide otherwise. Upon
          any
          sale or other transfer by any Subsidiary Guarantor (other than to FCX or
          any
          other Subsidiary) of any Collateral that is permitted under this Agreement,
          or
          upon the effectiveness of any written consent to the release of the security
          interest granted under any Loan Document in any Collateral pursuant to
          Section
          9.02 of this Agreement, the security interest in such Collateral shall
          be
          automatically released. In connection with any termination or release pursuant
          to this Section, the Collateral Agent shall promptly execute and deliver
          to any
          Subsidiary Guarantor, at such Subsidiary Guarantor’s expense, all documents that
          such Subsidiary Guarantor shall reasonably request to evidence such termination
          or release.

         

        (b)
          Subject to paragraph (e) below, at any time following the Investment Grade
          Date
          when there is no outstanding Tranche B Term Loan, upon written notice from
          the
          Borrowers and at the Borrowers’ expense, the Collateral Agent, the Security
          Agent, the JAA Security Agent and the FI Trustee, as applicable, shall
          terminate
          and release all the Collateral under the Security Documents (but not, unless
          specifically requested by FCX in such notice, any Collateral under the
          FI
          Security Documents) and the Collateral Agent, the Security Agent, the JAA
          Security Agent and the FI Trustee, as applicable, shall promptly execute
          and
          deliver all documents that the Borrowers shall reasonably request to evidence
          such termination or release.

         

        (c)
          Notwithstanding any provision of any Loan Document to the contrary, at
          any time
          when either (i) the Full Stock Pledge Condition is satisfied or (ii) the
          Additional Collateral Requirement is satisfied, PTFI may elect to effect
          a
          transaction in which it will cease to be domesticated under the laws of
          Delaware
          as a corporation and shall become solely a limited liability company organized
          under the laws of the Republic of Indonesia. In the event that such
          rejurisdictioning is effected, upon written notice from the Borrowers and
          at the
          Borrowers’ expense, the Collateral Agent shall terminate and release the
          Guarantees provided under the Indonesian Guarantee Agreement by each of
          PT
          Kencana Infra Nusakarya and PT Kencana Wisata Nusakarya.

         

        (d)
          Any
          execution and delivery of documents pursuant to this Section shall be without
          recourse to or warranty by the Collateral Agent.

         

        
          
            
            

          

          
            122

            
              

            

          

          
            
            

          

        

         

        (e)
          Notwithstanding any provision to the contrary herein or in any other Loan
          Document, no Guarantee by a PCA Loan Party shall be released unless each
          Ratable
          Guarantee by the applicable PCA Loan Party shall be released upon the release
          of
          such PCA Loan Party’s Guarantee of the Secured Obligations.

         

        SECTION
          9.19. Non-Public
          Information. (a)
          Each
          Lender acknowledges that all information furnished to it pursuant to this
          Agreement from the Borrowers or on their behalf and relating to the Borrowers,
          the Subsidiaries or their respective businesses may include material non-public
          information concerning the Borrowers and the Subsidiaries or their securities,
          and confirms that it has developed compliance procedures regarding the
          use of
          material non-public information and that it will handle such material non-public
          information in accordance with the procedures and applicable law, including
          Federal and state securities laws.

         

        (b)
          All
          such information, including requests for waivers and amendments, furnished
          by
          the Borrowers or the Administrative Agent pursuant to, or in the course
          of
          administering, this Agreement will be syndicate-level information, which
          may
          contain material non-public information about the Borrowers and the Subsidiaries
          and their securities. Accordingly, each Lender represents to the Borrowers
          and
          the Administrative Agent that it has identified in its Administrative
          Questionnaire a credit contact who may receive information that may contain
          material non-public information in accordance with its compliance procedures
          and
          applicable law, including Federal and state securities laws.

         

        SECTION
          9.20. Parallel
          Debt.
          By
          execution of this Agreement, the Lenders and the Issuing Banks acknowledge
          the
          provisions of Section 2 of each of the FCX Pledge Agreements, the Fourth
          Amended
          and Restated Fiduciary Transfer, the Fiduciary Assignment of Accounts,
          the
          Fourth Amended and Restated Lender Fiduciary Assignment and the Fiduciary
          Transfer of Joint Account Assets, and hereby authorize the Administrative
          Agent,
          Collateral Agent and Security Agent, as applicable, to accept such clauses
          on
          their behalf.

         

        SECTION
          9.21. Joint
          and Several Obligations.
          Whenever
          in this Agreement or any other Loan Document any payment obligation or
          other
          obligation is expressed as an obligation of the Borrowers, each of the
          Borrowers
          shall be jointly and severally liable for the full payment and performance
          of
          such obligation.

         

        SECTION
          9.22. Agreements
          under the Existing Credit Agreement.
          The
          signatories hereto constituting pursuant to Section 10.02(b) of the Existing
          Credit Agreement (including the last sentence thereof) the required signatories
          for amending and taking other actions under the Existing Credit Agreement
          hereby
          agree as follows:

         

        
          	 	
                  (A)

                	
                  The
                    Existing Credit Agreement shall be amended and restated in the
                    form hereof
                    effective upon the date on which each of the conditions set forth
                    in
                    Section 4.01 is satisfied (or waived in accordance with
                    Section 9.02). For the avoidance of doubt, the Existing Credit
                    Agreement shall remain in full force and effect until the occurrence
                    of
                    such satisfaction or waiver. Notwithstanding the foregoing, all
                    appointments of the Agents shall, from and after the execution
                    hereof by
                    the Administrative Agent and the delivery of counterparts hereof
                    by each
                    other party hereto in accordance with Section 9.06, be effective
                    hereunder
                    for all purposes of facilitating the satisfaction of such conditions
                    or
                    the obtaining of any such waiver.

                

        

         

        
          	 	
                  (B)

                	
                  In
                    conjunction with the renewals of the currently existing Fiduciary
                    Certificate no. C2-128 HT.04.07.TH.2006P and no. C2-129
                    

                

        

         

        
          
            
            

          

          
            123

            
              

            

          

          
            
            

          

        

         

        
          
            	 	
                     

                  	
                    HT.04.07.TH.2006P,
                      both dated 29 August, 2006, in favor of the lenders under the
                      Existing
                      Credit Agreement who are Lenders hereunder, such Lenders hereby
                      authorize
                      the Security Agent and the FI Trustee to delete the registration
                      certificates stated above; to implement the foregoing, the
                      Security Agent
                      and the FI Trustee is hereby authorized by such Lenders with
                      power of
                      substitution, to sign, submit applications thereto and in general
                      to do
                      and carry out all things necessary or useful without
                      exemption.

                  

          

           

        

        
          	 	
                  (C)

                	
                  Upon
                    the effectiveness of the Collateral Agreement, the lenders under
                    the
                    Existing Credit Agreement who are Lenders hereunder hereby direct
                    and
                    authorize the Security Agent to release the debt instruments
                    pledged under
                    the Second Amended and Restated FCX Pledge Agreement (Indebtedness)
                    (as
                    defined in the Existing Credit Agreement) whereupon such debt
                    instruments
                    shall be pledged by FCX under the Collateral
                    Agreement.

                

        

         

        
          
            
            

          

          
            124

            
              

            

          

          
            
            

          

        

         

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

         

        

        
          	 	
                  FREEPORT-MCMORAN
                    COPPER & GOLD INC.,

                
	 	
                  by

                
	 	 	 
	 	 	
                  Name:
                    Kathleen L. Quirk

                
	 	 	
                  Title:
                    Senior Vice President, Chief Financial Officer and Treasurer
                    

                

        

         

        

        
          	 	
                  PT
                    FREEPORT INDONESIA,

                
	 	
                  by

                
	 	 	 
	 	 	
                  Name: Robert
                    R. Boyce

                
	 	 	
                  Title: Treasurer

                

        

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	
                  JPMORGAN
                    CHASE BANK, N.A., individually
                    and as Administrative Agent, Issuing Bank, Security Agent, JAA
                    Security
                    Agent and Collateral Agent,

                
	 	
                  by

                
	 	 	 
	 	 	
                  Name:
                    

                
	 	 	
                  Title:
                    

                

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

        
          	 	 
	 	
                  MERRILL
                    LYNCH, PIERCE, FENNER

                  &
                    SMITH INCORPORATED, as
                    Syndication Agent

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	
                  U.S.
                    BANK NATIONAL ASSOCIATION, as
                    FI Trustee,

                
	 	
                  by

                
	 	 	 
	 	 	
                  Name:
                    

                
	 	 	
                  Title:
                    

                

        

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  MERRILL
                    LYNCH CAPITAL CORPORATION

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  HSBC
                    BANK USA, NATIONAL ASSOCIATION

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  THE
                    BANK OF NOVA SCOTIA

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  UBS
                    LOAN FINANCE LLC

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  AUSTRALIA
                    AND NEW ZEALAND BANKING GROUP LIMITED

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  BNP
                    PARIBAS

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  THE
                    BANK OF TOKYO-MITSUBISHI UFJ, LTD., NY BRANCH

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  CALYON
                    NEW YORK BRANCH

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  BAYERISCHE
                    HYPO-UND VEREINSBANK AG, NEW YORK BRANCH

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  ING
                    CAPITAL LLC

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  MIZUHO
                    CORPORATION BANK, LTD.

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  NATIXIS

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  ROYAL
                    BANK OF CANADA

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  THE
                    ROYAL BANK OF SCOTLAND PLC

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  SOCIETE
                    GENERALE

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 	 
	 	
                  STANDARD
                    CHARTERED BANK

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  SUMITOMO
                    MITSUI BANKING CORPORATION

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  WESTLB
                    AG, TORONTO BRANCH

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  BANCO
                    SANTANDER CENTRAL HISPANO, S.A. NEW YORK BRANCH

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  BANK
                    OF AMERICA, N.A.

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  UNITED
                    OVERSEAS BANK LIMITED, NEW YORK AGENCY

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  DBS
                    BANK LTD., LOS ANGELES AGENCY

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  THE
                    NORTHERN TRUST COMPANY

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

         

        
          	 	 
	 	
                  WELLS
                    FARGO BANK, N.A.

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  BAYERISCHE
                    LANDESBANK, NEW YORK BRANCH

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  RAYMOND
                    JAMES BANK, FSB

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  BANCO
                    ESPIRITO SANTO, S.A., NASSAU BRANCH

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  HUA
                    NAN COMMERCIAL BANK, LTD. NEW YORK AGENCY

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  CHANG
                    HWA COMMERCIAL BANK, LTD., NEW YORK BRANCH

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:
                    

                

        

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	 
	 	
                  TAIPEI
                    FUBON COMMERCIAL BANK, NEW YORK AGENCY

                
	 	
                  by
                    /s/

                
	 	 	 
	 	 	
                  Name:

                
	 	 	
                  Title:Unassociated Document

     

    Exhibit
      4.1

     

     

    

      PE
        ENVIRONMENTAL FUNDING LLC,

       

      Issuer

       

      and

       

      U.S.
        BANK
        NATIONAL ASSOCIATION,

       

      Indenture
        Trustee

      

      _______________________________

       

      INDENTURE

       

      Dated
        as
        of [___________]

      _______________________________

       

      

      Securing
        Environmental Control Bonds

       

      Issuable
        in Series

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      TABLE
        OF CONTENTS

       

      Page

       

      ARTICLE
        I

      

      Definitions
        and Incorporation by Reference

      

      
        	
                SECTION
                  1.01.

              	
                Definitions

              	
                2

              
	
                SECTION
                  1.02.

              	
                Incorporation
                  by Reference of Trust Indenture Act

              	
                2

              
	
                SECTION
                  1.03.

              	
                Rules
                  of Construction

              	
                2

              

      

      

      ARTICLE
        II

      

      The
        Environmental Control Bonds

      

      
        	
                SECTION
                  2.01.

              	
                Form

              	
                3

              
	
                SECTION
                  2.02.

              	
                Execution,
                  Authentication and Delivery

              	
                3

              
	
                SECTION
                  2.03.

              	
                Denominations;
                  Environmental Control Bonds Issuable in Series

              	
                4

              
	
                SECTION
                  2.04.

              	
                Temporary
                  Environmental Control Bonds

              	
                5

              
	
                SECTION
                  2.05.

              	
                Registration;
                  Registration of Transfer and Exchange

              	
                5

              
	
                SECTION
                  2.06.

              	
                Mutilated,
                  Destroyed, Lost or Stolen Environmental Control Bonds

              	
                7

              
	
                SECTION
                  2.07.

              	
                Persons
                  Deemed Owner

              	
                8

              
	
                SECTION
                  2.08.

              	
                Payment
                  of Principal, Premium, if any, and Interest; Interest on Overdue
                  Principal
                  and Premium, if any;

                Principal,
                  Premium and Interest Rights Preserved

              	
                8

              
	
                SECTION
                  2.09.

              	
                Cancellation

              	
                9

              
	
                SECTION
                  2.10.

              	
                Authentication
                  and Delivery of Environmental Control Bonds

              	
                10

              
	
                SECTION
                  2.11.

              	
                Book-Entry
                  Environmental Control Bonds

              	
                10

              
	
                SECTION
                  2.12.

              	
                Notices
                  to Clearing Agency

              	
                10

              
	
                SECTION
                  2.13.

              	
                Definitive
                  Environmental Control Bonds

              	
                10

              
	
                SECTION
                  2.14

              	
                Tax
                  Treatment

              	
                16

              
	
                SECTION
                  2.15

              	
                State
                  Pledge

              	
                17

              
	
                SECTION
                  2.16

              	
                Security
                  Interests

              	
                17

              

      

      

      ARTICLE
        III

      

      Covenants

      

      
        	
                SECTION
                  3.01.

              	
                Payment
                  of Principal, Premium, if any, and Interest

              	
                18

              
	
                SECTION
                  3.02.

              	
                Maintenance
                  of Office or Agency

              	
                18

              
	
                SECTION
                  3.03.

              	
                Money
                  for Payments To Be Held in Trust

              	
                19

              
	
                SECTION
                  3.04.

              	
                Existence

              	
                20

              
	
                SECTION
                  3.05.

              	
                Protection
                  of Collateral

              	
                20

              

      

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

       

      
        	
                SECTION
                  3.06.

              	
                Opinions
                  as to Collateral

              	
                21

              
	
                SECTION
                  3.07.

              	
                Performance
                  of Obligations; SEC Filings

              	
                21

              
	
                SECTION
                  3.08.

              	
                Negative
                  Covenants

              	
                23

              
	
                SECTION
                  3.09.

              	
                Annual
                  Statement as to Compliance

              	
                24

              
	
                SECTION
                  3.10.

              	
                Issuer
                  May Consolidate, etc., Only on Certain Terms

              	
                24

              
	
                SECTION
                  3.11.

              	
                Successor
                  or Transferee

              	
                26

              
	
                SECTION
                  3.12.

              	
                No
                  Other Business

              	
                26

              
	
                SECTION
                  3.13.

              	
                No
                  Borrowing

              	
                27

              
	
                SECTION
                  3.14.

              	
                Guarantees,
                  Loans, Advances and Other Liabilities

              	
                27

              
	
                SECTION
                  3.15.

              	
                Capital
                  Expenditures

              	
                27

              
	
                SECTION
                  3.16.

              	
                Restricted
                  Payments

              	
                27

              
	
                SECTION
                  3.17.

              	
                Notice
                  of Events of Default

              	
                27

              
	
                SECTION
                  3.18.

              	
                Inspection

              	
                28

              
	
                SECTION
                  3.19.

              	
                Additional
                  Issuance

              	
                28

              
	
                SECTION
                  3.20.

              	
                Transfer
                  Agreement, Sale Agreement, Servicing Agreement Covenants and Swap
                  Agreement

              	
                29

              
	
                SECTION
                  3.21.

              	
                Taxes

              	
                32

              
	
                SECTION
                  3.22.

              	
                Separate
                  Entity

              	
                33

              

      

      

      ARTICLE
        IV

      

      Satisfaction
        and Discharge; Defeasance

      

      
        	
                SECTION
                  4.01.

              	
                Satisfaction
                  and Discharge of Indenture; Defeasance

              	
                33

              
	
                SECTION
                  4.02.

              	
                Conditions
                  to Defeasance

              	
                34

              
	
                SECTION
                  4.03.

              	
                Application
                  of Trust Money

              	
                35

              
	
                SECTION
                  4.04.

              	
                Repayment
                  of Moneys Held by Paying Agent

              	
                36

              

      

      

      ARTICLE
        V

      

      Remedies

      

      
        	
                SECTION
                  5.01.

              	
                Events
                  of Default

              	
                36

              
	
                SECTION
                  5.02.

              	
                Acceleration
                  of Maturity; Rescission and Annulment

              	
                37

              
	
                SECTION
                  5.03.

              	
                Collection
                  of Indebtedness and Suits for Enforcement by Indenture
                  Trustee

              	
                38

              
	
                SECTION
                  5.04.

              	
                Remedies;
                  Priorities

              	
                40

              
	
                SECTION
                  5.05.

              	
                Optional
                  Preservation of the Collateral

              	
                42

              
	
                SECTION
                  5.06.

              	
                Limitation
                  of Proceedings

              	
                42

              
	
                SECTION
                  5.07.

              	
                Unconditional
                  Rights of Environmental Control Bondholders To Receive Principal,
                  Premium,
                  if any, and Interest

              	
                43

              
	
                SECTION
                  5.08.

              	
                Restoration
                  of Rights and Remedies

              	
                43

              
	
                SECTION
                  5.09.

              	
                Rights
                  and Remedies Cumulative

              	
                43

              
	
                SECTION
                  5.10.

              	
                Delay
                  or Omission Not a Waiver

              	
                43

              
	
                SECTION
                  5.11.

              	
                Control
                  by Environmental Control Bondholders

              	
                44

              
	
                SECTION
                  5.12.

              	
                Waiver
                  of Past Defaults

              	
                44

              

      

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

       

      
        	
                SECTION
                  5.13.

              	
                Undertaking
                  for Costs

              	
                45

              
	
                SECTION
                  5.14.

              	
                Waiver
                  of Stay or Extension Laws

              	
                45

              
	
                SECTION
                  5.15.

              	
                Action
                  on Environmental Control Bonds

              	
                45

              

      

      

      ARTICLE
        VI

      

      The
        Indenture Trustee

      

      
        	
                SECTION
                  6.01.

              	
                Duties
                  and Liabilities of Indenture Trustee

              	
                45

              
	
                SECTION
                  6.02.

              	
                Rights
                  of Indenture Trustee

              	
                47

              
	
                SECTION
                  6.03.

              	
                Individual
                  Rights of Indenture Trustee

              	
                47

              
	
                SECTION
                  6.04.

              	
                Indenture
                  Trustee’s Disclaimer

              	
                47

              
	
                SECTION
                  6.05.

              	
                Notice
                  of Defaults

              	
                48

              
	
                SECTION
                  6.06.

              	
                Reports
                  by Indenture Trustee to Holders

              	
                48

              
	
                SECTION
                  6.07.

              	
                Compensation
                  and Indemnity

              	
                49

              
	
                SECTION
                  6.08.

              	
                Replacement
                  of Indenture Trustee

              	
                50

              
	
                SECTION
                  6.09.

              	
                Successor
                  Indenture Trustee by Merger

              	
                51

              
	
                SECTION
                  6.10.

              	
                Appointment
                  of Co-Trustee or Separate Trustee

              	
                51

              
	
                SECTION
                  6.11.

              	
                Eligibility;
                  Disqualification

              	
                52

              
	
                SECTION
                  6.12.

              	
                Preferential
                  Collection of Claims Against Issuer

              	
                53

              
	
                SECTION
                  6.14

              	
                Annual
                  Report by Independent Public Accountants

              	
                53

              
	
                SECTION
                  6.15

              	
                Custody
                  of Collateral

              	
                53

              

      

      

      ARTICLE
        VII

      

      Environmental
        Control Bondholders’ Lists and Reports

      

      
        	
                SECTION
                  7.01.

              	
                Issuer
                  To Furnish Indenture Trustee Names and Addresses of Environmental
                  Control
                  Bondholders

              	
                54

              
	
                SECTION
                  7.02.

              	
                Preservation
                  of Information; Communications to Environmental Control
                  Bondholders

              	
                54

              
	
                SECTION
                  7.03.

              	
                Reports
                  by Issuer

              	
                54

              
	
                SECTION
                  7.04.

              	
                Reports
                  by Indenture Trustee

              	
                55

              
	
                SECTION
                  7.05.

              	
                Provision
                  of Servicer Reports

              	
                55

              

      

      

      ARTICLE
        VIII

      

      Accounts,
        Disbursements and Releases

      

      
        	
                SECTION
                  8.01.

              	
                Collection
                  of Money

              	
                55

              
	
                SECTION
                  8.02.

              	
                Collection
                  Account

              	
                56

              
	
                SECTION
                  8.03.

              	
                Release
                  of Collateral

              	
                61

              
	
                SECTION
                  8.04.

              	
                Opinion
                  of Counsel

              	
                62

              
	
                SECTION
                  8.05.

              	
                Reports
                  by Independent Accountants

              	
                62

              

      

       

      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        IX

      

      Supplemental
        Indentures

      

      
        	
                SECTION
                  9.01.

              	
                Supplemental
                  Indentures Without Consent of Environmental Control
                  Bondholders

              	
                63

              
	
                SECTION
                  9.02.

              	
                Supplemental
                  Indentures with Consent of Environmental Control
                  Bondholders

              	
                64

              
	
                SECTION
                  9.03.

              	
                PSCWV
                  Condition

              	
                66

              
	
                SECTION
                  9.04.

              	
                Execution
                  of Supplemental Indentures

              	
                68

              
	
                SECTION
                  9.05.

              	
                Effect
                  of Supplemental Indenture

              	
                68

              
	
                SECTION
                  9.06.

              	
                Conformity
                  with Trust Indenture Act

              	
                68

              
	
                SECTION
                  9.07.

              	
                Reference
                  in Environmental Control Bonds to Supplemental Indentures

              	
                68

              

      

      

      ARTICLE
        X

      

      [RESERVED]

      

      ARTICLE
        XI

      

      Miscellaneous

      

      
        	
                SECTION
                  11.01.

              	
                Compliance
                  Certificates and Opinions, etc

              	
                69

              
	
                SECTION
                  11.02.

              	
                Form
                  of Documents Delivered to Indenture Trustee

              	
                69

              
	
                SECTION
                  11.03.

              	
                Acts
                  of Environmental Control Bondholders

              	
                70

              
	
                SECTION
                  11.04.

              	
                Notices,
                  etc., to Indenture Trustee, Issuer, Potomac Edison, PSCWV and Rating
                  Agencies

              	
                71

              
	
                SECTION
                  11.05.

              	
                Notices
                  to Environmental Control Bondholders; Waiver

              	
                71

              
	
                SECTION
                  11.06.

              	
                Alternate
                  Payment and Notice Provisions

              	
                72

              
	
                SECTION
                  11.07.

              	
                Conflict
                  with Trust Indenture Act

              	
                72

              
	
                SECTION
                  11.08.

              	
                Effect
                  of Headings and Table of Contents

              	
                72

              
	
                SECTION
                  11.09.

              	
                Successors
                  and Assigns

              	
                73

              
	
                SECTION
                  11.10.

              	
                Separability

              	
                73

              
	
                SECTION
                  11.11.

              	
                Benefits
                  of Indenture

              	
                73

              
	
                SECTION
                  11.12.

              	
                Legal
                  Holidays

              	
                73

              
	
                SECTION
                  11.13.

              	
                Governing
                  Law

              	
                73

              
	
                SECTION
                  11.14.

              	
                Counterparts

              	
                73

              
	
                SECTION
                  11.15.

              	
                Issuer
                  Obligation

              	
                73

              
	
                SECTION
                  11.16.

              	
                No
                  Petition

              	
                74

              

      

      

      

      Appendix A  Master
        Definitions

       

      Appendix
        B  Form
        of
        Series Supplement

      

      
        
          
          

        

        
          iv

          
            

          

        

        
          
          

        

      

       

      INDENTURE
        dated as of [___________] (as amended or otherwise supplemented from time
        to
        time, this “Indenture”),
        between PE ENVIRONMENTAL FUNDING LLC, a Delaware limited liability company
        (the “Issuer”),
        and
        U.S. Bank National Association, a national banking association, in its capacity
        as trustee for the benefit of the Holders of the Environmental Control Bonds,
        itself and each Swap Counterparty, if any (in its collective capacities,
        the
“Indenture
        Trustee”).

       

      The
        Issuer has duly authorized the execution and delivery of this Indenture to
        provide for one or more Series of Environmental Control Bonds, issuable as
        provided in this Indenture. Each such Series of Environmental Control Bonds
        will
        be issued only under a separate Series Supplement to this Indenture duly
        executed and delivered by the Issuer and the Indenture Trustee. The Issuer
        is
        entering into this Indenture, and the Indenture Trustee is accepting the
        trusts
        created hereby, each for good and valuable consideration, the receipt and
        sufficiency of which are hereby acknowledged and each intending to be legally
        bound hereby.

       

      NOW,
        THEREFORE, THIS INDENTURE WITNESSETH:

       

      That
        the
        Issuer, in consideration of the premises herein contained and of the purchase
        of
        the Environmental Control Bonds by the Holders and of other good and lawful
        consideration, the receipt and sufficiency of which are hereby acknowledged,
        and
        to secure, equally and ratably without prejudice, priority or distinction,
        except as specifically otherwise set forth in this Indenture, the payment
        of the
        Environmental Control Bonds, the payment of all other amounts due under or
        in
        connection with this Indenture (including, without limitation, all fees,
        expenses, counsel fees and other amounts due and owing to the Indenture Trustee)
        and the performance and observance of all of the covenants and conditions
        contained herein or in such Environmental Control Bonds, has hereby executed
        and
        delivered this Indenture and by these presents does herby and under one or
        more
        Series Supplements will convey, grant and assign, transfer and pledge, in
        each
        case, in and unto the Indenture Trustee, its successors and assigns forever,
        for
        the benefit of the Secured Parties of the related Series, all and singular
        the
        property described in one or more Series Supplements (such property with
        respect
        to a particular Series hereinafter referred to as the “Series
        Collateral”
and
        all
        such property, collectively, hereinafter referred to as the “Collateral”).
        Each
        Series Supplement will more particularly describe the obligations of the
        Issuer
        secured by the applicable Series Collateral.

       

      AND
        IT IS
        HEREBY COVENANTED, DECLARED AND AGREED between the parties hereto that all
        Environmental Control Bonds are to be issued, countersigned and delivered
        and
        that all of the Collateral is to be held and applied, subject to the further
        covenants, conditions, releases, uses and trusts hereinafter set forth, and
        the
        Issuer, for itself and any successor, does hereby covenant and agree to and
        with
        the Indenture Trustee and its successors in said trust, for the benefit of
        the
        Secured Parties, as follows:

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      ARTICLE
        I

       

      Definitions
        and Incorporation by Reference

       

      SECTION
        1.01.    Definitions.
        Capitalized terms used but not otherwise defined in this Indenture have the
        respective meanings set forth in Appendix A
        hereto
        unless the context otherwise requires.

       

      SECTION
        1.02.    Incorporation
        by Reference of Trust Indenture Act.
        Whenever this Indenture refers to a provision of the TIA, the provision is
        incorporated by reference in and made a part of this Indenture. Each of the
        following TIA terms used in this Indenture has the following
        meaning:

       

      “Commission”
        means the Securities and Exchange Commission.

       

      “indenture
        securities” means the Environmental Control Bonds.

       

      “indenture
        to be qualified” means this Indenture.

       

      “indenture
        trustee” or “institutional trustee” means the Indenture Trustee.

       

      All
        other
        TIA terms used in this Indenture that are defined by the TIA, defined by
        TIA
        reference to another statute or defined by Commission rule have the meaning
        assigned to them by such definitions.

       

      SECTION
        1.03.    Rules
        of Construction.
        Unless
        the context otherwise requires:

       

      (i)    
a
        term
        has the meaning assigned to it;

       

      (ii)    an
        accounting term not otherwise defined has the meaning assigned to it in
        accordance with generally accepted accounting principles as in effect from
        time
        to time;

       

      (iii)   “or”
is
        not exclusive;

       

      (iv)   “including”
        means including without limitation;

       

      (v)   words
        in
        the singular include the plural and words in the plural include the singular;
        and

       

      (vi)   the
        words
“herein”, “hereof”, “hereunder” and other words of similar import refer to this
        Indenture as a whole and not to any particular Article, Section or other
        subdivision.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        II

       

      The
        Environmental Control Bonds

       

      SECTION
        2.01.    Form.
        The
        Environmental Control Bonds and the Indenture Trustee’s certificate of
        authentication shall be in substantially the forms set forth in Exhibit A
        to the applicable Series Supplement, with such appropriate insertions,
        omissions, substitutions and other variations as are required or permitted
        by
        this Indenture or by the related Series Supplement and may have such
        letters, numbers or other marks of identification and such legends or
        endorsements placed thereon as may, consistently herewith, be determined
        by the
        Authorized Officer of the Issuer executing such Environmental Control Bonds,
        as
        evidenced by his or her execution of such Environmental Control Bonds. Any
        portion of the text of any Environmental Control Bond may be set forth on
        the
        reverse thereof, with an appropriate reference thereto on the face of the
        Environmental Control Bond. Each Environmental Control Bond shall be dated
        the
        date of its authentication.

       

      The
        Environmental Control Bonds shall be typewritten, printed, lithographed or
        engraved or produced by any combination of these methods (with or without
        steel
        engraved borders), all as determined by the Authorized Officer of the Issuer
        executing such Environmental Control Bonds, as evidenced by his or her execution
        of such Environmental Control Bonds.

       

      Each
        Environmental Control Bond shall bear upon its face the designation so selected
        for the Series or Tranche to which it belongs. The terms of all Environmental
        Control Bonds of the same Series shall be the same, unless such Series is
        comprised of one or more Tranches, in which case the terms of all Environmental
        Control Bonds of the same Tranche shall be the same.

       

      Each
        Environmental Control Bond shall state that the Statute provides that the
        State
        of West Virginia pledges to and agrees with the Environmental Control
        Bondholders that the State of West Virginia will not take or permit any action
        that impairs the value of the Environmental Control Property or , except
        as
        allowed under subsection (e) of W.Va Code §24-2-4e, reduce, alter or impair
        Environmental Control Charges that are imposed, collected and remitted for
        the
        benefit of the Environmental Control Bondholders until any principal, interest
        and premium, if any, in respect of the Environmental Control Bonds, all
        financing costs and all amounts to be paid to any assignee or financing party
        under an ancillary agreement are paid or performed in full.

       

      SECTION
        2.02.    Execution,
        Authentication and Delivery.
        The
        Environmental Control Bonds shall be executed on behalf of the Issuer by
        an
        Authorized Officer of the Issuer. The signature of any such Authorized Officer
        on the Environmental Control Bonds may be manual or facsimile.

       

      Environmental
        Control Bonds bearing the manual or facsimile signature of an individual
        who was
        at any time an Authorized Officer of the Issuer shall bind the Issuer,
        notwithstanding that such individuals or any of them have ceased to hold
        such
        offices prior to the authentication and delivery of such Environmental Control
        Bonds or did not hold such offices at the date of such Environmental Control
        Bonds.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      At
        any
        time and from time to time after the execution and delivery of this Indenture,
        the Issuer may deliver Environmental Control Bonds executed on behalf of
        the
        Issuer to the Indenture Trustee pursuant to an Issuer Order for authentication;
        and the Indenture Trustee shall authenticate and deliver such Environmental
        Control Bond as in this Indenture and in such Issuer Order provided and not
        otherwise.

       

      No
        Environmental Control Bond shall be entitled to any benefit under this Indenture
        or be valid or obligatory for any purpose, unless there appears on such
        Environmental Control Bond a certificate of authentication substantially
        in the
        form provided for in the related Series Supplement executed by the Indenture
        Trustee by the manual signature of one of its authorized signatories, and
        such
        certificate upon any Environmental Control Bond shall be conclusive evidence,
        and the only evidence, that such Environmental Control Bond has been duly
        authenticated and delivered hereunder.

       

      SECTION
        2.03.    Denominations;
        Environmental Control Bonds Issuable in Series.
        The
        Environmental Control Bonds of each Series shall be issuable as registered
        Environmental Control Bonds in the Authorized Initial Denominations specified
        in
        the Series Supplement therefor.

       

      The
        Environmental Control Bonds may, at the election of and as authorized by
        an
        Authorized Officer of the Issuer, and set forth in a Series Supplement, be
        issued in one or more Series (each of which may be comprised of one or more
        Tranches), and shall be designated generally as the “Environmental Control
        Bonds” of the Issuer, with such further particular designations added or
        incorporated in such title for the Environmental Control Bonds of any particular
        Series or Tranche as an Authorized Officer of the Issuer may determine and
        be
        set forth in the Series Supplement therefor.

       

      Each
        Series of Environmental Control Bonds shall be created by a
        Series Supplement authorized by an Authorized Officer of the Issuer and
        establishing the terms and provisions of such Series. The several Series
        and
        Tranches thereof may differ as between Series and Tranches, in respect of
        any of
        the following matters:

       

      (i)    designation
        of the Series and, if applicable, the Tranches thereof;

       

      (ii)   the
        aggregate principal amount of the Environmental Control Bonds of the Series
        and,
        if applicable, each Tranche thereof;

       

      (iii)   the
        Bond
        Rate of the Series and, if applicable, each Tranche thereof or the formula,
        if
        any, used to calculate the applicable Bond Rate or Bond Rates for the
        Series;

       

      (iv)   the
        Payment Dates for the Series and each Tranche thereof;

       

      (v)   the
        Expected Final Payment Date of the Series, and, if applicable, each Tranche
        thereof;

       

      (vi)   the
        Series Termination Date for the Series and, if applicable, the Tranche
        Termination Dates for each Tranche thereof;

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (vii)   the
        Series Issuance Date for the Series;

       

      (viii)   the
        place
        or places for payments with respect to the Series;

       

      (ix)    
the
        Authorized Initial Denominations for the Series;

       

      (x)     
        the
        Expected Sinking Fund Schedule for the Series;

       

      (xi)    
the
        Required Capital Amount;

       

      (xii)    the
        Calculation Dates and True-Up Adjustment Dates for the Series;

       

      (xiii)   the
        credit enhancement, if any, applicable to the Series and each Tranche thereof
        and, with respect to Floating Rate Bonds, the terms of the applicable Swap
        Agreement and the identity of the Swap Counterparty; and

       

      (xiv)   any
        other
        terms of the Series or Tranche that are not inconsistent with the provisions
        of
        this Indenture.

       

      SECTION
        2.04.    Temporary
        Environmental Control Bonds.
        Pending
        the preparation of Definitive Environmental Control Bonds, or by agreement
        of
        the purchasers of all Environmental Control Bonds, the Issuer may execute,
        and
        upon receipt of an Issuer Order the Indenture Trustee shall authenticate
        and
        deliver, temporary Environmental Control Bonds which are printed, lithographed,
        typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
        Environmental Control Bonds in lieu of which they are issued and with such
        variations not inconsistent with the terms of this Indenture and the related
        Series Supplement as the Authorized Officer of the Issuer executing such
        Environmental Control Bonds may determine, as evidenced by his or her execution
        of such Environmental Control Bonds.

       

      If
        temporary Environmental Control Bonds are issued, the Issuer will cause
        Definitive Environmental Control Bonds to be prepared without unreasonable
        delay. After the preparation of Definitive Environmental Control Bonds, the
        temporary Environmental Control Bonds shall be exchangeable for Definitive
        Environmental Control Bonds upon surrender of the temporary Environmental
        Control Bonds at the office or agency of the Issuer to be maintained as provided
        in Section 3.02, without charge to the Holder. Upon surrender for
        cancellation of any one or more temporary Environmental Control Bonds, the
        Issuer shall execute and the Indenture Trustee shall authenticate and deliver
        in
        exchange therefor a like initial principal amount of Definitive Environmental
        Control Bonds in Authorized Initial Denominations. Until so exchanged, the
        temporary Environmental Control Bonds shall in all respects be entitled to
        the
        same benefits under this Indenture as Definitive Environmental Control
        Bonds.

       

      SECTION
        2.05.    Registration;
        Registration of Transfer and Exchange.
        The
        Issuer shall cause to be kept a register (the “Bond
        Register”)
        in
        which, subject to such reasonable regulations as it may prescribe, the Issuer
        shall provide for the registration of Environmental Control Bonds and the
        registration of transfers of Environmental Control Bonds. The Indenture Trustee
        shall be the “Bond
        Registrar”
for
        the
        purpose of registering Environmental Control Bonds and transfers of
        Environmental Control Bonds as herein provided. Upon any
        resignation

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      of
        any
        Bond Registrar, the Issuer shall promptly appoint a successor or, if it elects
        not to make such an appointment, assume the duties of Bond
        Registrar.

       

      If
        a
        Person other than the Indenture Trustee is appointed by the Issuer as Bond
        Registrar, the Issuer shall give the Indenture Trustee prompt written notice
        of
        the appointment of such Bond Registrar and of the location, and any change
        in
        the location, of the Bond Register, and the Indenture Trustee shall have
        the
        right to inspect the Bond Register at all reasonable times and to obtain
        copies
        thereof, and the Indenture Trustee shall have the right to conclusively rely
        upon a certificate executed on behalf of the Bond Registrar by an Authorized
        Officer as to the names and addresses of the Holders of the Environmental
        Control Bonds and the original and Outstanding principal amounts and number
        of
        such Environmental Control Bonds.

       

      Upon
        surrender for registration of transfer of any Environmental Control Bond
        at the
        office or agency of the Issuer to be maintained as provided in
        Section 3.02, an Authorized Officer shall execute, and the Indenture
        Trustee shall authenticate and the Environmental Control Bondholder shall
        obtain
        from the Indenture Trustee, in the name of the designated transferee or
        transferees, one or more new Environmental Control Bonds in any Authorized
        Initial Denominations, of a like Series (and, if applicable, Tranche) and
        aggregate initial principal amount.

       

      At
        the
        option of the Holder, Environmental Control Bonds may be exchanged for other
        Environmental Control Bonds of a like Series (and, if applicable, Tranche)
        and
        aggregate initial principal amount in Authorized Initial Denominations, upon
        surrender of the Environmental Control Bonds to be exchanged at such office
        or
        agency. Whenever any Environmental Control Bonds are so surrendered for
        exchange, an Authorized Officer shall execute, and the Indenture Trustee
        shall
        authenticate and the Environmental Control Bondholder shall obtain from the
        Indenture Trustee, the Environmental Control Bonds which the Environmental
        Control Bondholder making the exchange is entitled to receive.

       

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

       

      Every
        Environmental Control Bond presented or surrendered for registration of transfer
        or exchange shall be duly endorsed by, or be accompanied by a written instrument
        of transfer in the form set forth in Exhibit A to the applicable
        Series Supplement or such other form as is satisfactory to the Indenture
        Trustee duly executed by, the Holder thereof or such Holder’s attorney duly
        authorized in writing, with such signature guaranteed by an Eligible Guarantor
        Institution in the form set forth in such Environmental Control
        Bond.

       

      No
        service charge shall be made to a Holder for any registration of transfer
        or
        exchange of Environmental Control Bonds, but, other than in respect of exchanges
        pursuant to Sections 2.04 or 2.06 not involving any transfer, the Issuer
        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 Environmental Control Bonds.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      The
        preceding provisions of this Section notwithstanding, the Issuer shall not
        be
        required to make, and the Bond Registrar need not register, transfers or
        exchanges of Environmental Control Bonds selected for transfers or exchanges
        of
        any Environmental Control Bond for a period of 15 days preceding the date
        on
        which final payment of principal is to be made with respect to such
        Environmental Control Bond.

       

      SECTION
        2.06.    Mutilated,
        Destroyed, Lost or Stolen Environmental Control Bonds.
        If
        (i) any mutilated Environmental Control Bond is surrendered to the
        Indenture Trustee, or the Indenture Trustee receives evidence to its
        satisfaction of the destruction, loss or theft of any Environmental Control
        Bond, and (ii) there is delivered to the Indenture Trustee such security or
        indemnity as may be required by it to hold the Issuer and the Indenture Trustee
        harmless, then, in the absence of notice to the Issuer, the Bond Registrar
        or
        the Indenture Trustee that such Environmental Control Bond has been acquired
        by
        a bona fide purchaser, an Authorized Officer shall execute, and upon such
        Authorized Officer’s request the Indenture Trustee shall authenticate and
        deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
        or
        stolen Environmental Control Bond, a replacement Environmental Control Bond
        of
        like Series (and, if applicable, Tranche), tenor and initial principal amount
        in
        Authorized Initial Denominations, bearing a number not contemporaneously
        Outstanding; provided, however, that if any such destroyed, lost or stolen
        Environmental Control Bond, but not a mutilated Environmental Control Bond,
        shall have become or within seven days shall be due and payable, instead
        of
        issuing a replacement Environmental Control Bond, the Issuer may pay such
        destroyed, lost or stolen Environmental Control Bond when so due or payable
        without surrender thereof. If, after the delivery of such replacement
        Environmental Control Bond or payment of a destroyed, lost or stolen
        Environmental Control Bond pursuant to the proviso to the preceding sentence,
        a
        bona fide purchaser of the original Environmental Control Bond in lieu of
        which
        such replacement Environmental Control Bond was issued presents for payment
        such
        original Environmental Control Bond, the Issuer and the Indenture Trustee
        shall
        be entitled to recover such replacement Environmental Control Bond (or such
        payment) from the Person to whom it was delivered or any Person taking such
        replacement Environmental Control Bond from such Person to whom such replacement
        Environmental Control Bond was delivered or any assignee of such Person,
        except
        a bona fide purchaser, and shall be entitled to recover upon the security
        or
        indemnity provided therefor to the extent of any loss, damage, cost or expense
        incurred by the Issuer or the Indenture Trustee in connection
        therewith.

       

      Upon
        the
        issuance of any replacement Environmental Control Bond under this Section,
        the
        Issuer may require the payment by the Holder of such Environmental Control
        Bond
        of a sum sufficient to cover any tax or other governmental charge that may
        be
        imposed in relation thereto and any other reasonable expenses (including
        the
        fees and expenses of the Indenture Trustee) connected therewith.

       

      Every
        replacement Environmental Control Bond issued pursuant to this Section in
        replacement of any mutilated, destroyed, lost or stolen Environmental Control
        Bond shall constitute an original additional contractual obligation of the
        Issuer, whether or not the mutilated, destroyed, lost or stolen Environmental
        Control Bond 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 Environmental Control Bonds duly issued hereunder.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      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 Environmental Control
        Bonds.

       

      SECTION
        2.07.    Persons
        Deemed Owner.
        Prior
        to due presentment for registration of transfer of any Environmental Control
        Bond, the Issuer, the Indenture Trustee and any agent of the Issuer or the
        Indenture Trustee may treat the Person in whose name any Environmental Control
        Bond is registered (as of the day of determination) as the owner of such
        Environmental Control Bond for the purpose of receiving payments of principal
        of
        and premium, if any, and interest on such Environmental Control Bond and
        for all
        other purposes whatsoever, whether or not such Environmental Control Bond
        be
        overdue, and neither the Issuer, the Indenture Trustee nor any agent of the
        Issuer or the Indenture Trustee shall be affected by notice to the contrary.
        Upon the issuance of Definitive Environmental Control Bonds, the Indenture
        Trustee shall recognize the Holders of Definitive Environmental Control Bonds
        as
        Environmental Control Bondholders.

       

      SECTION
        2.08.    Payment
        of Principal, Premium, if any, and Interest; Interest on Overdue Principal
        and
        Premium, if any; Principal, Premium and Interest Rights
        Preserved.  (a) The
        Environmental Control Bonds shall accrue interest as provided in the form
        of
        Environmental Control Bond attached to the Series Supplement for such
        Environmental Control Bonds, at the applicable Bond Rate specified therein,
        and
        such interest shall be payable on each Payment Date as specified therein.
        Any
        installment of interest, principal or premium, if any, payable on any
        Environmental Control Bond which is punctually paid or duly provided for
        by the
        Issuer on the applicable Payment Date or paid in accordance with the provisions
        of clause (c) below shall be paid to the Person in whose name such Environmental
        Control Bond (or one or more Predecessor Environmental Control Bonds) is
        registered on the Bond Register as of the close of business on the applicable
        Record Date or Special Record Date, in accordance with clause (c) below,
        for
        such Payment Date or Special Record Date, by check mailed first-class, postage
        prepaid to such Person’s address as it appears on the Bond Register as of the
        close of business on such date or in such other manner as may be provided
        in the
        related Series Supplement, except that (i) upon application to the
        Indenture Trustee by any Holder owning Environmental Control Bonds of any
        tranche in the principal amount of $10,000,000 or more not later than the
        applicable Record Date payment will be made by wire transfer to an account
        maintained by such Holder in New York, New York; (ii) with respect to
        Environmental Control Bonds registered as of the close of business on the
        applicable Record Date or Special Record Date in the name of the nominee
        of the
        Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
        made by wire transfer in immediately available funds to the account designated
        by such nominee; and (iii) with respect to the final installment of
        principal and premium, if any, payable with respect to such Environmental
        Control Bond on a Payment Date, such amounts shall be payable as provided
        in
        clause (b) below. The funds represented by any such checks returned
        undelivered shall be held in accordance with Section 3.03
        hereof.

       

      (b)    The
        principal of each Environmental Control Bond of each Series (and, if applicable,
        Tranche) shall be payable in installments on each Payment Date specified
        in the
        Expected Sinking Fund Schedule attached to the Series Supplement for such
        Environmental Control Bonds, but only to the extent that moneys are available
        for such payment pursuant to Section 8.02. Failure to pay in accordance
        with such Expected Sinking Fund Schedule because

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      moneys
        are not so available pursuant to Section 8.02 to make such payments shall
        not constitute a Default or Event of Default under this Indenture.
        Notwithstanding the foregoing, the entire unpaid principal amount of the
        Environmental Control Bonds of any Series or Tranche shall be due and payable,
        if not previously paid (i) on the Series Termination Date (or, if
        applicable, Tranche Termination Date) therefor or (ii) on the date on which
        the Environmental Control Bonds of all Series have been declared immediately
        due
        and payable in accordance with Section 5.02. The Indenture Trustee shall
        notify the Person in whose name an Environmental Control Bond is registered
        at
        the close of business on the Record Date second preceding the Payment Date
        on
        which the Issuer expects that the final installment of principal of and premium,
        if any, and interest on such Environmental Control Bond will be paid. Such
        notice shall be mailed no later than ten days prior to such final Payment
        Date
        and shall specify that such final installment of principal and premium, if
        any,
        will be payable to the Person in whose name an Environmental Control Bond
        is
        registered at the close of business on the Record Date immediately preceding
        such final Payment Date and only upon presentation and surrender of such
        Environmental Control Bond and shall specify the office or agency of the
        Indenture Trustee where such Environmental Control Bond may be presented
        and
        surrendered for payment of such installment.

       

      (c)    If
        the
        Issuer defaults in a payment of interest on the Environmental Control Bonds
        of
        any Series, or is in default with respect to any amount payable to any Swap
        Counterparty in accordance with any Swap Agreement, the Issuer shall pay
        defaulted interest or such other amount, as the case may be, (plus interest
        on
        such defaulted interest or on such other amount at the applicable Bond Rate
        to
        the extent lawful) in any lawful manner (subject to the availability of such
        amounts in the related Tranche Subaccount, in the case of interest owed with
        respect to any Floating Rate Bonds). The Issuer shall pay such defaulted
        interest to the Persons who are Environmental Control Bondholders and to
        any
        Swap Counterparty, as applicable, at the rate specified in the related Series
        Supplement or Swap Agreement, respectively, on a subsequent Special Record
        Date,
        which date shall be at least five Business Days prior to the Special Payment
        Date. The Issuer shall fix or cause to be fixed any such Special Record Date
        and
        Special Payment Date, and, at least fifteen days before any such special
        record
        date, the Indenture Trustee shall mail to each affected Environmental Control
        Bondholder a notice that states the Special Record Date, the Special Payment
        Date and the amount of defaulted interest (plus interest on the defaulted
        interest) to be paid.

       

      SECTION
        2.09.    Cancellation.
        All
        Environmental Control Bonds surrendered for payment, registration of transfer
        or
        exchange shall, if surrendered to any Person other than the Indenture Trustee,
        be delivered to the Indenture Trustee and shall be promptly canceled by the
        Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee
        for cancellation any Environmental Control Bonds previously authenticated
        and
        delivered hereunder which the Issuer may have acquired in any manner whatsoever,
        and all Environmental Control Bonds so delivered shall be promptly canceled
        by
        the Indenture Trustee. No Environmental Control Bonds shall be authenticated
        in
        lieu of or in exchange for any Environmental Control Bonds canceled as provided
        in this Section, except as expressly permitted by this Indenture. All canceled
        Environmental Control Bonds may be held or disposed of by the Indenture Trustee
        in accordance with its standard retention or disposal policy as in effect
        at the
        time unless the Issuer shall direct by an Issuer Order that they be destroyed
        or
        returned to it;

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      provided
        that such Issuer Order is timely and the Environmental Control Bonds have
        not
        been previously disposed of by the Indenture Trustee.

       

      SECTION
        2.10.    Authentication
        and Delivery of Environmental Control Bonds.
        The
        Issuer may issue Environmental Control Bonds of a new Series from time to
        time
        as a Financing Issuance or a Refunding Issuance.

       

      Environmental
        Control Bonds of a new Series may from time to time be executed by an Authorized
        Officer and delivered to the Indenture Trustee for authentication and thereupon
        the same shall be authenticated and delivered by the Indenture Trustee upon
        delivery by the Issuer, at the Issuer’s expense, to the Indenture Trustee of the
        following:

       

      (1)   Authentication
        Order.
        An
        Issuer Order authorizing and directing the execution, authentication and
        delivery of the Environmental Control Bonds by the Indenture Trustee and
        specifying the principal amount of Environmental Control Bonds to be
        authenticated.

       

      (2)   Authorizations.
        Either
        (i) a certificate of authentication or other official document evidencing
        the due authorization, approval or consent of any governmental body or bodies
        at
        the time having jurisdiction, together with an Opinion of Counsel on which
        the
        Indenture Trustee is entitled to rely to the effect that no authorization,
        approval, or consent of any other governmental body is required for the valid
        issuance, authentication and delivery of such Environmental Control Bonds,
        or
        (ii) an Opinion of Counsel that no such authorization, approval, or consent
        of any governmental body is required, except for, in the case of (i) and
        (ii),
        such registrations as are required under the Blue Sky and securities laws
        of any
        State.

       

      (3)   Authorizing
        Certificate.
        A
        certified resolution of the Issuer authorizing the execution and delivery
        of the
        Series Supplement for the Environmental Control Bonds applied for and the
        execution, authentication and delivery of such Environmental Control
        Bonds.

       

      (4)   Series
        Supplement.
        A
        Series Supplement for the Series of Environmental Control Bonds applied
        for, which shall set forth the provisions and form of the Environmental Control
        Bonds of such Series (and, if applicable, each Tranche thereof).

       

      (5)   Certificates
        of the Issuer, the Transferor and the Seller.
        a. An
        Officer’s Certificate from the Issuer, dated as of the Series Issuance
        Date, stating: (i) that no Default or Event of Default has occurred and is
        continuing under this Indenture and that the issuance of the Environmental
        Control Bonds applied for will not result in any Default or Event of Default;
        (ii) that the Issuer has appointed the firm of Independent registered
        public accountants as contemplated in Section 8.05; (iii) that
        attached thereto are duly executed, true and complete copies of the Transfer
        Agreement, the Sale Agreement and the Servicing Agreement; (iv) that all
        filings with the PSCWV pursuant to the Statute and all UCC financing statements
        with respect to the Series Collateral that are required to be filed in
        accordance with the terms of the Transfer Agreement, the Sale Agreement,
        the
        Servicing Agreement or this Indenture have been filed as required;
        and

      
         

        
          
            
            

          

          
            10

            
              

            

          

          
            
            

          

        

         

        (v) that
          all conditions precedent provided in the Indenture relating to the
          authentication and delivery of the Environmental Control Bonds have been
          complied with.

         

      

      (b)    An
        Officer’s Certificate from the Transferor, dated as of the Series Issuance
        Date, to the effect that, in the case of the Environmental Control Property
        to
        be transferred to the Seller on such date immediately prior to the conveyance
        thereof to the Seller pursuant to the Transfer Agreement:

       

      (i)    no
        entity, other than the Transferor, had any ownership interest in such
        Environmental Control Property at any time; to the extent of the Seller’s
        interest in the Environmental Control Property, such interest in the
        Environmental Control Property has been validly and absolutely transferred
        to
        the Seller free and clear of all Liens (other than Liens created by the Issuer
        pursuant to this Indenture); the Transferor has the corporate power and
        authority to transfer such Environmental Control Property to the Seller;
        and the
        Transferor has duly authorized such absolute transfer to the Seller by all
        necessary corporate action; and

       

      (ii)   the
        attached copy of the Financing Order creating such Environmental Control
        Property is true and correct and is in full force and effect.

       

      (c)    An
        Officer’s Certificate from the Seller, dated as of the Series Issuance
        Date, to the effect that, in the case of the Initial Transferred Environmental
        Control Property to be sold to the Issuer on such date immediately prior
        to the
        conveyance thereof to the Issuer pursuant to the Sale Agreement: the Seller
        is
        the sole owner of such Initial Transferred Environmental Control Property;
        such
        Initial Transferred Environmental Control Property has been validly transferred
        to the Issuer free and clear of all Liens (other than Liens created by the
        Issuer pursuant to this Indenture); the Seller has the limited liability
        company
        power and authority to own, sell and assign such Initial Transferred
        Environmental Control Property to the Issuer; and the Seller has duly authorized
        such sale and assignment to the Issuer by all necessary limited liability
        company action.

       

      (6)   Opinion
        of Counsel.
        An
        Opinion of Counsel, portions of which may be delivered by counsel for the
        Issuer, for the Transferor, the Seller, the Servicer and the Administrator
        dated
        as of the Series Issuance Date, to the collective effect that:

       

      (a)    the
        Issuer has the power and authority to execute and deliver the
        Series Supplement and this Indenture and to issue the Environmental Control
        Bonds applied for, each of the Series Supplement, this Indenture and the
        Environmental Control Bonds applied for have been duly authorized, executed
        and
        delivered, and the Issuer is duly organized and in good standing under the
        laws
        of the jurisdiction of its organization;

       

      (b)    the
        Environmental Control Bonds applied for, when authenticated in accordance
        with
        the provisions of the Indenture and the related Series Supplement and delivered,
        will constitute valid and binding obligations of the Issuer entitled to the
        benefits of the Indenture and the related Series Supplement, enforceable in
        accordance with the terms of such Bonds except as such enforceability may
        be
        subject to bankruptcy,

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      insolvency,
        moratorium, reorganization and other similar laws affecting the rights and
        remedies of creditors generally and general principles of equity (regardless
        of
        whether such enforceability is considered in a proceeding in equity or at
        law);

       

      (c)    the
        Indenture (including the related Series Supplement), the Sale Agreement,
        the Servicing Agreement and the Issuer Administration Agreement are valid
        and
        binding agreements of the Issuer, enforceable in accordance with their
        respective terms except as such enforceability may be subject to bankruptcy,
        insolvency, moratorium, reorganization and other similar laws affecting the
        rights and remedies of creditors generally and general principles of equity
        (regardless of whether such enforceability is considered in a proceeding
        in
        equity or at law);

       

      (d)    the
        Transfer Agreement is a valid and binding agreement of the Transferor,
        enforceable against the Transferor in accordance with its terms except as
        such
        enforceability may be subject to bankruptcy, insolvency, moratorium,
        reorganization and other similar laws affecting the rights and remedies of
        creditors generally and general principles of equity (regardless of whether
        such
        enforcement is considered in a proceeding in equity or at law);

       

      (e)    the
        Transfer Agreement, the Sale Agreement and the PER Administration Agreement
        are
        valid and binding agreements of the Seller, enforceable against the Seller
        in
        accordance with their respective terms except as such enforceability may
        be
        subject to bankruptcy, insolvency, moratorium, reorganization and other similar
        laws affecting the rights and remedies of creditors generally and general
        principles of equity (regardless of whether such enforcement is considered
        in a
        proceeding in equity or at law);

       

      (f)    the
        Servicing Agreement is a valid and binding agreement of the Servicer,
        enforceable against the Servicer in accordance with its terms except as such
        enforceability may be subject to bankruptcy, insolvency, moratorium,
        reorganization and other similar laws affecting the rights and remedies of
        creditors generally and general principles of equity (regardless of whether
        such
        enforcement is considered in a proceeding in equity or at law);

       

      (g)    the
        Issuer Administration Agreement is a valid and binding agreement of the
        Administrator, enforceable against the Administrator in accordance with its
        terms except as such enforceability may be subject to bankruptcy, insolvency,
        moratorium, reorganization and other similar laws affecting the rights and
        remedies of creditors generally and general principles of equity (regardless
        of
        whether such enforcement is considered in a proceeding in equity or at
        law);

       

      (h)    all
        filings with, and orders of, the PSCWV pursuant to the Statute that are
        necessary to transfer the Environmental Control Property to the Seller and
        subsequently the Transferred Environmental Control Property from the Seller
        to
        the Issuer have been executed and filed. Except for continuation filings
        with
        the Secretary of State of the State of West Virginia, all filings, including
        filings with the PSCWV and the Secretary of State of the State of West Virginia
        pursuant to the Statute, that are necessary

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      to
        fully
        preserve and protect the interests of the Seller in the Environmental Control
        Property and the Issuer in the Transferred Environmental Control Property
        have
        been executed and filed.

       

      (i)    [(I) to
        the extent that the provisions of Section 24-2-4e(l) of the Statute apply
        to the grant of a security interest by the Issuer in the Series Collateral,
        including the Transferred Environmental Control Property pursuant to
        Section 24-2-4e(l) of the Statute and the Financing Order, pursuant to this
        Indenture, then upon the later of the time (i) the Financing Order is
        issued, (ii) this Indenture is executed and delivered and (iii) value
        is received for the Environmental Control Bonds, (A) this Indenture creates
        in favor of the Indenture Trustee a security interest in the rights of the
        Issuer in the Series Collateral, (B) such security interest is valid and
        enforceable against the Issuer and third parties (subject to the rights of
        any
        third parties holding security interests in such Series Collateral in the
        manner
        described in Section 24-2-4e(l)(3) of the Statute), and has attached,
        (C) once the filing of a financing statement is made in accordance with
        Section 24-2-4(e)(l) of the Statute, such security interest will be perfected,
        and (D) such perfected security interest is of first priority; and
        (II) to the extent that the provisions of Section 24-2-4e(l) of the
        Statute do not apply to the grant of a security interest by the Issuer in
        the
        Series Collateral pursuant to this Indenture, then upon the giving of value
        by
        the Indenture Trustee to the Issuer with respect to the Series Collateral,
        (A) this Indenture creates in favor of the Indenture Trustee a security
        interest in the rights of the Issuer in the Series Collateral, (B) such
        security interest is enforceable against the Issuer and third parties with
        respect to such Series Collateral, (C) such security interest is perfected
        upon the filing of a financing statement in accordance with the Statute and
        Article Nine of the West Virginia [and Delaware] UCC, and (D) such
        perfected security interest is of first priority;] [To
        be reviewed by WVA and DE counsel.]

       

      (j)    the
        Indenture has been duly qualified under the Trust Indenture Act and either
        the
        Series Supplement for the Environmental Control Bonds applied for has been
        duly qualified under the Trust Indenture Act or no such qualification of
        such
        Series Supplement is necessary;

       

      (k)    the
        Issuer is not an “investment company” or under the “control” of an “investment
        company” as such terms are defined under the Investment Company Act of 1940, as
        amended;

       

      (l)    all
        instruments furnished to the Indenture Trustee conform to the requirements
        of
        this Indenture and constitute all the documents required to be delivered
        hereunder for the Indenture Trustee to authenticate and deliver the
        Environmental Control Bonds applied for, and all conditions precedent provided
        for in this Indenture relating to the authentication and delivery of the
        Environmental Control Bonds have been complied with;

       

      (m)    either
        (A) the Registration Statement is effective under the Securities Act and,
        to the best of such counsel’s knowledge and information, no stop order
        suspending the effectiveness of the Registration Statement has been issued
        under
        the Securities Act nor have proceedings therefor been instituted or threatened
        by the

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      Commission
        or (B) the Environmental Control Bonds are exempt from the registration
        requirements under the Securities Act;

       

      (n)    the
        Transfer Agreement, the Sale Agreement and the Servicing Agreement and the
        Issuer Administration Agreement have been duly authorized, executed and
        delivered by the Issuer, the Transferor, the Seller, the Servicer and the
        Administrator, as applicable.

       

      (7)    [Accountant’s
        Certificate or Opinion.
        A
        certificate or opinion, addressed to the Issuer and the Indenture Trustee
        complying with the requirements of Section 11.01 hereof, of a firm of
        Independent certified public accountants of recognized national reputation
        to
        the effect that (i) such accountants are Independent with respect to the
        Issuer within the meaning of the Indenture, and are independent public
        accountants within the meaning of the standards of The American Institute
        of
        Certified Public Accountants, and (ii) with respect to the Collateral, they
        have made such calculations as they deemed necessary for the purpose and
        determined that, based on the assumptions used in calculating the initial
        Environmental Control Charges with respect to the Transferred Environmental
        Control Property or, if applicable, the most recent revised Environmental
        Control Charges with respect to the Transferred Environmental Control Property,
        and taking into account amounts on deposit in the Excess Funds Subaccount,
        as of
        the Series Issuance Date for such Series (after giving effect to the
        issuance of such Series and the application of the proceeds therefrom) such
        Environmental Control Charges are sufficient to (a) pay Operating Expenses
        when incurred, (b) pay interest on each Series of Environmental Control
        Bonds at their respective Bond Rates when due, or, with respect to Tranches
        or
        Series for which a Swap Agreement is in effect and for which any payments
        due
        thereunder from the applicable Counterparty are being received by the Issuer,
        regular fixed payments due to the related Counterparties (not including any
        breakage or termination payments), (c) pay principal of the Environmental
        Control Bonds of all Series in accordance with their respective Expected
        Sinking
        Fund Schedules, and (d) replenish the Capital Subaccount up to the Required
        Capital Amount as of each Payment Date.] [Confirm with accountants and
        Trustee]

       

      (8)    Rating
        Agency Condition.
        The
        Indenture Trustee shall receive written notice reasonably satisfactory to
        it
        from each Rating Agency that the Rating Agency Condition will be satisfied
        with
        respect to the issuance of such new Series if, at the time, there are any
        Outstanding Series of Environmental Control Bonds. Additionally, such new
        Series
        shall be rated “Aaa” by Moody’s, “AAA” by S&P and “AAA” by
        Fitch.

       

      (9)    Bills
        of Sale.
        If the
        issuance of an additional Series of Environmental Control Bonds is a Financing
        Issuance, the Bill of Sale delivered to the Issuer under the Sale Agreement
        with
        respect to the Transferred Environmental Control Property being purchased
        with
        the proceeds of such Financing Issuance.

       

      (10)   Moneys
        for Refunding.
        If the
        issuance of a Series of Environmental Control Bonds is a Refunding Issuance,
        the
        amount of money necessary to pay the outstanding principal balance of, and
        premium and interest on, the Environmental

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      Control
        Bonds being refunded, such money to be deposited into a separate account
        with
        the Indenture Trustee.

       

      (11)   Other
        Requirements.
        Such
        other documents, certificates, agreements, instruments or opinions as the
        Indenture Trustee may reasonably require.

       

      SECTION
        2.11.    Book-Entry
        Environmental Control Bonds.
        Unless
        otherwise specified in the related Series Supplement, each Series, upon original
        issuance, will be issued in the form of a typewritten Environmental Control
        Bond
        or Environmental Control Bonds representing the Book-Entry Environmental
        Control
        Bonds, to be delivered to the Indenture Trustee as custodian for The Depository
        Trust Company, the initial Clearing Agency, by, or on behalf of, the Issuer.
        Such Environmental Control Bond shall initially be registered on the Bond
        Register in the name of Cede & Co., the nominee of the initial Clearing
        Agency, and no Bondholder will receive a definitive Environmental Control
        Bond
        representing such Holder’s interest in such Environmental Control Bond, except
        as provided in Section 2.13. Unless and until Definitive Environmental Control
        Bonds have been issued to Environmental Control Bondholders pursuant to Section
        2.13:

       

      (a)    the
        provisions of this Section 2.11 shall be in full force and effect; 

       

      (b)    the
        Bond
        Registrar and the Indenture Trustee shall be entitled to deal with the then
        acting Clearing Agency for all purposes of this Indenture (including the
        payment
        of Principal of and interest on the Environmental Control Bonds and the giving
        of instructions or directions hereunder) as the sole Holder of the Environmental
        Control Bonds, and shall have no obligation to the Environmental Control
        Bond
        Owners; 

       

      (c)    to
        the
        extent that the provisions of this Section 2.11 conflict with any other
        provisions of this Indenture, the provisions of this Section 2.11 shall
        control;

       

      (d)    the
        rights of the Environmental Control Bond Owners shall be exercised only through
        the then acting Clearing Agency and shall be limited to those established
        by law
        and agreements between such the Environmental Control Bond Owners and the
        Clearing Agency or the Clearing Agency Participants. Pursuant to the DTC
        Agreement, unless and until Definitive Environmental Control Bonds are issued
        pursuant to Section 2.13, the initial Clearing Agency will make book-entry
        transfers among the Clearing Agency Participants and receive and transmit
        payments of Principal of and interest on the Environmental Control Bonds
        to such
        Clearing Agency Participants; and 

       

      (e)    whenever
        this Indenture requires or permits actions to be taken based upon instructions
        or directions of Holders evidencing a specified percentage of the Outstanding
        Amount of the Environmental Control Bonds or a Series or Tranche thereof,
        the
        Clearing Agency shall be deemed to represent such percentage only to the
        extent
        that it has received instructions to such effect from the Environmental Control
        Bond Owners or Clearing Agency Participants owning or representing,
        respectively, such required percentage of the beneficial interest in the
        Environmental Control Bonds or such Series or Tranche and has delivered such
        instructions to the Indenture Trustee.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      SECTION
        2.12.    Notices
        to Clearing Agency.
        Whenever a notice or other communication to the Environmental Control
        Bondholders is required under this Indenture, unless and until Definitive
        Environmental Control Bonds shall have been issued to the Environmental Control
        Bond Owners pursuant to Section 2.13, the Indenture Trustee shall give all
        such
        notices and communications specified herein to be given to Environmental
        Control
        Bondholders to the Clearing Agency, and shall have no obligation to the
        Environmental Control Bond Owners.

       

      SECTION
        2.13.    Definitive
        Environmental Control Bonds.
        If (i)
        the Issuer advises the Indenture Trustee in writing that the then acting
        Clearing Agency is no longer willing or able to properly discharge its
        responsibilities as nominee and depository with respect to the book-entry
        bonds
        of any Series or Tranche and the Issuer is unable to locate a qualified
        successor, (ii) the Issuer, at its option, advises the Indenture Trustee
        in
        writing that it elects to terminate the book-entry system through the Clearing
        Agency with respect to any Series or Tranche or (iii) after the occurrence
        of an
        Event of Default, Environmental Control Bond Owners representing beneficial
        interests aggregating no less than a majority of the Outstanding Amount of
        the
        Environmental Control Bonds of all Series maintained as book-entry bonds
        advise
        the Issuer, the Indenture Trustee and the Clearing Agency in writing that
        the
        continuation of a book-entry system through the Clearing Agency is no longer
        in
        the best interests of the Environmental Control Bond Owners, then the Clearing
        Agency shall notify all affected Environmental Control Bond Owners and the
        Indenture Trustee of the occurrence of any such event and of the availability
        of
        Definitive Environmental Control Bonds to affected Environmental Control
        Bond
        Owners requesting the same. Upon surrender to the Indenture Trustee of the
        typewritten Environmental Control Bond or Environmental Control Bonds
        representing the Book-Entry Environmental Control Bonds by the Clearing Agency,
        accompanied by registration instructions, a Manager on behalf of the Issuer
        shall execute and the Indenture Trustee shall authenticate the Definitive
        Environmental Control Bonds in accordance with the instructions of the Clearing
        Agency. None of the Issuer, the Bond Registrar or the Indenture Trustee shall
        be
        liable for any delay in delivery of such instructions and may conclusively
        rely
        on, and shall be protected in relying on, such instructions. Upon the issuance
        of Definitive Environmental Control Bonds in accordance with this Section
        2.13,
        the Indenture Trustee shall recognize the Holders of the Definitive
        Environmental Control Bonds as Environmental Control Bondholders.

       

      Definitive
        Environmental Control Bonds will be transferable and exchangeable at the
        offices
        of the Bond Registrar.

       

      SECTION
        2.14.    Tax
        Treatment.
        The
        Issuer, by entering into this Indenture, and the Holders and any Persons
        holding
        a beneficial interest in any Bond, by acquiring any Bond or interest therein,
        (i) express their intention that, solely for the purposes of federal income
        taxes and, to the extent consistent with applicable state, local and other
        tax
        law, solely for the purposes of state, local and other taxes, the Bonds qualify
        under applicable tax law as indebtedness of the Member secured by the Collateral
        and (ii) solely for the purposes of federal income taxes and, to the extent
        consistent with applicable state, local and other tax law, solely for purposes
        of state, local and other taxes, so long as any of the Bonds are outstanding,
        agree to treat the Bonds as indebtedness of the Member secured by the Collateral
        unless otherwise required by appropriate taxing authorities. 

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      SECTION
        2.15.    State
        Pledge.
        Under
        the laws of the State of West Virginia in effect on the Closing Date, the
        State
        of West Virginia (including the PSCWV) has pledged and agreed with the Holders,
        pursuant to Section (q) of the Statute, as follows: 

       

      “that
        the
        state will not take or permit any action that impairs the value of environmental
        control property or, except as allowed under subsection (e) of this section
        reduce, alter or impair environmental control charges that are imposed,
        collected and remitted for the benefit of the bondholders, any assignee,
        and any
        financing parties, until any principal, interest and redemption premium in
        respect of environmental control bonds, all financing costs and all amounts
        to
        be paid to an assignee or financing party under ancillary agreement are paid
        or
        performed in full.”

       

      The
        Issuer hereby acknowledges that the purchase of any Bond by a Holder is made
        in
        reliance on such agreement and pledge by the State of West Virginia.

       

      SECTION
        2.16.    Security
        Interests.
        The
        Issuer hereby makes the following representations and warranties. Other than
        (i)
        the security interest granted to the Indenture Trustee pursuant to this
        Indenture in the applicable Series Supplement and (ii) any security interest
        granted by the Issuer pursuant to an Additional Issuance, the Issuer has
        not
        pledged, granted, sold, conveyed or otherwise assigned any interests or security
        interests in any Collateral and no security agreement, financing statement
        or
        equivalent security or Lien instrument listing the Issuer as debtor covering
        all
        or any part of any Collateral is on file or of record in any jurisdiction,
        except such as may have been filed, recorded or made by the Issuer in favor
        of
        the Indenture Trustee on behalf of the Holders of Bonds secured by such
        Collateral in connection with this Indenture. This Indenture constitutes
        a valid
        and continuing lien on the Collateral in favor of the Indenture Trustee on
        behalf of the Holders of the Bonds secured by such Collateral, which lien
        is
        prior to all other Liens and is enforceable as such as against creditors
        of and
        purchasers from the Issuer in accordance with its terms, except as such
        enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
        reorganization, moratorium and other similar laws affecting creditors’ rights
        generally or by general equitable principles, whether considered in a proceeding
        at law or in equity and by an implied covenant of good faith and fair dealing.
        With respect to all Series Collateral, this Indenture together with the related
        Series Supplement creates a valid and continuing security interest (as defined
        in the UCC) in the related Series Collateral, which security interest is
        prior
        to all other Liens and is enforceable as such as against creditors of and
        purchasers from the Issuer in accordance with its terms, except as such
        enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
        reorganization, moratorium and other similar laws affecting creditors’ rights
        generally or by general equitable principles, whether considered in a proceeding
        at law or in equity and by an implied covenant of good faith and fair dealing.
        The Issuer has good and marketable title to the Collateral free and clear
        of any
        Lien, claim or encumbrance of any Person. All of the Collateral constitute
        either Environmental Control Property, deposit accounts, investment property
        or
        general intangibles (as each such term is defined in the UCC) except that
        proceeds of the Collateral may also take the form of instruments. The Issuer
        has
        taken, or caused the Servicer to take, all action necessary to perfect the
        security interest in the Series Collateral granted to the Indenture Trustee
        pursuant to this Indenture in the applicable Series Supplement. The Issuer
        has
        filed (or has caused the Servicer to file) all appropriate financing statements
        in the proper filing offices in the appropriate jurisdictions under applicable
        law in order to perfect the security interest in the Series Collateral granted
        to the Indenture Trustee for the benefit of the Secured Parties of each related
        Series. The

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      Issuer
        has not authorized the filing of and is not aware of any financing statements
        against the Issuer that include a description of the Collateral other than
        those
        filed in favor of the Indenture Trustee. The Issuer is not aware of any judgment
        or tax Lien filings against the Issuer. The Collection Account (including
        all
        subaccounts thereof) constitutes a “securities account” within the meaning of
        the UCC. The Issuer has taken all steps necessary to cause the securities
        intermediary of each such securities account to identify in its records the
        Indenture Trustee as the person having a Security Entitlement against the
        securities intermediary in such securities account, the Collection Account
        for
        such Series of Bonds is not in the name of any Person other than the Indenture
        Trustee, and the Issuer has not consented to the securities intermediary
        of the
        Collection Account for such Series of Bonds to comply with entitlement orders
        of
        any Person other than the Indenture Trustee. All of the Series Collateral
        constituting investment property has been and will have been credited to
        the
        Collection Account for such Series of Bonds or a subaccount thereof, and
        the
        entity acting as Indenture Trustee, in its capacity as the securities
        intermediary for such Collection Account, has agreed to treat all assets
        credited to the Collection Account for such Series of Bonds as “financial
        assets” within the meaning of the UCC. Accordingly, the Indenture Trustee has a
        first priority perfected security interest in the Collection Account for
        such
        Series of Bonds, all funds and financial assets on deposit therein, and all
        Securities Entitlements relating thereto. The representations and warranties
        set
        forth in this Section 2.16 shall survive the execution and delivery of this
        Indenture and the issuance of any Bonds, shall be deemed re-made on each
        date on
        which any funds in the Collection Account for each Series of Bonds are
        distributed to Issuer or otherwise released from the lien of the Indenture
        and
        may not be waived by any party hereto except pursuant to a supplemental
        indenture executed in accordance with Article IX and as to which the Rating
        Agency Condition has been satisfied.

       

      ARTICLE
        III

       

      Covenants

       

      SECTION
        3.01.    Payment
        of Principal, Premium, if any, and Interest.
        The
        Issuer will duly and punctually pay the principal of and premium, if any,
        and
        interest on the Environmental Control Bonds in accordance with the terms
        of the
        Environmental Control Bonds and this Indenture; provided that except on the
        Series Termination Date or the Tranche Termination Date for a Series or Tranche
        of Environmental Control Bonds or upon the acceleration of the Environmental
        Control Bonds following the occurrence of an Event of Default pursuant to
        Section 5.02, the Issuer shall only be obligated to pay the principal of
        such
        Environmental Control Bonds on each Payment Date therefor to the extent moneys
        are available for such payment pursuant to Section 8.02. Amounts properly
        withheld under the Code by any Person from a payment to any Environmental
        Control Bondholder of interest or principal or premium, if any, shall be
        considered as having been paid by the Issuer to such Environmental Control
        Bondholder for all purposes of this Indenture.

       

      SECTION
        3.02.    Maintenance
        of Office or Agency.
        As long
        as any of the Environmental Control Bonds remain Outstanding, the Issuer
        will
        maintain in the Borough of Manhattan, the City of New York, an office or
        agency
        where Environmental Control Bonds may be surrendered for registration of
        transfer or exchange, and where notices and demands to or upon the Issuer
        in
        respect of the Environmental Control Bonds and this Indenture may be served.
        The
        Issuer hereby initially appoints the Indenture Trustee to serve as its agent
        for
        the foregoing

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      purposes.
        The Issuer will give prompt written notice to the Indenture Trustee of the
        location, and of any change in the location, of any such office or agency.
        If at
        any time the Issuer shall fail to maintain any such office or agency or shall
        fail to furnish the Indenture Trustee with the address thereof, such surrenders,
        notices and demands may be made or served at the Corporate Trust Office,
        and the
        Issuer hereby appoints the Indenture Trustee as its agent to receive all
        such
        surrenders, notices and demands.

       

      SECTION
        3.03.   Money
        for Payments To Be Held in Trust.
        As
        provided in Section 8.02(a), all payments of principal of, or premium and
        interest on, the Environmental Control Bonds that are to be made from amounts
        withdrawn from the Collection Account pursuant to Section 8.02(d), (e),
 (g) or (h) or Section 4.03 shall be made on behalf of the Issuer
        by the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn
        from the Collection Account for payments of Environmental Control Bonds shall
        be
        paid over to the Issuer except as provided in this Section and in
        Section 8.02.

       

      The
        Issuer shall cause each Paying Agent other than the Indenture Trustee to
        execute
        and deliver to the Indenture Trustee an instrument in which such Paying Agent
        shall agree with the Indenture Trustee (and if the Indenture Trustee acts
        as
        Paying Agent, it hereby so agrees), subject to the provisions of this Section,
        that such Paying Agent will:

       

      (i)    hold
        all
        sums held by it for the payment of principal of, or premium or interest on,
        the
        Environmental Control Bonds in trust for the benefit of the Persons entitled
        thereto until such sums shall be paid to such Persons or otherwise disposed
        of
        as herein provided and pay such sums to such Persons as herein
        provided;

       

      (ii)   give
        the
        Indenture Trustee, the Rating Agencies and the PSCWV notice of any Default
        or
        Event of Default by the Issuer (or any other obligor upon the Environmental
        Control Bonds) of which the Paying Agent has actual knowledge with respect
        to
        the Issuer’s making of any payment required to be made with respect to the
        Environmental Control Bonds;

       

      (iii)   at
        any
        time during the continuance of any such Default or Event of Default, upon
        the
        written request of the Indenture Trustee, forthwith pay to the Indenture
        Trustee
        all sums so held in trust by such Paying Agent;

       

      (iv)   immediately
        resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums
        held by the Paying Agent in trust for the payment of Environmental Control
        Bonds
        if at any time the Paying Agent ceases to meet the standards required to
        be met
        by a Paying Agent at the time of its appointment; and

       

      (v)    comply
        with all requirements of the Code with respect to the withholding from any
        payments made by it on any Environmental Control Bonds of any applicable
        withholding taxes imposed thereon and with respect to any applicable reporting
        requirements in connection therewith.

       

      The
        Issuer may at any time, for the purpose of obtaining the satisfaction and
        discharge of this Indenture or for any other purpose, by Issuer Order direct
        any
        Paying Agent to pay to the Indenture Trustee all sums held in trust by such
        Paying Agent, such sums to be held by

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      the
        Indenture Trustee upon the same trusts as those upon which the sums were
        held by
        such Paying Agent; and upon such payment by any Paying Agent to the Indenture
        Trustee, such Paying Agent shall be released from all further liability with
        respect to such money.

       

      Subject
        to applicable laws with respect to escheat of funds, any money held by the
        Indenture Trustee or any Paying Agent in trust for the payment of any amount
        of
        principal of, premium on, if any, or interest on any Environmental Control
        Bond
        and remaining unclaimed for two years after such amount has become due and
        payable shall be discharged from such trust and be paid to the Issuer on
        Issuer
        Request; and the Holder of such Environmental Control Bond shall thereafter,
        as
        an unsecured general creditor, look only to the Issuer for payment thereof
        (but
        only to the extent of the amounts so paid to the Issuer), and all liability
        of
        the Indenture Trustee or such Paying Agent with respect to such trust money
        shall thereupon cease; provided, however, that the Indenture Trustee or such
        Paying Agent, before being required to make any such repayment, may at the
        expense of the Issuer cause to be published once, in a newspaper published
        in
        the English language, customarily published on each Business Day and of general
        circulation in the City of New York, notice that such money remains unclaimed
        and that, after a date specified therein, which shall not be less than 30
        days
        from the date of such publication, any unclaimed balance of such money then
        remaining will be repaid to the Issuer. The Indenture Trustee may also adopt
        and
        employ, at the expense of the Issuer, any other reasonable means of notification
        of such repayment (including mailing notice of such repayment to Holders
        whose
        right to or interest in moneys due and payable but not claimed is determinable
        from the records of the Indenture Trustee or of any Paying Agent, at the
        last
        address of record for each such Holder).

       

      SECTION
        3.04.   Existence.
        Subject
        to Section 3.10, the Issuer will keep in full effect its existence, rights
        and franchises as a limited liability company under the laws of the State
        of
        Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
        organized under the laws of any other State or of the United States of America,
        in which case the Issuer will keep in full effect its existence, rights and
        franchises under the laws of such other jurisdiction) and will obtain and
        preserve its qualification to do business in each jurisdiction in which such
        qualification is or shall be necessary to protect the validity and
        enforceability of this Indenture, the Environmental Control Bonds, the
        Collateral and each other instrument or agreement included therein.

       

      SECTION
        3.05.   Protection
        of Collateral.
        The
        Issuer will from time to time execute and deliver all such supplements and
        amendments hereto and all such filings (including filings with the PSCWV
        and the
        Secretary of State of the State of West Virginia pursuant to the Statute),
        financing statements, continuation statements, instruments of further assurance
        and other instruments, and shall take such other action necessary or advisable
        to:

       

      (i)    maintain
        and preserve the lien and security interest (and the first priority thereof)
        of
        this Indenture or carry out more effectively the purposes hereof;

       

      (ii)   perfect,
        publish notice of or protect the validity of any Grant made or to be made
        by
        this Indenture;

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      (iii)   enforce
        any of the Collateral, including its rights under each Swap
        Agreement;

       

      (iv)   preserve
        and defend title to the Collateral and the rights of the Indenture Trustee
        and
        the Environmental Control Bondholders in the Collateral against the claims
        of
        all Persons and parties; or

       

      (v)    pay
        any
        and all taxes levied or assessed upon all or any part of the
        Collateral.

       

      The
        Issuer hereby designates the Indenture Trustee as its agent and attorney-in-fact
        to execute any filing with the PSCWV or the Secretary of State of the State
        of
        West Virginia, financing statements, continuation statements or other instrument
        required by the Indenture Trustee pursuant to this Section.

       

      SECTION
        3.06.    Opinions
        as to Collateral.  (a)  On
        or
        before July 1st in each calendar year, beginning at least three months
        after the issuance of the first Series of the Environmental Control Bonds
        while
        any Series is Outstanding, the Issuer shall furnish to the Indenture Trustee
        an
        Opinion of Counsel either stating that, in the opinion of such counsel, such
        action has been taken with respect to the recording, filing, re-recording
        and
        refiling of this Indenture, any Indentures supplemental hereto and any other
        requisite documents and, with respect to the execution and filing of any
        filings
        with the PSCWV pursuant to the Statute, financing statements and continuation
        statements as is necessary to maintain the lien and security interest created
        by
        this Indenture and reciting the details of such action or stating that in
        the
        opinion of such counsel no such action is necessary to maintain such lien
        and
        security interest, and no other lien or security interest is equal or provide
        the lien and security interest of the Bond Trustee in the Series Collateral.
        Such Opinion of Counsel shall also describe the recording, filing, re-recording
        and refiling of this Indenture, any Indentures supplemental hereto and any
        other
        requisite documents, and the execution and filing of any filings with the
        PSCWV
        and the Secretary of State of the State of West Virginia, financing statements
        and continuation statements that will, in the opinion of such counsel, be
        required to maintain the lien and security interest of this Indenture until
        July 1 in the following calendar year.

       

      (b)    Prior
        to
        the effectiveness of any amendment to the Transfer Agreement, the Sale Agreement
        or the Servicing Agreement, the Issuer shall furnish to the Indenture Trustee
        an
        Opinion of Counsel either (A) stating that, in the opinion of such counsel,
        all filings, including filings with the PSCWV and the Secretary of State
        of the
        State of West Virginia pursuant to the Statute, have been executed and filed
        that are necessary fully to preserve and protect the interest of the Issuer
        and
        the Indenture Trustee in the Transferred Environmental Control Property and
        the
        proceeds thereof, and reciting the details of such filings or referring to
        prior
        Opinions of Counsel in which such details are given, or (B) stating that,
        in the opinion of such counsel, no such action shall be necessary to preserve
        and protect such interest.

       

      SECTION
        3.07.    Performance
        of Obligations, SEC Filings.  (a)  The
        Issuer (i) shall diligently pursue any and all actions to enforce its
        rights under each instrument or agreement included in the Collateral and
        (ii) shall not take any action and will use its best efforts not to permit
        any action to be taken by others that would release any Person from any of
        such

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      Person’s
        covenants or obligations under any such instrument or agreement or that would
        result in the amendment, hypothecation, subordination, termination or discharge
        of, or impair the validity or effectiveness of, any such instrument or
        agreement, except, in each case, as expressly provided in this Indenture,
        the
        Transfer Agreement, the Sale Agreement, the Servicing Agreement, any Swap
        Agreement or such other instrument or agreement.

       

      (b)    The
        Issuer may contract with other Persons to assist it in performing its duties
        under this Indenture, and any performance of such duties by a Person identified
        to the Indenture Trustee in an Officer’s Certificate of the Issuer shall be
        deemed to be action taken by the Issuer. Initially, the Issuer has contracted
        with the Servicer and the Administrator to assist the Issuer in performing
        its
        duties under this Indenture.

       

      (c)    The
        Issuer shall punctually perform and observe all of its obligations and
        agreements contained in the Sale Agreement, this Indenture and any supplements
        hereto, the Servicing Agreement, the Issuer Administration Agreement, each
        Swap
        Agreement and in all other instruments and agreements included in the
        Collateral.

       

      (d)    Without
        derogating from the absolute nature of the assignment granted to the Indenture
        Trustee under this Indenture or the rights of the Indenture Trustee hereunder,
        but subject to Section 3.20, the Issuer agrees that it will not, without
        the prior written consent of the Indenture Trustee or the Holders of at least
        a
        majority in Outstanding Amount of the Environmental Control Bonds of all
        Series,
        amend, modify, waive, supplement, terminate or surrender, or agree to any
        amendment, modification, supplement, termination, waiver or surrender of,
        the
        terms of any Collateral or the Basic Documents. If any such amendment,
        modification, supplement or waiver shall be so consented to by the Indenture
        Trustee or such Holders, the Issuer agrees to execute and deliver, in its
        own
        name and at its own expense, such agreements, instruments, consents and other
        documents as shall be necessary or appropriate in the circumstances. The
        Issuer
        agrees that no such amendment, modification, supplement or waiver shall
        adversely affect the rights of the Holders of the Environmental Control Bonds
        Outstanding at the time of any such amendment, modification, supplement or
        waiver.

       

      (e)    The
        Issuer shall (or shall cause the Utility to) post on its website and file
        with
        or furnish to the SEC in periodic reports and other reports as are required
        from
        time to time under Section 13 or Section 15(d) of the Exchange Act the
        following information with respect to each Series of Outstanding Environmental
        Control Bonds to the extent such information is reasonably available to the
        Issuer:

       

      (i)    statements
        of all remittances of Environmental Control Charges made to the Indenture
        Trustee (to
        be
        included in the next Form 10-D filed with respect to the preceding period
        and
        each Form 10-K);

       

      (ii)   a
        statement reporting the balances in each Collection Account and in each
        subaccount of each Collection Account as of all Payment Date (to be included
        on
        the next Form 10-D filed) and as of the end of each year
        (to
        be
        included on the next Form 10-K filed);

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      (iii)   a
        statement showing the balance of Outstanding Environmental Control Bonds
        that
        reflects the actual periodic payments made on each Series of the Environmental
        Control Bonds versus the expected periodic payments
        (to be
        included in the next Form 10-D and in each Form 10-K filed);

       

      (iv)   the
        Quarterly Servicer’s Certificate and the Monthly Servicer’s Certificate that are
        required to be submitted pursuant to the Servicing Agreement
        (to be
        filed with the next Form 10-D, Form 10-K or Form 8-K filed);

       

      (v)   the
        text
        (or a link to the website where a reader can find the text) of each adjustment
        filing and the results of each such filing following the issuance of the
        Series
        of Environmental Control Bonds (to be filed with the next Form 10-D, Form
        10-K
        or Form 8-K);

       

      (vi)   any
        change in the long-term or short-term credit ratings of the Servicer assigned
        by
        the Rating Agencies
        below
        investment grade ratings
        (to be
        filed or furnished in a Form 8-K);
        and

       

      (vii)   material
        legislative or regulatory developments directly relevant to the Outstanding
        Environmental Control Bonds
        (to be
        filed or furnished in a Form 8-K);
        and

       

      (f)    The
        Issuer shall make all filings required under the Statute relating to the
        transfer of the ownership or security interest in the Transferred Environmental
        Control Property other than those required to be made by the Seller, the
        Transferor or the Servicer pursuant to the Basic Documents.

       

      SECTION
        3.08.    Negative
        Covenants.
        The
        Issuer shall not:

       

      (i)    except
        as
        expressly permitted by this Indenture, the Sale Agreement, the Servicing
        Agreement or any Swap Agreement, or in connection with an Additional Issuance,
        sell, transfer, exchange or otherwise dispose of any of the Collateral, unless
        directed to do so by the Indenture Trustee in accordance with
        Article V;

       

      (ii)   claim
        any
        credit on, or make any deduction from the principal or premium, if any, or
        interest payable in respect of, the Environmental Control Bonds (other than
        amounts properly withheld from such payments under the Code or any other
        tax
        laws or pursuant to any Swap Agreement) or assert any claim against any present
        or former Environmental Control Bondholder by reason of the payment of taxes
        levied or assessed upon the Issuer or any part of the Collateral;

       

      (iii)   (A) permit
        the validity or effectiveness of this Indenture to be impaired, or permit
        the
        lien of this Indenture to be amended, hypothecated, subordinated, terminated
        or
        discharged, or permit any Person to be released from any covenants or
        obligations with respect to the Environmental Control Bonds under this Indenture
        except as may be expressly permitted hereby, (B) permit any lien, charge,
        excise, claim, security interest, mortgage or other encumbrance (other than
        the
        lien and security interest created by this Indenture and the other Basic
        Documents) to be created on or extend to or

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      otherwise
        arise upon or burden the Collateral or any part thereof or any interest therein
        or the proceeds thereof or (C) permit the lien of any Series Supplement not
        to constitute a continuing valid first priority security interest in the
        related
        Series Collateral;

       

      (iv)   terminate
        its existence, or dissolve or liquidate in whole or in part; or

       

      (v)    take
        any
        action without first satisfying the Rating Agency Condition, if any Basic
        Document requires that the Rating Agency Condition be satisfied in connection
        with such action.

       

      SECTION
        3.09.    Annual
        Statement as to Compliance.
        The
        Issuer will deliver to the Indenture Trustee, Potomac Edison and the Rating
        Agencies within 120 days after the end of each fiscal year of the Issuer
        (commencing with December 31, [____] - the end of the fiscal year [____]),
        an Officer’s Certificate stating, as to the Authorized Officer signing such
        Officer’s Certificate, that

       

      (i)    a
        review
        of the activities of the Issuer during such year (or relevant portion thereof)
        and of performance under this Indenture has been made under such Authorized
        Officer’s supervision; and

       

      (ii)   to
        the
        best of such Authorized Officer’s knowledge, based on such review, the Issuer
        has complied with all conditions and covenants under this Indenture throughout
        such calendar year (or relevant portion thereof), or, if there has been a
        default in complying with any such condition or covenant, describing each
        such
        default and the nature and status thereof.

       

      SECTION
        3.10.    Issuer
        May Consolidate, etc., Only on Certain Terms.  (a)  The
        Issuer shall not consolidate or merge with or into any other Person,
        unless:

       

      (i)    the
        Person (if other than the Issuer) formed by or surviving such consolidation
        or
        merger shall (A) be a Person organized and existing under the laws of the
        United
        States of America or any State, (B) expressly assume by a Supplemental
        Indenture, executed and delivered to the Indenture Trustee, in form and
        substance satisfactory to the Indenture Trustee, the performance or observance
        of every agreement and covenant of this Indenture and the related Series
        Supplement on the part of the Issuer to be performed or observed, all as
        provided herein and in the applicable Series Supplement or
        Series Supplements, and (C) expressly assume all obligations and succeed to
        all rights of the Issuer under the Transfer Agreement, the Sale Agreement,
        the
        Servicing Agreement, the Issuer Administration Agreement and any Swap
        Agreement;

       

      (ii)   immediately
        after giving effect to such consolidation or merger, no Default, Event of
        Default or Servicer Default shall have occurred and be continuing;

       

      (iii)   the
        Rating Agency Condition shall have been satisfied with respect to such
        consolidation or merger;

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      (iv)   the
        Issuer shall have delivered to the Seller, the Indenture Trustee and the
        Rating
        Agencies an opinion or opinions of outside tax counsel (as selected by the
        Issuer, in form and substance reasonably satisfactory to the Seller and the
        Indenture Trustee, and which may be based on a ruling from the Internal Revenue
        Service (unless the Internal Revenue Service has announced that it will not
        rule
        on the issues described in this paragraph)) to the effect that such
        consolidation or merger will not result in a material adverse federal or
        state
        tax consequence to the Issuer, the Seller, the Indenture Trustee or the
        then-existing Environmental Control Bondholders;

       

      (v)   any
        action as is necessary to maintain the first priority perfected security
        interest in the Collateral created by this Indenture and the related Series
        Supplement shall have been taken as evidenced by an Opinion of Counsel of
        external counsel of the Issuer delivered to the Indenture Trustee;
        and

       

      (vi)   the
        Issuer shall have delivered to the Indenture Trustee an Officer’s Certificate
        and an Opinion of Counsel of external counsel of the Issuer each stating
        that
        such consolidation or merger and any related Supplemental Indenture comply
        with
        this Indenture, any related Series Supplement and that all condition precedent
        herein provided for with respect to such consolidation or merger have been
        complied with.

       

      (b)    Except
        as
        specifically provided herein, the Issuer shall not sell, convey, exchange,
        transfer or otherwise dispose of any of its properties or assets included
        in the
        Collateral to any other Person unless:

       

      (i)    the
        Person that acquires the properties and assets of the Issuer, shall (A) be
        a
        United States citizen or a Person organized and existing under the laws of
        the
        United States of America or any State, (B) expressly assumes, by a Supplemental
        Indenture, executed and delivered to the Indenture Trustee, in form and
        substance satisfactory to the indenture Trustee, the performance or observance
        of every agreement and covenant of this Indenture on the part of the Issuer
        to
        be performed or observed, all as provided herein and in the applicable Series
        Supplements, (C) expressly agrees by means of such Supplemental Indenture
        that
        all right, title and interest so sold, conveyed, exchanges, transferred or
        otherwise disposed of shall be subject and subordinate to the rights of Holders,
        (D) unless otherwise provided in the Supplemental Indenture referred to in
        clause (B) above, expressly agrees to indemnify, defend and hold harmless
        the
        Issuer and the Indenture Trustee against and from any loss, liability or
        expense
        arising under or related to this Indenture, the related Series Supplements
        and
        the Environmental Control Bonds, (E) expressly agrees by means of a Supplemental
        Indenture that such Person (or if a group of Persons, then one specified
        Person)
        shall make all filings with the SEC (and any other appropriate Person) required
        by the Exchange Act in connection with the Environmental Control Bonds and
        (F)
        if such sale, conveyance, exchange, transfer or disposal related to the Issuer’s
        rights and obligations under the Transfer Agreement, Sale Agreement, Servicing
        Agreement or any Swap Agreement, assume all obligations and succeed to all
        rights of the Issuer under the applicable agreement;

       

      (ii)   immediately
        after giving effect to such transaction, no Default, Event of Default or
        Servicer Default shall have occurred and be continuing;

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

      (iii)   the
        Rating Agency Condition shall have been satisfied with respect to such
        transaction;

       

      (iv)   the
        Issuer shall have delivered to the Seller, the Indenture Trustee and the
        Rating
        Agencies an opinion or opinions of outside tax counsel (as selected by the
        Issuer, in form and substance reasonably satisfactory to the Seller and the
        Indenture Trustee, and which may be based on a ruling from the Internal Revenue
        Service) to the effect that the disposition will not result in a material
        adverse federal or state income tax consequence to the Issuer, the Seller,
        the
        Indenture Trustee or the then existing Bondholders;

       

      (v)   any
        action as is necessary to maintain the Lien and the first priority perfected
        security interest in the Collateral created by this Indenture and the related
        Series Supplement shall have been taken as evidenced by an Opinion of Counsel
        of
        external counsel of the Issuer delivered to the Indenture Trustee;
        and

       

      (vi)   the
        Issuer shall have delivered to the Indenture Trustee an Officer’s Certificate
        and an Opinion of Counsel of external counsel of the Issuer each stating
        that
        such sale, conveyance, exchange, transfer or other disposition and such
        Supplemental Indenture comply with this Indenture and the related Series
        Supplement and that all conditions precedent herein provided for in this
        Section
        3.10(b) with respect to such transaction have been complied with (including
        any
        filing required by the Exchange Act).

       

      SECTION
        3.11.    Successor
        or Transferee.  (a)  Upon
        any
        consolidation or merger of the Issuer in accordance with Section 3.10, the
        Person formed by or surviving such consolidation or merger (if other than
        the
        Issuer) shall succeed to, and be substituted for, and may exercise every
        right
        and power of, the Issuer under this Indenture with the same effect as if
        such
        Person had been named as the Issuer herein.

       

      (b)    Except
        as
        set forth in Section 6.07, upon any sale, conveyance or transfer by the
        Issuer of substantially all of its assets in a sale which complies with
        Section 3.10, PE Environmental Funding LLC will be released from every
        covenant and agreement of this Indenture to be observed or performed on the
        part
        of the Issuer with respect to the Environmental Control Bonds and from every
        covenant and agreement of the Sale Agreement, the Issuer Administration
        Agreement, and the Servicing Agreement and each Swap Agreement to be observed
        or
        performed on the part of the Issuer immediately upon the delivery of written
        notice to the Indenture Trustee stating that PE Environmental Funding LLC
        is to be so released.

       

      SECTION
        3.12.    No
        Other Business.
        The
        Issuer shall not engage in any business other than (i) purchasing and
        owning Transferred Environmental Control Property, issuing Environmental
        Control
        Bonds from time to time, pledging its interest in the Collateral to the
        Indenture Trustee under this Indenture in order to secure the Environmental
        Control Bonds, entering into the Basic Documents and all other agreements
        related to the Environmental Control Bonds, performing its obligations
        thereunder, performing activities that are necessary, suitable or convenient
        to
        accomplish these purposes and activities incidental thereto pursuant to this
        Indenture and the Basic Documents
        and
        (ii) issuing securities in connection with one or more Additional
        Issuances, pledging its interest in the related collateral, entering into
        the
        agreements

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

      related
        to such Additional Issuances and performing activities that are necessary,
        suitable or convenient to accomplish any such Additional Issuance.

       

      SECTION
        3.13.    No
        Borrowing.
        The
        Issuer shall not issue, incur, assume, guarantee or otherwise become liable,
        directly or indirectly, for any indebtedness for borrowed money except for
        the
        Environmental Control Bonds or as permitted by the PSCWV in connection with
        an
        Additional Issuance.

       

      SECTION
        3.14.    Guarantees,
        Loans, Advances and Other Liabilities.
        Except
        as contemplated by the Sale Agreement, the Servicing Agreement, this Indenture,
        the Issuer LLC Agreement or any Swap Agreement or in connection with an
        Additional Issuance, the Issuer shall not make any loan or advance or credit
        to,
        or guarantee (directly or indirectly or by an instrument having the effect
        of
        assuring another’s payment or performance on any obligation or capability of so
        doing or otherwise), endorse or otherwise become contingently liable, directly
        or indirectly, in connection with the obligations, stocks or dividends of,
        or
        own, purchase, repurchase or acquire (or agree contingently to do so) any
        stock,
        obligations, assets or securities of, or any other interest in, or make any
        capital contribution to, any other Person, other than Eligible
        Investments.

       

      SECTION
        3.15.    Capital
        Expenditures.
        The
        Issuer shall not make any expenditure (by long-term or operating lease or
        otherwise) for capital assets (either realty or personalty) other than
        Transferred Environmental Control Property purchased from the Seller pursuant
        to, and in accordance with, the Sale Agreement or any expenditure made in
        connection with any Additional Issuance.

       

      SECTION
        3.16.    Restricted
        Payments.
        Except
        in accordance with this Indenture and the Basic Documents, or as required
        by the
        terms of any Additional Issuance, the Issuer shall not, directly or indirectly,
        (i) pay any dividend or make any distribution (by reduction of capital or
        otherwise), whether in cash, property, securities or a combination thereof,
        to
        any owner of a beneficial interest in the Issuer or otherwise with respect
        to
        any ownership or equity interest in, or ownership security of, the Issuer,
        (ii) redeem, purchase, retire or otherwise acquire for value any such
        ownership or equity interest or security, (iii) set aside or otherwise
        segregate any amounts for any such purpose; provided,
        however,
        that if
        no Event of Default shall have occurred and be continuing or would otherwise
        result from such payment, the Issuer may make, or cause to be made, any such
        distributions to any owner of a beneficial interest in the Issuer or otherwise
        with respect to any ownership or equity interest or security in or of the
        Issuer
        using funds either distributed by the Indenture Trustee on behalf of the
        Issuer
        pursuant to Section 8.02(e) hereof or which are not otherwise subject to
        the Lien of this Indenture, to the extent that such distributions would not
        cause the book value of the remaining equity in the Issuer to decline below
        [0.5]% of the original principal amount of all Series of
        Environmental Control Bonds which remain Outstanding or (iv) make
        payments to or distributions from the Collection Account.

       

      SECTION
        3.17.    Notice
        of Events of Default.
        The
        Issuer agrees to deliver to the Indenture Trustee, the PSCWV, and the Rating
        Agencies written notice in the form of an Officer’s Certificate of any Default
        or Event of Default hereunder, its status and what

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

      action
        the Issuer is taking or proposes to take with respect thereto within five
        Business Days after the occurrence thereof.

       

      SECTION
        3.18.    Inspection.
        The
        Issuer agrees that, on reasonable prior notice, it will permit any
        representative of the Indenture Trustee, during the Issuer’s normal business
        hours, to examine all the books of account, records, reports, and other papers
        of the Issuer, to make copies and extracts therefrom, to cause such books
        to be
        audited annually by Independent certified public accountants, and to discuss
        the
        Issuer’s affairs, finances and accounts with the Issuer’s officers, employees,
        and Independent certified public accountants, all at such reasonable times
        and
        as often as may be reasonably requested. The Indenture Trustee shall and
        shall
        cause its representatives to hold in confidence all such information except
        to
        the extent disclosure may be required by law (and all reasonable applications
        for confidential treatment are unavailing) and except to the extent that
        the
        Indenture Trustee may reasonably determine that such disclosure is consistent
        with its obligations hereunder.

       

      SECTION
        3.19.    Additional
        Issuance.   (a) 
If
        the Issuer receives an order from the PSCWV, the Issuer may, in its sole
        discretion, acquire additional and separate property (including property
        other
        than Environmental Control Property) and issue one or more Additional Issuances
        that are backed by such separate additional property. Any new Additional
        Issuance may include terms and provisions unique to that Additional
        Issuance.

       

      (b)    The
        Issuer shall not issue additional Environmental Control Bonds or other
        securities if the Additional Issuance would result in the then-current ratings
        on any Outstanding Series of Environmental Control Bonds being reduced or
        withdrawn.

       

      (c)    The
        following conditions must be satisfied in connection with any Additional
        Issuance:

       

      (i)    if
        the
        Additional Issuance is a new series of Environmental Control Bonds, such
        Bonds
        shall be rated “Aaa” by Moody’s and “AAA” by S&P and Fitch;

       

      (ii)   each
        Additional Issuance shall have recourse only to the assets pledged in connection
        with such Additional Issuance, shall be nonrecourse to any of the Issuer’s other
        assets and shall not constitute a claim against the Issuer if cash flow from
        the
        pledged assets is insufficient to pay such Additional Issuance in
        full;

       

      (iii)   the
        Issuer has delivered to the Indenture Trustee and each Rating Agency then
        rating
        any series of Outstanding Environmental Control Bonds an Opinion of Counsel
        of a
        nationally recognized firm experienced in such matters to the effect that
        after
        such issuance, in the opinion of such counsel, if either or both of the Utility
        or the Seller were to become a debtor in a case under the United States
        Bankruptcy Code (Title 11, U.S.C.), a federal court exercising bankruptcy
        jurisdiction and exercising reasonable judgment after full consideration
        of all
        relevant factors would not order substantive consolidation of the assets
        and
        liabilities of the Issuer with those of the bankruptcy estate of the Utility
        or
        the Seller, subject to the customary exceptions, qualifications and assumptions
        contained therein;

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

      (iv)   the
        Issuer has delivered to the Indenture Trustee an Officer’s Certificate from the
        Issuer certifying that the Additional Securities shall have the benefit of
        a
        true-up mechanism;

       

      (v)    the
        transaction documentation for such Additional Issuance provides that holders
        of
        the securities of such Additional Issuance will not file or join in the filing
        of any bankruptcy petition against the Issuer;

       

      (vi)    if
        the
        holders of the securities of any Additional Issuance are deemed to have any
        interest in any of the Series Collateral pledged
        under a Series Supplement (other than the Series Supplement related to such
        Additional Issuance, if any), the holders of such securities must
        agree that any such interest is subordinate to the claims and rights of the
        Holders of such other related Series of Environmental Control Bonds;
         

      

      (vii)   the
        Additional Issuance shall have its own bank accounts or trust accounts;
        and

       

      (viii)  
the
        Additional Issuance shall bear its own trustees fees and servicer fees and
        a pro
        rata portion of fees due under the Issuer Administration Agreement.

       

      SECTION
        3.20.    Transfer
        Agreement, Sale Agreement, Servicing Agreement, Issuer Administration Agreement
        and Swap Agreement Covenants.  (a)  The
        Issuer agrees to take all such lawful actions to enforce its rights under
        the
        Transfer Agreement, the Sale Agreement, the Issuer Administration Agreement,
        the
        Servicing Agreement and each Swap Agreement and to compel or secure the
        performance and observance by the Transferor, the Seller, the Administrator,
        the
        Servicer and each Swap Counterparty, of each of their obligations to the
        Issuer
        under or in connection with the Transfer Agreement, the Sale Agreement, the
        Issuer Administration Agreement, the Servicing Agreement and the applicable
        Swap
        Agreement, respectively, in accordance with the terms thereof. So long as
        no
        Event of Default occurs and is continuing, but subject to Section 3.20(f),
        the Issuer may exercise any and all rights, remedies, powers and privileges
        lawfully available to the Issuer under or in connection with the Transfer
        Agreement, the Sale Agreement, the Issuer Administration Agreement, the
        Servicing Agreement and each Swap Agreement.

       

      (b)    If
        an
        Event of Default occurs and is continuing, the Indenture Trustee may, and,
        at
        the written direction of (i) with respect to the Transfer Agreement, the
        Sale Agreement or the Servicing Agreement, the Holders of a majority of the
        Outstanding Amount of the Environmental Control Bonds of all Series and
        (ii) with respect to any Swap Agreement, the Holders of that percentage of
        the Outstanding Amount of the Environmental Control Bonds of the related
        Tranche
        specified in the related Swap Agreement, shall, exercise all rights, remedies,
        powers, privileges and claims of the Issuer against the Transferor, the Seller,
        the Servicer, the Administrator or any Swap Counterparty under or in connection
        with the Transfer Agreement, the Sale Agreement, the Servicing Agreement,
        the
        Issuer Administration Agreement or any Swap Agreement, respectively, including
        the right or power to take any action to compel or secure performance or
        observance by the Transferor, the Seller, the Servicer, the Administrator
        or any
        Swap Counterparty of each of their obligations to the Issuer thereunder and
        to
        give any consent, request, notice, direction, approval, extension or waiver
        under the Transfer Agreement, the Sale

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

       

      Agreement,
        the Servicing Agreement, the Issuer Administration Agreement and any Swap
        Agreement, and any right of the Issuer to take such action shall be
        suspended.

       

      (c)    With
        the
        prior written consent of the Indenture Trustee, the Transfer Agreement, the
        Sale
        Agreement, the Servicing Agreement and the Issuer Administration Agreement
        may
        be amended, at any time and from time to time, without the consent of the
        Environmental Control Bondholders or any Swap Counterparty, provided that
        (i) such amendment shall not, as evidenced by an Officer’s Certificate,
        change the Environmental Control Charge Adjustment Process, (ii) the Rating
        Agency Condition is satisfied and (iii) the PSCWV Condition (as described
        in Section 9.03 hereof, or alternatively, if applicable, Section 6.01(b) of
        the Transfer Agreement, Section 6.01(b) of the Sale Agreement,
        Section 7.01(b) of the Servicing Agreement or Section 7(b) of the Issuer
        Administration Agreement) is satisfied. Further, with the prior written consent
        of the Indenture Trustee and the related counterparty under a Swap Agreement,
        such Swap Agreement may be amended, at any time and from time to time. However,
        such amendment may not adversely affect in any material respect the interest
        of
        any Environmental Control Bondholder or any Swap Counterparty without the
        written consent of a majority of the Holders of the Outstanding Amount of
        the
        Environmental Control Bonds of each Series or Tranche and each such Swap
        Counterparty materially and adversely affected thereby.

       

      (d)    Except
        as
        set forth in Section 3.20(c), if the Issuer, the Seller, the Transferor,
        the
        Administrator, the Servicer of any other party to the respective agreement
        proposes to amend, modify, waive, supplement, terminate or surrender, or
        agree
        to any amendment modification, waiver, supplement, termination or surrender
        of,
        the terms of the Sale Agreement, the Transfer Agreement, the Issuer
        Administration Agreement, the Servicing Agreement, or any Swap Agreement,
        or
        waive timely performance or observance by the Seller, the Issuer, the
        Administrator, the Servicer or any Swap Counterparty under the Sale Agreement,
        the Transfer Agreement, the Issuer Administration Agreement, the Servicing
        Agreement or any Swap Agreement, in each case in such a way as would materially
        and adversely affect the interests of any Holder of Environmental Control
        Bonds
        of any Series or Tranche, the Issuer shall satisfy the Rating Agency Condition
        and shall promptly thereafter notify the Indenture Trustee and the PSCWV
        in
        writing and the Indenture Trustee shall notify the Holders of the Environmental
        Control Bonds of such Series of the proposed amendment, modification, waiver,
        supplement, termination or surrender and whether the Rating Agency Condition
        has
        been satisfied with respect thereto. The Indenture Trustee shall consent
        to such
        proposed amendment, modification, supplement or waiver (i) with respect to
        the Transfer Agreement, the Sale Agreement or the Servicing Agreement, only
        with
        the written consent of the Holders of at least a majority of the Outstanding
        Amount of the Environmental Control Bonds of each Series or Tranche materially
        and adversely affected thereby, (ii) with respect to any Swap Agreement,
        only with the written consent of the Holders of that percentage of the
        Outstanding Amount of the Environmental Control Bonds of the related Tranche
        as
        specified in the related Swap Agreement, and (iii) if the proposed
        amendment, modification, waiver, supplement, termination or surrender would
        increase ongoing Financing Costs as defined in the Financing Order, the PSCWV
        Condition must be satisfied. If any such amendment, modification, supplement
        or
        waiver shall be so consented to by the Indenture Trustee or such Holders,
        the
        Issuer agrees to execute and deliver, in its own name and at its own expense,
        such agreements, instruments, consents and other documents as shall be necessary
        or appropriate in the circumstances.

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

       

      (e)    If
        the
        Issuer or the Servicer propose to amend, modify, waive, supplement, terminate
        or
        surrender, or agree to any amendment, modification, supplement, termination,
        waiver or surrender of, the Environmental Control Charge Adjustment Process
        (other than with respect to Routine True-Up Adjustments and Non-Routine True-Up
        Adjustments), the Issuer shall notify the Indenture Trustee and the PSCWV
        in
        writing and the Indenture Trustee shall notify Environmental Control Bondholders
        of such proposal and the Indenture Trustee shall consent thereto only if
        the
        Rating Agency Condition is satisfied and with the consent of the Holders
        of a
        majority of each Outstanding Environmental Control Bond of each Series or
        Tranche materially and adversely affected thereby.

       

      (f)    Promptly
        following a default by any of the Transferor, the Seller, Servicer or any
        Swap
        Counterparty under the Transfer Agreement, the Sale Agreement, the Servicing
        Agreement or any related Swap Agreement, respectively, and at the Issuer’s
        expense, the Issuer agrees to take all such lawful actions as the Indenture
        Trustee may request to compel or secure the performance and observance by
        the
        Transferor, the Seller, the Servicer or Swap Counterparty, as applicable,
        of
        each of their obligations to the Issuer under or in connection with the Transfer
        Agreement, the Sale Agreement, the Servicing Agreement or such related Swap
        Agreement in accordance with the terms thereof, and to exercise any and all
        rights, remedies, powers and privileges lawfully available to the Issuer
        under
        or in connection with the Transfer Agreement, the Sale Agreement, the Servicing
        Agreement or such Swap Agreement to the extent and in the manner directed
        by the
        Indenture Trustee, including the transmission of notices of default on the
        part
        of the Transferor, the Seller, the Servicer or Swap Counterparty thereunder
        and
        the institution of legal or administrative actions or proceedings to compel
        or
        secure performance by the Transferor, the Seller, the Servicer or Swap
        Counterparty of each of their obligations under the Transfer Agreement, the
        Sale
        Agreement, the Servicing Agreement and such Swap Agreement.

       

      (g)    If
        the
        Issuer shall have knowledge of the occurrence of a Servicer Default under
        the
        Servicing Agreement or an event of default, termination event or downgrade
        event
        under any Swap Agreement, the Issuer shall promptly give written notice thereof
        to the Indenture Trustee and the Rating Agencies, and shall specify in such
        notice the action, if any, the Issuer is taking with respect to such default.
        

       

      (h)    If
        a
        Servicer Default shall arise from the failure of the Servicer to perform
        any of
        its duties or obligations under the Servicing Agreement with respect to the
        Transferred Environmental Control Property or the Environmental Control Charges,
        the Issuer shall take all reasonable steps available to it to remedy such
        failure. The Issuer shall not take any action to terminate the Servicer’s rights
        and powers under the Servicing Agreement following a Servicer Default without
        the prior written consent of (i) the PSCWV, (ii) Indenture Trustee or
        of the Holders of Environmental Control Bonds evidencing not less than 25%
        of
        the Outstanding Amount of the Environmental Control Bonds of all Series and
        (iii) the prior written consent, not to be unreasonably withheld, of any
        Counterparties affected thereby.

       

      (i)    As
        promptly as possible after the giving of notice to the Servicer and the Rating
        Agencies of termination the Servicer’s rights and powers pursuant to
        Section 6.01 of the Servicing Agreement, the Indenture Trustee shall,
        together with such other Persons, if any, as are specified in Section 6.04
        of the Servicing Agreement, appoint a successor Servicer (the

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

       

      “Successor
        Servicer”),
        and
        such Successor Servicer shall accept its appointment by a written assumption
        in
        a form acceptable to the Issuer and the Indenture Trustee. A person shall
        qualify as a Successor Servicer only if such Person satisfies the requirements
        of Section 6.04 of the Servicing Agreement. If within 30 days after the
        delivery of the notice referred to above, a Successor Servicer shall not
        have
        been appointed and accepted its appointment as such, the Indenture Trustee
        may
        petition [the PSCWV or] a court of competent jurisdiction to appoint a Successor
        Servicer. In connection with any such appointment, the Issuer may make such
        arrangements for the compensation of such Successor Servicer as it and such
        Successor Servicer shall agree, subject to the limitations set forth below
        and
        in the Servicing Agreement, and in accordance with Section 6.04 of the
        Servicing Agreement, the Issuer shall enter into an agreement with such
        Successor Servicer for the servicing of the Transferred Environmental Control
        Property (such agreement to be in form and substance satisfactory to the
        Indenture Trustee).

       

      (j)    Upon
        termination of the Servicer’s rights and powers pursuant to the Servicing
        Agreement, the Indenture Trustee shall promptly notify the Issuer, the PSCWV,
        the Environmental Control Bondholders and the Rating Agencies. As soon as
        a
        Successor Servicer is appointed, the Issuer shall notify the Indenture Trustee,
        the Environmental Control Bondholders and the Rating Agencies of such
        appointment, specifying in such notice the name and address of such Successor
        Servicer.

       

      (k)    The
        Issuer shall not take any action to terminate or assign a Swap Counterparty’s
        rights and powers under any Swap Agreement or replace a Swap Counterparty
        following an event of default, termination event or downgrade event under
        a Swap
        Agreement without (i) the prior written consent of the Indenture Trustee
        and of the Holders of that percentage of the Outstanding Amount of the
        Environmental Control Bonds, if any such consent is required under the related
        Series Supplement, of the related Series and Tranche, if any, as specified
        in
        the related Series Supplement, and (ii) satisfying any other requirements
        set forth in the related Series Supplement and Swap Agreement.

       

      (l)    Upon
        termination or assignment of a Swap Counterparty’s rights and powers, pursuant
        to a Swap Agreement, the Indenture Trustee shall promptly inform the Issuer,
        the
        Environmental Control Bondholders of the related Tranche and the Rating Agencies
        of such termination or assignment. As soon as a replacement Swap Counterparty
        is
        appointed, the Issuer shall notify the Trustee, the Environmental Control
        Bondholders of the related Tranche and the Rating Agencies in writing of
        such
        appointment, specifying in such notice the name and address of such replacement
        Swap Counterparty.

       

      SECTION
        3.21.    Taxes.
        So long
        as any of the Environmental Control Bonds are Outstanding, the Issuer shall pay
        or cause to be paid all material taxes, including gross receipts taxes,
        assessments and governmental charges imposed upon it or any of its properties
        or
        assets or with respect to any of its franchises, business, income or property
        before any penalty accrues thereon if the failure to pay any such taxes,
        assessments and governmental charges would, after any applicable grace periods,
        notices or other similar requirements, result in a Lien on the
        Collateral.

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

       

      SECTION
        3.22.    Separate
        Entity.
        The
        Issuer shall take all reasonable steps to continue its identity as a separate
        legal entity and to make it apparent to third parties that it is an entity
        with
        assets and liabilities distinct from those of the Transferor and the Seller,
        other affiliates or any other Person.

       

      ARTICLE
        IV

       

      Satisfaction
        and Discharge; Defeasance

       

      SECTION
        4.01.    Satisfaction
        and Discharge of Indenture; Defeasance.  (a) 
        The Environmental Control Bonds of any Series, all moneys payable with respect
        thereto and this Indenture as it applies to such Series shall cease to be
        of
        further effect and the lien hereunder shall be released with respect to such
        Series, interest shall cease to accrue on the Environmental Control Bonds
        of
        such Series and the Indenture Trustee, on reasonable written demand of and
        at
        the expense of the Issuer, shall execute proper instruments acknowledging
        satisfaction and discharge of this Indenture with respect to the Environmental
        Control Bonds of such Series, when

       

      (A)   either

       

       (1)   all
        Environmental Control Bonds of such Series theretofore authenticated and
        delivered (other than (i) Environmental Control Bonds that have been
        destroyed, lost or stolen and that have been replaced or paid as provided
        in
        Section 2.06 and (ii) Environmental Control Bonds for whose payment
        money has theretofore been deposited in trust or segregated and held in trust
        by
        the Issuer and thereafter repaid to the Issuer or discharged from such trust,
        as
        provided in Section 3.03) have been delivered to the Indenture Trustee for
        cancellation; or

       

       (2)   the
        Expected Final Payment Date has occurred with respect to all Environmental
        Control Bonds of such Series not theretofore delivered to the Indenture Trustee
        for cancellation, and the Issuer has irrevocably deposited or caused to be
        irrevocably deposited with the Indenture Trustee cash, in trust for such
        purpose, in an amount sufficient to pay and discharge the entire indebtedness
        on
        such Environmental Control Bonds not theretofore delivered to the Indenture
        Trustee on the Expected Final Payment Date therefor;

       

      (B)    the
        Issuer has paid or caused to be paid all other sums payable hereunder by
        the
        Issuer with respect to such Series; and

       

      (C)    the
        Issuer has delivered to the Indenture Trustee and to the PSCWV an Officer’s
        Certificate, an Opinion of Counsel from external counsel and (if required
        by the
        TIA or the Indenture Trustee) an Independent Certificate from a firm of
        registered public accountants, each meeting the applicable requirements of
        Section 11.01 and each stating that all conditions precedent

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

       

      herein
        provided for relating to the satisfaction and discharge of this Indenture
        with
        respect to Environmental Control Bonds of such Series have been complied
        with.

       

      (b)    Subject
        to Sections 4.01(c) and 4.02, the Issuer at any time may terminate
        (i) all its obligations under this Indenture with respect to the
        Environmental Control Bonds of any Series (“Legal
        Defeasance Option”)
        or
        (ii) its obligations under Sections 3.04, 3.05, 3.06, 3.07, 3.08,
        3.09, 3.10, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17, 3.18, 3.19 and 3.20 and the
        operation of Section 5.01(iv) (“Covenant
        Defeasance Option”)
        with
        respect to any Series of Environmental Control Bonds. The Issuer may exercise
        the Legal Defeasance Option with respect to any Series of Environmental Control
        Bonds notwithstanding its prior exercise of the Covenant Defeasance Option
        with
        respect to such Series.

       

      If
        the
        Issuer exercises the Legal Defeasance Option with respect to any Series,
        the
        maturity of the Environmental Control Bonds of such Series may not be
        (a) accelerated because of an Event of Default or (b) except as
        provided in Section 4.02, redeemed. If the Issuer exercises the Covenant
        Defeasance Option with respect to any Series, the maturity of the Environmental
        Control Bonds of such Series may not be accelerated because of an Event of
        Default specified in Section 5.01(iv).

       

      Upon
        satisfaction of the conditions set forth herein to the exercise of the Legal
        Defeasance Option or the Covenant Defeasance Option with respect to any Series
        of Environmental Control Bonds, the Indenture Trustee, on reasonable written
        demand of and at the expense of the Issuer, shall execute proper instruments
        acknowledging satisfaction and discharge of the obligations that are terminated
        pursuant to such exercise.

       

      (c)    Notwithstanding
        Sections 4.01(a) and 4.01(b) above, (i) rights of registration of
        transfer and exchange, (ii) rights of substitution of mutilated, destroyed,
        lost or stolen Environmental Control Bonds, (iii) rights of Environmental
        Control Bondholders to receive payments of principal, premium, if any, and
        interest, but only from the amounts deposited with the Indenture Trustee
        for
        such payments, (iv) Sections 4.03 and 4.04, (v) the rights,
        obligations and immunities of the Indenture Trustee hereunder (including
        the
        rights of the Indenture Trustee under Section 6.07 and the obligations of
        the Indenture Trustee under Section 4.03) and (vi) the rights of
        Environmental Control Bondholders under this Indenture with respect to the
        property deposited with the Indenture Trustee payable to all or any of them,
        shall survive until the Environmental Control Bonds of the Series as to which
        this Indenture or certain obligations hereunder have be satisfied and discharged
        pursuant to Section 4.01(a) or 4.01(b) and have been paid in full.
        Thereafter, the obligations in Sections 6.07 and 4.04 with respect to such
        Series shall survive.

       

      SECTION
        4.02.   Conditions
        to Defeasance.
        The
        Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance
        Option with respect to any Series of Environmental Control Bonds only
        if:

       

      (a)    the
        Issuer irrevocably deposits or causes to be deposited in trust with the
        Indenture Trustee cash or U.S. Government Obligations maturing as to principal
        and interest in such amounts and at such times will insure the availability
        of
        cash (or a combination thereof) for the payment of principal of and premium,
        if
        any, and interest on such Environmental Control

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

      Bonds
        to
        the Expected Payment Date, such deposit to be made in the Defeasance Subaccount
        for such Series of Environmental Control Bonds;

       

      (b)    the
        Issuer delivers to the Indenture Trustee a certificate from a nationally
        recognized firm of independent registered public accountants expressing its
        opinion that the payments of principal and interest when due and without
        reinvestment on the deposited U.S. Government Obligations plus any deposited
        cash without investment will provide cash at such times and in such amounts
        (but, in the case of the Legal Defeasance Option only, not more than such
        amounts) as will be sufficient to pay in respect of the Environmental Control
        Bonds of such Series (i) principal in accordance with the Expected Sinking
        Fund Schedule therefor and (ii) interest when due;

       

      (c)    in
        the
        case of the Legal Defeasance Option, ninety-five days pass after the deposit
        is
        made and during the ninety-five-day period no Default specified in
        Section 5.01(iv) or (v) occurs which is continuing at the end of the
        period;

       

      (d)    no
        Default or Event of Default has occurred and is continuing on the day of
        such
        deposit and after giving effect thereto;

       

      (e)    in
        the
        case of the Legal Defeasance Option, the Issuer delivers to the Indenture
        Trustee an Opinion of Counsel from external counsel stating that (i) the
        Issuer has received from, or there has been published by, the Internal Revenue
        Service a ruling, or (ii) since the date of execution of this Indenture,
        there has been a change in the applicable Federal income tax law, in either
        case
        to the effect that, and based thereon such opinion shall confirm that, the
        Holders of the Environmental Control Bonds of such Series will not recognize
        income, gain or loss for Federal income tax purposes as a result of the exercise
        of such Legal Defeasance Option and will be subject to Federal income tax
        on the
        same amounts, in the same manner and at the same times as would have been
        the
        case if such Legal Defeasance had not occurred;

       

      (f)   in
        the
        case of the Covenant Defeasance Option, the Issuer delivers to the Indenture
        Trustee an Opinion of Counsel to the effect that the Holders of the
        Environmental Control Bonds of such Series will not recognize income, gain
        or
        loss for Federal income tax purposes as a result of the exercise of such
        Covenant Defeasance Option and will be subject to Federal income tax on the
        same
        amounts, in the same manner and at the same times as would have been the
        case if
        such Covenant Defeasance had not occurred;

       

      (g)    the
        Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion
        of Counsel, each stating that all conditions precedent to the satisfaction
        and
        discharge of the Environmental Control Bonds of such Series to the extent
        contemplated by this Article IV have been complied with; and

       

      (h)    the
        Rating Agency Condition has been satisfied.

       

      SECTION
        4.03.    Application
        of Trust Money.
        All
        moneys or U.S. Government Obligations deposited with the Indenture Trustee
        pursuant to Section 4.01 or 4.02 hereof with respect to any Series of
        Environmental Control Bonds shall be held in trust in the Defeasance Subaccount
        for such Series and applied by it, in accordance with the provisions of the
        Environmental Control Bonds and this Indenture, to the payment, either directly
        or through

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

       

      any
        Paying Agent, as the Indenture Trustee may determine, to the Holders of the
        particular Environmental Control Bonds for the payment or redemption of which
        such moneys have been deposited with the Indenture Trustee, of all sums due
        and
        to become due thereon for principal, premium, if any, and interest. Such
        moneys
        shall be segregated and held apart solely for paying such Environmental Control
        Bonds and such Environmental Control Bonds shall not be entitled to any amounts
        on deposit in the Collection Account other than amounts on deposit in the
        Defeasance Subaccount for such Environmental Control Bonds.

       

      SECTION
        4.04.    Repayment
        of Moneys Held by Paying Agent.
        In
        connection with the satisfaction and discharge of this Indenture or the exercise
        of the Covenant Defeasance Option or the Legal Defeasance Option with respect
        to
        the Environmental Control Bonds of any Series, all moneys then held by any
        Paying Agent other than the Indenture Trustee under the provisions of this
        Indenture with respect to such Environmental Control Bonds shall, upon demand
        of
        the Issuer, be paid to the Indenture Trustee to be held and applied according
        to
        Section 3.03 and thereupon such Paying Agent shall be released from all
        further liability with respect to such moneys.

       

      ARTICLE
        V

       

      Remedies

       

      SECTION
        5.01.    Events
        of Default.
“Event
        of Default” with respect to any Series, wherever used herein, means any one of
        the following events (whatever the reason for such Event of Default and whether
        it shall be voluntary or involuntary or be effected by operation of law or
        pursuant to any judgment, decree or order of any court or any order, rule
        or
        regulation of any administrative or governmental body):

       

      (i)    default
        in the payment of any interest on any Environmental Control Bond when the
        same
        becomes due and payable, and such default shall continue for a period of
        five
        Business Days;

       

      (ii)   default
        in the payment of the then unpaid principal of any Environmental Control
        Bond of
        any Series on the Series Termination Date for such Series or, if
        applicable, any Tranche on the Tranche Termination Date for such
        Tranche;

       

      (iii)   default
        in the observance or performance of any covenant or agreement of the Issuer
        made
        in this Indenture (other than a covenant or agreement, a default in the
        observance or performance of which is specifically dealt with in clause (i)
        or
        (ii) above), or any material representation or warranty of the Issuer made
        in
        this Indenture or in any certificate or writing delivered pursuant hereto
        or in
        connection herewith proves to have been incorrect in any material respect
        as of
        the time when made, and such default shall continue or not be cured, or such
        representation or warranty shall continue to be incorrect or not cured, as
        applicable, for a period of thirty days after the earlier of (A) the date
        there
        shall have been given, by registered or certified mail, to the Issuer by
        the
        Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders
        of
        at least 25% of the Outstanding Amount of the Environmental Control Bonds
        of any
        Series, a written notice specifying such default or incorrect representation
        or
        warranty

       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

       

      and
        requiring it to be remedied and stating that such notice is a “Notice of
        Default” hereunder; or (B) the date that the Issuer has actual knowledge of the
        default;

       

      (iv)   the
        filing of a decree or order for relief by a court having jurisdiction in
        the
        premises in respect of the Issuer or any substantial part of the Collateral
        in
        an involuntary case under any applicable Federal or state bankruptcy, insolvency
        or other similar law now or hereafter in effect, or appointing a receiver,
        liquidator, assignee, custodian, trustee, sequestrator or similar official
        of
        the Issuer or for any substantial part of the Collateral, or ordering the
        winding-up or liquidation of the Issuer’s affairs, and such decree or order
        shall remain unstayed and in effect for a period of ninety consecutive days;
        

       

      (v)    the
        commencement by the Issuer of a voluntary case under any applicable Federal
        or
        state bankruptcy, insolvency or other similar law now or hereafter in effect,
        or
        the consent by the Issuer to the entry of an order for relief in an involuntary
        case under any such law, or the consent by the Issuer to the appointment
        or
        taking possession by a receiver, liquidator, assignee, custodian, trustee,
        sequestrator or similar official of the Issuer or for any substantial part
        of
        the Collateral, or the making by the Issuer of any general assignment for
        the
        benefit of creditors, or the failure by the Issuer generally to pay its debts
        as
        such debts become due, or the taking of action by the Issuer in furtherance
        of
        any of the foregoing; or

       

      (vi)   any
        act
        or failure to act by the State of West Virginia or any of its agencies
        (including the PSCWV), officers or employees that violates or is not in
        accordance with the pledge and agreement of the State of West Virginia in
        Section (q) of the Statute (W.Va Code, § 24-2-4e(q)).

       

      The
        Issuer shall deliver to a Responsible Officer of the Indenture Trustee, the
        PSCWV and the Rating Agencies, within five days after an Authorized Officer
        has
        knowledge of the occurrence thereof, written notice in the form of an Officer’s
        Certificate of any event which with the giving of notice and the lapse of
        time
        would become an Event of Default under clause (iii) above, its status and
        what
        action the Issuer is taking or proposes to take with respect thereto. An
        Event
        of Default with respect to one Series of Environmental Control Bonds will
        not
        automatically trigger an Event of Default with respect to any other Outstanding
        Series of Environmental Control Bonds.

       

      SECTION
        5.02.    Acceleration
        of Maturity; Rescission and Annulment.
        If an
        Event of Default (other than an Event of Default under Section 5.01(vi))
        occurs
        and is continuing with respect to any Series, then and in every such case
        either
        the Indenture Trustee or the Holders of Environmental Control Bonds representing
        not less than a majority of the Outstanding Amount of the Environmental Control
        Bonds of such Series may, but need not, declare the Environmental Control
        Bonds
        of such Series to be immediately due and payable, by a notice in writing
        to the
        Issuer (and to the Indenture Trustee and the PSCWV if given by Environmental
        Control Bondholders), and upon any such declaration the unpaid principal
        amount
        of the Environmental Control Bonds of such Series, together with accrued
        and
        unpaid interest thereon through the date of acceleration, shall become
        immediately due and payable.

       

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

       

      At
        any
        time after such declaration of acceleration of maturity has been made and
        before
        a judgment or decree for payment of the money due has been obtained by the
        Indenture Trustee as hereinafter in this Article V provided, the Holders of
        Environmental Control Bonds representing a majority of the Outstanding Amount
        of
        the Environmental Control Bonds of such Series, by written notice to the
        Issuer,
        the PSCWV and the Indenture Trustee, may rescind and annul such declaration
        and
        its consequences if:

       

      (i)  the
        Issuer has paid or deposited with the Indenture Trustee, for deposit in the
        General Subaccount of the Collection Account, a sum sufficient to
        pay

       

      (A)    all
        payments of principal of and premium, if any, and interest on all Environmental
        Control Bonds of all Series due and owing and all other amounts that would
        then
        be due hereunder or upon such Environmental Control Bonds if the Event of
        Default giving rise to such acceleration had not occurred; and

       

      (B)    all
        sums
        paid or advanced by the Indenture Trustee hereunder and the reasonable
        compensation, expenses, disbursements and advances of the Indenture Trustee
        and
        its agents and counsel; and

       

      (ii)  all
        Events of Default with respect to such Series, other than the nonpayment
        of the
        principal of the Environmental Control Bonds of such Series during that has
        become due solely by such acceleration, have been cured or waived as provided
        in
        Section 5.12.

       

      No
        such
        rescission shall affect any subsequent Event of Default or impair any right
        consequent thereto.

       

      SECTION
        5.03.    Collection
        of Indebtedness and Suits for Enforcement by Indenture Trustee.  (a)  The
        Issuer covenants that if (i) default is made in the payment of any interest
        on any Environmental Control Bond when such interest becomes due and payable
        and
        such Default continues for a period of five Business Days, or (ii) default
        is made in the payment of the then unpaid principal of any Environmental
        Control
        Bond on the Series Termination Date or Tranche Termination Date, as
        applicable, therefor, the Issuer will, upon demand of the Indenture Trustee,
        pay
        to it, for the benefit of the Holders of the Environmental Control Bonds
        of such
        Series, such amount as shall be sufficient to cover the costs and expenses
        of
        collection, including the reasonable compensation, expenses, disbursements
        and
        advances of the Indenture Trustee and its agents and counsel and the whole
        amount then due and payable on such Environmental Control Bonds for principal,
        premium, if any, and interest, with interest upon the overdue principal and
        premium, if any, and, to the extent payment at such rate of interest shall
        be
        legally enforceable, upon overdue installments of interest, at the respective
        Bond Rate of such Series or the applicable Tranche of such Series and in
        addition thereto, such further amount as shall be sufficient to cover the
        costs
        and expenses of collection, including the reasonable compensation, expenses,
        disbursements and advances of the Indenture Trustee and its agents and
        counsel.

       

      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

       

      (b)    In
        case
        the Issuer shall fail forthwith to pay the amounts specified in clause (a)
        above upon such demand, the Indenture Trustee, in its own name and as trustee
        of
        an express trust, may institute a Proceeding for the collection of the sums
        so
        due and unpaid, and may prosecute such Proceeding to judgment or final decree,
        and may enforce the same against the Issuer or other obligor upon such
        Environmental Control Bonds and collect in the manner provided by law out
        of the
        property of the Issuer or other obligor upon such Environmental Control Bonds,
        wherever situated, the moneys adjudged or decreed to be payable.

       

      (c)    If
        an
        Event of Default occurs and is continuing, the Indenture Trustee may, as
        more
        particularly provided in Section 5.04, in its discretion, proceed to
        protect and enforce its rights and the rights of the Environmental Control
        Bondholders, by such appropriate Proceedings as the Indenture Trustee shall
        deem
        most effective to protect and enforce any such rights, whether for the specific
        enforcement of any covenant or agreement in this Indenture or in aid of the
        exercise of any power granted herein, or to enforce any other proper remedy
        or
        legal or equitable right vested in the Indenture Trustee by this Indenture
        or by
        law including foreclosing or otherwise enforcing the lien on the Transferred
        Environmental Control Property securing the Environmental Control Bonds or
        applying to the PSCWV or to a court of competent jurisdiction in accordance
        with
        the Statute for sequestration of revenues arising with respect to such
        Transferred Environmental Control Property.

       

      (d)    In
        case
        there shall be pending, relative to the Issuer or any other obligor upon
        the
        Environmental Control Bonds or any Person having or claiming an ownership
        interest in the Collateral, Proceedings under Title 11 of the United States
        Code or any other applicable Federal or state bankruptcy, insolvency or other
        similar law, or in case a receiver, assignee or trustee in bankruptcy or
        reorganization, liquidator, sequestrator or similar official shall have been
        appointed for or taken possession of the Issuer or its property or such other
        obligor or Person, or in case of any other comparable judicial Proceedings
        relative to the Issuer or other obligor upon the Environmental Control Bonds,
        or
        to the creditors or property of the Issuer or such other obligor, the Indenture
        Trustee, irrespective of whether the principal of any Environmental Control
        Bonds shall then be due and payable as therein expressed or by declaration
        or
        otherwise and irrespective of whether the Indenture Trustee shall have made
        any
        demand pursuant to the provisions of this Section, shall be entitled and
        empowered, by intervention in such Proceedings or otherwise:

       

      (i)    to
        file
        and prove a claim or claims for the whole amount of principal, premium, if
        any,
        and interest owing and unpaid in respect of the Environmental Control Bonds
        and
        to file such other papers or documents as may be necessary or advisable in
        order
        to have the claims of the Indenture Trustee (including any claim for reasonable
        compensation to the Indenture Trustee and each predecessor Indenture Trustee,
        and their respective agents, attorneys and counsel, and for reimbursement
        of all
        expenses and liabilities incurred, and all advances made, by the Indenture
        Trustee and each predecessor Indenture Trustee, except as a result of negligence
        or bad faith), the Environmental Control Bondholders;

       

      (ii)   unless
        prohibited by applicable law and regulations, to vote on behalf of the Holders
        of Environmental Control Bonds in any election of a trustee, a standby trustee
        or Person performing similar functions in any such Proceedings;

       

      
        
          
          

        

        
          39

          
            

          

        

        
          
          

        

      

       

      (iii)   to
        collect and receive any moneys or other property payable or deliverable on
        any
        such claims and to distribute all amounts received with respect to the claims
        of
        the Environmental Control Bondholders and of the Indenture Trustee on their
        behalf; and

       

      (iv)   to
        file
        such proofs of claim and other papers or documents as may be necessary or
        advisable in order to have the claims of the Indenture Trustee or the Holders
        of
        Environmental Control Bonds allowed in any judicial proceedings relative
        to the
        Issuer, its creditors and its property;

       

      and
        any
        trustee, receiver, liquidator, custodian or other similar official in any
        such
        Proceeding is hereby authorized by each of such Environmental Control
        Bondholders to make payments to the Indenture Trustee, and, in the event
        that
        the Indenture Trustee shall consent to the making of payments directly to
        such
        Environmental Control Bondholders, to pay to the Indenture Trustee such amounts
        as shall be sufficient to cover reasonable compensation to the Indenture
        Trustee, each predecessor Indenture Trustee and their respective agents,
        attorneys and counsel, and all other expenses and liabilities incurred, and
        all
        advances made, by the Indenture Trustee and each predecessor Indenture Trustee
        except as a result of negligence or bad faith.

       

      (e)    Nothing
        herein contained shall be deemed to authorize the Indenture Trustee to authorize
        or consent to or vote for or accept or adopt on behalf of any Environmental
        Control Bondholder any plan of reorganization, arrangement, adjustment or
        composition affecting the Environmental Control Bonds or the rights of any
        Holder thereof or to authorize the Indenture Trustee to vote in respect of
        the
        claim of any Environmental Control Bondholder in any such proceeding except,
        as
        aforesaid, to vote for the election of a trustee in bankruptcy or similar
        Person.

       

      (f)    All
        rights of action and of asserting claims under this Indenture, or under any
        of
        the Environmental Control Bonds of any Series, may be enforced by the Indenture
        Trustee without the possession of any of the Environmental Control Bonds
        of such
        Series or the production thereof in any trial or other Proceedings relative
        thereto, and any such action or Proceedings instituted by the Indenture Trustee
        shall be brought in its own name as trustee of an express trust, and any
        recovery of judgment, subject to the payment of the expenses, disbursements
        and
        compensation of the Indenture Trustee, each predecessor Indenture Trustee
        and
        their respective agents and attorneys, shall be for the ratable benefit of
        the
        Holders of the Environmental Control Bonds of such Series.

       

      (g)    In
        any
        Proceedings brought by the Indenture Trustee (and also any Proceedings involving
        the interpretation of any provision of this Indenture to which the Indenture
        Trustee shall be a party), the Indenture Trustee shall be held to represent
        all
        the Holders of the Environmental Control Bonds, and it shall not be necessary
        to
        make any Environmental Control Bondholder a party to any such
        Proceedings.

       

      SECTION
        5.04.    Remedies;
        Priorities.  (a)  If
        an
        Event of Default (other than an Event of Default under Section 5.01(vi))
        occurs
        and is continuing with respect to a Series, the Indenture Trustee may do
        one or
        more of the following (subject to Section 5.05):

       

      
        
          
          

        

        
          40

          
            

          

        

        
          
          

        

      

       

      (i)    institute
        Proceedings in its own name and as trustee of an express trust for the
        collection of all amounts then payable on the Environmental Control Bonds
        of
        such Series or under this Indenture with respect thereto, whether by declaration
        or otherwise, enforce any judgment obtained, and collect from the Issuer
        and any
        other obligor upon such Environmental Control Bonds moneys adjudged
        due;

       

      (ii)   institute
        Proceedings from time to time for the complete or partial foreclosure of
        this
        Indenture with respect to the Series Collateral;

       

      (iii)   exercise
        any remedies of a secured party under the West Virginia UCC, the Delaware
        UCC or
        the Statute or any other applicable law and take any other appropriate action
        to
        protect and enforce the rights and remedies of the Indenture Trustee and
        the
        Holders of the Environmental Control Bonds of such Series;

       

      (iv)   sell
        the
        Series Collateral or any portion thereof or rights or interest therein, at
        one
        or more public or private sales called and conducted in any manner permitted
        by
        law; and

       

      (v)    exercise
        all rights, remedies, powers, privileges and claims of the Issuer against
        the
        Transferor, the Seller, the Servicer or any Swap Counterparty under or in
        connection with the Transfer Agreement, the Sale Agreement, the Servicing
        Agreement or the related Swap Agreement as provided in
        Section 3.20(b);

       

      provided,
        however, that the Indenture Trustee may not sell or otherwise liquidate any
        portion of the Collateral following an Event of Default, other than an Event
        of
        Default described in Section 5.01(i) or (ii), with respect to any Series
        unless
        (A) the Holders of 100% of the Outstanding Amount of the Environmental
        Control Bonds of all Series consent in writing thereto, (B) the proceeds of
        such sale or liquidation distributable to the Environmental Control Bondholders
        of all Series are sufficient to discharge in full all amounts then due and
        unpaid upon such Environmental Control Bonds for principal, premium, if any,
        and
        interest or (C) the Indenture Trustee determines, after having been advised
        in writing by the Servicer, that the Collateral will not continue to provide
        sufficient funds for all payments on the Environmental Control Bonds of all
        Series as they would have become due if the Environmental Control Bonds had
        not
        been declared due and payable, and the Indenture Trustee obtains the consent
        of
        Holders of 662/3%
        of the
        Outstanding Amount of the Environmental Control Bonds of all Series. In
        determining such sufficiency or insufficiency with respect to clause (B)
        and (C), the Indenture Trustee may, but need not, obtain and conclusively
        rely
        upon an opinion of an Independent investment banking or accounting firm of
        national reputation as to the feasibility of such proposed action and as
        to the
        sufficiency of the Collateral for such purpose.

       

      (b)    If
        an
        Event of Default under Section 5.01(vi) occurs and is continuing, the Indenture
        Trustee, for the benefit of the Holders of the related Series, shall be entitled
        and empowered to the extent permitted by applicable law to institute or
        participate in Proceedings reasonably necessary to compel performance of
        or to
        enforce the pledge and agreement of the State of West Virginia in Section
        (q) of
        the Statute (W.Va Code, § 24-2-4e(q)) and to collect monetary damages incurred
        by the Holders or the Indenture Trustee as a result of any such Event of
        Default, and may prosecute any such Proceedings to final judgment or decree.
        Such remedy

       

      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

       

      shall
        be
        the only remedy that the Indenture Trustee may exercise if the only Event
        of
        Default that has occurred and is continuing is an Event of Default under
        Section
        5.01(vi).

       

      (c)    If
        the
        Indenture Trustee collects any money pursuant to this Article V, it shall
        pay out such money in accordance with the priorities set forth in
        Section 8.02(e).

       

      SECTION
        5.05.    Optional
        Preservation of the Collateral.
        If the
        Environmental Control Bonds of any Series have been declared to be due and
        payable under Section 5.02 following an Event of Default and such
        declaration and its consequences have not been rescinded and annulled, the
        Indenture Trustee may, but need not, elect, as provided in
        Section 5.11(iii), to maintain possession of the related Series Collateral
        and not sell or liquidate the same. It is the desire of the parties hereto
        and
        the Environmental Control Bondholders that there be at all times sufficient
        funds for the payment of principal of and premium, if any, and interest on
        the
        Environmental Control Bonds, and the Indenture Trustee shall take such desire
        into account when determining whether or not to maintain possession of the
        Series Collateral or sell or liquidate the same. In determining whether to
        maintain possession of the Series Collateral or sell or liquidate the same,
        the
        Indenture Trustee may, but need not, obtain and rely upon an opinion of an
        Independent investment banking or registered public accounting firm of national
        reputation as to the feasibility of such proposed action and as to the
        sufficiency of the Series Collateral for such purpose.

       

      SECTION
        5.06.    Limitation
        of Proceedings.
        No
        Holder of any Environmental Control Bond of any Series shall have any right
        to
        institute any Proceeding, judicial or otherwise, or to avail itself of the
        remedies provided in the Statute, with respect to this Indenture and the
        related
        Series Supplement, or for the appointment of a receiver or trustee, or for
        any
        other remedy hereunder, unless:

       

      (i)    such
        Holder has previously given written notice to the Indenture Trustee of a
        continuing Event of Default with respect to such Series;

       

      (ii)   the
        Holders of not less than 25% of the Outstanding Amount of the Environmental
        Control Bonds of each Series have made written request to the Indenture Trustee
        to institute such Proceeding in respect of such Event of Default in its own
        name
        as Indenture Trustee hereunder;

       

      (iii)   such
        Holder or Holders have offered to the Indenture Trustee security or indemnity
        reasonably satisfactory to the Indenture Trustee against the costs, expenses
        and
        liabilities to be incurred in complying with such request;

       

      (iv)   the
        Indenture Trustee for 60 days after its receipt of such notice, request and
        offer of indemnity has failed to institute such Proceedings; and

       

      (v)    no
        direction inconsistent with such written request has been given to the Indenture
        Trustee during such 60-day period by the Holders of a majority of the
        Outstanding Amount of the Environmental Control Bonds of all
        Series;

       

      it
        being
        understood and intended that no one or more Holders of Environmental Control
        Bonds shall have any right in any manner whatever by virtue of, or by availing
        of, any provision of this

       

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

       

      Indenture
        to affect, disturb or prejudice the rights of any other Holders of Environmental
        Control Bonds or to obtain or to seek to obtain priority or preference over
        any
        other Holders or to enforce any right under this Indenture, except in the
        manner
        herein provided.

       

      In
        the
        event the Indenture Trustee shall receive conflicting or inconsistent requests
        and indemnity from two or more groups of Holders of Environmental Control
        Bonds,
        each representing less than a majority of the Outstanding Amount of the
        Environmental Control Bonds of all Series, the Indenture Trustee in its sole
        discretion may determine what action, if any, shall be taken, notwithstanding
        any other provisions of this Indenture.

       

      SECTION
        5.07.    Unconditional
        Rights of Environmental Control Bondholders To Receive Principal, Premium,
        if
        any, and Interest.
        Notwithstanding any other provisions in this Indenture, the Holder of any
        Environmental Control Bond shall have the right, which is absolute and
        unconditional, (a) to receive payment of (i) the interest, if any, on
        such Environmental Control Bond on or after the due dates thereof expressed
        in
        such Environmental Control Bond or in this Indenture or (ii) the unpaid
        principal, if any, of such Environmental Control Bonds on or after the
        Series Termination Date or Tranche Termination Date therefor and
        (b) to institute suit for the enforcement of any such payment, and such
        right shall not be impaired without the consent of such Holder.

       

      SECTION
        5.08.    Restoration
        of Rights and Remedies.
        If the
        Indenture Trustee or any Environmental Control Bondholder has instituted
        any
        Proceeding to enforce any right or remedy under this Indenture and such
        Proceeding has been discontinued or abandoned for any reason or has been
        determined adversely to the Indenture Trustee or to such Environmental Control
        Bondholder, then and in every such case the Issuer, the Indenture Trustee
        and
        the Environmental Control Bondholders shall, subject to any determination
        in
        such Proceeding, be restored severally and respectively to their former
        positions hereunder, and thereafter all rights and remedies of the Indenture
        Trustee and the Environmental Control Bondholders shall continue as though
        no
        such Proceeding had been instituted.

       

      SECTION
        5.09.    Rights
        and Remedies Cumulative.
        No
        right or remedy herein conferred upon or reserved to the Indenture Trustee
        or to
        the Environmental Control Bondholders is intended to be exclusive of any
        other
        right or remedy, and every right and remedy shall, to the extent permitted
        by
        law, be cumulative and in addition to every other right and remedy given
        hereunder or now or hereafter existing at law or in equity or otherwise.
        The
        assertion or employment of any right or remedy hereunder, or otherwise, shall
        not prevent the concurrent assertion or employment of any other appropriate
        right or remedy.

       

      SECTION
        5.10.    Delay
        or Omission Not a Waiver.
        No
        delay or omission of the Indenture Trustee or any Environmental Control
        Bondholder to exercise any right or remedy accruing upon any Default or Event
        of
        Default shall impair any such right or remedy or constitute a waiver of any
        such
        Default or Event of Default or an acquiescence therein. Every right and remedy
        given by this Article V or by law to the Indenture Trustee or to the
        Environmental Control Bondholders may be exercised from time to time, and
        as
        often as may be deemed expedient, by the Indenture Trustee or by the
        Environmental Control Bondholders, as the case may be.

       

      
        
          
          

        

        
          43

          
            

          

        

        
          
          

        

      

       

      SECTION
        5.11.    Control
        by Environmental Control Bondholders.
        The
        Holders of not less than a majority of the Outstanding Amount of the
        Environmental Control Bonds of all Series (or, if less than all Series or
        Tranches are affected, the affected Series or Tranche or Tranches) shall
        have
        the right to direct the time, method and place of conducting any Proceeding
        for
        any remedy available to the Indenture Trustee with respect to the Environmental
        Control Bonds of such Series or Tranche or Tranches of exercising any trust
        or
        power conferred on the Indenture Trustee with respect to such Series or Tranche
        or Tranches; provided that

       

      (i)    such
        direction shall not be in conflict with any rule of law or with this
        Indenture;

       

      (ii)   subject
        to the express terms of Section 5.04, any direction to the Indenture
        Trustee to sell or liquidate any Series Collateral shall be by the Holders
        of
        Environmental Control Bonds representing not less than 100% of the Outstanding
        Amount of the Environmental Control Bonds of the affected Series;

       

      (iii)   if
        the
        conditions set forth in Section 5.05 have been satisfied and the Indenture
        Trustee elects to retain the Series Collateral pursuant to such Section and
        not
        sell or liquidate the same, then any direction to the Indenture Trustee by
        Holders of Environmental Control Bonds representing less than 100% of the
        Outstanding Amount of the Environmental Control Bonds of all Series to sell
        or
        liquidate the Series Collateral shall be of no force and effect;
        and

       

      (iv)   the
        Indenture Trustee may take any other action deemed proper by the Indenture
        Trustee that is not inconsistent with such direction;

       

      provided,
        however, that, subject to Section 6.01, the Indenture Trustee need not take
        any action that it determines might involve it in liability for which it
        would
        not be adequately indemnified to its satisfaction against any cost, expense
        or
        liability or if the Indenture Trustee determines that such action might
        materially and adversely affect the rights of any Holders not consenting
        to such
        action.

       

      SECTION
        5.12.    Waiver
        of Past Defaults.
        Prior
        to the declaration of the acceleration of the maturity of the Environmental
        Control Bonds of all Series as provided in Section 5.02 and upon
        satisfaction of the PSCWV Condition set forth in 9.03 of this Indenture,
        the
        Holders of not less than a majority of the Outstanding Amount of the
        Environmental Control Bonds of an affected Series may waive any past Default
        or
        Event of Default and its consequences except a Default (i) in payment of
        principal of or premium, if any, or interest on any of the Environmental
        Control
        Bonds or (ii) in respect of a covenant or provision hereof that cannot be
        modified or amended without the consent of the Holders of each Environmental
        Control Bond of all Series or Tranches affected. In the case of any such
        waiver,
        the Issuer, the Indenture Trustee and the Holders of the Environmental Control
        Bonds 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 thereto.

       

      Upon
        any
        such waiver, such Default shall cease to exist and be deemed to have been
        cured
        and not to have occurred, and any Event of Default arising therefrom shall
        be
        deemed

       

      
        
          
          

        

        
          44

          
            

          

        

        
          
          

        

      

       

      to
        have
        been cured and not to have occurred, for every purpose of this Indenture;
        but no
        such waiver shall extend to any subsequent or other Default or Event of Default
        or impair any right consequent thereto.

       

      SECTION
        5.13.    Undertaking
        for Costs.
        All
        parties to this Indenture agree, and each Holder of any Environmental Control
        Bond by such Holder’s 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 Indenture
        Trustee for any action taken, suffered or omitted by it as Indenture Trustee,
        the filing by any party litigant in such suit of an undertaking to pay the
        costs
        of such suit, and that 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 merits and good faith of the claims or defenses
        made by
        such party litigant; but the provisions of this Section shall not apply to
        (a) any suit instituted by the Indenture Trustee, (b) any suit
        instituted by any Environmental Control Bondholder, or group of Environmental
        Control Bondholders, in each case holding in the aggregate more than 10%
        of the
        Outstanding Amount of the Environmental Control Bonds of a Series or
        (c) any suit instituted by any Environmental Control Bondholder for the
        enforcement of the payment of (i) interest on any Environmental Control
        Bond on or after the due dates expressed in such Environmental Control Bond
        and
        in this Indenture or (ii) the unpaid principal, if any, of any
        Environmental Control Bond on or after the Series Termination Date or
        Tranche Termination Date, if applicable, therefor.

       

      SECTION
        5.14.    Waiver
        of Stay or Extension Laws.
        The
        Issuer covenants (to the extent that it may lawfully do so) that it will
        not at
        any time insist upon, or plead or in any manner whatsoever, claim or take
        the
        benefit or advantage of, any stay or extension law wherever enacted, now
        or at
        any time hereafter in force, that may affect the covenants or the performance
        of
        this Indenture; and the Issuer (to the extent that it may lawfully do so)
        hereby
        expressly waives all benefit or advantage of any such law, and covenants
        that it
        will not hinder, delay or impede the execution of any power herein granted
        to
        the Indenture Trustee, but will suffer and permit the execution of every
        such
        power as though no such law had been enacted.

       

      SECTION
        5.15.    Action
        on Environmental Control Bonds.
        The
        Indenture Trustee’s right to seek and recover judgment on the Environmental
        Control Bonds or under this Indenture shall not be affected by the seeking,
        obtaining or application of any other relief under or with respect to this
        Indenture. Neither the lien of this Indenture nor any rights or remedies
        of the
        Indenture Trustee or the Environmental Control Bondholders shall be impaired
        by
        the recovery of any judgment by the Indenture Trustee against the Issuer
        or by
        the levy of any execution under such judgment upon any portion of the Collateral
        or upon any of the assets of the Issuer.

       

      ARTICLE
        VI

       

      The
        Indenture Trustee

       

      SECTION
        6.01.    Duties
        and Liabilities of Indenture Trustee.  (a) 
If
        an Event of Default has occurred and is continuing, the Indenture Trustee
        shall
        exercise the rights and powers vested in it by this Indenture and use the
        same
        degree of care and skill in their exercise as

       

      
        
          
          

        

        
          45

          
            

          

        

        
          
          

        

      

       

      a
        prudent
        Person would exercise or use under the circumstances in the conduct of such
        Person’s own affairs.

       

      (b)    Except
        during the continuance of an Event of Default:

       

      (i)    the
        Indenture Trustee undertakes to perform such duties and only such duties
        as are
        specifically set forth in this Indenture and no implied covenants or obligations
        shall be read into this Indenture against the Indenture Trustee;
        and

       

      (ii)   in
        the
        absence of bad faith on its part, the Indenture Trustee may conclusively
        rely,
        as to the truth of the statements and the correctness of the opinions expressed
        therein, upon certificates or opinions furnished to the Indenture Trustee
        and
        conforming to the requirements of this Indenture.

       

      (c)    The
        Indenture Trustee may not be relieved from liability for its own negligent
        action, its own negligent failure to act or its own willful misconduct, except
        that:

       

      (i)    this
        paragraph does not limit the effect of paragraph (b) of this
        Section;

       

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

       

      (iii)   the
        Indenture Trustee shall not be liable with respect to any action it takes
        or
        omits to take in good faith in accordance with a direction received by it
        pursuant to Section 5.11.

       

      (d)    Every
        provision of this Indenture that in any way relates to the Indenture Trustee
        is
        subject to paragraphs (a), (b) and (c) of this
        Section 6.01.

       

      (e)    The
        Indenture Trustee shall not be liable for interest on any money received
        by it
        except as provided in this Indenture or as the Indenture Trustee may agree
        in
        writing with the Issuer.

       

      (f)    Money
        held in trust by the Indenture Trustee need not be segregated from other
        funds
        held by the Trustee except to the extent required by law or the terms of
        this
        Indenture or the Transfer Agreement, the Sale Agreement, the Servicing Agreement
        or any Swap Agreement.

       

      (g)    No
        provision of this Indenture shall require the Indenture Trustee to expend
        or
        risk its own funds or otherwise incur financial liability in the performance
        of
        any of its duties hereunder or in the exercise of any of its rights or powers,
        if it shall have reasonable grounds to believe that repayments of such funds
        or
        adequate indemnity against such risk or liability is not reasonably assured
        to
        it.

       

      
        
          
          

        

        
          46

          
            

          

        

        
          
          

        

      

       

      (h)    Every
        provision of this Indenture relating to the conduct or affecting the liability
        of or affording protection to the Indenture Trustee shall be subject to the
        provisions of this Section and to the provisions of the TIA.

       

      (i)    Under
        no
        circumstances shall the Indenture Trustee be liable for any indebtedness
        evidenced by or arising under the Environmental Control Bonds or any Basic
        Document.

       

      SECTION
        6.02.    Rights
        of Indenture Trustee.   (a)  The
        Indenture Trustee may rely on any document believed by it to be genuine and
        to
        have been signed or presented by the proper Person. The Indenture Trustee
        need
        not investigate any fact or matter stated in the document.

       

      (b)    Before
        the Indenture Trustee acts or refrains from acting, it may require an Officer’s
        Certificate or an Opinion of Counsel. The Indenture Trustee shall not be
        liable
        for any action it takes or omits to take in good faith in reliance on an
        Officer’s Certificate or an Opinion of Counsel.

       

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

       

      (d)    The
        Indenture Trustee shall not be liable for any action it takes or omits to
        take
        in good faith that it believes to be authorized or within its rights or powers;
        provided, however, that the Indenture Trustee’s conduct does not constitute
        willful misconduct, negligence or bad faith.

       

      (e)    The
        Indenture Trustee may consult with counsel, and the advice or opinion of
        counsel
        with respect to legal matters relating to this Indenture and the Environmental
        Control Bonds shall be full and complete authorization and protection from
        liability in respect to any action taken, omitted or suffered by it hereunder
        in
        good faith and in accordance with the advice or opinion of such
        counsel.

       

      SECTION
        6.03.    Individual
        Rights of Indenture Trustee.
        The
        Indenture Trustee in its individual or any other capacity may become the
        owner
        or pledgee of Environmental Control Bonds and may otherwise deal with the
        Issuer
        or its affiliates with the same rights it would have if it were not Indenture
        Trustee. Any Paying Agent, Bond Registrar, co-registrar or co-paying agent
        may
        do the same with like rights. However, the Indenture Trustee must comply
        with
        Sections 6.11 and 6.12.

       

      SECTION
        6.04.    Indenture
        Trustee’s Disclaimer.
        The
        Indenture Trustee shall not be responsible for and makes no representation
        as to
        the validity or adequacy of this Indenture or the Environmental Control Bonds.
        The Indenture Trustee shall not be accountable for the Issuer’s use of the
        proceeds from the Environmental Control Bonds, and the Indenture Trustee
        shall
        not be responsible for any statement of the Issuer in the Indenture or in
        any
        document issued in connection with the sale of the Environmental Control
        Bonds
        or in the

       

      
        
          
          

        

        
          47

          
            

          

        

        
          
          

        

      

       

      Environmental
        Control Bonds other than the Indenture Trustee’s certificate of authentication.
        The Indenture Trustee shall not be responsible for the form, character,
        genuineness, sufficiency, value or validity of any of the Collateral, or
        for or
        in respect of the validity or sufficiency of the Environmental Control Bonds
        (other than the certificate of authentication for the Environmental Control
        Bonds) or the Basic Documents and the Indenture Trustee shall in no event
        assume
        or incur any liability, duty or obligation to any Holder of an Environmental
        Control Bond, other than is expressly provided for in this Indenture. The
        Indenture Trustee shall not be liable for the default or misconduct of the
        Issuer, the Transferor, the Seller, the Servicer or any Swap Counterparty
        and
        the Indenture Trustee shall have no obligation or liability to perform the
        obligations of the Issuer.

       

      SECTION
        6.05.    Notice
        of Defaults.
        If a
        Default or Event of Default occurs and is continuing with respect to any
        Series
        and if it is known to a Responsible Officer of the Indenture Trustee, the
        Indenture Trustee shall mail to each Holder of Environmental Control Bonds
        of
        all Series, the PSCWV and to the Rating Agencies notice of the Default or
        Event
        of Default within 90 days after it occurs. Except in the case of a Default
        in
        payment of principal of or premium, if any, or interest on any Environmental
        Control Bond, the Indenture Trustee may withhold the notice if and so long
        as a
        committee of its Responsible Officers in good faith determines that withholding
        the notice is in the interests of Environmental Control
        Bondholders.

       

      SECTION
        6.06.    Reports
        by Indenture Trustee to Holders.  (a)  So
        long
        as the Indenture Trustee is the Bond Registrar, upon the written request
        of any
        Owner, within the prescribed period of time for tax reporting purposes after
        the
        end of each calendar year during the term of the Bonds, the Indenture Trustee
        shall deliver to each relevant current or former Owner such information as
        may
        be required to enable such Owner to prepare its Federal and state income
        tax
        returns.

       

      (b)    With
        respect to each Series of Environmental Control Bonds, on or prior to each
        Payment Date or Special Payment Date therefor, the Indenture Trustee will
        deliver a statement prepared by the Servicer to each Holder of Environmental
        Control Bonds and the PSCWV which will include (to the extent applicable)
        the
        following information (and any other information so specified in the
        Series Supplement for such Series) as to the Environmental Control Bonds of
        such Series with respect to such Payment Date, or Special Payment Date or
        the
        period since the previous Payment Date or Special Payment Date, as
        applicable:

       

      (i)    the
        amount paid to Holders of such Environmental Control Bonds in respect of
        principal, such amount to be expressed as a dollar amount
        per thousand;

       

      (ii)   the
        amount paid to Holders of such Environmental Control Bonds in respect of
        interest, such amount to be expressed as a dollar amount
        per thousand;

       

      (iii)   the
        Environmental Control Bond Balance, after giving effect to the payments to
        be
        made on such Payment Date, and the Projected Environmental Control Bond Balance,
        in each case for such Series and as of the most recent Payment Date, and
        the
        difference between such amounts;

       

      
        
          
          

        

        
          48

          
            

          

        

        
          
          

        

      

       

      (iv)   the
        amount, if any, on deposit in the Capital Subaccount and the Required Capital
        Amount, in each case as of that Payment Date; 

       

      (v)    the
        amount, if any, on deposit in the Excess Funds Subaccount as of that Payment
        Date;

       

      (vi)   the
        amount, if any, to be paid to each Swap Counterparty on that Payment Date
        to the
        extent provided in any Swap Agreement;

       

      (vii)   the
        amount paid or to be paid to the Indenture Trustee since the previous Payment
        Date;

       

      (viii)   the
        amount paid or to be paid to the Servicer since the previous Payment
        Date;

       

      (ix)    the
        amount paid to the Administrator since the previous Payment Date;
        and

       

      (x)    the
        amount of any other transfers and payments made pursuant to the Indenture
        since
        the previous Payment Date.

       

      (c)    The
        Indenture Trustee’s responsibility for disbursing the information described in
        subsection (b) above to Holders of Environmental Control Bonds and the
        PSCWV is limited to the availability, timeliness and accuracy of the information
        provided by the Servicer pursuant to the Servicing Agreement.

       

      SECTION
        6.07.    Compensation
        and Indemnity.
        The
        Issuer shall pay to the Indenture Trustee from time to time reasonable
        compensation for its services. The Indenture Trustee’s compensation shall not be
        limited by any law on compensation of a trustee of an express trust. The
        Issuer
        shall reimburse the Indenture Trustee for all reasonable out-of-pocket expenses,
        disbursements and advances incurred or made by it, including costs of
        collection, in addition to the compensation for its services. Such expenses
        shall include the reasonable compensation and expenses, disbursements and
        advances of the Indenture Trustee’s agents, counsel, accountants and experts.
        The Issuer shall indemnify and hold harmless the Indenture Trustee and its
        officers, directors, employees and agents, to the extent permitted by law,
        from
        and against any and all costs, damages, expenses, losses, taxes (other than
        taxes imposed on the Indenture Trustee in connection with fees and amounts
        earned or obtained in accordance with this Indenture), liabilities or other
        amounts whatsoever (including reasonable counsel fees and expenses) incurred
        by
        the Indenture Trustee in connection with the administration of this trust,
        the
        enforcement of this trust and all of the Indenture Trustee’s rights, powers and
        duties under this Indenture and the other Basic Documents to which the Indenture
        Trustee is a party and the performance by the Indenture Trustee of the duties
        and obligations of the Indenture Trustee under or pursuant to this Indenture
        and
        the other Basic Documents to which the Indenture Trustee is a party. The
        Indenture Trustee shall notify the Issuer as soon as is reasonably practicable
        of any claim for which it may seek indemnity. Failure by the Indenture Trustee
        to so notify the Issuer shall not relieve the Issuer of its obligations
        hereunder. The Issuer shall defend the claim and the Indenture Trustee may
        have
        separate counsel and the Issuer shall pay the fees and expenses of such counsel.
        The Issuer need not reimburse any expense or indemnify against

       

      
        
          
          

        

        
          49

          
            

          

        

        
          
          

        

      

       

      any
        loss,
        liability or expense incurred by the Indenture Trustee (i) through the
        Indenture Trustee’s own willful misconduct, negligence or bad faith or
        (ii) to the extent the Indenture Trustee was reimbursed for or indemnified
        against any such loss, liability or expense by the Transferor pursuant to
        the
        Transfer Agreement, the Seller pursuant to the Sale Agreement or by the Servicer
        pursuant to the Servicing Agreement.

       

      The
        Issuer’s payment obligations to the Indenture Trustee pursuant to this Section
        shall survive the discharge of this Indenture or the earlier resignation
        or
        removal of the Indenture Trustee. When the Indenture Trustee incurs expenses
        after the occurrence of a Default or Event of Default specified in
        Section 5.01(iv) or (v) with respect to the Issuer, the expenses are
        intended to constitute expenses of administration under Title 11 of the
        United States Code or any other applicable Federal or state bankruptcy,
        insolvency or similar law.

       

      SECTION
        6.08.    Replacement
        of Indenture Trustee.
        The
        Indenture Trustee may resign at any time upon 30 days’ prior written notice by
        so notifying the Issuer. The Holders of a majority in Outstanding Amount
        of the
        Environmental Control Bonds of all Series may remove the Indenture Trustee
        by so
        notifying the Issuer and the Indenture Trustee and may appoint a successor
        Indenture Trustee. The Issuer shall remove the Indenture Trustee
        if:

       

      (i)    the
        Indenture Trustee fails to comply with Section 6.11;

       

      (ii)   the
        Indenture Trustee is adjudged a bankrupt or insolvent;

       

      (iii)   a
        receiver or other public officer takes charge of the Indenture Trustee or
        its
        property; or

       

      (iv)   the
        Indenture Trustee otherwise becomes incapable of acting.

       

      If
        the
        Indenture Trustee resigns or is removed or if a vacancy exists in the office
        of
        Indenture Trustee for any reason (the Indenture Trustee in such event being
        referred to herein as the “Retiring
        Indenture Trustee”),
        the
        Issuer shall promptly appoint a successor Indenture Trustee.

       

      A
        successor Indenture Trustee shall deliver a written acceptance of its
        appointment to the Retiring Indenture Trustee and to the Issuer. Thereupon
        the
        resignation or removal of the Retiring Indenture Trustee shall become effective,
        and the successor Indenture Trustee shall have all the rights, powers and
        duties
        of the Indenture Trustee under this Indenture. No resignation or removal
        of the
        Indenture Trustee pursuant to this Section 6.08 shall become effective until
        the
        acceptance of the appointment by a successor Indenture Trustee. The successor
        Indenture Trustee shall mail a notice of its succession to Environmental
        Control
        Bondholders. The Retiring Indenture Trustee shall promptly transfer all property
        held by it as Indenture Trustee to the successor Indenture Trustee.

       

      If
        a
        successor Indenture Trustee does not take office within 60 days after the
        Retiring Indenture Trustee resigns or is removed, the Retiring Indenture
        Trustee, the Issuer or the Holders of a majority in Outstanding Amount of
        the
        Environmental Control Bonds of all Series may petition any court of competent
        jurisdiction for the appointment of a successor Indenture Trustee.

       

      
        
          
          

        

        
          50

          
            

          

        

        
          
          

        

      

       

      If
        the
        Indenture Trustee fails to comply with Section 6.11, any Environmental
        Control Bondholder may petition any court of competent jurisdiction for the
        removal of the Indenture Trustee and the appointment of a successor Indenture
        Trustee.

       

      The
        Issuer shall promptly furnish written notification of the appointment of
        any
        successor Indenture Trustee pursuant to this Section 6.08 to each of the
        Rating Agencies. The Issuer shall be responsible for payment of the expenses
        of
        any resignation or removal of the Indenture Trustee.

       

      Notwithstanding
        the replacement of the Indenture Trustee pursuant to this Section 6.08, the
        Issuer’s obligations under Section 6.07 shall continue for the benefit of
        the Retiring Indenture Trustee.

       

      SECTION
        6.09.    Successor
        Indenture Trustee by Merger.
        If the
        Indenture Trustee consolidates with, merges or converts into, or transfers
        all
        or substantially all its corporate trust business or assets to, another
        corporation or banking association, the resulting, surviving or transferee
        corporation or banking association shall, without any further act, be the
        successor Indenture Trustee. The Issuer shall promptly furnish written
        notification of any such successor Indenture Trustee to each of the Rating
        Agencies.

       

      If
        at the
        time such successor or successors by merger, conversion consolidation or
        transfer shall succeed to the trusts created by this Indenture, any of the
        Environmental Control Bonds shall have been authenticated but not delivered,
        any
        such successor to the Indenture Trustee may adopt the certificate of
        authentication of any Retiring Indenture Trustee, and deliver such Environmental
        Control Bonds so authenticated; and if at that time any of the Environmental
        Control Bonds shall not have been authenticated, any successor to the Indenture
        Trustee may authenticate such Environmental Control Bonds either in the name
        of
        any Retiring Indenture Trustee hereunder or in the name of the successor
        to the
        Indenture Trustee. Such certificates so authenticated shall have the full
        force
        and effect equal to any other Environmental Control Bond authenticated in
        accordance with the terms of this Indenture.

       

      SECTION
        6.10.    Appointment
        of Co-Trustee or Separate Trustee.  (a)  Notwithstanding
        any other provisions of this Indenture, at any time, for the purpose of meeting
        any legal requirement of any jurisdiction in which any part of the Collateral
        may at the time be located, the Indenture Trustee shall have the power and
        may
        execute and deliver all instruments to appoint one or more Persons to act
        as a
        co-trustee or co-trustees, or separate trustee or separate trustees, of all
        or
        any part of the Collateral, and to vest in such Person or Persons, in such
        capacity and for the benefit of the Environmental Control Bondholders, such
        title to the Collateral, or any part hereof, and, subject to the other
        provisions of this Section, such powers, duties, obligations, rights and
        trusts
        as the Indenture Trustee may consider necessary or desirable. No co-trustee
        or
        separate trustee hereunder shall be required to meet the terms of eligibility
        as
        a successor trustee under Section 6.11 and no notice to Environmental
        Control Bondholders of the appointment of any co-trustee or separate trustee
        shall be required under Section 6.08 hereof. Notes of any such appointment
        shall be promptly given to each Rating Agency and to the PSCWV by the
        Trustee.

       

      
        
          
          

        

        
          51

          
            

          

        

        
          
          

        

      

       

      (b)    Every
        separate trustee and co-trustee shall, to the extent permitted by law, be
        appointed and act subject to the following provisions and
        conditions:

       

      (i)    all
        rights, powers, duties and obligations conferred or imposed upon the Indenture
        Trustee shall be conferred or imposed upon and exercised or performed by
        the
        Indenture Trustee and such separate trustee or co-trustee jointly (it being
        understood that such separate trustee or co-trustee is not authorized to
        act
        separately without the Indenture Trustee joining in such act), except to
        the
        extent that under any law of any jurisdiction in which any particular act
        or
        acts are to be performed the Indenture Trustee shall be incompetent or
        unqualified to perform such act or acts, in which event such rights, powers,
        duties and obligations (including the holding of title to the Collateral
        or any
        portion thereof in any such jurisdiction) shall be exercised and performed
        singly by such separate trustee or co-trustee, but solely at the direction
        of
        the Indenture Trustee;

       

      (ii)   no
        trustee hereunder shall be personally liable by reason of any act or omission
        of
        any other trustee hereunder; and

       

      (iii)   the
        Indenture Trustee may at any time accept the resignation of or remove any
        separate trustee or co-trustee.

       

      (c)    Any
        notice, request or other writing given to the Indenture Trustee shall be
        deemed
        to have been given to each of the then separate trustees and co-trustees,
        as
        effectively as if given to each of them. Every instrument appointing any
        separate trustee or co-trustee shall refer to this Indenture and the conditions
        of this Article VI. Each separate trustee and co-trustee, upon its
        acceptance of the trusts conferred, shall be vested with the estates or property
        specified in its instrument of appointment, either jointly with the Indenture
        Trustee or separately, as may be provided therein, subject to all the provisions
        of this Indenture, specifically including every provision of this Indenture
        relating to the conduct of, affecting the liability of, or affording protection
        to, the Indenture Trustee. Every such instrument shall be filed with the
        Indenture Trustee.

       

      (d)    Any
        separate trustee or co-trustee may at any time constitute the Indenture Trustee,
        its agent or attorney-in-fact with full power and authority, to the extent
        not
        prohibited by law, to do any lawful act under or in respect of this Indenture
        on
        its behalf and in its name. If any separate trustee or co-trustee shall die,
        become incapable of acting, resign or be removed, all of its estates,
        properties, rights, remedies and trusts shall vest in and be exercised by
        the
        Indenture Trustee, to the extent permitted by law, without the appointment
        of a
        new or successor trustee.

       

      SECTION
        6.11.    Eligibility;
        Disqualification.
        The
        Indenture Trustee shall at all times satisfy the requirements of
        TIA § 310(a) and rule 3a-7 under the Investment Company Act of 1940.
        The Indenture Trustee shall have a combined capital and surplus of at least
        $50,000,000 as set forth in its most recent published annual report of condition
        and it shall have a long term debt rating of “Baa3” or better by Moody’s and
“BBB-“ by Standard & Poor’s and Fitch (if currently rated by Fitch).
        The Indenture Trustee shall comply with TIA § 310(b), including the
        optional provision permitted by the second sentence of TIA § 310(b)(9);
        provided,

       

      
        
          
          

        

        
          52

          
            

          

        

        
          
          

        

      

       

      however,
        that there shall be excluded from the operation of TIA § 310(b)(1) any
        indenture or indentures under which other securities of the Issuer are
        outstanding if the requirements for such exclusion set forth in TIA
§ 310(b)(1) are met.

       

      SECTION
        6.12.    Preferential
        Collection of Claims Against Issuer.
        The
        Indenture Trustee shall comply with TIA § 311(a), excluding any creditor
        relationship listed in TIA § 311(b). A Indenture Trustee who has resigned
        or been removed shall be subject to TIA § 311(a) to the extent
        indicated.

       

      SECTION
        6.13.    Representations
        and Warranties of Indenture Trustee.
        The
        Indenture Trustee hereby represents and warrants that: 

       

      (i)    [the
        Indenture Trustee is a banking corporation validly existing and in good standing
        under the laws of the State of New York; and ]

       

      (ii)   the
        Indenture Trustee has full power, authority and legal right to execute, deliver
        and perform this Indenture and the Basic Documents to which the Indenture
        Trustee is a party and has taken all necessary action to authorize the
        execution, delivery, and performance by it of this Indenture and such Basic
        Documents. 

       

      SECTION
        6.14.    Annual
        Report by Independent Public Accountants.
        In the
        event the firm of independent registered public accountants requires the
        Indenture Trustee to agree or consent to the procedures performed by such
        firm
        pursuant to Section [ ]of the Servicing Agreement, the Indenture Trustee
        shall
        deliver such letter of agreement or consent in conclusive reliance upon the
        written direction of the Issuer in accordance with Section [ ] of the Servicing
        Agreement. 

       

      SECTION
        6.15.    Custody
        of Collateral.
        The
        Indenture Trustee shall hold such of the Collateral (and any other collateral
        that may be granted to the Indenture Trustee) as consists of instruments,
        deposit accounts, negotiable documents, money, goods, letters of credit,
        and
        advices of credit in the State of [New York]. The Indenture Trustee shall
        hold
        such of the Collateral as constitute investment property through a securities
        intermediary (which may be the entity acting as Indenture Trustee), which
        securities intermediary shall agree (and, to the extent that the entity acting
        as Indenture Trustee is the securities intermediary, such entity hereby agrees
        with respect to itself as securities intermediary) with such entity that
        (a)
        such investment property shall at all times be credited to a securities account
        of the Indenture Trustee, (b) such securities intermediary shall treat the
        Indenture Trustee as entitled to exercise the rights that comprise each
        financial asset credited to such securities account, (c) all property credited
        to such securities account shall be treated as a financial asset, (d) such
        securities intermediary shall comply with entitlement orders originated by
        the
        Indenture Trustee without the further consent of any other person or entity,
        (e)
        such securities intermediary will not agree with any person other than the
        Indenture Trustee to comply with entitlement orders originated by such other
        person, (f) such securities accounts and the property credited thereto shall
        not
        be subject to any Lien, security interest, right of set-off in favor of such
        securities intermediary or anyone claiming through it (other than the Indenture
        Trustee), and (g) such agreement shall be governed by the internal laws of
        the
        State of New York. Terms used in the preceding sentence that are defined
        in the
        UCC and not otherwise defined herein shall have the meaning set forth in
        the
        UCC. Except

       

      
        
          
          

        

        
          53

          
            

          

        

        
          
          

        

      

       

      as
        permitted by this Section 6.15, or elsewhere in this Indenture, the Indenture
        Trustee shall not hold Collateral through an agent or a nominee.

       

      ARTICLE
        VII

       

      Environmental
        Control Bondholders’ Lists and Reports

       

      SECTION
        7.01.    Issuer
        To Furnish Indenture Trustee Names and Addresses of Environmental Control
        Bondholders.
        The
        Issuer will furnish or cause to be furnished to the Indenture Trustee
        (a) not more than five days after the earlier of (i) each Record Date
        with respect to each Series and (ii) three months after the last Record
        Date with respect to each Series, a list, in such form as the Indenture Trustee
        may reasonably require, of the names and addresses of the Holders of
        Environmental Control Bonds of such Series as of such Record Date, (b) at
        such other times as the Indenture Trustee may request in writing, within
        30 days
        after receipt by the Issuer of any such request, a list of similar form and
        content as of a date not more than 10 days prior to the time such list is
        furnished; provided, however, that so long as the Indenture Trustee is the
        Bond
        Registrar, no such list shall be required to be furnished.

       

      SECTION
        7.02.    Preservation
        of Information; Communications to Environmental Control
        Bondholders.  (a)  The
        Indenture Trustee shall preserve, in as current a form as is reasonably
        practicable, the names and addresses of the Holders of Environmental Control
        Bonds contained in the most recent list furnished to the Indenture Trustee
        as
        provided in Section 7.01 and the names and addresses of Holders of
        Environmental Control Bonds received by the Indenture Trustee in its capacity
        as
        Bond Registrar. The Indenture Trustee may destroy any list furnished to it
        as
        provided in such Section 7.01 upon receipt of a new list so
        furnished.

       

      (b)    Environmental
        Control Bondholders may communicate pursuant to TIA § 312(b) with other
        Environmental Control Bondholders with respect to their rights under this
        Indenture or under the Environmental Control Bonds. In addition, upon the
        written request of any Holder or group of Holders of any Series or of all
        Outstanding Series of Environmental Control Bonds evidencing not less than
        10
        percent of the Outstanding Amount of the Environmental Control Bonds of that
        Series or of all Series, as applicable, the Indenture Trustee shall afford
        the
        Holder or Holders making such request access during normal business hours
        to a
        copy of a current list of Holders of that Series of all Outstanding Series,
        as
        applicable, for purposes of communicating with other Holders with respect
        to
        their rights hereunder.

       

      (c)    The
        Issuer, the Indenture Trustee and the Bond Registrar shall have the protection
        of TIA § 312(c).

       

      SECTION
        7.03.    Reports
        by Issuer.  (a)  The
        Issuer shall:

       

      (i)   file
        with
        the Indenture Trustee and the PSCWV, within 15 days after the Issuer is required
        to file the same with the Commission, copies of the annual reports and of
        the
        information, documents and other reports (or copies of such portions of any
        of
        the foregoing as the Commission may from time to time by rules and regulations
        prescribe) which the Issuer may be required to file with the Commission pursuant
        to Section 13 or 15(d) of the Exchange Act;

       

      
        
          
          

        

        
          54

          
            

          

        

        
          
          

        

      

       

      (ii)   file
        with
        the Indenture Trustee and the PSCWV and the Commission in accordance with
        rules
        and regulations prescribed from time to time by the Commission such additional
        information, documents and reports with respect to compliance by the Issuer
        with
        the conditions and covenants of this Indenture as may be required from time
        to
        time by such rules and regulations; and

       

      (iii)   supply
        to
        the Indenture Trustee and the PSCWV (and the Indenture Trustee shall transmit
        by
        mail to all Environmental Control Bondholders described in TIA § 313(c))
        such summaries of any information, documents and reports required to be filed
        by
        the Issuer pursuant to clauses (i) and (ii) of this
        Section 7.03(a) as may be required by rules and regulations prescribed from
        time to time by the Commission; provided, however, that the Indenture Trustee
        shall be deemed to have been furnished and notified of all filings made by
        the
        Issuer with the Commission on the Electronic Data Gathering, Analysis and
        Retrieval (EDGAR) system.

       

      (b)    Unless
        the Issuer otherwise determines, the fiscal year of the Issuer shall end
        on
        December 31 of each year.

       

      SECTION
        7.04.    Reports
        by Indenture Trustee.
        If
        required by TIA § 313(a), within 60 days after January 1st of each
        year, commencing with the year after the issuance of the Environmental Control
        Bonds of any Series, the Indenture Trustee shall mail to each Holder of
        Environmental Control Bonds of such Series as required by TIA § 313(c) a
        brief report dated as of such date that complies with TIA § 313(a). The
        Indenture Trustee also shall comply with TIA § 313(b); provided, however,
        that the initial report so issued shall be delivered not more than 12 months
        after the initial issuance of each Series.

       

      A
        copy of
        each report at the time of its mailing to Environmental Control Bondholders
        shall be filed by the Indenture Trustee with the Commission and each stock
        exchange, if any, on which the Environmental Control Bonds are listed. The
        Issuer shall notify the Indenture Trustee in writing if and when the
        Environmental Control Bonds are listed on any stock exchange.

       

      SECTION
        7.05.    Provision
        of Servicer Reports.
        Upon
        the written request of any Environmental Control Bondholder to the Indenture
        Trustee addressed to the Corporate Trust Office, the Indenture Trustee shall
        provide such Environmental Control Bondholder with a copy of the Officer’s
        Certificate referred to in Section 3.05 of the Servicing Agreement and the
        Annual Accountant’s Report referred to in Section 3.06 of the Servicing
        Agreement.

       

      ARTICLE
        VIII

       

      Accounts,
        Disbursements and Releases

       

      SECTION
        8.01.    Collection
        of Money.
        Except
        as otherwise expressly provided herein, the Indenture Trustee may demand
        payment
        or delivery of, and shall receive and collect, directly and without intervention
        or assistance of any fiscal agent or other intermediary, all money and other
        property payable to or receivable by the Indenture Trustee pursuant to this
        Indenture. The Indenture Trustee shall apply all such money received by it
        as

       

      
        
          
          

        

        
          55

          
            

          

        

        
          
          

        

      

       

      provided
        in this Indenture. Except as otherwise expressly provided in this Indenture,
        if
        any default occurs in the making of any payment or performance under any
        agreement or instrument that is part of the Collateral, the Indenture Trustee
        may take such action as may be appropriate to enforce such payment or
        performance, including the institution and prosecution of appropriate
        Proceedings. Any such action shall be without prejudice to any right to claim
        a
        Default or Event of Default under this Indenture and any right to proceed
        thereafter as provided in Article V.

       

      SECTION
        8.02.    Collection
        Account.  (a)  On
        or
        prior to the Series Issuance Date for the first Series issued hereunder,
        the Issuer shall open, at the Indenture Trustee’s Corporate Trust Office, or at
        another Eligible Institution, one or more non-interest bearing segregated
        trust
        accounts in the Indenture Trustee’s name for the deposit of Environmental
        Control Charge Collections for such Series of Bonds and all other amounts
        received with respect to the Series Collateral servicing such Series of Bonds
        (each, a “Collection
        Account”
and
        collectively, the “Collection
        Accounts”).
        The
        Indenture Trustee shall hold each Collection Account for the benefit of the
        related Environmental Control Bondholders, the Indenture Trustee and the
        other
        Persons indemnified hereunder. The Collection Account for each Series of
        Environmental Control Bonds will initially be divided into subaccounts, which
        need not be separate bank accounts: a general subaccount (each, a “General
        Subaccount”),
        a
        capital subaccount (each, a “Capital
        Subaccount”),
        an
        excess funds subaccount (each, an “Excess
        Funds Subaccount”)
        and a
        tranche subaccount for any Tranche of any Series that has a floating rate
        of
        interest as specified in any Series Supplement (each, a “Tranche
        Subaccount”).
        Prior
        to depositing funds or U.S. Government Obligations in the Collection Account
        pursuant to Sections 4.01 or 4.02, the Issuer shall establish defeasance
        subaccounts (each a “Defeasance
        Subaccount”)
        for
        each Series for which funds shall be deposited, as subaccounts of the Collection
        Account. All amounts in the Collection Account for any Series of Bonds not
        allocated to any other subaccount shall be allocated to the General Subaccount
        for such Series of Bonds. All payments received by the Indenture Trustee
        from
        any Swap Counterparty at any time shall be deposited in the related Tranche
        Subaccount All references to the Collection Account shall be deemed to include
        reference to all subaccounts contained therein. Withdrawals from and deposits
        to
        each of the foregoing subaccounts of any Collection Account shall be made
        as set
        forth in Sections 4.01, 4.02, 4.03 and 8.02(c), (d), (e), (g) and (h). Such
        Collection Account shall at all times be maintained in an Eligible Deposit
        Account and only the Indenture Trustee shall have access to such Collection
        Account for the purpose of making deposits in and withdrawals from such
        Collection Account in accordance with this Indenture. Funds in the Collection
        Account shall not be commingled with any other moneys, including moneys in
        any
        other Collection Account. All moneys deposited from time to time in a Collection
        Account, all deposits therein pursuant to this Indenture, and all investments
        made in Eligible Investments with such moneys, including all income or other
        gain from such investments, shall be held by the Indenture Trustee in such
        Collection Account for such Series of Bonds as part of the Series Collateral
        securing such Bonds as herein provided. The Indenture Trustee shall have
        sole
        dominion and exclusive control over all moneys in such Collection Account
        and
        shall apply such amounts therein as provided in this
        Section 8.02.

       

      The
        Securities Intermediary hereby confirms that (i) each Collection Account
        is, or at inception will be established as, a “securities account” as such term
        is defined in Section 8-501(a) of the UCC, (ii) it is a “securities
        intermediary” (as such term is defined in Section 8-102(a)(14) of the UCC) and
        is acting in such capacity with respect to such accounts, and
        (iii) the

       

      
        
          
          

        

        
          56

          
            

          

        

        
          
          

        

      

       

      Indenture
        Trustee for the benefit of the Secured Parties is the sole “entitlement holder”
(as such term is defined in Section 8-102(a)(7) of the UCC) with respect
        to such
        accounts and not other Person shall have the right to give “entitlement orders"
        (as such term is defined in Section 8-102(a)(8)) with respect to such accounts.
        The Securities Intermediary hereby further agrees that each item of property
        (whether investment property, financial asset, security, instrument or cash)
        received by it will be credited to the applicable Collection Account and
        shall
        be treated by it as “financial asset” within the meaning of Section 8-102(a)(9)
        of the UCC. Notwithstanding anything to the contrary, [New York State] shall
        be
        deemed to be the location and jurisdiction of the Securities Intermediary
        for
        purposes of Section 8-110 of the UCC, and each Collection Account (as well
        as
        the securities entitlements related thereto) shall be governed by the laws
        of
        the State of [New York].

       

      (b)    So
        long
        as no Default or Event of Default has occurred and is continuing, all or
        a
        portion of the funds in each Collection Account shall be invested in Eligible
        Investments and reinvested by the Indenture Trustee at the written direction
        of
        the Servicer unless otherwise directed by Issuer Order; provided, however,
        that
        (i) such Eligible Investments shall not mature later than the Business Day
        prior to the next Payment Date for the related Series or Tranche, (ii) such
        Eligible Investments shall not be sold, liquidated or otherwise disposed
        of at a
        loss prior to the maturity thereof, and (iii) no funds in the Defeasance
        Subaccount for any Series of Environmental Control Bonds shall be invested
        in
        Eligible Investments or otherwise, except that U.S. Government Obligations
        deposited by the Issuer with the Indenture Trustee pursuant to
        Sections 4.01 or 4.02 shall remain as such. All income or other gain from
        investments of moneys deposited in each Collection Account shall be deposited
        by
        the Indenture Trustee in such Collection Account, and any loss resulting
        from
        such investments shall be charged to such Collection Account. The Issuer
        shall
        not direct the Indenture Trustee to make any investment of any funds or to
        sell
        any investment held in each Collection Account unless the security interest
        granted and perfected in such account will continue to be perfected in such
        investment or the proceeds of such sale, in either case without any further
        action by any Person, and, in connection with any direction to the Indenture
        Trustee to make any such investment or sale, if requested by the Indenture
        Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion of
        Counsel, acceptable to the Indenture Trustee, to such effect. Subject to
        Section 6.01(c), the Indenture Trustee shall not in any way be held liable
        for the selection of Eligible Investments or for investment losses incurred
        thereon except for losses attributable to the Indenture Trustee’s failure to
        make payments on such Eligible Investments issued by the Indenture Trustee,
        in
        its commercial capacity as principal obligor and not as Indenture Trustee,
        in
        accordance with their terms. The Indenture Trustee shall have no liability
        in
        respect of losses incurred as a result of the liquidation of any Eligible
        Investment prior to its stated maturity or the failure of the Issuer to provide
        timely written investment direction. The Indenture Trustee shall have no
        obligation to invest or reinvest any amounts held hereunder in the absence
        of
        written investment direction pursuant to an Issuer Order, however, if
        (i) the Issuer shall have failed to give investment directions for any
        funds on deposit in the Collection Account to the Indenture Trustee by
        11:00 a.m. Eastern Time (or such other time as may be agreed by the Issuer
        and Indenture Trustee) on any Business Day; or (ii) a Default or Event of
        Default shall have occurred and be continuing but the Environmental Control
        Bonds shall not have been declared due and payable pursuant to
        Section 5.02; then the Indenture Trustee shall, to the fullest extent
        practicable, invest and reinvest funds in each Collection Account in one
        or more
        Eligible Investments.

       

      
        
          
          

        

        
          57

          
            

          

        

        
          
          

        

      

       

      (c)    Any
        Environmental Control Charge Collections, all investment earnings on the
        subaccounts in the Collection Account, and Indemnity Amounts remitted to
        the
        Indenture Trustee by the Transferor, the Seller or the Servicer or otherwise
        received by the Indenture Trustee, any other proceeds of Collateral received
        by
        the Servicer, the Issuer or the Indenture Trustee and any amounts paid by
        any
        Swap Counterparty under a Swap Agreement received by the Servicer, the Issuer
        or
        the Indenture Trustee, shall be deposited in the General
        Subaccount.

       

      (d)    On
        the
        Business Day preceding the Payment Date, the Indenture Trustee, at the written
        direction of the Servicer, shall allocate to each Tranche Subaccount the
        amounts
        specified in the related Series Supplement. Such amounts shall be so allocated
        after taking into account all allocations and payments required in connection
        with such Payment Date under clauses (e)(i) through (v) below; provided that
        in
        the event of any shortfall of amounts to be allocated pursuant to clause
        (e)(v)
        among more than one Tranche of the applicable Series amounts shall be allocated
        pursuant to clause (e)(v) among more than one Tranche of the applicable Series,
        amounts shall be allocated to such Tranche Subaccount on a Pro Rata basis
        with
        all other Tranches of the relevant Series. Amounts in each Tranche Subaccount
        shall be applied as provided in the related Series Supplement.

       

      (e)    On
        each
        Payment Date for any Series of Bonds, or before each Payment Date to the
        extent
        otherwise specified in the related Series Supplement with respect to any
        Tranche
        Subaccount, by 12:00 noon (New York City time), or if such day is not a
        Business Day, on the following Business Day, the Indenture Trustee shall,
        at the
        written direction of the Servicer as set forth in an Officer’s Certificate,
        apply all amounts on deposit in the General Subaccount of the Collection
        Account
        for a particular Series of Bonds and any investment earnings on the Subaccounts
        in the Collection Account, after allocating to any Tranche Subaccount in
        accordance with clause (d) above and the related payment to each Swap
        Counterparty in accordance with the related Series Supplement, and in the
        following priority:

       

      (i)    to
        the
        Indenture Trustee, all amounts due and owing to the Indenture Trustee (or
        the
        allocable share of such amounts, if Additional Bonds are Outstanding) as
        of such
        Payment Date (including any Indemnity Amounts);

       

      (ii)   to
        the
        Servicer, the Servicing Fee for such Payment Date and all unpaid Servicing
        Fees
        from prior Payment Dates (or the allocable share of such Servicing Fees,
        if
        Additional Bonds are Outstanding) shall be paid to the Servicer;

       

      (iii)   to
        the
        Administrator, the Administrative Fee payable on such Payment Date under
        the
        Issuer Administration Agreement (or the allocable share of such Administrative
        Fee, if Additional Bonds are Outstanding), together with any unpaid
        Administrative Fees from prior Payment Dates, and to the Independent Managers,
        their fees in an amount equal to $_____ for such Payment Date, together with
        any
        unpaid fees from prior Payment Dates;

       

      (iv)   so
        long
        as no Event of Default has occurred and is continuing or would be caused
        by such
        payment, all Operating Expenses (including the allocable share of all Operating
        Expenses not directly attributable to the Bonds or the trusts
        administered

       

      
        
          
          

        

        
          58

          
            

          

        

        
          
          

        

      

       

      hereunder)
        other than distributions made in accordance with clauses (i), (ii) and
(iii) above
        shall be paid to the Persons entitled thereto;

       

      (v)    an
        amount
        equal to the sum of (1) the interest then due and owing on such Payment
        Date with respect to such Series of Bonds, (2) any amount in respect of
        periodic payments that are required to be made to any Swap Counterparty on
        any
        Swap Agreement with respect to any Floating Rate Bonds and (3) any deferred
        interest on any Floating Rate Bonds;

       

      (vi)   payment
        of the principal due and payable on each Tranche of the Bonds of all Series
        as a
        result of (1) Final Maturity Date, (2)  any acceleration under
        Section 5.02, (3) payment of the principal due and payable on each
        Tranche of Bonds according to the Expected Sinking Fund Schedule, and
        (4) any Swap Termination Payments that result from (a) the failure of
        the Issuer to pay any amount due under the applicable Swap Agreement within
        five
        Business Days, (b) any breach of any Swap Agreement by the Issuer or the
        Indenture Trustee where the applicable Swap Counterparty is not the defaulting
        party or the solely affected party, (c) any Issuer Bankruptcy, (d) any
        merger or consolidation of the Issuer where no successor assumes the Issuer’s
        liabilities under the related Swap Agreement, (e) any failure or
        termination of the security interest under this Indenture or
        (f) termination of any Swap Agreement as a result of a tax event, any
        illegality, a tax event upon merger, any acceleration of the Bonds under
        Section 5.02 following an event of default or a change in the applicable
        laws that makes any Swap Agreement unenforceable;

       

      (vii)   all
        remaining unpaid Operating Expenses (or the allocable share of such Operating
        Expenses if Additional Bonds are Outstanding) and Indemnity Amounts shall
        be
        paid to the Persons entitled thereto;

       

      (viii)   any
        amount necessary to replenish any shortfalls in the Capital Subaccount below
        the
        Required Capital Amount shall be allocated to the Capital
        Subaccount;

       

      (ix)    
after
        the
        payment of the Bonds in full, any other payments required to be paid under
        any
        Swap Agreement as specified in the related Swap Agreement shall be paid to
        the
        respective Swap Counterparty, excluding such payments made pursuant to
clauses (v)
        or
(vi),
        above
        or a Senior Termination Event (as such term is defined in the applicable
        Swap
        Agreement);

       

      (x)    provided
        that no Event of Default has occurred and is continuing, an amount up to
        the
        amount of the Capital Equity Return (including any portion of the Capital
        Equity
        Return for a prior Payment Date that has not yet been paid) will be released
        to
        the Seller, free from the lien of this Indenture; and

       

      (xi)   the
        balance, if any, shall be allocated to the Excess Funds Subaccount.

       

      (f)    “Pro
        Rata”
means
        with respect to the Bonds or any Tranche of Bonds, the ratio (i) in the
        case of clause (e)(v) above, the numerator of which is the aggregate amount
        of

       

      
        
          
          

        

        
          59

          
            

          

        

        
          
          

        

      

       

      Interest
        payable or net amount payable to a Swap Counterparty under any Swap Agreement
        with respect to the Bonds or such Tranche on such Payment Date and the
        denominator of which is the sum of the aggregate amounts of interest payable
        and
        aggregate of the net amounts payable under all Swap Agreements with respect
        to
        the Bonds or such Tranche; and (ii) in the case of other clauses in
        clause (e) above, the numerator of which is the aggregate amount of
        principal scheduled to be paid or payable on such Payment Date with respect
        to
        all Bonds or any Tranche of Bonds on such Payment Date and the denominator
        of
        which is the sum of the aggregate amounts of principal scheduled to be paid
        or
        payable with respect to all Outstanding Tranches on such Payment
        Date.

       

      (g)    If,
        on
        any Payment Date with respect to all Outstanding Tranches of any Series,
        funds
        on deposit in the General Subaccount (and, with respect to interest on the
        Bonds
        with a floating rate of interest, the Tranche Subaccount for that Tranche
        of
        Bonds other than amounts relating to Swap Termination Payments) are insufficient
        to make the payments and allocations contemplated by subclauses (e)(i)
        through (xi) above or by subclauses (h)(i) through (iv), for the Bonds, the
        Indenture Trustee shall, at the direction of the Servicer, draw from amounts
        on
        deposit in the following Subaccounts in the following order up to the amount
        of
        such shortfall, in order to make such payments and allocations:

       

      (i)    from
        the
        Excess Funds Subaccount, Pro Rata, for payments and allocations contemplated
        by
        subclauses (e)(i) through (ix) and
        subclauses (h)(i) through (iv); and

       

      (ii)   from
        the
        Capital Subaccount, Pro Rata, for payments and allocations contemplated by
        subclauses (e)(i) through (vii) and subclauses (h)(i) through (iv);

       

      provided
        that no amounts from the Excess Funds Subaccount or the Capital Subaccount
        shall
        be allocated to any Tranche Subaccount pursuant to subclause (e)(v) to the
        extent a shortfall in amounts available to pay interest due on the related
        Floating Rate Bonds is caused solely by a failure by a Swap Counterparty
        to make
        payments due under the related Swap Agreement.

       

      (h)    On
        each
        Payment Date on which Interest payments are to be made in respect of Bonds
        with
        a floating rate of interest but not in respect to Bonds with a fixed rate
        of
        interest in accordance with the applicable Series Supplement, the Trustee
        will
        allocate or pay all amounts on deposit in the General Subaccount (and, with
        respect to interest on the Bonds with a floating rate of interest, the Tranche
        Subaccount for that Tranche of Bonds other than amounts relating to Swap
        Termination Payments) of the Collection Account for the Floating Rate Bonds
        in
        the following priority, at the direction of the Servicer as set forth in
        an
        Officer’s Certificate of the Servicer:

       

      (i)    to
        the
        Trustee all amounts due and owing the Trustee (or the allocable share of
        such
        Operating Expenses, if Additional Bonds are Outstanding) as of such Payment
        Date
        and any outstanding Indemnity Amounts;

       

      
        
          
          

        

        
          60

          
            

          

        

        
          
          

        

      

       

      (ii)   to
        the
        Servicer all unpaid Servicing Fees from prior Payment Dates (or the allocable
        share of such Operating Expenses, if Additional Bonds are Outstanding) shall
        be
        paid to the Servicer;

       

      (iii)   all
        remaining unpaid Operating Expenses (or the allocable share of such Operating
        Expenses if Additional Bonds are Outstanding);

       

      (iv)   an
        amount
        equal to the sum of (1) the interest then due and owing on such Payment
        Date and (2) any amount in respect of periodic payments that are required
        to be made to any Swap Counterparty on any Swap Agreement with respect to
        any
        Floating Rate Bonds; payment of the Interest then payable on the Floating
        Rate
        Bonds, amounts payable in respect of interest to the Swap Counterparty under
        any
        Swap Agreement and any deferred interest on any Floating Rate Bonds,
        and

       

      (v)    the
        balance, if any, shall be allocated to the General Subaccount.

       

      (i)    Notwithstanding
        any other provision in this Indenture to the contrary, upon an acceleration
        of
        the maturity of the Bonds pursuant to Section 5.02, the aggregate amount of
        principal of and interest accrued on each Bond shall be payable, without
        priority of interest over principal or of principal over interest and without
        regard to Tranche, in the proportion that the aggregate amount of principal
        of
        and interest accrued on such Bond bears to the aggregate amount of principal
        of
        and interest accrued on all Bonds.

       

      (j)    Notwithstanding
        any other provision in this Indenture to the contrary, in the event of an
        acceleration of the maturity of Environmental Control Bonds and a subsequent
        liquidation of the Collateral in accordance with Section 5.04(a), if so required
        by any Swap Agreement, the proceeds of such liquidation allocated to the
        related
        Tranche of Floating Rate Bonds in accordance with this Section 8.02 shall
        be
        deposited in the related Tranche Subaccount and allocated between and paid
        to
        the Holders of the related Floating Rate Bonds, on the one hand, and the
        related
        Swap Counterparty, on the other hand, Pro Rata based on the aggregate amount
        of
        Principal and interest due and payable on such Tranche of Floating Rate Bonds
        and the aggregate amount payable to the related Swap Counterparty in accordance
        with such Swap Agreement.

       

      SECTION
        8.03.    Release
        of Collateral.  (a)  All
        money
        and other property withdrawn from the Collection Account by the Indenture
        Trustee for payment to the Issuer as provided in this Indenture in accordance
        with Section 8.02 hereof shall be deemed released from the Indenture when
        so withdrawn and applied in accordance with the provisions of Article VIII,
        without further notice to, or release or consent by, the Indenture
        Trustee.

       

      (b)    So
        long
        as the Issuer is not in default hereunder, the Issuer, through the Servicer,
        may
        collect, liquidate, sell or otherwise dispose of the Transferred Environmental
        Control Property, at any time and from time to time, without any notice to,
        or
        release or consent by, the Indenture Trustee, but only as and to the extent
        permitted by the Basic Documents; provided, however, that any and all proceeds
        of such dispositions shall become Collateral and be deposited to the General
        Subaccount immediately upon receipt thereof by the Issuer or any other Person,
        including the Servicer.

       

      
        
          
          

        

        
          61

          
            

          

        

        
          
          

        

      

       

      (c)    Other
        than as provided for in clauses (a) and (b) above, the Indenture
        Trustee shall release property from the lien of this Indenture only as and
        to
        the extent permitted by the Basic Documents and only upon receipt of an Issuer
        Request accompanied by an Officer’s Certificate, an Opinion of Counsel and
        Independent Certificates in accordance with TIA § 314(c) and 314(d)(1)
        meeting the applicable requirements of Section 11.01 or an Opinion of
        Counsel in lieu of such Independent Certificates to the effect that the TIA
        does
        not require any such Independent Certificate.

       

      (d)    Subject
        to the payment of its fees and expenses pursuant to Section 6.07, the
        Indenture Trustee may, and when required by the provisions of this Indenture
        shall, execute instruments to release property from the lien of this Indenture,
        or convey the Indenture Trustee’s interest in the same, in a manner and under
        circumstances that are not inconsistent with the provisions of this Indenture.
        No party relying upon an instrument executed by the Indenture Trustee as
        provided in this Article VIII shall be bound to ascertain the Indenture
        Trustee’s authority, inquire into the satisfaction of any conditions precedent
        or see to the application of any moneys.

       

      (e)    Subject
        to Section 8.03(c), the Indenture Trustee shall, at such time as there are
        no Environmental Control Bonds Outstanding and all sums due the Indenture
        Trustee pursuant to Section 6.07 have been paid, release any remaining
        portion of the Series Collateral that secured the Environmental Control Bonds
        from the lien of this Indenture and release to the Issuer or any other Person
        entitled thereto any funds then on deposit in the Collection
        Account.

       

      SECTION
        8.04.    Opinion
        of Counsel.
        The
        Indenture Trustee shall receive at least five Business Days written notice
        when
        requested by the Issuer to take any action pursuant to Section 8.03,
        accompanied by copies of any instruments involved, and the Indenture Trustee
        shall also require, as a condition to such action, an Opinion of Counsel,
        in
        form and substance satisfactory to the Indenture Trustee, stating the legal
        effect of any such action, outlining the steps required to complete the same,
        and concluding that all conditions precedent to the taking of such action
        have
        been complied with and such action will not materially and adversely impair
        the
        security for the Environmental Control Bonds or the rights of the Environmental
        Control Bondholders in contravention of the provisions of this Indenture;
        provided, however, that such Opinion of Counsel shall not be required to
        express
        an opinion as to the fair value of the Collateral. Counsel rendering any
        such
        opinion may rely, without independent investigation, on the accuracy and
        validity of any certificate or other instrument delivered to the Indenture
        Trustee in connection with any such action.

       

      SECTION
        8.05.    Reports
        by Independent Accountants.
        The
        Issuer shall appoint a firm of Independent registered public accountants
        of
        recognized national reputation for purposes of preparing and delivering the
        reports or certificates of such accountants required by this Indenture and
        the
        related Series Supplements. Upon any resignation by such firm the Issuer
        shall promptly appoint a successor thereto that shall also be a firm of
        Independent registered public accountants of recognized national reputation.
        If
        the Issuer shall fail to appoint a successor to a firm of Independent registered
        public accountants that has resigned within fifteen days after such resignation,
        the Indenture Trustee shall promptly notify the Issuer of such failure in
        writing. If the Issuer shall not have appointed a successor within ten days
        thereafter the Indenture Trustee shall promptly appoint a successor firm
        of
        Independent registered public

       

      
        
          
          

        

        
          62

          
            

          

        

        
          
          

        

      

       

      accountants
        of recognized national reputation. The fees of such firm of Independent
        registered public accountants and its successor shall be payable by the
        Issuer.

       

      ARTICLE
        IX

       

      Supplemental
        Indentures

       

      SECTION
        9.01.    Supplemental
        Indentures Without Consent of Environmental Control Bondholders.  (a)  Without
        the consent of the Holders of any Environmental Control Bonds or any Swap
        Counterparty but with prior notice to the Rating Agencies, the Issuer and
        the
        Indenture Trustee, when authorized by an Issuer Order, at any time and from
        time
        to time, may enter into one or more indentures supplemental hereto (which
        shall
        conform to the provisions of the Trust Indenture Act as in force at the date
        of
        the execution thereof), in form satisfactory to the Indenture Trustee, for
        any
        of the following purposes:

       

      (i)    to
        correct or amplify the description of the Collateral, or to better assure,
        convey and confirm to the Indenture Trustee the Collateral, or to subject
        to the
        lien of this Indenture additional property;

       

      (ii)   to
        evidence the succession, in compliance with the applicable provisions hereof,
        of
        another person to the Issuer, and the assumption by any such successor of
        the
        covenants of the Issuer contained herein and in the Environmental Control
        Bonds;

       

      (iii)   to
        add to
        the covenants of the Issuer, for the benefit of the Holders of the Environmental
        Control Bonds, or to surrender any right or power herein conferred upon the
        Issuer;

       

      (iv)   to
        convey, transfer, assign, mortgage or pledge any property to or with the
        Indenture Trustee or to any Swap Counterparty, as provided by the related
        Swap
        Agreement;

       

      (v)    to
        cure
        any ambiguity, to correct or supplement any provision herein or in any
        Supplemental Indenture that may be inconsistent with any other provision
        herein
        or in any Supplemental Indenture or to make any other provisions with respect
        to
        matters or questions arising under this Indenture or in any Supplemental
        Indenture; provided, however, that (A) such action shall not, as evidenced
        by an Opinion of Counsel, adversely affect in any material respect the interests
        of any Environmental Control Bondholder or any Swap Counterparty and (B)
        the
        then-current ratings on any tranche of Outstanding Environmental Control
        Bonds
        shall not be withdrawn or downgraded by the Rating Agencies; or

       

      (vi)   to
        evidence and provide for the acceptance of the appointment hereunder by a
        successor Indenture Trustee with respect to the Environmental Control Bonds
        and
        to add to or change any of the provisions of this Indenture as shall be
        necessary to facilitate the administration of the trusts hereunder by more
        than
        one Indenture Trustee, pursuant to the requirements of
        Article VI;

       

      
        
          
          

        

        
          63

          
            

          

        

        
          
          

        

      

       

      (vii)   to
        modify, eliminate or add to the provisions of this Indenture to such extent
        as
        shall be necessary to provide for definitive Bonds or effect the qualification
        of this Indenture under the TIA or under any similar Federal statute hereafter
        enacted and to add to this Indenture such other provisions as may be expressly
        required by the TIA;

       

      (viii)   to
        set
        forth the terms of any Series that has not theretofore been authorized by
        a
        Series Supplement;

       

      (ix)   to
        provide for one or more Swap Agreements with respect to any Series or Tranche
        that bears a floating rate of interest or any Series or Tranche with specified
        credit enhancement; provided, however, that:

       

      (A)   such
        action shall not, as evidenced by an Opinion of Counsel, adversely affect
        in any
        material respect the interests of any Environmental Control Bondholder or
        any
        Swap Counterparty;

       

      (B)   the
        then-current ratings or any Outstanding Environmental control Bonds or any
        securities of any Additional Issuance shall not be withdrawn or downgraded
        by
        the Rating Agencies; or

       

      (x)    to
        authorize the appointment of any fiduciary for any Tranche of bonds required
        or
        advisable with the listing of any Tranche on any stock exchange and otherwise
        amend this Indenture to incorporate changes requested or required by any
        government authority, stock exchange authority or fiduciary or any Tranche
        in
        connection with such listing;

       

      The
        Indenture Trustee is hereby authorized to join in the execution of any such
        Supplemental Indenture and to make any further appropriate agreements and
        stipulations that may be therein contained.

       

      (b)    The
        Issuer and the Indenture Trustee, when authorized by an Issuer Order, may,
        also
        without the consent of any of the Holders of the Environmental Control Bonds,
        enter into an Indenture or Supplemental Indentures hereto for the purpose
        of
        adding any provisions to, or changing in any manner or eliminating any of
        the
        provisions of, this Indenture or of modifying in any manner the rights of
        the
        Holders of the Environmental Control Bonds under this Indenture; provided,
        however, that (i) such action shall not, as evidenced by an Opinion of
        Counsel, materially adversely affect the interests of any Environmental Control
        Bondholder or any Swap Counterparty or the Certificateholders and (ii) the
        Rating Agency Condition shall have been satisfied with respect
        thereto.

       

      SECTION
        9.02.    Supplemental
        Indentures with Consent of Environmental Control Bondholders.
        The
        Issuer and the Indenture Trustee, when authorized by an Issuer Order, also
        may,
        with prior notice to the Rating Agencies and satisfaction of the Rating Agency
        Condition, and with the consent of the Holders of not less than a majority
        of
        the Outstanding Amount of the Environmental Control Bonds of each Series
        or
        Tranche to be affected, by Act of such Holders delivered to the Issuer and
        the
        Indenture Trustee, enter into an Indenture or Supplemental Indentures hereto
        for
        the purpose of adding any provisions to, or changing in any

       

      
        
          
          

        

        
          64

          
            

          

        

        
          
          

        

      

       

      manner
        or
        eliminating any of the provisions of, this Indenture or of modifying in any
        manner the rights of the Holders of the Environmental Control Bonds under
        this
        Indenture; provided, however, that no such Supplemental Indenture shall,
        without
        the consent of the Holder of each Outstanding Environmental Control Bond
        of each
        Series or Tranche and each Swap Counterparty affected thereby:

       

      (i)    change
        the date of payment of any installment of principal of or premium, if any,
        or
        interest on any Environmental Control Bond, or reduce the principal amount
        thereof, the interest rate thereon or the premium, if any, with respect thereto,
        change the provisions of any Swap Agreement relating to the amount, calculation
        or timing of payments, change the provisions of this Indenture and the related
        applicable Series Supplement relating to the application of collections on,
        or
        the proceeds of the sale of, the Collateral to payment of principal of or
        premium, if any, or interest on the Environmental Control Bonds, or change
        any
        place of payment where, or the coin or currency in which, any Environmental
        Control Bond or the interest thereon is payable;

       

      (ii)   impair
        the right to institute suit for the enforcement of the provisions of this
        Indenture requiring the application of funds available therefor, as provided
        in
        Article V, to the payment of any such amount due on the Environmental
        Control Bonds on or after the respective due dates thereof;

       

      (iii)   reduce
        the percentage of the Outstanding Amount of the Environmental Control Bonds
        or
        of a Series or Tranche thereof, the consent of the Holders of which is required
        for any such Supplemental Indenture, or the consent of the Holders of which
        is
        required for any waiver of compliance with certain provisions of this Indenture
        or certain defaults hereunder and their consequences provided for in this
        Indenture or modify or alter the provisions of the proviso to the definition
        of
        the term “Outstanding”;

       

      (iv)   reduce
        the percentage of the Outstanding Amount of the Environmental Control Bonds
        required to direct the Indenture Trustee to direct the Issuer to sell or
        liquidate the Collateral pursuant to Section 5.04;

       

      (v)   modify
        any provision of this Section except to increase any percentage specified
        herein
        or to provide that certain additional provisions of this Indenture or the
        Basic
        Documents cannot be modified or waived without the consent of the Holder
        of each
        Outstanding Environmental Control Bond affected thereby;

       

      (vi)   modify
        any of the provisions of this Indenture in such manner as to affect the amount
        of any payment of interest, principal or premium, if any, payable on any
        Environmental Control Bond on any Payment Date or change the Redemption Dates,
        Expected Sinking Fund Schedules, Series Termination Dates or Tranche Termination
        Dates of any Environmental Control Bonds or the method of calculating interest
        on any Floating Rate Bond;

       

      (vii)   decrease
        the Required Capital Amount with respect to any Series;

       

      
        
          
          

        

        
          65

          
            

          

        

        
          
          

        

      

       

      (viii)   modify
        or
        alter the provisions of this Indenture regarding the voting of Environmental
        Control Bonds held by the Issuer, the Transferor, the Seller, an Affiliate
        of
        any of them or any obligor on the Environmental Control Bonds;

       

      (ix)    decrease
        the percentage of the aggregate principal amount of Environmental Control
        Bonds
        required to amend the sections of this Indenture which specify the applicable
        percentage of the aggregate principal amount of the Environmental Control
        Bonds
        necessary to amend this Indenture or the Transfer Agreement, the Sale Agreement,
        the Servicing Agreement, the Issuer Administration Agreement or any Swap
        Agreement; or

       

      (x)    permit
        the creation of any lien ranking prior to or on a parity with the lien of
        this
        Indenture with respect to any part of the Collateral or, except as otherwise
        permitted or contemplated herein, terminate the lien of this Indenture on
        any
        property at any time subject hereto or deprive the Holder of any Environmental
        Control Bond of the security provided by the lien of this
        Indenture.

       

      The
        Indenture Trustee may in its discretion determine whether or not any
        Environmental Control Bonds of a Tranche would be affected by any Supplemental
        Indenture and any such determination shall be conclusive upon the Holders
        of all
        Environmental Control Bonds, whether theretofore or thereafter authenticated
        and
        delivered hereunder. The Indenture Trustee shall not be liable for any such
        determination made in good faith.

       

      It
        shall
        not be necessary for any Act of Environmental Control Bondholders under this
        Section to approve the particular form of any proposed Supplemental Indenture,
        but it shall be sufficient if such Act shall approve the substance
        thereof.

       

      Promptly
        after the execution by the Issuer and the Indenture Trustee of any Supplemental
        Indenture pursuant to this Section, the Indenture Trustee shall mail to the
        Rating Agencies, Potomac Edison and the Holders of the Environmental Control
        Bonds to which such amendment or Supplemental Indenture relates, a notice
        prepared by the Issuer setting forth in general terms the substance of such
        Supplemental Indenture. Any failure of the Indenture Trustee 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
        9.03.    PSCWV
        Condition.
        Notwithstanding anything to the contrary in Section 9.01 or 9.02, no
        Supplemental Indenture shall be effective, nor shall any action requiring
        satisfaction of the PSCWV Condition pursuant to Sections 3.20 or 5.02 be
        taken or be effective, unless the process set forth in this Section 9.03
        has been followed.

       

      (a)    At
        least
        sixteen days prior to the effectiveness of any such supplemental indenture
        and
        after obtaining the other necessary approvals set forth in Sections 9.01
        or
        9.02, as applicable (except for the consent of the Holders if the consent
        of the
        Holders is required or sought by the Indenture Trustee in connection with
        such
        supplemental indenture) or prior to the effectiveness of any waiver of a
        default
        approved by the Holders of a majority of the Outstanding Amount of Bonds
        of all
        Series as provided in Section 5.12, the Issuer shall have delivered to
        the

       

      
        
          
          

        

        
          66

          
            

          

        

        
          
          

        

      

       

      PSCWV’s
        executive director and general counsel written notification of any proposed
        Supplemental Indenture or waiver, which notification shall contain:

       

      (i)    a
        reference to Case Nos. 05-0402-E-CN and 05-0750-E-PC and any other Case No.
        under which a Subsequent Financing Order has been issued;

       

      (ii)   an
        Officer’s Certificate stating that the proposed supplemental Indenture has been
        approved by all parties to this Indenture or alternatively, the waiver of
        default has been approved by the Holders of a majority of the Outstanding
        Amount
        of Bonds of all Series; and

       

      (iii)   a
        statement identifying the person to whom the PSCWV or its authorized
        representative is to address any response to the proposed Supplemental Indenture
        or to request additional time;

       

      (b)    The
        PSCWV
        or its authorized representative shall, within fifteen days of receiving
        the
        notification complying with Section 9.03(a) above, either:

       

      (i)    provide
        notice of its determination that the proposed Supplemental Indenture or waiver
        will not under any circumstances have the effect of increasing the ongoing
        financing costs related to the Environmental Control Bonds;

       

      (ii)   provide
        notice of its consent or lack of consent to the person specified in Section
        9.03(a)(iii) above, or 

       

      (iii)   be
        conclusively deemed to have consented to the proposed Supplemental
        Indenture,

       

      unless,
        within fifteen days of receiving the notification complying with Section
        9.03(a)
        above, the PSCWV or its authorized representative delivers to the office
        of the
        person specified in Section 9.03(a)(iii) above a written statement requesting
        an
        additional amount of time not to exceed fifteen days in which to consider
        whether to consent to the proposed supplemental Indenture or waiver. If the
        PSCWV or its authorized representative requests an extension of time in the
        manner set forth in the preceding sentence, then the PSCWV shall either provide
        notice of its consent or lack of consent or notice of its determination that
        the
        proposed Supplemental Indenture or waiver will not under any circumstances
        increase ongoing financing costs to the person specified in Section 9.03(a)(iii)
        above no later than the last day of such extension of time or be conclusively
        deemed to have consented to the proposed Supplemental Indenture or waiver
        on the
        last day of such extension of time. Any Supplemental Indenture or waiver
        requiring the consent of the PSCWV shall become effective on the later of
        (i) the date proposed by the parties to the Supplemental Indenture or
        waiver or (ii) the first day after the expiration of the fifteen-day period
        provided for in this Section 9.03(b), or, if such period has been extended
        pursuant to the terms hereof, the first day after the expiration of such
        period
        as so extended.

       

      (c)    Following
        the delivery of a statement from the PSCWV to the Issuer under
        paragraph (b), the Issuer shall have the right at any time to withdraw from
        the PSCWV further consideration of any proposed Supplemental Indenture or
        waiver
        of default.

       

      
        
          
          

        

        
          67

          
            

          

        

        
          
          

        

      

       

      (d)    For
        the
        purpose of this Section 9.03 and Section 11.11, an “authorized
        representative of the PSCWV” means any person authorized to act on behalf of the
        PSCWV, as evidenced by an Opinion of Counsel (which may be the general counsel)
        to the PSCWV.

       

      SECTION
        9.04.    Execution
        of Supplemental Indentures.
        In
        executing, or permitting the additional trusts created by, any Supplemental
        Indenture permitted by this Article IX or the modifications thereby of the
        trusts created by this Indenture, the Indenture Trustee shall be entitled
        to
        receive, and subject to Sections 6.01 and 6.02, shall be fully protected in
        relying upon, an Opinion of Counsel stating that the execution of such
        Supplemental Indenture is authorized or permitted by this Indenture. The
        Indenture Trustee may, but shall not be obligated to, enter into any such
        Supplemental Indenture that affects the Indenture Trustee’s own rights, duties,
        liabilities or immunities under this Indenture or otherwise.

       

      SECTION
        9.05.    Effect
        of Supplemental Indenture.
        Upon
        the execution of any Supplemental Indenture pursuant to the provisions hereof,
        this Indenture shall be and be deemed to be modified and amended in accordance
        therewith with respect to each Series or Tranche of Environmental Control
        Bonds
        affected thereby, and the respective rights, limitations of rights, obligations,
        duties, liabilities and immunities under this Indenture of the Indenture
        Trustee, the Issuer, the Holders of the Environmental Control Bonds and each
        Swap Counterparty 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
        9.06.    Conformity
        with Trust Indenture Act.
        Every
        amendment of this Indenture and every Supplemental Indenture executed pursuant
        to this Article IX shall conform to the requirements of the TIA as then in
        effect so long as this Indenture shall then be qualified under the
        TIA.

       

      SECTION
        9.07.    Reference
        in Environmental Control Bonds to Supplemental Indentures.
        Environmental Control Bonds authenticated and delivered after the execution
        of
        any Supplemental Indenture pursuant to this Article IX may, and if required
        by the Indenture Trustee shall, bear a notation in form approved by the
        Indenture Trustee as to any matter provided for in such Supplemental Indenture.
        If the Issuer or the Indenture Trustee shall so determine, new Environmental
        Control Bonds so modified as to conform, in the opinion of the Indenture
        Trustee
        and the Issuer, to any such Supplemental Indenture may be prepared and executed
        by the Issuer and authenticated and delivered by the Indenture Trustee in
        exchange for Outstanding Environmental Control Bonds.

       

      
        
          
          

        

        
          68

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        X

       

      [RESERVED]

       

      ARTICLE
        XI

       

      Miscellaneous

       

      SECTION
        11.01.    Compliance
        Certificates and Opinions, etc.
        Upon
        any application or request by the Issuer to the Indenture Trustee to take
        any
        action under any provision of this Indenture, the Issuer shall furnish to
        the
        Indenture Trustee (i) an Officer’s Certificate stating that all conditions
        precedent, if any, provided for in this Indenture relating to the proposed
        action have been complied with, (ii) an Opinion of Counsel stating that in
        the opinion of such counsel all such conditions precedent, if any, have been
        complied with and (iii) (if required by the TIA) an Independent Certificate
        from a firm of registered public accountants meeting the applicable requirements
        of this Section, except that, in the case of any such application or request
        as
        to which the furnishing of such documents is specifically required by any
        provision of this Indenture, no additional certificate or opinion need be
        furnished.

       

      Every
        certificate or opinion with respect to compliance with a condition or covenant
        provided for in this Indenture shall include:

       

      (a)    statement
        that each signatory of such certificate or opinion has read or has caused
        to be
        read such covenant or condition and the definitions herein relating
        thereto;

       

      (b)    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;

       

      (c)    a
        statement that, in the opinion of each such signatory, such signatory has
        made
        such examination or investigation as is necessary to enable such signatory
        to
        express an informed opinion as to whether or not such covenant or condition
        has
        been complied with; and

       

      (d)    a
        statement as to whether, in the opinion of each such signatory, such condition
        or covenant has been complied with.

       

      SECTION
        11.02.    Form
        of Documents Delivered to Indenture Trustee.
        In any
        case where several matters are required to be certified by, or covered by
        an
        opinion of, any specified Person, it is not necessary that all such matters
        be
        certified by, or covered by the opinion of, only one such Person, or that
        they
        be so certified or covered by only one document, but one such Person may
        certify
        or give an opinion with respect to some matters and one or more other such
        Persons as to other matters, and any such Person may certify or give an opinion
        as to such matters in one or several documents.

       

      Any
        certificate or opinion of an Authorized Officer of the Issuer may be based,
        insofar as it relates to legal matters, upon a certificate or opinion of,
        or
        representations by, counsel, unless such officer knows, or in the exercise
        of
        reasonable care should know, that the certificate or opinion or representations
        with respect to the matters upon which his certificate or

       

      
        
          
          

        

        
          69

          
            

          

        

        
          
          

        

      

       

      opinion
        is based are erroneous. Any such certificate of an Authorized Officer or
        Opinion
        of Counsel may be based, insofar as it relates to factual matters, upon a
        certificate or opinion of, or representations by, an officer or officers
        of the
        Servicer, the Transferor, the Seller or the Issuer, stating that the information
        with respect to such factual matters is in the possession of the Servicer,
        the
        Transferor, the Seller or the Issuer, unless such Authorized Officer or counsel
        knows, or in the exercise of reasonable care should know, that the certificate
        or opinion or representations with respect to such matters are
        erroneous.

       

      Where
        any
        Person is required to make, give or execute two or more applications, requests,
        consents, certificates, statements, opinions or other instruments under this
        Indenture, they may, but need not, be consolidated and form one
        instrument.

       

      Whenever
        in this Indenture, in connection with any application or certificate or report
        to the Indenture Trustee, it is provided that the Issuer shall deliver any
        document as a condition of the granting of such application, or as evidence
        of
        the Issuer’s compliance with any term hereof, it is intended that the truth and
        accuracy, at the time of the granting of such application or at the effective
        date of such certificate or report (as the case may be), of the facts and
        opinions stated in such document shall in such case be conditions precedent
        to
        the right of the Issuer to have such application granted or to the sufficiency
        of such certificate or report. The foregoing shall not, however, be construed
        to
        affect the Indenture Trustee’s right to rely upon the truth and accuracy of any
        statement or opinion contained in any such document as provided in
        Article VI.

       

      SECTION
        11.03.    Acts
        of Environmental Control Bondholders.  (a)  Any
        request, demand, authorization, direction, notice, consent, waiver or other
        action provided by this Indenture to be given or taken by Environmental Control
        Bondholders may be embodied in and evidenced by one or more instruments of
        substantially similar tenor signed by such Environmental Control Bondholders
        in
        person or by agents duly appointed in writing; and except as herein otherwise
        expressly provided such action shall become effective when such instrument
        or
        instruments are delivered to the Indenture Trustee, and, where it is hereby
        expressly required, to the Issuer. Such instrument or instruments (and the
        action embodied therein and evidenced thereby) are herein sometimes referred
        to
        as the “Act”
of
        the
        Environmental Control Bondholders signing such instrument or instruments.
        Proof
        of execution of any such instrument or of a writing appointing any such agent
        shall be sufficient for any purpose of this Indenture and (subject to
        Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer,
        if made in the manner provided in this Section.

       

      (b)    The
        fact
        and date of the execution by any person of any such instrument or writing
        may be
        proved in any manner that the Indenture Trustee deems sufficient.

       

      (c)    The
        ownership of Environmental Control Bonds shall be proved by the Bond
        Register.

       

      (d)    Any
        request, demand, authorization, direction, notice, consent, waiver or other
        action by the Holder of any Environmental Control Bonds shall bind the Holder
        of
        every Environmental Control Bond issued upon the registration thereof or
        in
        exchange therefor or in lieu thereof, in respect of anything done, omitted
        or
        suffered to be done by the Indenture Trustee

       

      
        
          
          

        

        
          70

          
            

          

        

        
          
          

        

      

       

      or
        the
        Issuer in reliance thereon, whether or not notation of such action is made
        upon
        such Environmental Control Bond.

       

      SECTION
        11.04.    Notices,
        etc., to Indenture Trustee, Issuer, Potomac Edison, PSCWV and Rating
        Agencies.
        Any
        request, demand, authorization, direction, notice, consent, waiver or Act
        of
        Environmental Control Bondholders or other documents provided or permitted
        by
        this Indenture to be made upon, given or furnished to or filed
        with:

       

      (a)    the
        Indenture Trustee by any Environmental Control Bondholder or by the Issuer
        shall
        be sufficient for every purpose hereunder if made, given, furnished or filed
        in
        writing, delivered personally, via facsimile transmission, by reputable
        overnight courier or by first-class mail, postage prepaid, to the Indenture
        Trustee, at its Corporate Trust Office, or

       

      (b)    the
        Issuer by the Indenture Trustee or by any Environmental Control Bondholder
        shall
        be sufficient for every purpose hereunder if in writing, delivered personally,
        via facsimile transmission, by reputable overnight courier or by first-class
        mail, postage prepaid, to the Issuer addressed to: PE Environmental
        Funding LLC, [Address], Attention: [____________________, Attention:
        Secretary], or at any other address previously furnished in writing to the
        Indenture Trustee by the Issuer. The Issuer shall promptly transmit any notice
        received by it from the Environmental Control Bondholders to the Indenture
        Trustee.

       

      (c)    Potomac
        Edison by the Indenture Trustee, the Issuer, or by any Environmental Control
        Bondholder shall be sufficient for every purpose hereunder if in writing,
        delivered personally, via facsimile transmission, by reputable overnight
        courier
        or by first-class mail, postage prepaid, to Potomac Edison, doing business
        as
        Allegheny Power, [Address], Attention: [___________], or at any other address
        previously furnished in writing to the Indenture Trustee by Potomac Edison.
        Potomac Edison shall promptly transmit any notice received by it from the
        Environmental Control Bondholders to the Indenture Trustee.

       

      Notices
        required to be given to the Rating Agencies by the Issuer or the Indenture
        Trustee shall be in writing, delivered personally, via facsimile transmission,
        by reputable overnight courier or by first-class mail, postage prepaid, to
        (i) in the case of Fitch, at the following address: Fitch, Inc.,
        1 State Street Plaza, New York, New York 10004, Attention:  ABS
        Surveillance, (ii) in the case of Moody’s, at the following address:
        Moody’s Investors Service, Inc., 99 Church Street, New York, New York
        10007, Attention: [ABS Monitoring Department], and (iii) in the case of
        Standard & Poor’s, at the following address: Standard & Poor’s
        Ratings Services, 55 Water Street, New York, New York 10041, Attention:
        [Asset Backed Surveillance Department].

       

      Notices
        required to be given to the PSCWV by the Issuer or the Indenture Trustee
        shall
        be in writing, delivered personally, via facsimile transmission, by reputable
        overnight courier or by first-class mail, postage prepaid, to
        ______________________________, Attention:  __________.

       

      SECTION
        11.05.    Notices
        to Environmental Control Bondholders; Waiver.
        Where
        this Indenture provides for notice to Environmental Control Bondholders of
        any
        event, such notice shall be sufficiently given (unless otherwise herein
        expressly provided) if in writing

       

      
        
          
          

        

        
          71

          
            

          

        

        
          
          

        

      

       

      and
        delivered by first-class mail, postage prepaid, to each Environmental Control
        Bondholder affected by such event, at their address as it appears on the
        Bond
        Register, not later than the latest date, and not earlier than the earliest
        date, prescribed for the giving of such notice. In any case where notice
        to
        Environmental Control Bondholders is given by mail, neither the failure to
        mail
        such notice nor any defect in any notice so mailed to any particular
        Environmental Control Bondholder shall affect the sufficiency of such notice
        with respect to other Environmental Control Bondholders, and any notice that
        is
        mailed in the manner herein provided shall conclusively be presumed to have
        been
        duly given.

       

      Where
        this Indenture provides for notice in any manner, such notice may be waived
        in
        writing by any Person entitled to receive such notice, either before or after
        the event, and such waiver shall be the equivalent of such notice. Waivers
        of
        notice by Environmental Control Bondholders shall be filed with the Indenture
        Trustee but such filing shall not be a condition precedent to the validity
        of
        any action taken in reliance upon such a waiver.

       

      In
        case
        it shall be impractical to deliver notice in accordance with the first paragraph
        of this Section 11.05 to the Holders of Environmental Control Bonds when
        such notice is required to be given pursuant to any provision of this Indenture,
        then any manner of giving such notice as shall be satisfactory to the Indenture
        Trustee shall be deemed to be a sufficient giving of such notice.

       

      Where
        this Indenture provides for notice to the Rating Agencies, failure to give
        such
        notice shall not affect any other rights or obligations created hereunder,
        and
        shall not under any circumstance constitute a Default or Event of
        Default.

       

      SECTION
        11.06.    Alternate
        Payment and Notice Provisions.
        Notwithstanding any provision of this Indenture or any of the Environmental
        Control Bonds to the contrary, the Issuer may enter into any agreement with
        any
        Holder of an Environmental Control Bond providing for a method of payment,
        or
        notice by the Indenture Trustee or any Paying Agent to such Holder, that
        is
        different from the methods provided for in this Indenture for such payments
        or
        notices. The Issuer will furnish to the Indenture Trustee a copy of each
        such
        agreement and the Indenture Trustee will cause payments to be made and notices
        to be given in accordance with such agreements.

       

      SECTION
        11.07.    Conflict
        with Trust Indenture Act.
        If any
        provision hereof limits, qualifies or conflicts with another provision hereof
        that is required to be included in this Indenture by any of the provisions
        of
        the TIA, such required provision shall control.

       

      The
        provisions of TIA §§ 310 through 317 that impose duties on any person
        (including the provisions automatically deemed included herein unless expressly
        excluded by this Indenture) are a part of and govern this Indenture, whether
        or
        not physically contained herein.

       

      SECTION
        11.08.    Effect
        of Headings and Table of Contents.
        The
        Article and Section headings herein and the Table of Contents are for
        convenience only and shall not affect the construction hereof.

       

      
        
          
          

        

        
          72

          
            

          

        

        
          
          

        

      

       

      SECTION
        11.09.    Successors
        and Assigns.
        All
        covenants and agreements in this Indenture and the Environmental Control
        Bonds
        by the Issuer shall bind its successors and permitted assigns, whether so
        expressed or not.

       

      All
        agreements of the Indenture Trustee in this Indenture shall bind its
        successors.

       

      SECTION
        11.10.    Separability.
        In case
        any provision in this Indenture or in the Environmental Control Bonds shall
        be
        invalid, illegal or unenforceable, the validity, legality, and enforceability
        of
        the remaining provisions shall not in any way be affected or impaired
        thereby.

       

      SECTION
        11.11.    Benefits
        of Indenture.
        Nothing
        in this Indenture or in the Environmental Control Bonds, express or implied,
        shall give to any Person, other than the parties hereto and their successors
        hereunder, and the Environmental Control Bondholders, and any other party
        secured hereunder, and any other Person with an ownership interest in any
        part
        of the Collateral, any benefit or any legal or equitable right, remedy or
        claim
        under this Indenture.
        Notwithstanding anything to the contrary contained herein, for the avoidance
        of
        doubt, as provided in the Financing Order, any right, remedy or claim to
        which
        any Customer may be entitled pursuant to the Financing Order and to this
        Indenture may be asserted or exercised only by the PSCWV (or its authorized
        representative) for the benefit of such Customer.

       

      SECTION
        11.12.    Legal
        Holidays.
        In any
        case where the date on which any payment is due shall not be a Business Day,
        then (notwithstanding any other provision of the Environmental Control Bonds
        or
        this Indenture) payment need not be made on such date, but may be made on
        the
        next succeeding Business Day with the same force and effect as if made on
        the
        date on which nominally due, and no interest shall accrue for the period
        from
        and after any such nominal date.

       

      SECTION
        11.13.    GOVERNING
        LAW.
        THIS
        INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
        OF THE
        STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
        THE
        OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
        IN
        ACCORDANCE WITH SUCH LAWS, PROVIDED THAT THE LAWS OF THE STATE OF WEST VIRGINIA
        SHALL GOVERN THE CREATION, ATTACHMENT, PERFECTION AND ENFORCEMENT OF THE
        SECURITY INTEREST HEREUNDER IN THE TRANSFERRED ENVIRONMENTAL CONTROL PROPERTY
        UNDER THE STATUTE.

       

      SECTION
        11.14.    Counterparts.
        This
        Indenture may be executed in any number of counterparts, each of which so
        executed shall be deemed to be an original, but all such counterparts shall
        together constitute but one and the same instrument.

       

      SECTION
        11.15.    Issuer
        Obligation.
        No
        recourse may be taken, directly or indirectly, with respect to the obligations
        of the Issuer or the Indenture Trustee on the Environmental Control Bonds
        or
        under this Indenture or any certificate or other writing delivered in connection
        herewith or therewith, against (i) any owner of a beneficial interest in
        the Issuer or (ii) any partner, owner, beneficiary, agent, officer,
        director, employee or agent of the Indenture

       

      
        
          
          

        

        
          73

          
            

          

        

        
          
          

        

      

       

      Trustee,
        any holder of a beneficial interest in the Issuer or the Indenture Trustee
        or of
        any successor or assign of the Indenture Trustee, except as any such Person
        may
        have expressly agreed (it being understood that none of the Indenture Trustee’s
        obligations are in its individual capacity).

       

      SECTION
        11.16.    No
        Petition.
        The
        Indenture Trustee, by entering into this Indenture, and each Environmental
        Control Bondholder, by accepting an Environmental Control Bond (or interest
        thereon), hereby covenant and agree that they shall not, prior to the date
        that
        is one year and one day after the termination of this Indenture, institute
        against the Issuer or any of its Managers or Members, or join in any institution
        against the Issuer of, any bankruptcy, reorganization, arrangement, insolvency
        or liquidation proceedings, or other proceedings under any United States
        Federal
        or state bankruptcy or similar law in connection with any obligations relating
        to the Environmental Control Bonds, this Indenture or any of the Basic
        Documents, subject to the right of a circuit court of the State of West Virginia
        to order sequestration and payment of revenues arising with respect to the
        Environmental Control Property.

       

      
        
          
          

        

        
          74

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Indenture
        to be duly executed by their respective officers, thereunto duly authorized
        and
        duly attested, all as of the day and year first above written.

       

      
        	 	
                PE
                  ENVIRONMENTAL FUNDING LLC,

                 

                 

              
	 	
                by

              	 
	 	 	
                Name:

                Title:

              
	 	 	
                 

                 

              
	 	
                U.S.
                  BANK NATIONAL ASSOCIATION, as Indenture Trustee,

                 

                 

              
	 	
                by

              	 
	 	 	
                Name:

                Title:

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      APPENDIX A

       

      MASTER
        DEFINITIONS

       

      [SEE
        ATTACHED]

      
         

        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

      APPENDIX A

       

      MASTER
        DEFINITIONS

       

      To
        be
        used in connection with the Administration Agreements, the
        Indenture,

      the
        Issuer LLC Agreement, the Transfer Agreement,

      the
        Sale Agreement and the Servicing Agreement.

       

      Unless
        the context other requires in this Appendix A, (i) a term has the
        meaning assigned to it; (ii) an accounting term not otherwise defined has
        the meaning assigned to it in accordance with generally accepted accounting
        principles as in effect from time to time; (iii) “or” is not exclusive;
        (iv) “including” means including without limitation; (v) words in the
        singular include the plural and words in the plural include the singular;
        (vi) words are applicable to the masculine as well as to the feminine and
        neuter genders of such terms; and (vii) the words “therein”, “thereof”,
“thereunder” and other words of similar import refer to the applicable document
        referenced as a whole and not to any particular article, section or other
        subdivision.

       

      “Act”
has
        the
        meaning specified in Section 11.03(a) of the Indenture.

       

      “Actual
        Environmental Control Charge Collections”
means
        the sum of the Environmental Control Charge Payments which are actually received
        by the Servicer, directly or indirectly (including through a Third Party),
        from
        or on behalf of Customers less an allowance for Write-Offs.

       

      “Addition
        Notice”
means,
        (i) when used in the Transfer Agreement with respect to the transfer of
        Subsequent Environmental Control Property to the Seller pursuant to
        Section 2.02 of the Transfer Agreement, notice, which shall be given by the
        Transferor to the Seller and the Rating Agencies not later than 10 days prior
        to
        the related Subsequent Contribution Date, specifying the Subsequent Contribution
        Date for such Subsequent Environmental Control Property and (ii) when used
        in the Sale Agreement with respect to the transfer of Subsequent Environmental
        Control Property to the Issuer pursuant to Section 2.02 of the Sale Agreement,
        notice, which shall be given by the Seller to the Issuer and the Rating Agencies
        not later than 10 days prior to the related Subsequent Sale Date, specifying
        the
        Subsequent Sale Date for such Subsequent Environmental Control
        Property.

       

      “Additional
        Bonds”
means
        each Series of environmental control bonds issued by the Issuer pursuant
        to a
        Subsequent Financing Order.

       

      “Additional
        Indenture” means
        any
        indenture entered into between the Company and the applicable trustee in
        connection with the issuance of any Additional Bonds.

       

      “Additional
        Issuance”
means
        issuance of securities by the Issuer, including any series of Environmental
        Control Bonds or other Additional Securities issued after the Initial Sale
        Date,
        that will be undertaken only if (i) such issuance has been authorized by
        the PSCWV, (ii)  the Rating Agencies then rating any Outstanding Series of
        Environmental Control Bonds or Outstanding Additional Securities provide
        written
        confirmation that the credit ratings in all Outstanding Series of Environmental
        Control Bonds or other Additional Securities will not be reduced or withdrawn
        as
        a result of such issuance, (iii) the Issuer has delivered to the
        Indenture

       

      
        
          
          

        

        
          A-2

          
            

          

        

        
          
          

        

      

       

      Trustee
        an Opinion of Counsel of a nationally recognized firm experienced in such
        matters to the effect that after such issuance, in the opinion of such counsel,
        if either or both of the Utility or the Seller were to become a debtor in
        a case
        under the United States Bankruptcy Code (Title 11, U.S.C.), a federal court
        exercising bankruptcy jurisdiction and exercising reasonable judgment after
        full
        consideration of all relevant factors would not order substantive consolidation
        of the assets and liabilities of the Issuer with those of the bankruptcy
        estate
        of the Utility or the Seller, subject to the customary exceptions,
        qualifications and assumptions contained therein.

       

      “Additional
        Securities”
means
        additional bonds or other securities issued by the Issuer pursuant to a
        Subsequent Financing Order or otherwise authorized or approved by the
        PSCWV.

       

      “Administration
        Agreements”
means
        (i) the PER Administration Agreement and (ii) the Issuer
        Administration Agreement.

       

      “Administrative
        Fees”
means
        the fees of the Administrator under the Administration Agreements.

       

      “Administrator”
means
        Allegheny Energy Service Corporation, as administrator under the Administration
        Agreements, and its permitted successors and assigns thereunder.

       

      “Affiliate”
means,
        with respect to any specified Person, any other Person controlling or controlled
        by or under common control with such specified Person. For the purposes of
        this
        definition, “control” when used with respect to any specified Person means the
        power to direct or cause the direction of the management or policies of such
        Person, directly or indirectly, whether through the ownership of voting
        securities or general partnership or managing member interests, by contract
        or
        otherwise; and the terms “controlling” and “controlled” have meanings
        correlative to the foregoing. Without limiting the generality of the foregoing,
        a Person shall be deemed to control any other Person in which it owns, directly
        or indirectly, a majority of the ownership interests.

       

      “Alternative
        Energy Supplier”
means
        an energy supplier which is authorized by applicable Requirements of Law
        to sell
        electric service to a customer using the transmission or distribution system
        of
        the Utility.

       

      “Annual
        Accountant’s Report”
has
        the
        meaning specified in Section 3.06(a) of the Servicing Agreement.

       

      “Annual
        Reconciliation”
means
        the Servicer's annual process of reconciling Actual Environmental
        Control Charge Collections with Estimated Environmental Control
        Charge Collections in accordance with Section 5.11(d) of the Servicing
        Agreement.

       

      “Applicable
        MDMA”
means
        with respect to each Customer, any meter data management agent or Third Party
        providing meter reading services for that Customer’s account as authorized by
        any PSCWV Regulations or orders.

       

      “Applicable
        Third Party”
means,
        with respect to each Customer, the Third Party, if any, providing billing
        or
        metering services to that Customer.

       

      
        
          
          

        

        
          A-3

          
            

          

        

        
          
          

        

      

       

      “Authorized
        Initial Denominations”
means,
        with respect to any Series of Environmental Control Bonds, $1,000 and integral
        multiples thereof, or such other denominations as may be specified in the
        Series
        Supplement therefor.

       

      “Authorized
        Officer”
means
        any officer who is authorized to act for the Issuer and who is identified
        on the
        list of Authorized Officers delivered on the Closing Date by the Issuer to
        the
        Indenture Trustee as of such date (as such list may be modified or supplemented
        from time to time thereafter). 

       

      “Available
        Excess Funds Amount”
means,
        as of any date, the amount on deposit in the Excess Funds
        Subaccount.

       

      “Bankruptcy”
means,
        with respect to any Person, if (A) such Person (i) makes an assignment
        for the benefit of creditors, (ii) files a voluntary petition in
        bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has entered
        against it an order for relief, in any bankruptcy or insolvency proceedings,
        (iv) files a petition or answer seeking for itself any reorganization,
        arrangement, composition, readjustment, liquidation or similar relief under
        any
        statute, law or regulation, (v) files an answer or other pleading admitting
        or failing to contest the material allegations of a petition filed against
        it in
        any proceeding of this nature, (vi) seeks, consents to or acquiesces in the
        appointment of a trustee, receiver or liquidator of the Person or of all
        or any
        substantial part of its properties, or (B)(i) if 120 days after the
        commencement of any proceeding against the Person seeking reorganization,
        arrangement, composition, readjustment, liquidation or similar relief under
        any
        statute, law or regulation, if the proceeding has not been dismissed, or
        (ii) if within 90 days after the appointment without such Person’s
        consent or acquiescence of a trustee, receiver or liquidator of such Person
        or
        of all or any substantial part of its properties, the appointment is not
        vacated
        or stayed, or within 90 days after the expiration of any such stay, the
        appointment is not vacated. The foregoing definition of “Bankruptcy” is intended
        to replace and shall supersede and replace the definition of “Bankruptcy” set
        forth in Sections 18-101(1) and 18-304 of the LLC Act.

       

      “Basic
        Documents”
means,
        the Indenture (including any Series Supplement), the Certificate of Formation,
        the Issuer LLC Agreement, the Management Agreement, the Transfer Agreement,
        the
        Sale Agreement, the Servicing Agreement, each Bill of Sale delivered by the
        Seller to the Issuer pursuant to the Sale Agreement, the Issuer Administration
        Agreement, the Underwriting Agreement, any Swap Agreement and all documents
        and
        certificates contemplated thereby or delivered in connection
        therewith.

       

      “Bill
        of Sale”
means
        any bill of sale delivered by Seller to the Issuer pursuant to the Sale
        Agreement.

       

      “Billed
        Environmental Control Charges”
means
        the amounts billed to Customers pursuant to the Environmental Control Charges,
        whether billed directly to such Customers by the Servicer or indirectly through
        a Third Party.

       

      “Billing
        Period”
means
        the revenue period relating to a Customer’s Bill.

       

      “Bill”
means
        each of the periodic bills and the Closing Bills issued to Customers or Third
        Parties by Potomac Edison on its own behalf and in its capacity as
        Servicer.

       

      
        
          
          

        

        
          A-4

          
            

          

        

        
          
          

        

      

       

      “Board”
or
        “Board
        of Managers”
means
        the Board of Managers of the Issuer.

       

      “Bond
        Rate”
means,
        with respect to any Series or Tranche, the rate at which interest accrues
        on the
        principal balance of Environmental Control Bonds of such Series or Tranche,
        as
        specified in the Series Supplement therefor.

       

      “Bond
        Register”
and
        “Bond
        Registrar”
have
        the respective meanings specified in Section 2.05 of the
        Indenture.

       

      “Book-Entry
        Environmental Control Bonds”
means
        beneficial interests in the Environmental Control Bonds, ownership and transfers
        of which shall be made through book entries by a Clearing Agency as described
        in
        Section 2.11 of the Indenture.

       

      “Budget
        Billing Plan”
means
        a
        level payment plan offered by the Transferor, which, if elected by a residential
        Customer, provides for levelized monthly Bill charges to such residential
        Customer by estimating the amount that the residential Customer would pay
        (based
        on the residential Customer’s actual usage during the previous twelve months),
        then charging the residential Customer 1/12th
        of that
        amount. Each month, a new payment amount is calculated based upon the most
        recent twelve months of usage data. After the twelfth month, the payments
        made
        by such residential Customer during the preceding twelve months are reconciled
        with the amount owed by such residential Customer for actual usage during
        the
        budget billing period, and the difference is amortized over the next twelve
        month period.

       

      “Business
        Day”
means
        any day other than a Saturday, Sunday or a day on which banking institutions
        in
        the City of New York, New York or the City of Charleston, West Virginia,
        or the
        Depository Trust Company, are authorized or obligated by law, regulation
        or
        executive order to remain closed.

       

      “Calculation
        Date”
means
        [specify semi-annual true-up adjustment dates] and any other date on which
        the
        Servicer files a True-Up Adjustment Filing.

       

      “Calculation
        Period”
for
        any
        Series initially, means the rolling six month anniversary date of the Series
        Issuance Date, commencing on ____________ 2007 (or, in the case of any
        subsequent Series, the corresponding rolling six month anniversary date of
        such
        Series based on its Series Issuance Date).

       

      “Capital
        Equity Return”
means
        the amount equal to ___% (being the rate on the longest maturing tranche
        of the
        Bonds) on the initial deposit by the Seller into the Capital Subaccount,
        as such
        amount shall be calculated by the Servicer from time to time.

       

      “Capital
        Subaccount”
has
        the
        meaning specified in Section 8.02(a) of the Indenture.

       

      “Certificate
        of Formation”
means
        the certificate of formation of the Issuer, which was filed with the Secretary
        of State of the State of Delaware on November 17, 2006, as amended on December
        27, 2006, and as it may be further amended or restated from time to
        time.

       

      “Clearing
        Agency”
means
        an organization registered as a “clearing agency” pursuant to Section 17A of the
        Exchange Act.

       

      
        
          
          

        

        
          A-5

          
            

          

        

        
          
          

        

      

       

      “Clearing
        Agency Participant”
means
        a
        broker, dealer, bank, other financial institution or other Person for whom
        from
        time to time a Clearing Agency effects book-entry transfers and pledges of
        securities dispatched with the Clearing Agency.

       

      “Closing
        Bill”
means
        the final Bill issued to a Customer at the time service is
        terminated.

       

      “Closing
        Date”
means
        _______________, 2007.

       

      “Code”
means
        the Internal Revenue Code of 1986, as amended from time to time, and Treasury
        Regulations promulgated thereunder.

       

      “Collateral”
has
        the
        meaning specified in the preamble to the Indenture.

       

      “Collection
        Account”
has
        the
        meaning specified in Section 8.02(a) of the Indenture.

       

      “Collection
        Period”
means
        any period commencing on the first Business Day of any Billing Period and
        ending
        on the last Business Day of such Billing Period. 

       

      “Commission”
means
        the Securities and Exchange Commission.

       

      “Company”
has
        the
        meaning specified in the preamble to the Issuer LLC Agreement.

       

      “Consolidated
        Third Party Billing”
means
        the billing option available to Customers served by a Third Party pursuant
        to
        which such Third Party will be responsible for billing and collecting all
        charges to Customers electing such billing option, including the Environmental
        Control Bond Charge, and will become obligated to the Servicer for the Billed
        Environmental Control Bond Charges, all in accordance with applicable PSCWV
        Regulations and the Financing Order. 

       

      “Corporate
        Trust Office”
means
        the principal office of the Indenture Trustee at which at any particular
        time
        its corporate trust business shall be administered, which office at date
        of the
        execution of the Indenture is located at [Address], Attention: [___________],
        or
        at such other address as the Indenture Trustee may designate from time to
        time
        by notice to the Environmental Control Bondholders and the Issuer, or the
        principal corporate trust office of any successor Indenture Trustee (the
        address
        of which the successor Indenture Trustee will notify the Environmental Control
        Bondholders and the Issuer).

       

      “Counterparty”
means
        the counterparty with respect to any Swap Agreement.

       

      “Covenant
        Defeasance Option”
has
        the
        meaning specified in Section 4.01(b) of the Indenture.

       

      “Covered
        Persons”
has
        the
        meaning specified in Section 2.08(b) of the Issuer LLC Agreement.

       

      “Customers”
means
        each customer of the Utility located within the Utility’s service area as of the
        date of the Financing Order, and any additions to or enlargements of such
        geographic area, whether or not approved by the PSCWV in a formal proceeding,
        and, as provided by the Statute, whether or not such customers may become
        entitled by law to purchase electric generation services from a provider
        of
        electric generation services other than the Utility.

       

      
        
          
          

        

        
          A-6

          
            

          

        

        
          
          

        

      

       

      “Daily
        Remittance”
means
        all Estimated Environmental Control Charge Collections (from whatever source)
        and all proceeds of other collateral of the Issuer, if any, received by the
        Servicer and remitted each Servicer Business Day by the Servicer to the
        Indenture Trustee for deposit in the appropriate Collection Account, in
        accordance with Section 5.11(a) of the Servicing Agreement.

       

      “Default”
means
        any occurrence that is, or with notice or the lapse of time or both would
        become, an Event of Default.

       

      “Defaulting
        Bond Issuer”
means
        an Issuer for which an Event of Default has occurred and is
        continuing.

       

      “Defeasance
        Subaccount”
has
        the
        meaning specified in Section 8.02(a) of the Indenture.

       

      “Definitive
        Environmental Control Bonds”
means
        Environmental Control Bonds in the form of definitive physical certificates
        in
        fully registered form without coupons.

       

      “DTC
        Agreement”
means
        the agreement between the Issuer and The Depository Trust Company, dated
        on or
        about _________, 2007, relating to the Environmental Control Bonds, as the
        same
        may be amended or supplemented from time to time.

       

      “Eligible
        Deposit Account”
means
        either (a) a segregated account with an Eligible Institution or (b) a
        segregated trust account with the corporate trust department of a depository
        institution organized under the laws of the United States of America or any
        State (or any domestic branch of a foreign bank), having corporate trust
        powers
        and acting as trustee for funds deposited in such account, so long as any
        of the
        securities of such depository institution shall have a credit rating from
        each
        Rating Agency in one of its generic rating categories which signifies investment
        grade.

       

      “Eligible
        Guarantor Institution”
means
        a
        firm or other entity identified in Rule 17Ad-15 under the Exchange Act as
“an eligible guarantor institution,” including (as such terms are defined
        therein) (i) a bank; (ii) a broker, dealer, municipal securities
        broker or dealer or government securities broker or dealer; (iii) a credit
        union; (iv) a national securities exchange, registered securities
        association or clearing agency; or (v) a savings association that is a
        participant in a securities transfer association.

       

      “Eligible
        Institution”
means
        (a) the corporate trust department of the Indenture Trustee or a subsidiary
        thereof or (b) a depository institution organized under the laws of the
        United States of America or any State (or any domestic branch of a foreign
        bank), (i) which has either (A) a long-term unsecured debt rating of
“AAA” by Standard & Poor’s and Fitch, if rated by Fitch, and “Aaa” by
        Moody’s or (B) a short-term or certificate of deposit rating of “A-1+” by
        Standard & Poor’s, “F1+” by Fitch, if rated by Fitch, and “P-1” by
        Moody’s, or any other long-term, short-term or certificate of deposit rating
        acceptable to the Rating Agencies and (ii) whose deposits are insured by
        the FDIC. If so qualified under clause (b) above, the Indenture Trustee may
        be considered an Eligible Institution for the purposes of clause (a) of the
        definition of Eligible Deposit Account.

       

      
        
          
          

        

        
          A-7

          
            

          

        

        
          
          

        

      

       

      “Eligible
        Investments”
mean
        instruments or investment property denominated in United States currency
        which
        evidence:

       

      (a)    direct
        obligations of, or obligations fully and unconditionally guaranteed as to
        timely
        payment by, the United States of America;

       

      (b)    demand
        deposits, time deposits or certificates of deposit of any depository institution
        or trust company incorporated under the laws of the United States of America
        or
        any state thereof (or any domestic branch of a foreign bank) and subject
        to
        supervision and examination by federal or state banking or depository
        institution authorities; provided,
        however,
        that at
        the time of the investment or contractual commitment to invest therein, the
        commercial paper or other short-term unsecured debt obligations (other than
        such
        obligations the rating of which is based on the credit of a Person other
        than
        such depository institution or trust company) thereof shall have a credit
        rating
        from each of the Rating Agencies in the highest short-term rating category
        granted thereby;

       

      (c)    commercial
        paper or other short-term obligations of any corporation organized under
        the
        laws of the United States (other than commercial paper of the Seller, the
        Servicer or any of their Affiliates) having, at the time of the investment
        or
        contractual commitment to invest therein, a rating from each of the Rating
        Agencies from which a rating is available in the highest short-term rating
        category granted thereby;

       

      (d)    investments
        in money market funds (including funds for which the Indenture Trustee or
        any of
        its Affiliates is investment manager or advisor) having a rating from each
        of
        the Rating Agencies from which a rating is available in the highest investment
        category granted thereby (for Standard & Poor’s such rating being
“AAAm” or “AAAm-G” and for Fitch such rating being “AAA/V1+”);

       

      (e)    bankers’
        acceptances by any depository institution or trust company referred to in
        (b)
        above;

       

      (f)    repurchase
        obligations with respect to any security that is a direct obligation of,
        or
        fully guaranteed by, the United States of America or any agency or
        instrumentality thereof the obligations of which are backed by the full faith
        and credit of the United States of America, in either case entered into
        with depository institutions or trust companies (acting as principal described
        in clause (b) above);

       

      (g)    repurchase
        obligations with respect to any security or whole loan entered into
        with:

       

      (i)    a
        financial institution (acting as principal) as described in clause (b) above,
        or

       

      (ii)   a
        broker/dealer (acting as principal) registered as a broker or dealer under
        Section 15 of the Exchange Act, the unsecured short term debt obligations
        of
        which are rated “P-1” by Moody’s, “A-1+” by S&P and “F1+” by Fitch, if rated
        by Fitch, at the time of entering into the repurchase obligation; 

       

      
        
          
          

        

        
          A-8

          
            

          

        

        
          
          

        

      

       

      (h)    a
        guaranteed investment contract provided by a Person having a long-term debt
        rating of not less than Aa3 by Moody’s and AA- by Standard & Poors and
        Fitch; and

       

      (i)    any
        other
        investment permitted by each of the Rating Agencies;

       

      in
        each
        case which matures on or before the Business Day preceding the next Payment
        Date
        or Special Payment Date (if applicable), provided,
        however,
        that
        (1) the obligor related to clauses (b), (c), (d), (f), and (g) above must
        have a long-term rating of at least “Aa3” or a short-term rating of at least
“P-1” with respect to Moody’s only, and a short-term rating of at least “A-1+”
or a long-term rating of at least “AA-” with respect to Standard &
Poor’s only, and a short-term rating of at least “F1+” or a long-term rating of
        at least “AA-” with respect to Fitch only, if rated by Fitch, (2) with
        respect to clause (a) above, the instruments must have a predetermined fixed
        dollar amount of principal at maturity that cannot vary, and if rated, the
        instruments must not have an “r” suffix attached to its Standard &
Poor’s rating, (3) unless otherwise permitted by each Rating Agency, upon
        the failure of any Eligible Institution to maintain any applicable rating
        set
        forth in this definition or the definition of Eligible Institution, the related
        investments at such institution shall be reinvested in Eligible Investments
        at a
        successor Eligible Institution within 10 days, and (4) that all
        Eligible Investments must not:

       

      (x)    be
        sold,
        liquidated or otherwise disposed of at a loss, prior to the maturity
        thereof,

       

      (y)    mature
        later than (i) the date on which the proceeds of such Eligible Investment
        will be required to be on deposit in the Collection Account in order for
        the
        Indenture Trustee to make all required and scheduled payments and deposits
        into
        subaccounts under the Indenture, if such Eligible Investment is held by an
        Affiliate of the Indenture Trustee, or (ii) the Business Day prior to the
        date on which the proceeds of such Eligible Investment will be required to
        be on
        deposit in the Collection Account in order for the Indenture Trustee to make
        all
        required and scheduled payments and deposits into subaccounts under the
        Indenture, if such Eligible Investment is not held by an Affiliate of the
        Indenture Trustee, or

       

      (z)    have
        maturities in excess of one year.

       

      “Environmental
        Control Bond Balance”
means,
        as of any date, the aggregate outstanding principal amount of all Series
        of
        Environmental Control Bonds on such date.

       

      “Environmental
        Control Bond Owner” or “Owner”
        means,
        with respect to a Book-Entry Environmental Control Bond, the Person who is
        the
        beneficial owner of such Book-Entry Environmental Control Bond, as reflected
        on
        the books of the Clearing Agency, or on the books of a Person maintaining
        an
        account with such Clearing Agency (directly as a Clearing Agency Participant
        or
        as an indirect participant, in each case in accordance with the rules of
        such
        Clearing Agency).

       

      “Environmental
        Control Bondholder”
or
        “Bondholder”
means
        the Person in whose name an Environmental Control Bond of any Series or Tranche
        is registered on the Bond Register.

       

      
        
          
          

        

        
          A-9

          
            

          

        

        
          
          

        

      

       

      “Environmental
        Control Bonds”
or
        “Bonds”
means
        the “environmental control bonds” (as defined in the Statute and the Financing
        Order) issued and authenticated under the Indenture.

       

      “Environmental
        Control Charge”
means
        “environmental control charge” (as defined in the Statute and the Financing
        Order).

       

      “Environmental
        Control Charge Adjustment Process”
means
        the process by which Environmental Control Charges are adjusted pursuant
        to the
        Servicing Agreement and the Statute.

       

      “Environmental
        Control Charge Collections”
means
        amounts collected in respect of Environmental Control Charges or the
        Environmental Control Property remitted to the Collection Account.

       

      “Environmental
        Control Charge Effective Date”
means
        the date on which the initial Environmental Control Charges go into effect
        pursuant to the Financing Order.

       

      “Environmental
        Control Charge Payments”
means
        the payments, including any partial payments allocated in accordance with
        Section 6(b) of Exhibit A of the Servicing Agreement, made by or on behalf
        of
        Customers (including through a Third Party) based on the Environmental Control
        Charges.

       

      “Environmental
        Control Cost”
means
        “environmental control cost” (as defined in the Statute and the Financing
        Order).

       

      “Environmental
        Control Equipment”
means
        “environmental control equipment” (as defined in the Statute and the Financing
        Order).

       

      “Environmental
        Control Property”
means
        “environmental control property” (as defined in the Statute and the Financing
        Order) contributed to the Seller under the Transfer Agreement.

       

      “Environmental
        Control Property Documentation”
means
        all documents relating to Environmental Control Property, including copies
        of
        the Financing Order, the Monthly Servicer’s Certificates, the Quarterly
        Servicer’s Certificates, and all documents filed with the PSCWV in connection
        with any Environmental Control Charge Adjustment.

       

      “Environmental
        Control Revenues”
means
        “environmental control revenues” (as defined in the Statute and the Financing
        Order).

       

      “Estimated
        Environmental Control Charge Collections”
means
        the sum of the Environmental Control Charge Payments which are deemed to
        have
        been received by the Servicer, directly or indirectly (including through
        a Third
        Party), from or on behalf of Customers, based on the average days outstanding
        less an allowance for Write-Offs, to be remitted to the Collection
        Account.

       

      “Event
        of Default”
has
        the
        meaning specified in Section 5.01 of the Indenture.

       

      “Excess
        Funds Subaccount”
has
        the
        meaning specified in Section 8.02(a) of the Indenture.

       

      
        
          
          

        

        
          A-10

          
            

          

        

        
          
          

        

      

       

      “Excess
        Remittance”
means
        the amount, if any, calculated for a particular Reconciliation Period, by
        which
        all Estimated Environmental Control Charge Collections remitted to the
        Collection Account during such Reconciliation Period exceed Actual Environmental
        Control Charge Collections received by the Servicer during such Reconciliation
        Period.

       

      “Exchange
        Act”
means
        the Securities Exchange Act of 1934, as amended.

       

      “Executive
        Officer”
means,
        with respect to any entity, the Chief Executive Officer, Chief Operating
        Officer, Chief Financial Officer, President, Executive Vice President, any
        Vice
        President, the Secretary or the Treasurer of such entity; with respect to
        any
        partnership, any general partner thereof; and with respect to any limited
        liability company, the managers thereof.

       

      “Expected
        Final Payment Date”
means,
        with respect to any Series or Tranche of Environmental Control Bonds, the
        expected final payment date therefor, as specified in the Series Supplement
        therefor.

       

      “Expected
        Sinking Fund Schedule”
means,
        with respect to any Series of Environmental Control Bonds, the expected sinking
        fund schedule for principal thereof, as specified in the Series Supplement
        therefor.

       

      “FDIC”
means
        the Federal Deposit Insurance Corporation or any successor.

       

      “Federal
        Book-Entry Regulations”
means
        31 C.F.R. Part 357 et seq. (Department of Treasury).

       

      “Federal
        Book-Entry Securities”
means
        securities issued in book-entry form by the United States Treasury.

       

      “Final
        Maturity Date”
means,
        with respect to any Series or Tranche of Environmental Control Bonds, the
        Final
        Maturity Date therefor, as specified in the related Series
        Supplement.

       

      “Final
        Payment Date”
means
        with respect to each Series of the Environmental Control Bonds, the day on
        which
        the final payment is made to the Environmental Control Bondholders in respect
        of
        the last Outstanding Environmental Control Bonds of such Series.

       

      “Financial
        Asset”
means
        “financial asset” as set forth in Section 8-102(a)(9) of the NY
        UCC.

       

      “Financing
        Cost”
means
        “financing cost” (as defined in the Statute and the Financing
        Order).

       

      “Financing
        Issuance”
means
        an issuance of a new Series of Environmental Control Bonds under the Indenture
        to provide funds to finance the purchase by the Issuer of Transferred
        Environmental Control Property.

       

      “Financing
        Order”
means
        the order, Case Nos. 05-0402-E-CN and 05-0750-E-PC issued by the PSCWV on
        April
        7, 2006, as amended on June 13, 2006 and January 17, 2007 pursuant to the
        Statute, as the same may be further amended or supplemented in accordance
        with
        the Statute and the terms of such order.

       

      “Fitch”
means
        Fitch, Inc., or its successor.

       

      
        
          
          

        

        
          A-11

          
            

          

        

        
          
          

        

      

       

      “Floating
        Rate Bonds”
means
        any Series or Tranche of Environmental Control Bonds that accrues interest
        at a
        variable rate determined as described in the related Series Supplement, if
        any.

       

      “General
        Subaccount”
has
        the
        meaning specified in Section 8.02(a) of the Indenture.

       

      “Governmental
        Authority”
means
        any nation or government, any federal, state, local or other political
        subdivision thereof and any court, administrative agency or other
        instrumentality or entity exercising executive, legislative, judicial,
        regulatory or administrative function of government.

       

      “Grant”
means
        a
        mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey,
        assign, transfer, create, and grant a lien upon and a security interest in
        and
        right of set-off against, deposit, set over and confirm pursuant to the
        Indenture. A Grant of the Collateral or of any other agreement or instrument
        shall include all rights, powers and options (but none of the obligations)
        of
        the granting party thereunder, including the immediate and continuing right
        to
        claim for, collect, receive and give receipt for principal, interest and
        other
        payments in respect of the Collateral and all other moneys payable thereunder,
        to give and receive notices and other communications, to make waivers or
        other
        agreements, to exercise all rights and options, to bring Proceedings in the
        name
        of the granting party or otherwise and generally to do and receive anything
        that
        the granting party is or may be entitled to do or receive thereunder or with
        respect thereto.

       

      “Holder”
means
        the Person in whose name an Environmental Control Bond is registered on the
        Bond
        Register.

       

      “Indemnification
        Event”
        (i) when used with respect to the Transfer Agreement, has the meaning
        specified in Section 5.01(d) of the Transfer Agreement and (ii) when used
        with respect to the Sale Agreement, has the meaning specified in Section
        5.01(d)
        of the Sale Agreement.

       

      “Indemnified
        Party” has
        the
        meaning (i) specified in Section 5.02(b) of the Servicing Agreement,
        (ii) specified in Section 6(b) of the Issuer Administration Agreement and
        (iii) specified in Section 10 of the PER Administration
        Agreement.

       

      “Indemnity
        Amounts”
means
        any amounts paid by the Transferor, the Seller or the Servicer, as applicable,
        to the Indenture Trustee, for itself or on behalf of the Environmental Control
        Bondholders, pursuant to Section 5.01(b), Section 5.01(c),
        Section 5.01(d) and Section 5.01(f) of the Transfer Agreement,
        Section 5.01(b), Section 5.01(c), Section 5.01(d) and
        Section 5.01(f) of the Sale Agreement or Section 5.02(b) and Section
        5.02(d) of the Servicing Agreement or by the Issuer to the Indenture Trustee
        pursuant to Section 6.07 of the Indenture.

       

      “Indenture”
means
        the Indenture dated as of [___________], 2007, by and between the Issuer
        and the
        Indenture Trustee, as the same may be amended and supplemented from time
        to time
        by one or more Indentures supplemental thereto entered into pursuant to the
        applicable provisions of the Indenture, as so supplemented or amended, or
        both,
        and shall include the forms and terms of the Environmental Control Bonds
        established under the Indenture.

       

      
        
          
          

        

        
          A-12

          
            

          

        

        
          
          

        

      

       

      “Indenture
        Trustee”
means
        [____________], a [____________] banking corporation, or any successor Indenture
        Trustee under the Indenture, not in its individual capacity but solely as
        Indenture Trustee under the Indenture.

       

      “Independent”
means,
        when used with respect to any specified Person, other than a Manager, that
        the
        Person (a) is in fact independent of the Issuer, any other obligor upon the
        Environmental Control Bonds, the Transferor, the Seller and any Affiliate
        of any
        of the foregoing Persons, (b) does not have any direct financial interest
        or any material indirect financial interest in the Issuer, any such other
        obligor, the Transferor, the Seller or any Affiliate of any of the foregoing
        Persons and (c) is not connected with the Issuer, any such other obligor,
        the Transferor, the Seller or any Affiliate of any of the foregoing Persons
        as
        an officer, employee, promoter, underwriter, trustee, partner, director or
        person performing similar functions.

       

      “Independent
        Certificate”
means
        a
        certificate or opinion to be delivered to the Indenture Trustee under the
        circumstances described in, and otherwise complying with, the applicable
        requirements of Section 11.01 of the Indenture, made by an Independent
        appraiser or other expert appointed by an Issuer Order and approved by the
        Indenture Trustee in the exercise of reasonable care, and such opinion or
        certificate shall state that the signer has read the definition of “Independent”
in the Indenture and that the signer is Independent within the meaning
        thereof.

       

      “Independent
        Manager”
has
        the
        meaning specified in the Issuer LLC Agreement.

       

      “Initial
        Sale Date”
means
        the Series Issuance Date for the first Series of Environmental Control
        Bonds.

       

      “Initial
        Contribution Date”
means
        [date].

       

      “Initial
        Environmental Control Property”
means
        Environmental Control Property contributed by the Transferor to the Seller
        on
        the Initial Contribution Date pursuant to the Transfer Agreement and
        subsequently sold by the Seller on the Initial Sale Date pursuant to the
        Sale
        Agreement, as identified on the related Bill of Sale, in connection with
        the
        issuance of the Series A Senior Secured Sinking Fund Environmental Control
        Bonds.

       

      “Initial
        Transferred Environmental Control Property”
means
        Environmental Control Property, as identified in the related Bill of Sale,
        sold
        to the Issuer on the Initial Sale Date pursuant to the Sale Agreement and
        such
        Bill of Sale in connection with the issuance of the Series A Senior Secured
        Sinking Fund Environmental Control Bonds.

       

      “Insolvency
        Event”
means,
        with respect to a specified Person, (a) the filing of a decree or order for
        relief by a court having jurisdiction in the premises in respect of such
        Person
        or any substantial part of its property in an involuntary case under any
        applicable Federal or state bankruptcy, insolvency or other similar law now
        or
        hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
        trustee, sequestrator or similar official for such Person or for any substantial
        part of its property, or ordering the winding-up or liquidation of such Person’s
        affairs, and such decree or order shall remain unstayed and in effect for
        a
        period of 90 consecutive days or (b) the commencement by such Person of a
        voluntary case under any applicable Federal or state bankruptcy, insolvency
        or
        other similar law now or hereafter in effect, or the

       

      
        
          
          

        

        
          A-13

          
            

          

        

        
          
          

        

      

       

      consent
        by such Person to the entry of an order for relief in an involuntary case
        under
        any such law, or the consent by such Person to the appointment of or taking
        possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
        or similar official for such Person or for any substantial part of its property,
        or the making by such Person of any general assignment for the benefit of
        creditors, or the failure by such Person generally to pay its debts as such
        debts become due, or the taking of action by such Person in furtherance of
        any
        of the foregoing.

       

      “Issuance
        Advice Letter”
means
        [the final] Issuance Advice Letter filed with the PSCWV pursuant to the Statute
        with respect to any Environmental Control Charges.

       

      “Issuer”
means
        PE Environmental Funding LLC, a Delaware limited liability company, under
        the
        Indenture until a successor replaces it and, thereafter, means the successor
        and, for purposes of any provision contained in the Indenture and required
        by
        the TIA, each other obligor on the Environmental Control Bonds.

       

      “Issuer
        Administration Agreement”
means
        the Administration Agreement dated as of [________], 2007, between the Issuer
        and the Administrator, as the same may be amended and supplemented from time
        to
        time.

       

      “Issuer
        LLC Agreement”
means
        the Amended and Restated Limited Liability Company Agreement of the Issuer
        dated
        as of [___________], 2007, together with the schedules attached thereto,
        as
        amended and supplemented from time to time.

       

      “Issuer
        Order”
and
        “Issuer
        Request”
means
        a
        written order or request signed in the name of the Issuer by any one of its
        Authorized Officers and delivered to the Indenture Trustee.

       

      “Legal
        Defeasance Option”
has
        the
        meaning specified in Section 4.01(b) of the Indenture.

       

      “Lien”
means
        a
        security interest, lien, charge, pledge, equity or encumbrance of any
        kind.

       

      “LLC
        Act”
has
        the
        meaning specified in Issuer LLC Agreements.

       

      “LLC
        Agreements”
means
        the Issuer LLC Agreement and PER LLC Agreement.

       

      “Losses”
means
        collectively, without duplication, any and all liabilities, obligations,
        losses,
        damages, payments, costs or expenses of any kind whatsoever, provided however,
        that Losses shall not include any consequential damages, including any loss
        of
        market value of the Environmental Control Bonds, resulting from any downgrade
        of
        the ratings of the Environmental Control Bonds.

       

      “Management
        Agreement”
means
        the agreement of the Managers in the form attached as Schedule D to the Issuer
        LLC Agreement. The Management Agreement shall be deemed incorporated into,
        and a
        part of, the Issuer LLC Agreement.

       

      “Managers”
means
        the Persons elected to the Board of Managers of the Issuer from time to time
        by
        the Member, including the Independent Managers, in their capacity as managers
        of
        the Issuer. 

       

      “Material
        Action”
means
        to consolidate or merge the Issuer with or into any Person, or sell all or
        substantially all of the assets of the Issuer, or to institute proceedings
        to
        have the Company be

       

      
        
          
          

        

        
          A-14

          
            

          

        

        
          
          

        

      

       

      adjudicated
        bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency
        proceedings against the Issuer or file a petition seeking, or consent to,
        reorganization or relief with respect to the Issuer under any applicable
        federal
        or state law relating to bankruptcy, or consent to the appointment of a
        receiver, liquidator, assignee, trustee, sequestrator (or other similar
        official) of the Issuer or a substantial part of its property, or make any
        assignment for the benefit of creditors of the Issuer, or admit in writing
        the
        Issuer’s inability to pay its debts generally as they become due, or, to the
        fullest extent permitted by law, take action in furtherance of any such action,
        or dissolve or liquidate the Issuer.

       

      “Measure
        Date”
means
        a
        date no earlier than two days prior to the calculation of the Periodic Bond
        Payment Requirement.

       

      “Member”
means
        PE Renaissance Funding, LLC, as the member of the Issuer, and includes any
        Person admitted as an additional member of the Issuer or a substitute member
        of
        the Issuer pursuant to the provisions of the Issuer LLC Agreement, each in
        its
        capacity as a member of the Issuer; provided, however, the term “Member” shall
        not include the Special Member.

       

      “Minimum
        Denomination”
means
        $1,000 or any integral multiple thereof.

       

      
        “Mon
          Power”
means
          Monongahela Power Company, an Ohio corporation.

         
“Monthly
        Servicer’s Certificate”
has
        the
        meaning specified in Section 3.04 of the Servicing Agreement.

       

      “Monthly
        True-Up Adjustment Date”
means,
        with respect to any Series of Environmental Control Bonds, the date or dates
        specified as such in the Series Supplement therefor.

       

      “Monthly
        True-Up Adjustment Filing”
means
        a
        True-Up Adjustment Filing with respect to a Monthly True-Up Adjustment
        Date.

       

      “Moody’s”
means
        Moody’s Investors Service Inc., or its successor.

       

      “Net
        Write-Off Percent”
means
        the number (expressed as a percent) equal to: (i) the amount by which Write-offs
        attributable to a particular Billing Period exceed Write-Off recoveries
        attributable to such Billing Period, divided by (ii) the total billed revenue
        attributable to the current Billing Period.

       

      “Non-Routine
        True-Up Adjustment”
means
        any non-routine adjustment for revised Environmental Control Charges, obtained
        pursuant to Section 4.02 of the Servicing Agreement.

       

      “Non-Routine
        True-Up Adjustment Filing”
means
        a
        request filed by the Servicer with the PSCWV seeking approval to revise the
        True-Up Mechanism, pursuant to Section 4.02 of the Servicing
        Agreement.

       

      “NY
        UCC”
means
        the Uniform Commercial Code as in effect on the Closing Date in the State
        of New
        York.

       

      “Officer”
means
        an officer of the Issuer described in Article IV of the Issuer LLC
        Agreement.

       

      
        
          
          

        

        
          A-15

          
            

          

        

        
          
          

        

      

       

      “Officer’s
        Certificate”
means
        a
        certificate signed by any Authorized Officer of the Issuer, under the
        circumstances described in, and otherwise complying with, the applicable
        requirements of the Issuer LLC Agreement or Section 11.01 of the Indenture
        (and in the case of an Officer’s Certificate delivered pursuant to the
        Indenture, such certificate shall be delivered to the Indenture Trustee).
        Unless
        otherwise specified, any reference in the Indenture or the Issuer LLC Agreement
        to an Officer’s Certificate shall be to an Officer’s Certificate of any
        Authorized Officer of the Issuer. When used with respect to the Transferor,
        the
        Seller or the Servicer, “Officer’s
        Certificate”
means
        a
        certificate signed by (a) the chairman of the board, the president, the
        vice chairman of the board, the executive vice president or any vice president
        and (b) a treasurer, assistant treasurer, secretary or assistant secretary,
        or any other authorized officer, in each case of the Transferor, the Seller
        or
        the Servicer, as appropriate.

       

      “Operating
        Expenses”
means,
        with respect to the Issuer, all fees, costs, expenses and indemnity payments
        owed by the Issuer (including reasonable fees and expenses of agents and
        counsel), including all amounts owed by the Issuer to the Indenture Trustee,
        Potomac Edison, and the Independent Managers of the Issuer, the Servicing
        Fee
        payable in respect of Environmental Control Bonds issued by the Issuer, the
        Administrative Fees in respect of the Issuer Administration Agreement, fees
        owed
        to the Rating Agencies, legal fees and expenses of the Servicer and legal,
        accounting and audit fees, costs and expenses of the Issuer.

       

      “Opinion
        of Counsel”
means
        (i) with respect to opinions of counsel delivered pursuant to the
        Indenture, one or more written opinions of counsel who may, except as otherwise
        expressly provided in the Indenture, be employees of or counsel to the Issuer
        and who shall be reasonably satisfactory to the Indenture Trustee, and which
        opinion or opinions shall be addressed to the Indenture Trustee, as Indenture
        Trustee, and shall comply with any applicable requirements of Section 11.01
        of the Indenture, and shall be in a form reasonably satisfactory to the
        Indenture Trustee and (ii) with respect to opinions of counsel delivered
        pursuant to the Transfer Agreement, the Sale Agreement or the Servicing
        Agreement, means one or more written opinions of counsel who may be an employee
        of or counsel to the Transferor, the Seller or the Servicer, as applicable,
        which counsel shall be reasonably acceptable to the Indenture Trustee, the
        Issuer or the Rating Agencies, as applicable, and shall be in form reasonably
        satisfactory to the Indenture Trustee, if applicable.

       

      “Outstanding”
means,
        as of the date of determination, all Environmental Control Bonds or Additional
        Securities, theretofore authenticated and delivered under the Indenture
        except:

       

      (i)    Environmental
        Control Bonds or Additional Securities theretofore canceled by the Bond
        Registrar or delivered to the Bond Registrar for cancellation;

       

      (ii)   Environmental
        Control Bonds or Additional Securities or portions thereof the payment for
        which
        money in the necessary amount has been theretofore deposited with the Indenture
        Trustee or any Paying Agent in trust for the Holders of such Environmental
        Control Bonds or Additional Securities; (provided, however, that if such
        Environmental Control Bonds or Additional Securities are to be redeemed,
        notice
        of such redemption has been duly given pursuant to the Indenture or provision
        therefor, satisfactory to the Indenture Trustee, made); and

       

      
        
          
          

        

        
          A-16

          
            

          

        

        
          
          

        

      

       

      (iii)   Environmental
        Control Bonds or Additional Securities in exchange for or in lieu of other
        Environmental Control Bonds or Additional Securities, respectively, which
        have
        been authenticated and delivered pursuant to the Indenture unless proof
        satisfactory to the Indenture Trustee is presented that any such Environmental
        Control Bonds or Additional Securities are held by a bona fide
        purchaser;

       

      and
        in
        determining whether the Holders of the requisite Outstanding Amount of the
        Environmental Control Bonds or Additional Securities or any Series or Tranche
        thereof have given any request, demand, authorization, direction, notice,
        consent or waiver under the Indenture or under any Basic Document, Environmental
        Control Bonds or Additional Securities owned by the Issuer, any other obligor
        upon the Environmental Control Bonds or Additional Securities, the Transferor,
        the Seller or any Affiliate of any of the foregoing Persons shall be disregarded
        and deemed not to be Outstanding, except that, in determining whether the
        Indenture Trustee shall be protected in relying upon any such request, demand,
        authorization, direction, notice, consent or waiver, only Environmental Control
        Bonds or Additional Securities that the Indenture Trustee actually knows
        to be
        so owned shall be so disregarded. Environmental Control Bonds so owned that
        have
        been pledged in good faith may be regarded as Outstanding if the pledgee
        establishes to the satisfaction of the Indenture Trustee the pledgee’s right so
        to act with respect to such Environmental Control Bonds or Additional Securities
        and that the pledgee is not the Issuer, any other obligor upon the Environmental
        Control Bonds or Additional Securities, the Transferor, the Seller or any
        Affiliate of any of the foregoing Persons.

       

      “Outstanding
        Amount”
means
        the aggregate principal amount of all Outstanding Environmental Control Bonds
        or
        Additional Securities or, if the context requires, all Outstanding Environmental
        Control Bonds or Additional Securities of a Series or Tranche Outstanding
        at the
        date of determination.

       

      “Paying
        Agent”
means
        the Indenture Trustee or any other Person that meets the eligibility standards
        for the Indenture Trustee specified in Section 6.11 of the Indenture and is
        authorized by the Issuer to make the payments of principal of or premium,
        if
        any, or interest on the Environmental Control Bonds on behalf of the
        Issuer.

       

      “Payment
        Date”
means,
        with respect to any Series or Tranche, each date or dates specified as Payment
        Dates for such Series or Tranche in the Series Supplement therefor.

       

      “PER
        Administration Agreement”
means
        the Administration Agreement dated as of [________], 2007, between the Seller
        and the Administrator, as the same may be amended and supplemented from time
        to
        time.

       

      “PER
        LLC Agreement”
means
        the Limited Liability Company Agreement of the Seller dated as of [___________],
        2007, together with the schedules attached thereto, as amended and supplemented
        from time to time.

       

      “Periodic
        Bond Payment Requirement”
means
        that amount of Environmental Control Charge Collections projected to be received
        by the Indenture Trustee on and after the applicable True-Up Adjustment Date,
        which, after taking into account (i) the Available True-up Excess Funds
        Amount as of the Measure Date, (ii) the Environmental Control Charge
        Collections which will

       

      
        
          
          

        

        
          A-17

          
            

          

        

        
          
          

        

      

       

      be
        collected prior the applicable True-Up Adjustment Date, and (iii) any
        payments or disbursements required to be made pursuant to Section 8.02(d)
        of the Indenture prior to the applicable True-Up Adjustment Date, will be
        sufficient so that interest on each outstanding Series of Bonds will be paid
        on
        a timely basis and (x) the outstanding principal balance of each
        outstanding Series will equal the amount provided for in the Expected Sinking
        Fund Schedule therefor, (y) the amount on deposit in the Capital Subaccount
        will equal the Required Capital Amount and (z) the amount on deposit in the
        Excess Funds Subaccount will equal zero, in each case by the Payment Date
        immediately preceding the next Semi-Annual True-Up Adjustment Date or, in
        the
        case of a True-Up Adjustment Filing filed pursuant to Section 4.01(a)(ii),
        by the next Payment Date.

       

      “Person”
means
        any individual, corporation, limited liability company, estate, partnership,
        joint venture, association, joint stock company, trust (including any
        beneficiary thereof), business trust, unincorporated organization or government
        or any agency or political subdivision thereof.

       

      “Potomac
        Edison”
means
        The Potomac Edison Company, a Maryland and Virginia corporation.

       

      “Predecessor
        Environmental Control Bond”
means,
        with respect to any particular Environmental Control Bond, every previous
        Environmental Control Bond evidencing all or a portion of the same debt as
        that
        evidenced by such particular Environmental Control Bond; and, for the purpose
        of
        this definition, any Environmental Control Bond authenticated and delivered
        under Section 2.06 of the Indenture in lieu of a mutilated, lost, destroyed
        or stolen Environmental Control Bond shall be deemed to evidence the same
        debt
        as the mutilated, lost, destroyed or stolen Environmental Control
        Bond.

       

      “Proceeding”
means
        any suit in equity, action at law or other judicial or administrative
        proceeding.

       

      “Projected
        Environmental Control Bond Balance”
means,
        as of any date, the sum of the amounts provided for in the Expected Sinking
        Fund
        Schedules for each Outstanding Series of Environmental Control Bonds and
        such
        date.

       

      “PSCWV”
means
        the Public Service Commission of West Virginia or any successor.

       

      “PSCWV
        Condition”
means
        the satisfaction of any precondition to any amendment or modification to
        or
        action under any Basic Documents through the obtaining of the PSCWV’s consent or
        acquiescence, as described in the related Basic Document.

       

      “PSCWV
        Regulations”
means
        any regulations promulgated or adopted by the PSCWV.

       

      “Quarterly
        Payment Date”
means,
        with respect to any Series or Tranche, each date or dates specified as Quarterly
        Payment Dates for such Series or Tranche in the Series Supplement
        therefor.

       

      “Quarterly
        Servicer’s Certificate”
has
        the
        meaning specified in Section 3.04 of the Servicing Agreement.

       

      
        
          
          

        

        
          A-18

          
            

          

        

        
          
          

        

      

       

      “Quarterly
        True-Up Adjustment Date”
means,
        with respect to any Series of Environmental Control Bonds, the date or dates
        specified as such in the Series Supplement therefor.

       

      “Quarterly
        True-Up Adjustment Filing”
means
        a
        True-Up Adjustment Filing with respect to a Quarterly True-Up Adjustment
        Date.

       

      “Rate
        Schedule”
means
        each of the rate schedules into which Customers are divided as of the date
        hereof, as such rate schedules may be reconfigured from time to
        time.

       

      “Rating
        Agency”
means
        any rating agency rating the Environmental Control Bonds of any Tranche or
        Series, as the case may be, at the request of the Issuer. If no such
        organization or successor is any longer in existence, “Rating Agency” shall be a
        nationally recognized statistical rating organization or other comparable
        Person
        designated by the Issuer, notice of which designation shall be given to the
        Indenture Trustee.

       

      “Rating
        Agency Condition”
means,
        with respect to any action, the notification in writing by the Issuer of
        such
        action to each Rating Agency and the confirmation in writing by each Rating
        Agency (other than Moody’s and Fitch) to the Transferor, the Seller, the
        Servicer, the Indenture Trustee and the Issuer that such action will not
        result
        in a suspension, reduction or withdrawal of the then current rating by such
        Rating Agency of any Outstanding Series or Tranche of Environmental Control
        Bonds or Additional Securities.

       

      “Reconciliation
        Date”
means
        the last Business Day of ______ of each year, commencing with _______________,
        2007 and continuing through ________ (or such earlier month as the Servicer
        shall have specified to the Issuer and the Indenture Trustee by not less
        than 30
        days prior written notice).

       

      “Reconciliation
        Period”
means,
        with respect to the 12-month period ending the last day of _____ of each
        year
[should
        be three months before the Reconciliation Date];
        provided,
        that
        the initial Reconciliation Period shall commence on the Closing
        Date.

       

      “Record
        Date”
means,
        with respect to any Payment Date for a Series of Environmental Control Bonds,
        the date set forth as such in the Series Supplement therefor.

       

      “Refunding
        Issuance”
means
        issuance of a new Series of Environmental Control Bonds under the Indenture
        to
        pay the cost of refunding, through payment on the Expected Final Payment
        Date
        for a Series or Tranche of Environmental Control Bonds, all or part of the
        Environmental Control Bonds of such Series or Tranche to the extent permitted
        by
        the terms thereof.

       

      “Registered
        Holder”
means,
        as of any date, the Person in whose name an Environmental Control Bond is
        registered on the Bond Register on such date.

       

      “Registration
        Statement”
has
        the
        meaning specified in the Underwriting Agreement.

       

      “Regulation
        AB”
means
        the rules of the Commission promulgated under Subpart 229.110 - Asset Backed
        Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1123, as such may be
        amended from time to time.

       

      
        
          
          

        

        
          A-19

          
            

          

        

        
          
          

        

      

       

      “Released
        Parties”
has
        the
        meaning specified in Section 5.02(f) of the Servicing
        Agreement.

       

      “Remittance
        Date”
means
        each date on which Environmental Control Charge Collections are to be remitted
        by the Servicer to the Indenture Trustee pursuant to Section 5.10 of the
        Servicing Agreement.

       

      “Remittance
        Period”
means
        a
        calendar year, or with respect to any Quarterly True-Up Adjustment Filing
        or
        Monthly True-Up Adjustment Filing made with respect to a period following
        the
        last Expected Final Payment Date, the period between the Quarterly True-Up
        Adjustment Date or Monthly True-Up Adjustment Date, as the case may be, and
        the
        next Payment Date.

       

      “Remittance
        Shortfall”
means
        the amount, if any, calculated for a particular Reconciliation Period, by
        which
        Actual Environmental Control Charge Collections received by the Servicer
        during
        such Reconciliation Period exceed all Estimated Environmental Control Charge
        Collections remitted to the Collection Account during such Reconciliation
        Period.

       

      “Required
        Capital Amount”
means,
        with respect to any Series of Environmental Control Bonds, the amount specified
        as such in the Series Supplement therefor.

       

      “Requirements
        of Law”
means
        any foreign, federal, state or local laws, statutes, regulations, rules,
        codes
        or ordinances enacted, adopted, issued or promulgated by any Governmental
        Authority or common law, including the Statute, PSCWV Regulations, any
        applicable Financing Order and any tariff.

       

      “Responsible
        Officer”
means,
        with respect to the Indenture Trustee, any officer within the Corporate Trust
        Office of the Indenture Trustee (or any successor thereto), including any
        Managing Director, Director, Vice President, Assistant Vice President,
        Associate, or any other officer of the Indenture Trustee customarily performing
        functions similar to those performed by any of the above designated officers
        and
        also, with respect to a particular matter, any other officer to whom such
        matter
        is referred because of such officer’s knowledge of and familiarity with the
        particular subject.

       

      “Retiring
        Indenture Trustee”
has
        the
        meaning specified in Section 6.08 of the Indenture.

       

      “Routine
        True-Up Adjustment”
means
        any routine adjustment for revised Environmental Control Charges obtained
        pursuant to Section 4.01 of the Servicing Agreement.

       

      “Routine
        True-Up Adjustment Filing”
means
        a
        letter filed by the Servicer with the PSCWV for revised Environmental Control
        Charges, pursuant to Section 4.01 of the Servicing Agreement.

       

      “S&P”
means
        Standard & Poor’s, a division of The McGraw Hill Companies, or any
        successor.

       

      “Sale
        Agreement”
means
        the Transferred Environmental Control Property Sale Agreement dated as of
        [________], 2007, between the Seller and the Issuer, relating to the sale
        of
        Transferred Environmental Control Property to the Issuer, as the same may
        be
        amended and supplemented from time to time.

       

      
        
          
          

        

        
          A-20

          
            

          

        

        
          
          

        

      

       

      “Schedule
        Revision Date”
means
        (i) the date on which a new Series of Environmental Control Bonds is issued
        or any Outstanding Series of Environmental Control Bonds is defeased,
        (ii) any date on which the Environmental Control Charges are changed or
        revised in accordance with a True-Up Adjustment Filing and (iii) any
        Payment Date on which payments are not made in accordance with the Expected
        Sinking Fund Schedule in the related Series Supplement.

       

      “Secretary
        of State”
shall
        mean the Secretary of State of the State of Delaware.

       

      “Secured
        Parties”
means,
        with respect to each Series, the Indenture Trustee, the relevant Bondholders
        and
        any credit enhancer described in the applicable Series Supplement.

       

      “Securities
        Account”
means
        the Collection Account (to the extent it constitutes a securities account
        as
        defined in the NY UCC and Federal Book-Entry Regulations).

       

      “Securities
        Act”
means
        the Securities Act of 1933, as amended.

       

      “Securities
        Intermediary”
means
        [Indenture Trustee] a [New York] banking corporation, solely in the capacity
        of
        a “securities intermediary” as defined in the NY UCC and Federal Book-Entry
        Regulations or any successor securities intermediary under the
        Indenture.

       

      “Security
        Entitlement”
means
        “security entitlement” ( as defined in Section 8-102(a)(17) of the NY UCC) with
        respect to Financial Assets now or hereafter credited to the Securities Account
        and, with respect to Federal Book-Entry Regulations, with respect to Federal
        Book-Entry Securities now or hereafter credited to the Securities Account,
        as
        applicable.

       

      “Seller”
means
        PE Renaissance Funding, LLC and its successors in interest to the extent
        permitted under the Sale Agreement.

       

      “Semi-Annual
        True-Up Adjustment Date”
means,
        with respect to any Series of Environmental Control Bonds, the date or dates
        specified as such in the Series Supplement therefor.

       

      “Semi-Annual
        True-Up Adjustment Filing”
means
        a
        True-Up Adjustment Filing with respect to a Semi-Annual True-Up Adjustment
        Date.

       

      “Series”
means
        any series of Environmental Control Bonds or any series of Additional
        Securities.

       

      “Series
        Collateral”
has
        the
        meaning specified in the preamble to the Indenture.

       

      “Series
        Issuance Date”
means,
        with respect to any Series, the date on which the Environmental Control Bonds
        or
        Additional Securities of such Series are to be originally issued in accordance
        with Section 2.10 of the Indenture and the Series Supplement for such
        Series.

       

      “Series
        Supplement”
means
        an Indenture supplemental to the Indenture that authorizes a particular Series
        of Environmental Control Bonds substantially in the form of Appendix B to
        the
        Indenture.

       

      
        
          
          

        

        
          A-21

          
            

          

        

        
          
          

        

      

       

      “Series
        Termination Date”
means,
        with respect to any Series of Environmental Control Bonds, the termination
        date
        therefor, as specified in the Series Supplement for such Series.

       

      “Servicer”
means
        the Transferor, as the servicer of Environmental Control Property pursuant
        to
        the Servicing Agreement, and each successor to the Transferor (in the same
        capacity) pursuant to Section 5.03 or 6.04 of the Servicing
        Agreement.

       

      “Servicer
        Default”
means
        an event specified in Section 6.01 of the Servicing Agreement.

       

      “Servicer
        Policies and Practices”
means,
        with respect to the Servicer’s duties under Exhibit A to the Servicing
        Agreement, the policies and practices of the Servicer applicable to such
        duties
        that the Servicer follows with respect to comparable assets that it services
        for
        itself.

       

      “Servicing
        Agreement”
means
        the Transferred Environmental Control Property Servicing Agreement dated
        as of
        [________], 2007, between the Servicer and the Issuer, as the same may be
        amended and supplemented from time to time.

       

      “Servicing
        Fee”
means,
        with respect to any Series of Environmental Control Bonds, the fee payable
        to
        the Servicer on each Payment Date for services rendered, determined pursuant
        to
        Section 5.08 of the Servicing Agreement.

       

      “Special
        Member”
means,
        upon such person’s admission to the Company as a member of the Company pursuant
        to Section 5(c) of the Issuer LLC Agreement, a person acting as Independent
        Manager, in such person’s capacity as a member of the Company. A Special Member
        shall only have the rights and duties expressly set forth in the Issuer LLC
        Agreement.

       

      “Special
        Payment”
means
        with respect to any Series or Tranche of Environmental Control Bonds, any
        payment on principal of or interest on (including any interest accruing upon
        default), or any other amount in respect of, the Environmental Control Bonds
        of
        such Series or Tranche that is not actually paid within five days of the
        Payment
        Date applicable thereto.

       

      “Special
        Payment Date”
means
        the Business Day on which a Special Payment is to be made by the Indenture
        Trustee to the Holders.

       

      “Special
        Record Date”
means
        with respect to any Special Payment Date, the close of business on the fifteenth
        day (wither or not a Business Day) preceding such Special Payment
        Date.

       

      “Standard &
        Poor’s”
means
        Standard & Poor’s Ratings Services, a division of The McGraw-Hill
        Companies, Inc., or its successor.

       

      “State”
means
        any one of the 50 states of the United States of America or the District
        of
        Columbia.

       

      “Statute”
means
        the West Virginia Code, Chapter 24, Article 2, §§ 24-2-4e(a)
        through and including 24-2-4e(v).

       

      “State
        of West Virginia Pledge”
means
        the pledge of the State of West Virginia set forth in Section 24-2-4e(q)
        of the
        Statute.

       

      
        
          
          

        

        
          A-22

          
            

          

        

        
          
          

        

      

       

      “Subsequent
        Contribution Date”
means
        any date on which Subsequent Transferred Environmental Control Property is
        to be
        transferred to the Seller pursuant to Section 2.02 of the Transfer
        Agreement.

       

      “Subsequent
        Environmental Control Property”
means
        Environmental Control Property contributed by the Transferor to the Seller
        on
        any Subsequent Contribution Date pursuant to the Transfer Agreement and
        subsequently sold by the Seller on the Subsequent Sale Date pursuant to the
        Sale
        Agreement, as identified on the related Bill of Sale, and such Bill of Sale
        in
        connection with a Series of Environmental Control Bonds.

       

      “Subsequent
        Financing Order”
means,
        a financing order of the PSCWV issued to the Utilities subsequent to the
        Financing Order.

       

      “Subsequent
        Sale Date”
means
        the date that a sale of Subsequent Transferred Environmental Control Property
        will be effective, as specified in a written notice provided by the Seller
        to
        the Issuer pursuant to Section 2.02 of the Sale Agreement.

       

      “Subsequent
        Transferred Environmental Control Property”
means
        Environmental Control Property, as identified in the related Bill of Sale,
        sold
        to the Issuer on any Subsequent Sale Date pursuant to the Sale Agreement
        and
        such Bill of Sale in connection with the issuance of a Series of Environmental
        Control Bonds.

       

      “Subsidiaries”
has
        the
        meaning specified in the Administration Agreements.

       

      “Successor
        Servicer”
has
        the
        meaning specified in Section 3.20(i) of the Indenture.

       

      “Supplemental
        Indenture”
means
        a
        supplemental indenture entered into by the Issuer and the Indenture Trustee
        pursuant to Article IX of the Indenture.

       

      “Swap
        Agreement”
means
        each ISDA Master Agreement, together with the related schedule and
        confirmations, between the Issuer and a Swap Counterparty, or agreement with
        respect to any hedge or similar transaction entered into by the Issuer, as
        the
        same may be amended and supplemented from time to time.

       

      “Swap
        Counterparty”
means,
        with respect to any Swap Agreement, the Issuer counterparty under the Swap
        Agreement.

       

      “Swap
        Termination Payments”
means
        all amounts payable by the Issuer to a Swap Counterparty by the Issuer in
        accordance with the terms of the related Swap Agreement after certain
        terminations of such Swap Agreement, as specified therein.

       

      “System”
has
        the
        meaning specified in the Administration Agreements.

       

      “Termination
        Notice”
has
        the
        meaning specified in Section 6.01 of the Servicing Agreement.

       

      “Third
        Party”
means
        any third party, including any electric generation supplier, providing billing
        or metering services, licensed by the PSCWV pursuant to relevant provisions
        of
        any law of the State of West Virginia and any PSCWV order.

       

      
        
          
          

        

        
          A-23

          
            

          

        

        
          
          

        

      

       

      “Tranche”
means,
        with respect to any Series of Environmental Control Bonds, any one of the
        tranches of Environmental Control Bonds of that Series.

       

      “Tranche
        Subaccount”
has
        the
        meaning specified in Section 8.02(a) of the Indenture.

       

      “Tranche
        Termination Date”
means,
        with respect to any Tranche of Environmental Control Bonds, the termination
        date
        therefor, as specified in the Series Supplement therefor.

       

      “Transfer
        Agreement”
means
        the Environmental Control Property Transfer Agreement dated as of [___________],
        2007, between the Transferor and the Seller relating to the transfer of
        Environmental Control Property to the Seller thereunder, as the same may
        be
        amended and supplemented from time to time.

       

      “Transfer
        Date”
means
        [_________________________], 2007.

       

      “Transferor”
means
        The Potomac Edison Company, as transferor under the Transfer Agreement, and
        its
        successors in interest to the extent permitted hereunder.

       

      “Transferred
        Environmental Control Property”
means,
        collectively, the Initial Transferred Environmental Control Property and
        any
        Subsequent Transferred Environmental Control Property.

       

      “Transferred
        Sale Date”
means
        any date on which the Seller sells, conveys, or otherwise transfers any
        Transferred Environmental Control Property to the Issuer.

       

      “True-Up
        Adjustment”
means
        any Routine True-Up Adjustment or Non-Routine True-Up Adjustment to any
        Environmental Control Charge related to the Environmental Control Property
        made
        in accordance with Article IV of the Servicing Agreement or otherwise to
        ensure
        the timely and complete payment and recovery of Environmental Control Costs
        and
        Financing Costs.

       

      “True-Up
        Adjustment Date”
means
        [specify dates for true-ups].

       

      “True-Up
        Adjustment Filing”
means
        any Routine True-Up Adjustment Filing or Non-Routine True-Up Adjustment
        Filing.

       

      “True-Up
        Mechanism”
means
        the mechanism by which the Servicer adjusts the Environmental Control Charge
        through a True-Up Adjustment pursuant to Section 4.01 of the Servicing
        Agreement.

       

      “Trust
        Indenture Act”
or
        “TIA”
means
        the Trust Indenture Act of 1939 as in force on the date of the Indenture,
        unless
        otherwise specifically provided.

       

      “UCC”
means,
        unless the context otherwise requires, the Uniform Commercial Code, as in
        effect
        in the relevant jurisdiction, as amended from time to time.

       

      “Underwriters”
means
        [___________].

       

      
        
          
          

        

        
          A-24

          
            

          

        

        
          
          

        

      

       

      “Underwriting
        Agreement”
means
        the Underwriting Agreement dated as of [___________], 2007, among the Issuer,
        the Utility, the Seller, and the underwriters name therein, as the same may
        be
        amended and supplemented from time to time.

       

      “U.S.
        Government Obligations”
means
        direct obligations (or certificates representing an ownership interest in
        such
        obligations) of the United States of America (including any agency or
        instrumentality thereof) for the payment of which the full faith and credit
        of
        the United States of America is pledged and which are not callable at the
        Issuer’s option.

       

      “Utilities”
means
        Monongahela Power Company and The Potomac Edison Company, each doing business
        as
        Allegheny Power.

       

      “Utility”
means
        The Potomac Edison Company doing business as Allegheny Power.

       

      “Variables”
means
        the variables for each Rate Schedule used in calculating True-Up Adjustment
        Filings which variables are listed in Attachment A to Annex 1 to the Servicing
        Agreement.

       

      “Write-Offs”
means
        write-offs of Billed Environmental Control Charges, as the case may be, that
        remain unpaid by Customers or Third Parties as of 45 days after the issuance
        of
        the Closing Bills containing such charges.

       

      
        
          
          

        

        
          A-25

          
            

          

        

        
          
          

        

      

       

      
        APPENDIX B

         

        FORM
          OF
          SERIES SUPPLEMENT

         

        [SEE
          ATTACHED]

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        APPENDIX
          B

        

        FORM
          OF SERIES SUPPLEMENT

         

        
          
            

          

         

        PE
          ENVIRONMENTAL FUNDING LLC,

         

        Issuer

         

        and

         

        U.S.
          BANK
          NATIONAL ASSOCIATION,

         

        Indenture
          Trustee

         

        _______________________________

         

        SERIES
          SUPPLEMENT

         

        Dated
          as
          of [_______________]

        _______________________________

         

         

        
          
            

          

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

             

          

        

        TABLE
          OF CONTENTS

         

        Page

        

        
          	
                  SECTION
                    1.

                	
                  Definitions

                	
                  2

                
	
                  SECTION
                    2.

                	
                  Designation;
                    Series Issuance Dates

                	
                  5

                
	
                  SECTION
                    3.

                	
                  Initial
                    Principal Amount; Bond Rate; Expected Final Payment Date; Final
                    Maturity
                    Date

                	
                  5

                
	
                  SECTION
                    4.

                	
                  Payment
                    Dates; Expected Sinking Fund Schedule for Principal; Interest;
                    Required
                    Capital Amount

                	
                  5

                
	
                  SECTION
                    5.

                	
                  Authorized
                    Initial Denominations

                	
                  9

                
	
                  SECTION
                    6.

                	
                  Redemption

                	
                  9

                
	
                  SECTION
                    7.

                	
                  Credit
                    Enhancement

                	
                  9

                
	
                  SECTION
                    8.

                	
                  Delivery
                    and Payment for the Series [ ] Environmental Control Bonds; Form
                    of the
                    Series [ ] Environmental Control Bonds

                	
                  9

                
	
                  SECTION
                    9.

                	
                  Swap
                    Agreement

                	
                  5

                
	
                  SECTION
                    10

                	
                  Adjustment
                    Dates

                	
                  9

                
	
                  SECTION
                    11.

                	
                  Confirmation
                    of Indenture

                	
                  11

                
	
                  SECTION
                    12.

                	
                  Counterparts

                	
                  11

                
	
                  SECTION
                    13.

                	
                  Governing
                    Law

                	
                  11

                
	
                  SECTION
                    14.

                	
                  Issuer
                    Obligation

                	
                  11

                

        

        

        

        Schedule
          A       Expected
          Sinking Fund Schedule

        Schedule
          B        Calculation
          of LIBOR

        

        Exhibit
          A   Form
          of
          Fixed Rate Environmental Control Bonds

        Exhibit
          B    Form
          of
          Floating Rate Environmental Control Bonds

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        SERIES
          SUPPLEMENT dated as of [_______________] (as amended, restated, supplemented
          or
          otherwise modified from time to time, this “Supplement”), by and between PE
          ENVIRONMENTAL FUNDING LLC, a Delaware limited liability company (the “Issuer”),
          and U.S. BANK NATIONAL ASSOCIATION, a national banking association (the
          “Indenture Trustee”), as Indenture Trustee under the Indenture dated as of
          [_______________], between the Issuer and the Indenture Trustee (as amended,
          restated, supplemented or otherwise modified from time to time, the
“Indenture”).

         

        PRELIMINARY
          STATEMENT

         

        Section 9.01
          of the Indenture provides, among other things, that the Issuer and the
          Indenture
          Trustee may at any time and from time to time enter into one or more indentures
          supplemental to the Indenture for the purposes of authorizing the issuance
          by
          the Issuer of a Series of Environmental Control Bonds and specifying the
          terms
          thereof. The Issuer has duly authorized the execution and delivery of this
          Supplement and the creation of a Series of Environmental Control Bonds
          with an
          initial aggregate principal amount of $[_______________] to be known as
          the
          Issuer’s Senior Secured Sinking Fund Environmental Control Bonds, Series
          [    ] (the “Series [    ] Environmental
          Control Bonds”). All acts and all things necessary to make the Series
          [    ] Environmental Control Bonds, when duly executed by
          the Issuer and authenticated by the Indenture Trustee as provided in the
          Indenture and this Supplement and issued by the Issuer, the valid, binding
          and
          legal obligations of the Issuer and to make this Supplement a valid and
          enforceable supplement to the Indenture have been done, performed and fulfilled
          and the execution and delivery hereof have been in all respects duly and
          lawfully authorized. The Issuer and the Indenture Trustee are executing
          and
          delivering this Supplement in order to provide for the Series [  
 ] Environmental Control Bonds.

         

        GRANTING
          CLAUSE

         

        The
          Issuer hereby Grants to the Indenture Trustee, on the date hereof as trustee
          for
          the benefit of (i) the Holders of the Series [    ]
          Environmental Control Bonds, (ii) the Indenture Trustee and
          [(iii) each Swap Counterparty] all of the Issuer’s right, title and
          interest (whether now owned or hereinafter acquired or arising) in, to
          and under
          (a) the Transferred Environmental Control Property transferred by the
          Seller to the Issuer on the date hereof pursuant to the Sale Agreement
          and all
          proceeds thereof, (b) to the extent related to the Series [   ]
          Environmental Control Bonds, the Transfer Agreement, (c) to the extent
          related to the Series [   ] Environmental Control Bonds, the Sale
          Agreement, (d) the Bill of Sale delivered by the Seller pursuant to the
          Sale Agreement on the date hereof, (e) to the extent related to the Series
          [    ] Environmental Control Bonds, the Servicing Agreement,
          (f) to the extent related to the Series [    ] Environmental
          Control Bonds, the Issuer Administrative Agreement, (g) the Collection
          Account for the Series [    ] Environmental Bonds and all
          subaccounts thereof and all cash, securities, instruments, investment property
          or other assets deposited in or credited to such Collection Account or
          any
          subaccount thereof from time to time or purchased with funds therefrom,
          [(h) any Swap Agreement to which the Issuer is a party, if any, for the
          Series [   ] Environmental Control Bonds ](i) all other property
          related to the Series [    ] Environmental Control Bonds of
          whatever kind owned from time to time by the Issuer including all accounts,
          accounts receivable, investment property and chattel paper, (j) to the
          extent payable to the Collection Account for the Series [    ]
          Environmental Control Bonds, all present and future claims, demands, causes
          and

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        chooses
          in action in respect of any or all of the foregoing and (k) to the extent
          payable to the Collection Account for the Series [    ]
          Environmental Control Bonds, all payments on or under and all proceeds
          of every
          kind and nature whatsoever in respect of any or all of the foregoing, including
          all proceeds of the conversion, voluntary or involuntary, into cash or
          other
          liquid property, all cash proceeds, accounts, accounts receivable, general
          intangibles, notes, drafts, acceptances, chattel paper, documents, money,
          investment property, letters of credit, letter of credit rights, checks,
          deposit
          accounts, insurance proceeds, condemnation awards, rights to payment of
          any and
          every kind, and other forms of obligations and receivables, instruments
          and
          other property which at any time constitute all or part of or are included
          in
          the proceeds of any of the foregoing (collectively, the “Series
          [    ] Collateral”);
          provided (A) that the following shall not be subject to the lien of the
          Indenture: (i) cash or other property distributed to the Issuer from the
          Collection Account in accordance with the provisions of the Indenture,
          (ii) proceeds from the sale of the Series [    ]
          Environmental Control Bonds required to pay the purchase price of the
          Transferred Environmental Control Property pursuant to the Sale Agreement,
          as
          the case may be, and the costs of the issuance of the Environmental Control
          Bonds as set forth in the flow of funds memorandum delivered on the date
          hereof
          (together with any interest earnings thereon) and (iii) any cash released
          to any Swap Counterparty by the Indenture Trustee from the Tranche Subaccount
          related to the Tranche [    ] Environmental Control Bonds
          pursuant to Section 8.02(h) of the Indenture and (B) that this Grant shall
          be
          limited only to the Issuer’s right, title and interest as related to
          Environmental Control Property transferred on the date hereof and the Series
          [     ] Environmental Control Bonds and not to any
          Additional Issuance, including another issuance of Environmental Control
          Bonds.

         

        To
          have
          and to hold in trust to secure the payment of principal of and premium,
          if any,
          and interest on, and any other amounts owing in respect of, the Series
          [    ] Environmental Control Bonds, including all amounts payable
          to the Indenture Trustee under the Indenture and the other Basic Documents
          equally and ratably without prejudice, preference, priority or distinction,
          except as expressly provided in this Indenture and to secure performance
          by the
          Issuer of all of the Issuer’s obligations under this Indenture with respect to
          the Series [     ] Environmental Control Bonds, all as
          provided in this Indenture.

         

        The
          Indenture Trustee, as trustee on behalf of the Holders of the Environmental
          Control Bonds, acknowledges such Grant, accepts the trusts hereunder in
          accordance with the provisions hereof and agrees to perform its duties
          required
          in the Indenture and in this Supplement.

         

        SECTION
          1.    Definitions.
          All
          terms
          used in this Supplement that are defined in the Indenture, either directly
          or by
          reference therein, have the meanings assigned to them therein, except to
          the
          extent the context clearly requires otherwise or as such terms are defined
          or
          modified in this Supplement. With respect to the Series
          [     ] Environmental Control Bonds, the following
          definitions shall apply:

         

        “Adjustment
          Date”
has
          the
          meaning set forth in Section 10 of this Supplement.

         

        [“Approved
          Replacement Counterparty”
has
          the
          meaning set forth in Section 9(a) of this Supplement.]

         

        
          
            
            

          

          
            2

            
              

            

          

          
            
            

          

        

         

        “Authorized
          Initial Denominations”
shall
          mean $1,000 and integral multiples thereof.

         

        “Bond
          Rate”
has
          the
          meaning set forth in Section 3 of this Supplement.

         

        “Calculation
          Date”
shall
          mean: with respect to the [________] Semi-Annual True-Up Adjustment Date,
          the
          preceding [_______________]; with respect to the Quarterly True-Up Adjustment
          Date, the preceding [_______________]; and with respect to the Monthly
          True-Up
          Adjustment Date, the preceding [_______________].

         

        “Expected
          Final Payment Date”
means,
          with respect to any Tranche of the Series [    ]
          Environmental Control Bonds, the expected final payment date therefor,
          as
          specified in Section 3 of this Supplement.

         

        “Expected
          Sinking Fund Schedule”
means
          Schedule A to this Supplement.

         

        “Final
          Maturity Date”
means,
          with respect to any Tranche of the Series [     ]
          Environmental Control Bonds, the termination date therefor, as specified
          in
          Section 3 of this Supplement.

         

        [“[Floating
          Rate Tranche]”
means
          the Series [     ] Environmental Control Bonds, Tranche
          [     ].]

         

        “Interest
          Accrual Period”
means,
          with respect to any Payment Date, the period from and including the preceding
          Payment Date (or, in the case of the first Payment Date, from and including
          the
          Series Issuance Date) to and excluding such Payment Date.

         

        [“LIBOR”
means
          a
          rate per annum equal to the London interbank offered rate for three-month
          United
          States dollar deposits (except with respect to the period from the date
          of
          issuance to and including [  ] when the rate will be based on one-month
          United States dollar deposits), calculated by the Indenture Trustee on
          the
          Tranche [  ] Interest Determination Date according the procedure in
          Schedule B hereto.]

         

        [“London
          Banking Day”
means
          a
          day on which commercial banks in London are open for general
          business.]

         

        “Monthly
          True-Up Adjustment Date”
has
          the
          meaning set forth in Section 10 of this Supplement.

         

        [“Original
          Tranche [  ] Swap Agreement”
means
          the ISDA Master Agreement, together with the related Schedule and Confirmation,
          each dated
          [             ]
          between the Issuer and
          [            ], as the
          Swap Counterparty thereunder, relating to the [Floating Rate
          Tranche].]

         

        “Payment
          Date”
has
          the
          meaning set forth in Section 4(a) of this Supplement.

         

        [“Qualified
          Replacement Counterparty”
means
          a
          Replacement Counterparty that (i) has the Required Rating from each of
          the
          Rating Agencies or (ii) enters into such other arrangements as will result
          in
          the [Floating Rate Tranche] receiving ratings from the Rating

         

        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

        

         

        Agencies
          not less than the ratings that would be received if such Replacement
          Counterparty satisfied the Required Rating for each of the Rating
          Agencies.]

         

        “Quarterly
          True-Up Adjustment Date”
has
          the
          meaning set forth in Section 10 of this Supplement.

         

        “Record
          Date”
shall
          mean, with respect to any Payment Date, the close of business on the Business
          Day prior to such Payment Date.

         

        [“Replacement
          Counterparty”
has
          the
          meaning set forth in Section 9(a) of this Supplement.]

         

        “Required
          Capital Amount”
has
          the
          meaning set forth in Section 4(d) of this Supplement.

         

        [“Required
          Rating”
means
          in the case of Moody's, either "[   ]" for long-term unsecured debt or
          "[   ]" for short-term unsecured debt in the case of S&P and, if
          the Swap Counterparty is rated by Fitch, "[    ]" for long-term
          unsecured debt and "[    ]" for short-term unsecured
          debt.]

         

        “Semi-Annual
          True-Up Adjustment Date”
has
          the
          meaning set forth in Section 10 of this Supplement.

         

        “Series
          Issuance Date”
has
          the
          meaning set forth in Section 2(b) of this Supplement.

         

        “Series
          Termination Date”
is
          the
          final Final Maturity Date set forth in Section 3 of this
          Supplement.

         

        [“Swap
          Agent”
has
          the
          meaning set forth in Section 9(a) of this Supplement.]

         

        [“Swap
          Counterparty Downgrade Event”
shall
          have the meaning assigned to it in the related Swap Agreement.]

         

        [“Tranche
          [   ] Gross Fixed Amount”
with
          respect to any Payment Date means an amount equal to the product of the
          Tranche
          [    ] Gross Fixed Rate times the Outstanding Amount of the
          [Floating Rate Tranche] as of the close of business on the preceding Payment
          Date after giving effect to all payments of principal made to the Holders
          of the
          [Floating Rate Tranche] on such preceding Payment Date, which product (i)
          in the
          case of each Payment Date other than the initial Payment Date shall be
          multiplied by the number of days (determined on the basis of a 360-day
          year of
          twelve 30-day months) from and including the preceding payment date to,
          but
          excluding, the current Payment Date, divided by 360, and (ii) in the case
          of the
          initial Payment Date, shall be multiplied by the number of days (determined
          on
          the basis of a 360-day year of twelve 30-day months) from and including
          the
          Series Issuance Date to, but excluding, the initial Payment Date, divided
          by
          360, provided, that, so long as a Swap Agreement is in effect, the Tranche
          [    ] Gross Fixed Amount shall be calculated in accordance with
          such Swap Agreement.]

         

        
          
            
            

          

          
            4

            
              

            

          

          
            
            

          

        

         

        [“Tranche
          [   ] Gross Fixed Rate”
has
          the
          meaning set forth in Section 4(e)(iii) of this Supplement.]

         

        [“Tranche
          [   ] Interest Determination Date”
means,
          with respect to a Payment Date, the day two London Banking Days prior to
          (a) the
          preceding Payment Date, or, (b) in the case of the initial Payment Date,
          the
          Tranche [    ] Settlement Date.]

         

        [“Tranche
          [   ] Settlement Date”
means
          [date of floating rate bond settlement date].]

         

        [“Tranche
          [   ] Swap Agreement”
means
          the Original Tranche [   ] Swap Agreement and any replacement Swap
          Agreement relating to the [Floating Rate Tranche] entered into pursuant
          to
          Section 9 of this Supplement.]

         

        [“Tranche
          [   ] Swap Counterparty”
means
          the Swap Counterparty under the Tranche [   ] Swap
          Agreement.]

         

        SECTION
          2.    Designation;
          Series Issuance Dates.

         

        (a)    Designation.
          The
          Series [    ] Environmental Control Bonds shall be designated
          generally as the Issuer’s Senior Secured Sinking Fund Environmental Control
          Bonds, Series [    ] and further denominated as Tranches
          [    ] through [    ].

         

        (b)    Series
          Issuance Date.
          The
          Series [    ] Environmental Control Bonds that are authenticated
          and delivered by the Indenture Trustee to or upon the order of the Issuer
          on
          [_______________] (the “Series Issuance Date”) shall have as their date of
          authentication [_______________]. Each other Series [    ]
          Environmental Control Bond shall be dated the date of its
          authentication.

         

        SECTION
          3.    Initial
          Principal Amount; Bond Rate; Expected Final Payment Date; Final Maturity
          Date.
          The
          Environmental Control Bonds of each Tranche of the Series [    ]
          Environmental Control Bonds shall have the initial principal amounts, bear
          interest at the rates per annum and shall have Expected Final Payment Dates
          and
          Final Maturity Dates as set forth below:

         

        
          	
                  Tranche

                	
                  Initial
                    Principal

                  Amount

                	
                  Bond
                    Rate

                	
                  Expected
                    Final

                  Payment
                    Date

                	
                  Final
                    Maturity

                  Date

                
	
                  [  
                    ]

                	
                      $

                	
                      %

                	 	
                  [_____]

                

        

        

        Interest
          shall be paid on the Series [Floating Rate Tranche] in accordance with
          Section
          4(e) hereof.

         

        SECTION
          4.    Payment
          Dates; Expected Sinking Fund Schedule for Principal; Interest; Required
          Capital
          Amount.

         

        (a)    Payment
          Dates.
          The Payment
          Dates for each Tranche of the Series [   ] Environmental Control Bonds
          are [_______________] and [_______________] and additional Payment Dates
          for the
          [Floating Rate Tranche] are [_______________] and [_______________]

         

        
          
            
            

          

          
            5

            
              

            

          

          
            
            

          

        

         

        of
          each
          year or, if any such date is not a Business Day, the next succeeding Business
          Day, commencing on [_______________] and continuing until the earlier of
          repayment of such Tranche in full and the applicable Final Maturity
          Date.

         

        (b)    Expected
          Sinking Fund Schedule for Principal.
          Unless
          an Event of Default shall have occurred and be continuing and the unpaid
          principal amount of all Series of Environmental Control Bonds has been
          declared
          to be due and payable together with accrued and unpaid interest thereon,
          on each
          Payment Date, the Indenture Trustee shall distribute to the Series [  
] Environmental Control Bondholders of record as of the related Record
          Date
          amounts payable in respect of the Series [    ] Environmental
          Control Bonds pursuant to Section 8.02(e) of the Indenture as principal, in
          accordance with the Expected Sinking Fund Schedule. To the extent that
          more than
          one Tranche of the Series [    ] Environmental Control Bonds is
          to receive payments of principal in accordance with the Expected Sinking
          Fund
          Schedule on any Payment Date, such amounts will be allocated in a sequential
          manner, to the extent funds are available, as follows: (i) to the holders
          of the Series [    ] Environmental Control Bonds,
          Tranche [A-1], until this Tranche is retired in full; (ii) to the
          holders of the Series [    ] Environmental Control Bonds,
          Tranche [A-2], until this Tranche is retired in full; (iii) to the
          holders of the Series [    ] Environmental Control Bonds,
          Tranche [A-3], until this Tranche is retired in full; and (iv) to the
          holders of the Series [    ] Environmental Control Bonds,
          Tranche [A-4], until this Tranche if retired in full; provided, however,
          that other than in the event of an acceleration upon an Event of Default
          in no
          event shall a principal payment pursuant to this Section 4(b) on any
          Tranche on a Payment Date be greater than the amount that reduces the
          Outstanding Amount of such Tranche of Series [    ] Environmental
          Control Bonds to the amount specified in the Expected Sinking Fund Schedule
          which is attached as Schedule A hereto for such Tranche and Payment Date.
          If an Event of Default shall have occurred and be continuing and the unpaid
          principal amount of all Series of Environmental Control Bonds has been
          declared
          to be due and payable together with accrued and unpaid interest thereon,
          principal payments on each Tranche of Series [    ] Environmental
          Control Bonds will be made on a pro rata basis based on the respective
          Tranche
          Principal Balances for each such Tranche as of the prior Payment Date.
          Not later
          than each Schedule Revision Date, the Issuer shall deliver to the Indenture
          Trustee a replacement Schedule A hereto, adjusted to reflect the event
          giving rise to such Schedule Revision Date and setting forth the Expected
          Sinking Fund Schedule for each Payment Date.

         

        (c)    Interest.
          On each
          Payment Date after the initial Payment Date, interest will be payable on
          the
          Series [    ] Environmental Control Bonds in an amount equal to:
          (1) with respect to the Series [    ] Environmental Control
          Bonds, [List all fixed rate tranches] [floating rate Tranche] (to the extent
          interest is being paid at the Tranche [    ] Gross Fixed Rate),
          the number of days (determined on the basis of a 360-day year of twelve
          30-day
          months) from and including the preceding Payment Date to, but excluding,
          the
          current Payment Date, divided by 360, [and (2) with respect to the [Floating
          Rate Tranche] (to the extent interest is being paid at the floating rate),
          the
          actual number of days since the preceding Payment Date to, but excluding,
          the
          current Payment Date, divided by 360], times the product of:

         

        (i)    the
          applicable Bond Rate times

         

        (ii)   the
          Outstanding Amount of the related Tranche of Environmental Control Bonds
          as of
          the close of business on the preceding Payment Date after giving effect
          to

         

        
          
            
            

          

          
            6

            
              

            

          

          
            
            

          

        

         

        all
          payments of principal made to the Holders of the related Tranche of Series
          [ ] Environmental Control Bonds on such preceding Payment
          Date.

         

        With
          respect to the initial Payment Date, interest will be payable in an amount
          equal
          to:

         

        (1)   with
          respect to the Series [ ] Environmental Control Bonds, [Fixed rate
          tranches], the number of days (determined on the basis of a 360-day year
          of
          twelve 30-day months) from and including the Series Issuance Date to, but
          excluding, the initial Payment Date, divided by 360, times the product
          of:

         

        (a)    the
          applicable Bond Rate times 

         

        (b)    the
          original principal amount of such Tranche of Environmental Control Bonds
          as of
          the Series Issuance Date;

         

        (2)   [with
          respect to the [Floating Rate Tranche], 

         

        (a)    [              
          ]% times

         

        (b)    $[                        
          ] times

         

        (c)    the
          actual number of days from and including the Series Issuance Date up to
          and
          including
          [                         
], divided by 360, plus 

         

        (d)    LIBOR
          (calculated two London Banking Days before
          [                   ])
          plus [      ]% times

         

        (e)    $[                       
          ], times

         

        (f)    the
          actual number of days from and including
          [                   ]
          up to and including
          [                   ],
          divided by 360.]

         

        Upon
          the
          termination of the Tranche [    ] Swap Agreement for any reason
          and for so long as there is no replacement Tranche [    ] Swap
          Agreement in effect, the [Floating Rate Tranche] shall continue to bear
          interest
          as described above.

         

        (d)    Required
          Capital Amount.
          The
          Required Capital Amount for the Series [    ] Environmental
          Control Bonds shall be equal to 0.50% of the initial principal amount thereof,
          or $[_______________].

         

        (e)    [Floating
          Rate Tranche].

         

        (i)    Upon
          the
          issuance of the [Floating Rate Tranche], the Indenture Trustee will establish
          and maintain a Tranche Subaccount (the "Tranche [    ]
          Subaccount"), which the Indenture Trustee will hold in trust for the benefit
          of
          the Holders of the [Floating Rate Tranche] and the Tranche [    ]
          Swap Counterparty. On the Business Day preceding each Payment Date, but
          subject
          to any proration among Series and Tranches in the case of a shortfall of
          funds
          available

         

        
          
            
            

          

          
            7

            
              

            

          

          
            
            

          

        

         

        to
          pay
          interest on the Environmental Control Bonds pursuant to Section 8.02 of
          the
          Indenture, the Indenture Trustee shall allocate to the Tranche
          [    ] Subaccount an amount equal to the Tranche
          [    ] Gross Fixed Amount with respect to such Payment Date. On
          or before the Payment Date, any net amount payable by the Issuer to the
          Tranche
          [    ] Swap Counterparty under the Tranche [    ]
          Swap Agreement shall be paid from the Tranche [    ] Subaccount,
          and any net amount payable to the Issuer by the Tranche [    ]
          Swap Counterparty under the Tranche [    ] Swap Agreement shall
          be deposited into the Tranche [    ] Subaccount. On that Payment
          Date, amounts in the Tranche [    ] Subaccount after such netting
          and payment shall be paid as interest to the Holders of the [Floating Rate
          Tranche].

         

        (A)    For
          each
          Payment Date the Tranche [    ] Fixed Gross Amount with respect
          to such Payment Date shall be allocated to the Tranche [    ]
          Subaccount on a pro rata basis with amounts allocated with respect to Interest
          payable on each of the other Tranches of the Series [    ]
          Environmental Control Bonds pursuant to Section 8.02 of the Indenture.
          

         

        (B)    If,
          on
          any Payment Date for any Calculation Period during which the Tranche
          [    ] Swap Agreement is in effect, there are insufficient funds
          in the Tranche [    ] Subaccount to pay the interest due to the
          Holders of the [Floating Rate Tranche] because of a failure of the Tranche
          [    ] Swap Counterparty to pay any net amount payable by the
          Tranche [    ] Swap Counterparty under the Tranche
          [    ] Swap Agreement, the Tranche [    ]
          Environmental Control Bondholders shall have no recourse to amounts in
          any other
          Subaccount to recover such shortfall other than from amounts subsequently
          paid
          by the Tranche [    ] Swap Counterparty.

         

        (C)    If
          for
          any Payment Date there are insufficient funds in the Tranche A- 4 Subaccount
          to
          pay the interest due to the Holders of the [Floating Rate Tranche] and
          to pay
          any net amount payable to the Tranche [    ] Swap Counterparty by
          the Issuer under the Tranche [    ] Swap Agreement because of a
          shortfall of funds available for the Indenture Trustee to allocate to the
          Tranche [    ] Subaccount the full amount of the Tranche
          [    ] Fixed Gross Amount with respect to such Payment Date,
          amounts in the Tranche [    ] Subaccount shall be distributed to
          the Holders of the [Floating Rate Tranche] and the Tranche [    ]
          Swap Counterparty on a pro rata basis based on the respective amounts payable
          to
          the Swap Counterparty and the interest payable to Holders of the [Floating
          Rate
          Tranche] with respect to such Payment Date. Any overdue and unpaid amounts
          due
          to the Swap Counterparty shall be paid from the Tranche [    ]
          Subaccount pari passu and pro rata with any overdue and unpaid interest
          due to
          the Holders of the [Floating Rate Tranche].

         

        (D)    The
          Tranche [    ] Swap Counterparty shall be secured by the
          Grant made to the Indenture Trustee under the Granting Clause of the Indenture
          with respect to and to the extent of amounts on deposit in the Tranche
          [    ] Subaccount pari passu with the Holders of the [Floating
          Rate Tranche] based on the respective amounts payable to the Swap Counterparty
          and the amounts payable to the Holders of the [Floating Rate Tranche],
          in
          accordance with this Series Supplement, the Indenture and the Swap
          Agreement.

         

        (ii)   The
          Indenture Trustee shall calculate LIBOR in accordance with Schedule C hereto
          on
          each Tranche [    ] Interest Determination Date and the Indenture
          Trustee shall notify the Servicer, the Issuer and the Swap Counterparty
          of such
          calculation.

         

        
          
            
            

          

          
            8

            
              

            

          

          
            
            

          

        

         

        (iii)   The
          Tranche [    ] Gross Fixed Rate is [   
].

         

        SECTION
          5.    Authorized
          Initial Denominations.
          The
          Series [    ] Environmental Control Bonds shall be issuable in
          the Authorized Initial Denominations.

         

        SECTION
          6.    Redemption.
          The
          Series [    ] Environmental Control Bonds shall not be subject to
          mandatory or optional redemption.

         

        SECTION
          7.    Credit
          Enhancement.
          No
          credit enhancement is provided for the Series [    ]
          Environmental Control Bonds.

         

        SECTION
          8.   Delivery
          and Payment for the Series [    ] Environmental Control Bonds;
          Form of the Series [    ] Environmental Control
          Bonds.
          The
          Indenture Trustee shall deliver the Series [    ] Environmental
          Control Bonds to the Issuer when authenticated in accordance with
          Section 2.02 of the Indenture. The Series [    ]
          Environmental Control Bonds of each Tranche shall be in the form of
          Exhibits [  ] through [  ] hereto.

         

        SECTION
          9.    Swap
          Agreement.

         

        (a)    Upon
          a
          termination event or event of default under the Tranche [   ] Swap
          Agreement, the Issuer shall appoint a recognized swap dealer which is a
          member
          of the International Swaps and Derivatives Association, Inc. with capital
          and
          surplus of at least $50 million (the "Swap Agent") to independently solicit,
          for
          a period not exceeding 30 days, a replacement Tranche [   ] Swap
          Counterparty (a "Replacement Counterparty"), who shall not be the Swap
          Agent or
          an Affiliate thereof. During such 30 day period, the Swap Agent shall be
          required to identify a Qualified Replacement Counterparty, or if a Qualified
          Replacement Counterparty cannot be found, the Swap Agent shall be required
          to
          identify the highest rated Replacement Counterparty available that is approved
          by the Holders of at least 66 2/3% of the Outstanding Amount of the [Floating
          Rate Tranche] (an "Approved Replacement Counterparty"). In any case, if
          there is
          more than one available Qualified Replacement Counterparty or Approved
          Replacement Counterparty, as applicable, with the same credit rating, the
          Swap
          Agent shall select that prospective Qualified Replacement Counterparty
          or
          Approved Replacement Counterparty, as applicable, offering the terms with
          the
          lowest overall cost to the Issuer. The costs and expenses of a Swap Agent
          appointed pursuant to this Section 9(a) shall be an Operating Expense to
          be paid
          by the Issuer pursuant to Section 8.02(e)(iv), to the extent not paid by
          the
          Swap Counterparty .

         

        (b)    If
          the
          Swap Agent is successful in identifying a Qualified Replacement Counterparty
          or
          Approved Replacement Counterparty, upon the termination of the Tranche
          [    ] Swap Agreement, the Issuer shall execute a replacement
          Tranche [    ] Swap Agreement with such Replacement Counterparty
          having substantially the same terms as the Tranche [    ] Swap
          Agreement being replaced, effective as of the Payment Date immediately
          following
          such execution. Any initial upfront payments made by such Replacement
          Counterparty in connection with its entering into such replacement Tranche
          [    ] Swap Agreement shall be paid to the terminated Tranche
          [    ] Swap Counterparty, and any termination payment or other
          similar amount paid to the Issuer by the terminated Tranche [   
] Swap Counterparty in accordance with the terms of the Swap Agreement
          shall
          first be used to make any payment required to be made to a

         

        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

         

        Replacement
          Counterparty under a Swap Agreement and then to the extent not so used
          shall be
          deposited into the Tranche [    ] Subaccount and paid to the
          Holders of the [Floating Rate Tranche] on the next Payment Date, pro rata
          based
          on the principal amount held by each Holder.

         

        (c)    If
          a
          Qualified Replacement Counterparty or an Approved Replacement Counterparty
          has
          not been obtained, the Swap Agent shall be required to renew such search
          every
          three months thereafter until a Qualified Replacement Counterparty or Approved
          Replacement Counterparty has been identified and approved and a replacement
          Tranche [    ] Swap Agreement has been entered into in the manner
          set forth in clauses (a) and (b) above. 

         

        (d)    If
          a
          termination event or a event of default occurs and is continuing under
          the
          Tranche [    ] Swap Agreement, the Indenture Trustee may, and at
          the direction of the Holders of at least 66 2/3% of the Outstanding Amount
          of
          the [Floating Rate Tranche] shall, exercise all rights, remedies, powers,
          privileges and claims of the Issuer against the Tranche [    ]
          Swap Counterparty and any right of the Issuer to take this action shall
          be
          suspended.

         

        (e)    The
          Tranche [    ] Swap Agreement may be amended with the consent of
          the Indenture Trustee and the Tranche [    ] Swap Counterparty,
          upon prior notice to the Rating Agencies; provided that such amendment
          may not
          adversely affect in any material respect the interests of the Holders of
          [Floating Rate Tranche] unless the Holders of at least 66 2/3% of the
          Outstanding Amount of the [Floating Rate Tranche] direct the Indenture
          Trustee
          to consent to such amendment. Moreover, such amendment may not adversely
          affect
          in any material respect the interests of the Holders of any other Series
          or
          Tranche of Environmental Control Bonds or any counterparty to any other
          Swap
          Agreement without the consent of the Holders of 66 2/3% of the Outstanding
          Amount of all of such other Series or Tranches, and each counterparty to
          any
          other Swap Agreement, materially and adversely affected thereby.

         

        (f)    With
          respect to any action proposed by the Issuer to amend, modify, waive, supplement
          or surrender the terms of or rights under the Tranche [    ] Swap
          Agreement, or waive timely performance or observance by the Tranche
          [    ] Swap Counterparty under the Tranche [    ]
          Swap Agreement, in a way which would materially and adversely affect the
          interests of the Holders of the [Floating Rate Tranche], the Issuer shall
          provide prior notice to the Rating Agencies. The Issuer will consent to
          such
          proposed action only with the consent of (i) the Holders of at least 66
          2/3% of
          the Outstanding Amount of the [Floating Rate Tranche] and (ii) the Holders
          of at
          least 66 2/3% of the Outstanding Amount of all of such other Series or
          Tranches,
          and each counterparty to any other Swap Agreement, materially and adversely
          affected thereby. Notwithstanding the foregoing, nothing shall prevent
          the
          Issuer from seeking or retaining a Swap Agent to seek a Replacement
          Counterparty.

         

        (g)    Notwithstanding
          the foregoing clause (f), upon a Swap Counterparty Downgrade Event or payment
          default by the Tranche [    ] Swap Counterparty under the Tranche
          [    ] Swap Agreement, the Issuer shall not (i) continue with a
          downgraded Tranche [    ] Counterparty notwithstanding the
          failure timely to identify a Qualified Replacement Counterparty or Approved
          Replacement Counterparty, as provided in the Tranche [    ] Swap
          Agreement, or (ii) waive a payment default by the Tranche [    ]
          Swap Counterparty within the time periods prescribed in the Tranche
          [    ] Swap Agreement, except as directed by the Holders of at
          least 66 2/3% of the Outstanding Amount of the [Floating Rate
          Tranche].

         

        
          
            
            

          

          
            10

            
              

            

          

          
            
            

          

        

         

        SECTION
          10.    Adjustment
          Dates.
          The
          following table summarizes the adjustment frequency of the Environmental
          Control
          Charges with respect to the Series [     ] Environmental
          Control Bonds:

         

        
          	 	
                  Adjustment
                    Dates

                
	
                  Semi-Annual
                    True-Up Adjustments

                	
                  [______________]

                
	
                  Monthly
                    True-Up Adjustments

                	
                  [______________]

                
	
                  Quarterly
                    True-Up Adjustments

                	
                  [______________]

                

        

        

        The
          first
          Semi-Annual True-Up Adjustment will become effective on [______________].
          [No
          adjustment will be made on [______________].]

         

        SECTION
          11.    Confirmation
          of Indenture.
          As
          supplemented by this Supplement, the Indenture is in all respects ratified
          and
          confirmed and the Indenture, as so supplemented by this Supplement, shall
          be
          read, taken, and construed as one and the same instrument.

         

        SECTION
          12.    Counterparts.
          This
          Supplement may be executed in any number of counterparts, each of which
          so
          executed shall be deemed to be an original, but all of such counterparts
          shall
          together constitute but one and the same instrument.

         

        SECTION
          13.    Governing
          Law.
          This
          Supplement shall be construed in accordance with the laws of the State
          of New
          York without reference to its conflict of law provisions, and the obligations,
          rights and remedies of the parties hereunder shall be determined in accordance
          with such laws.

         

        SECTION
          14.    Issuer
          Obligation.
          No
          recourse may be taken, directly or indirectly, with respect to the obligations
          of the Issuer or the Indenture Trustee on the Environmental Control Bonds
          or
          under this Supplement or any certificate or other writing delivered in
          connection herewith or therewith, against (i) any owner of a beneficial
          interest in the Issuer or (ii) any partner, owner, beneficiary, agent,
          officer, director or employee of the Indenture Trustee, any holder of a
          beneficial interest in the Issuer or the Indenture Trustee or of any successor
          or assign of the Indenture Trustee, except as any such Person may have
          expressly
          agreed (it being understood that none of the Indenture Trustee’s obligations are
          in its individual capacity).

         

        

        IN
          WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
          Supplement to be duly executed by their respective officers thereunto duly
          authorized as of the first day of the month and year first above
          written.

         

        
          	 	
                  PE
                    ENVIRONMENTAL FUNDING LLC, as Issuer,

                   

                   

                
	 	
                  by:

                	 
	 	 	
                  Name:

                  Title:

                

        

         

        
          
            
            

          

          
            11

            
              

            

          

          
            
            

          

        

         

        
          	 	
                  U.S.
                    BANK NATIONAL ASSOCIATION, not in its individual capacity but
                    solely as
                    Indenture Trustee on behalf of the Environmental Control
                    Bondholders,

                   

                   

                
	 	
                  by:

                	 
	 	 	
                  Name:

                  Title:

                

        

        

        
          
            
            

          

          
            12

            
              

            

          

          
            
            

          

        

         

        SCHEDULE
          A

         

        Expected
          Sinking Fund Schedule

         

        Outstanding
          Principal Balance

         

        
          	
                  Payment
                    Date

                	
                  Tranche
                    

                  [A-
                    ]

                	
                  Tranche

                  [A-
                    ]

                	
                  Tranche

                  [A-
                    ]

                	
                  Tranche

                  [A-
                    ]

                	
                  [   
                    ]

                
	
                  Series
                    Issuance Date

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                	
                  [_____]

                
	
                  [_____]

                	
                  0    

                	
                  0    

                	
                  0    

                	
                  0    

                	
                  0    

                

        

        

        
          
            
            

          

          
            13

            
              

            

          

          
            
            

          

        

        SCHEDULE
          B

         

        Calculation
          of LIBOR

         

        (a)    On
          the
          Tranche [    ] Interest Determination Date immediately preceding
          the first day of each applicable Calculation Period, the Indenture Trustee
          will
          determine LIBOR based on the offered rate for deposits in United States
          dollars
          for the applicable period, commencing on the first day of that Calculation
          Period that appears on the Moneyline Telerate Service page 3750 of the
          Telerate
          Services as of 11:00 a.m., London time, on such Tranche [    ]
          Interest Determination Date (the "Telerate Page"). If no offered rate appears
          on
          the Telerate Page, LIBOR for such Calculation Period will be determined
          as
          described in clause (b) below.

         

        (b)    With
          respect to an Tranche [    ] Interest Determination Date on which
          no offered rate appears on the Telerate Page, the Indenture Trustee will
          request
          each of four major banks in the London interbank market, selected by the
          Indenture Trustee, to provide the Indenture Trustee with that bank’s offered
          quotation for deposits in United States dollars for the applicable Calculation
          Period, commencing on the second London Banking Day immediately following
          that
          Tranche [    ] Interest Determination Date, to prime banks in the
          London interbank market at approximately 11:00 a.m., London time, on such
          Tranche [    ] Interest Determination Date and in a principal
          amount that is representative for a single transaction in United States
          dollars
          in that market at that time for the applicable period. If at least two
          such
          quotations are provided, LIBOR for such Calculation Period will be the
          arithmetic mean of those quotations. If fewer than two quotations are provided,
          LIBOR for that Calculation Period will be the arithmetic mean of the rates
          quoted at approximately 11:00 a.m. in the City of New York, on that Tranche
          [    ] Interest Determination Date by major banks in the City of
          New York selected by the Indenture Trustee for loans in United States dollars
          to
          leading European banks, for the Calculation Period commencing on the second
          London Banking Day immediately following that Tranche [    ]
          Interest Determination Date and in a principal amount that is representative
          for
          a single transaction in United States dollars in that market at that
          time.

         

        (c)    On
          the
          first Tranche [    ] Interest Determination Date, the Indenture
          Trustee will determine three-month LIBOR as described above and will also
          determine LIBOR based on the offered rate for six-month deposits in United
          States dollars that appears on the Telerate page or, if no such offered
          rate
          appears on the Telerate page, in the manner described in (b) above (except
          that
          the “applicable period” will be six months). The interpolated LIBOR applicable
          to the first interest accrual period will be equal to the sum of
          (a) three-month LIBOR and (b) the LIBOR increment. The LIBOR increment
          will be equal to the product of (x) a fraction, the numerator of which is
          the actual number of days from and including the three-month anniversary
          of the
          closing date to but excluding the first payment date and the denominator
          of
          which is 90, and (y) the excess, if any, of six-month LIBOR over
          three-month LIBOR.

         

        (d)    If
          LIBOR
          cannot be determined in accordance with clauses (a), (b) or (c) above,
          then
          LIBOR will be determined to be the same as the rate which applied during
          the
          previous Calculation Period or, in the case of any failure to determine
          LIBOR on
          either of the two Tranche [    ] Interest Determination Dates
          preceding the first Payment Date, the rate which is on the Series Issuance
          Date.

         

        
          
            
            

          

          
            14

            
              

            

          

          
            
            

          

        

         

        EXHIBIT
          A

        

        FORM
          OF
          FIXED RATE ENVIRONMENTAL CONTROL BONDS

        

        
          	
                  REGISTERED

                  No.
                    ________

                	
                  $[      ]

                

        

         

        SEE
          REVERSE FOR CERTAIN DEFINITIONS

         

        CUSIP
          NO.
          ________

         

        THE
          PRINCIPAL OF THIS SERIES [  ], TRANCHE [  ] ENVIRONMENTAL CONTROL BOND
          (“TRANCHE [  ] ENVIRONMENTAL CONTROL BOND”) WILL BE PAID IN INSTALLMENTS AS
          SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS
          TRANCHE
          [   ] ENVIRONMENTAL CONTROL BOND AT ANY TIME MAY BE LESS THAN THE
          AMOUNT SHOWN ON THE FACE HEREOF. THE HOLDER OF THIS TRANCHE [   ]
          ENVIRONMENTAL CONTROL BOND HEREBY COVENANTS AND AGREES THAT PRIOR TO THE
          DATE
          WHICH IS ONE YEAR AND ONE DAY AFTER THE TERMINATION OF THE INDENTURE, IT
          WILL
          NOT INSTITUTE AGAINST, OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST,
          THE
          ISSUER OR ANY OF ITS MANAGERS OR MEMBERS ANY BANKRUPTCY, REORGANIZATION,
          ARRANGEMENT, INSOLVENCY OR LIQUIDATION PROCEEDINGS OR OTHER PROCEEDING
          UNDER ANY
          UNITED STATES FEDERAL OR STATE BANKRUPTCY OR SIMILAR LAW IN CONNECTION
          WITH ANY
          OBLIGATIONS RELATING
          TO THE ENVIRONMENTAL CONTROL BONDS, THE INDENTURE OR ANY OF THE BASIC DOCUMENTS,
          SUBJECT TO THE RIGHT OF A CIRCUIT COURT OF THE STATE OF WEST VIRGINIA TO
          ORDER
          SEQUESTRATION AND PAYMENT OF REVENUES ARISING WITH RESPECT TO THE ENVIRONMENTAL
          CONTROL PROPERTY.
          TRANSFERS OF THIS GLOBAL ENVIRONMENTAL CONTROL BOND SHALL BE LIMITED TO
          TRANSFERS IN THE CLEARING AGENCY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S
          NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL ENVIRONMENTAL CONTROL
          BOND
          SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
          SET FORTH
          IN THE INDENTURE.

         

        PE
          ENVIRONMENTAL FUNDING LLC

         

        ENVIRONMENTAL
          CONTROL BONDS, SERIES [    ], TRANCHE [   
].

         

        
          	
                  Bond

                  Rate

                	
                  Initial
                    Principal

                  Amount

                	
                  Expected
                    Final

                  Payment
                    Date

                	
                  Final
                    Maturity 

                  Date

                
	 	 	 	 
	
                  [    ]%

                	
                  $[    ]

                	
                  [    ],
                    [    ]

                	
                  [    ],
                    [    ]

                

        

         

        PE
          Environmental Funding LLC, a limited liability company organized and existing
          under the laws of the State of Delaware (herein referred to as the “Issuer”),
          for value

         

        
          
            
            

          

          
            A-1

            
              

            

          

          
            
            

          

        

         

        received,
          hereby promises to pay to [Cede & Co.], the Registered Holder hereof, or
          registered assigns, the Initial Principal Amount shown above in semi-annual
          installments on the Payment Dates (as defined below) and in the amounts
          specified on the reverse hereof or, if less, the amounts determined pursuant
          to
          Section 8.02(e) of the Indenture, in each year, commencing on
          [                                 ]
          and ending on or before the Final Maturity Date, to pay the entire unpaid
          principal hereof on the Final Maturity Date and to pay interest, at the
          Bond
          Rate shown above, on each [     ] and
          [     ] or if any such day is not a Business Day, the next
          succeeding Business Day (each a “Payment Date”), commencing on
          [     ] and continuing until the earlier of the payment of
          the principal hereof and the Final Maturity Date, on the principal amount
          of
          this Tranche [   ] Environmental Control Bond outstanding on such
          Payment Date, after giving effect to any payment of principal made on such
          Payment Date. Interest on this Tranche [   ] Environmental
          Control Bond will accrue for each Payment Date from and including the most
          recent Payment Date on which interest has been paid to but excluding such
          Payment Date or, if no interest has yet been paid, from
          [      ]. Interest will be computed on the basis of a
          360-day year of twelve 30-day months. Such principal of and interest on
          this
          Tranche [   ] Environmental Control Bond shall be paid in the manner
          specified on the reverse hereof.

         

        The
          principal of and interest on this Tranche [   ] Environmental Control
          Bond are payable in such coin or currency of the United States of America
          as at
          the time of payment is legal tender for payment of public and private debts.
          All
          payments made by the Issuer with respect to this Tranche [  ] Environmental
          Control Bond shall be applied first to interest due and payable on this
          Tranche
          [  ] Environmental Control Bond as provided above and then to the unpaid
          principal of and premium, if any, on this Tranche [   ] Environmental
          Control Bond, all in the manner set forth in Section 8.02(e) of the
          Indenture.

         

        Reference
          is made to the further provisions of this Tranche [   ] Environmental
          Control Bond set forth on the reverse hereof, which shall have the same
          effect
          as though fully set forth on the face of this Tranche [   ]
          Environmental Control Bond.

         

        Unless
          the certificate of authentication hereon has been executed by the Indenture
          Trustee whose name appears below by manual signature, this Tranche
          [   ] Environmental Control Bond shall not be entitled to any
          benefit under the Indenture referred to on the reverse hereof, or be valid
          or
          obligatory for any purpose.

         

        
          
            
            

          

          
            A-2

            
              

            

          

          
            
            

          

        

        IN
          WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually
          or
          in facsimile, by an Authorized Officer of the Issuer.

         

        Date:

         

        
          	 	
                  PE
                    ENVIRONMENTAL FUNDING LLC

                   

                   

                
	 	
                  By:

                	 
	 	 	
                  Name:

                  Title:

                

        

        

        
          
            
            

          

          
            A-3

            
              

            

          

          
            
            

          

        

         

        INDENTURE
          TRUSTEE’S CERTIFICATE OF AUTHENTICATION

         

        Dated: 
          __________________

         

        This
          is
          one of the Tranche [   ] Environmental Control Bonds of the Series
          [   ] Environmental Control Bonds, designated above and referred to in
          the within-mentioned Indenture.

         

        
          	 	
                  U.S.
                    BANK NATIONAL ASSOCIATION, not in its individual capacity but
                    solely as
                    Indenture
                    Trustee on behalf of the Environmental
                    Control Bondholders,

                   

                   

                
	 	
                  By:

                	 
	 	 	
                  Authorized
                    Signatory

                

        

        

        
          
            
            

          

          
            A-4

            
              

            

          

          
            
            

          

        

         

        [REVERSE
          OF ENVIRONMENTAL CONTROL BOND]

         

        This
          Series [    ], Tranche [    ] Environmental
          Control Bond is one of a duly authorized issue of Environmental Control
          Bonds of
          the Issuer, designated as its Environmental Control Bonds (herein called
          the
“Environmental Control Bonds”), issued and to be issued in one or more Series,
          which Series are issuable in one or more Tranches, and this Series
          [    ] Environmental Control Bond, in which this Tranche
          [    ] Environmental Control Bond represents an interest,
          consists of [    ] Tranches, including the Tranche
          [    ] Environmental Control Bonds (herein called the “Tranche [
          ] Environmental Control Bonds”), all issued and to be issued under an indenture
          dated as of [        ], and a series
          supplement thereto dated as of [        ]
          (such series supplement, as supplemented or amended, the “Supplement” and,
          collectively with such indenture, as supplemented or amended, the “Indenture”),
          each between the Issuer and [        ], as
          Indenture Trustee (the “Indenture Trustee”, which term includes any successor
          Indenture Trustee under the Indenture), to which Indenture and all indentures
          supplemental thereto reference is hereby made for a statement of the related
          Series Collateral property pledged, the nature and extent of the security,
          the
          respective rights, obligations and immunities thereunder of the Issuer,
          the
          Indenture Trustee and the Holders of the Environmental Control Bonds and
          the
          terms and conditions under which additional Environmental Control Bonds
          may be
          issued. All terms used in this Tranche [    ] Environmental
          Control Bond that are defined in the Indenture, as supplemented or amended,
          shall have the meanings assigned to them in the Indenture.

         

        The
          Tranche [    ] Environmental Control Bonds, the other Tranches of
          Series [    ] Environmental Control Bonds and any other Series of
          Environmental Control Bonds issued by the Issuer are and will be equally
          and
          ratably secured by the related Series Collateral pledged as security therefor
          as
          provided in the Indenture.

         

        The
          principal of this Tranche [   ] Environmental Control Bond shall be
          payable in installments on each Payment Date specified in the Expected
          Sinking
          Fund Schedule only to the extent that amounts in the related Collection
          Account
          are available therefor, and only until the outstanding principal balance
          thereof
          on such Payment Date (after giving effect to all payments of principal,
          if any,
          made on such Payment Date) has been reduced to the principal balance specified
          in the Expected Sinking Fund Schedule which is attached to the Supplement
          as
          Schedule A, unless payable earlier because an Event of Default (other than
          an
          Event of Default under Section 5.01(vi) of the Indenture) shall have occurred
          and be continuing and the Indenture Trustee or the Holders of Environmental
          Control Bonds representing not less than a majority of the Outstanding
          Amount of
          the Environmental Control Bonds of all Series have declared the Environmental
          Control Bonds to be immediately due and payable in accordance with Section
          5.02
          of the Indenture. However, actual principal payments may be made in lesser
          than
          expected amounts and at later than expected times as determined pursuant
          to
          Section 8.02(e) of the Indenture. The entire unpaid principal amount of
          this
          Tranche [    ] Environmental Control Bond shall be due and
          payable on the Final Maturity Date hereof. Notwithstanding the foregoing,
          the
          entire unpaid principal amount of the Environmental Control Bonds shall
          become
          immediately due and payable, if not then previously paid, after an Event
          of
          Default (other than an Event of Default under Section 5.01(vi) of the Indenture)
          shall have occurred and be continuing and the Indenture Trustee or the
          Holders
          of the Environmental Control Bonds representing not less than a majority
          of the
          Outstanding Amount of the Environmental Control Bonds have declared the
          Environmental Control Bonds to be immediately due and payable in the manner
          provided in

         

        
          
            
            

          

          
            A-5

            
              

            

          

          
            
            

          

        

         

        Section
          5.02 of the Indenture. All principal payments on the Tranche [   
] Environmental Control Bonds shall be made pro rata to the Tranche
          [    ] Environmental Control Bondholders entitled thereto based
          on the respective principal amounts of such Bonds held by them.

         

        Payments
          of interest on this Tranche [    ] Environmental Control Bond due
          and payable on each Payment Date, together with the installment of principal
          or
          premium, if any, due on this Tranche [    ] Environmental Control
          Bond on such Payment Date shall be made by check mailed first-class, postage
          prepaid, to the Person whose name appears as the Registered Holder of this
          Tranche [    ] Environmental Control Bond (or one or more
          Predecessor Environmental Control Bonds) in the Bond Register as of the
          close of
          business on the applicable Record Date or Special Record Date or in such
          other
          manner as may be provided in the Indenture or the Supplement except that
          (i) upon application to the Indenture Trustee by any Holder owning
          Environmental Control Bonds of any tranche in the principal amount of
          $10,000,000 or more not later than the applicable Record Date payment will
          be
          made by wire transfer to an account maintained by such Holder; (ii) with
          respect to Environmental Control Bonds registered as of the close of business
          on
          the applicable Record Date or Special Record Date in the name of the nominee
          of
          the Clearing Agency, payments will be made by wire transfer in immediately
          available funds to the account designated by such nominee; and (iii) with
          respect to the final installment of principal and premium, if any, payable
          with
          respect to such Environmental Control Bond on a Payment Date, such amounts
          shall
          be payable as provided below. Such checks shall be mailed to the Person
          entitled
          thereto at the address of such Person as it appears in the Bond Register
          as of
          the applicable Record Date or Special Record Date without requiring that
          this
          Tranche [    ] Environmental Control Bond be submitted for
          notation of payment. Any reduction in the principal amount of this Tranche
          [    ] Environmental Control Bond (or any one or more Predecessor
          Environmental Control Bonds) effected by any payments made on any Payment
          Date
          shall be binding upon all future Holders of this Tranche [    ]
          Environmental Control Bond and of any Tranche [    ]
          Environmental Control Bond issued upon the registration of transfer hereof
          or in
          exchange hereof or in lieu hereof, whether or not noted hereon. If funds
          are
          expected to be available, as provided in the Indenture, for payment in
          full of
          the then remaining unpaid principal amount of this Tranche [    ]
          Environmental Control Bond on a Payment Date, then the Indenture Trustee,
          in the
          name of and on behalf of the Issuer, will notify the Person who was the
          Registered Holder hereof as of the second preceding Record Date to such
          Payment
          Date by notice mailed no later than ten days prior to such final Payment
          Date
          and shall specify that such final installment will be payable to the Registered
          Holder hereof as of the Record Date immediately preceding such final Payment
          Date and only upon presentation and surrender of this Tranche
          [    ] Environmental Control Bond and shall specify the place
          where this Tranche [    ] Environmental Control Bond may be
          presented and surrendered for payment of such installment.

         

        The
          Issuer shall pay interest on overdue installments of interest on this Tranche
          [    ] Environmental Control Bond at the Tranche
          [    ] Bond Rate to the extent lawful in accordance with Section
          2.08(c) of the Indenture.

         

        As
          provided in the Indenture and subject to certain limitations set forth
          therein,
          the transfer of this Tranche [   ] Environmental Control Bond may be
          registered in the Bond Register upon surrender of this Tranche
          [    ] Environmental Control Bond for registration of transfer at
          the office or agency designated by the Issuer pursuant to the Indenture,
          duly
          endorsed

         

        
          
            
            

          

          
            A-6

            
              

            

          

          
            
            

          

        

         

        by,
          or
          accompanied by a written instrument of transfer in form satisfactory to
          the
          Indenture Trustee duly executed by the Holder hereof or his attorney duly
          authorized in writing, with such signature guaranteed by an Eligible Guarantor
          Institution, and thereupon one or more new Tranche [    ]
          Environmental Control Bonds of any Authorized Initial Denominations and
          in the
          same aggregate initial principal amount will be issued to the designated
          transferee or transferees. No service charge will be charged for any
          registration of transfer or exchange of this Tranche [    ]
          Environmental Control Bond, but the transferor may be required to pay a
          sum
          sufficient to cover any tax or other governmental charge that may be imposed
          in
          connection with any registration of transfer or exchange.

         

        Each
          Tranche [   ] Environmental Control Bondholder, by acceptance of a
          Tranche [   ] Environmental Control Bond, covenants and agrees that no
          recourse may be taken, directly or indirectly, with respect to the obligations
          of the Issuer or the Indenture Trustee on the Tranche [    ]
          Environmental Control Bonds or under the Indenture or any certificate or
          other
          writing delivered in connection herewith or therewith, against (i) any
          owner of a beneficial interest in the Issuer or (ii) any partner, owner,
          beneficiary, agent, officer, director or employee of the Indenture Trustee,
          any
          holder of a beneficial interest in the Issuer or the Indenture Trustee
          or of any
          successor or assign of the Indenture Trustee, except as any such Person
          may have
          expressly agreed (it being understood that all of the Indenture Trustee’s
          obligations are in its individual capacity).

         

        Prior
          to
          the due presentment for registration of transfer of this Tranche
          [    ] Environmental Control Bond, the Issuer, the Indenture
          Trustee and any agent of the Issuer or the Indenture Trustee may treat
          the
          Person in whose name this Tranche [    ] Environmental Control
          Bond is registered (as of the day of determination) as the owner hereof
          for the
          purpose of receiving payments of principal of and premium, if any, and
          interest
          on this Tranche [   ] Environmental Control Bond and for all other
          purposes whatsoever, whether or not this Tranche [   ] Environmental
          Control Bond be overdue, and neither the Issuer, the Indenture Trustee
          nor any
          such agent shall be affected by notice to the contrary.

         

        The
          Indenture permits, with certain exceptions as therein provided, the amendment
          thereof and the modification of the rights and obligations of the Issuer
          and the
          rights of the Holders of the Environmental Control Bonds under the Indenture
          at
          any time by the Issuer with the consent of the Holders of Environmental
          Control
          Bonds representing a majority of the Outstanding Amount of all Environmental
          Control Bonds at the time Outstanding of each Series or Tranche to be affected.
          The Indenture also contains provisions permitting the Holders of Environmental
          Control Bonds representing specified percentages of the Outstanding Amount
          of
          the Environmental Control Bonds of all Series, on behalf of the Holders
          of all
          the Environmental Control Bonds, to waive compliance by the Issuer with
          certain
          provisions of the Indenture and certain past defaults under the Indenture
          and
          their consequences. Any such consent or waiver by the Holder of this Tranche
          [   ] Environmental Control Bond (or any one of more Predecessor
          Environmental Control Bonds) shall be conclusive and binding upon such
          Holder
          and upon all future Holders of this Tranche [    ] Environmental
          Control Bond and of any Tranche [    ] Environmental Control Bond
          issued upon the registration of transfer hereof or in exchange hereof or
          in lieu
          hereof whether or not notation of such consent or waiver is made upon this
          Tranche [    ] Environmental Control Bond. The Indenture also
          permits the Indenture Trustee to

         

        
          
            
            

          

          
            A-7

            
              

            

          

          
            
            

          

        

         

        amend
          or
          waive certain terms and conditions set forth in the Indenture without the
          consent of Holders of the Environmental Control Bonds issued
          thereunder.

         

        The
          term
“Issuer” as used in this Tranche [    ] Environmental Control
          Bond includes any successor to the Issuer under the Indenture.

         

        The
          Issuer is permitted by the Indenture, under certain circumstances, to merge
          or
          consolidate, subject to the rights of the Indenture Trustee and the Holders
          of
          Environmental Control Bonds under the Indenture.

         

        This
          Tranche [    ] Environmental Control Bonds is an Environmental
          Control Bond as such term is defined in the Statute. Principal and interest
          due
          and payable on this Environmental Control Bond are payable from and secured
          primarily by environmental control property authorized by an order issued
          by the
          Public Service Commission of the State of West Virginia pursuant to the
          Statute.
          Environmental control property includes the right to impose, charge, collect
          and
          receive certain non-bypassable charges (defined in the Statute as “environmental
          control charges”) to be included in electric utility bills of all electric
          service retail customers of The Potomac Edison Company, a West Virginia
          electric
          utility doing business as Allegheny Power.

         

        The
          Statute provides that the State of West Virginia pledges to and agrees
          with the
          Environmental Control Bondholders that the State of West Virginia will
          not take
          or permit any action that impairs the value of the Environmental Control
          Property or, except as allowed under subsection (e) of W.Va Code §24-2-4e,
          reduce, alter or impair Environmental Control Charges that are imposed,
          collected and remitted for the benefit of the Environmental Control Bondholders
          until any principal, interest and premium, if any, in respect of the
          Environmental Control Bonds, all financing costs and all amounts to be
          paid to
          any assignee or financing party under an ancillary agreement are paid or
          performed in full.

         

        The
          Tranche [    ] Environmental Control Bonds are issuable only in
          registered form in Authorized Initial Denominations as provided in the
          Indenture
          and the Supplement, subject to certain limitations therein set
          forth.

         

        This
          Tranche [    ] Environmental Control Bond, the Indenture and the
          Supplement shall be construed in accordance with the laws of the State
          of New
          York, without reference to its conflict of law provisions, and the obligations,
          rights and remedies of the parties hereunder and thereunder shall be determined
          in accordance with such laws.

         

        No
          reference herein to the Indenture and no provision of this Tranche
          [    ] Environmental Control Bond or of the Indenture shall alter
          or impair the obligation of the Issuer, which is absolute and unconditional,
          to
          pay the principal of and interest on this Tranche [    ]
          Environmental Control Bond at the times, place, and rate, and in the coin
          or
          currency herein prescribed.

         

        
          
            
            

          

          
            A-8

            
              

            

          

          
            
            

          

        

        ASSIGNMENT

         

        Social
          Security or taxpayer I.D. or other identifying number of assignee
          ___________________________

         

        FOR
          VALUE
          RECEIVED, the undersigned hereby sells, assigns and transfers unto

         

          
            

          

        

         

          
            

          

        

        (name
          and
          address of assignee)

         

        the
          within Tranche [     ] Environmental Control Bond and all
          rights thereunder, and hereby irrevocably constitutes and appoints

         

          
            

          

        

        attorney,
          to transfer said Tranche [    ] Environmental Control Bond on the
          books kept for registration thereof, with full power of substitution in
          the
          premises.

         

        
          	
                  Dated:

                	 	 	
                  *

                
	 	 	 	
                  Signature
                    Guaranteed:

                   

                
	 	 	 

        

        

         

        *
          NOTE:
          The signature to this assignment must correspond with the name of the registered
          owner as it appears on the face of the within Tranche [    
] Environmental Control Bond in every particular, without alteration,
          enlargement or any change whatsoever.

         

        
          
            
            

          

          
            A-9

            
              

            

          

          
            
            

          

        

         

        EXHIBIT
          B

        

        FORM
          OF
          FLOATING RATE ENVIRONMENTAL CONTROL BONDS

        

        
          	
                  REGISTERED

                  No.
                    ________

                	
                  $[      ]

                

        

        

        SEE
          REVERSE FOR CERTAIN DEFINITIONS

         

        CUSIP
          NO.
          ________

         

        THE
          PRINCIPAL OF THIS SERIES [  ], TRANCHE [  ] ENVIRONMENTAL CONTROL BOND
          (“TRANCHE [  ] ENVIRONMENTAL CONTROL BONDS”) WILL BE PAID IN INSTALLMENTS
          AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS
          TRANCHE [  ] ENVIRONMENTAL CONTROL BOND AT ANY TIME MAY BE LESS THAN THE
          AMOUNT SHOWN ON THE FACE HEREOF. THE HOLDER OF THIS TRANCHE [   ]
          ENVIRONMENTAL CONTROL BOND HEREBY COVENANTS AND AGREES THAT PRIOR TO THE
          DATE
          WHICH IS ONE YEAR AND ONE DAY AFTER THE TERMINATION OF THE INDENTURE, IT
          WILL
          NOT INSTITUTE AGAINST, OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST,
          THE
          ISSUER OR ANY OF ITS MANAGERS OR MEMBERS ANY BANKRUPTCY, REORGANIZATION,
          ARRANGEMENT, INSOLVENCY OR LIQUIDATION PROCEEDINGS OR OTHER PROCEEDING
          UNDER ANY
          UNITED STATES FEDERAL OR STATE BANKRUPTCY OR SIMILAR LAW IN CONNECTION
          WITH ANY
          OBLIGATIONS RELATING
          TO THE ENVIRONMENTAL CONTROL BONDS, THE INDENTURE OR ANY OF THE BASIC DOCUMENTS,
          SUBJECT TO THE RIGHT OF A CIRCUIT COURT OF THE STATE OF WEST VIRGINIA TO
          ORDER
          SEQUESTRATION AND PAYMENT OF REVENUES ARISING WITH RESPECT TO THE ENVIRONMENTAL
          CONTROL PROPERTY.
          TRANSFERS OF THIS GLOBAL ENVIRONMENTAL CONTROL BOND SHALL BE LIMITED TO
          TRANSFERS IN THE CLEARING AGENCY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S
          NOMINEE, AND TRANSFERS OF PORTIONS OF THIS GLOBAL ENVIRONMENTAL CONTROL
          BOND
          SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
          SET FORTH
          IN THE INDENTURE.

         

        PE
          ENVIRONMENTAL FUNDING LLC

         

        ENVIRONMENTAL
          CONTROL BONDS, SERIES [   ], TRANCHE [   ].

         

        
          	
                  Bond

                  Rate

                	
                  Initial
                    Principal

                  Amount

                	
                  Expected
                    Final

                  Payment
                    Date

                	
                  Final
                    Maturity Date

                
	 	 	 	 
	
                  LIBOR
                    + [      ]%

                	
                  $[      ]

                	
                  [     ],
                    [     ]

                	
                  [     ],
                    [     ]

                

        

         

        PE
          Environmental Funding LLC, a limited liability company organized and existing
          under the laws of the State of Delaware (herein referred to as the “Issuer”),
          for value

         

        
          
            
            

          

          
            B-1

            
              

            

          

          
            
            

          

        

         

        received,
          hereby promises to pay to [Cede & Co.], the Registered Holder hereof, or
          registered assigns, the Initial Principal Amount shown above in quarterly
          installments on the Payment Dates (as defined below) and in the amounts
          specified on the reverse hereof or, if less, the amounts determined pursuant
          to
          Section 8.02(e) of the Indenture, in each year, commencing on
          [                         ]
          and ending on or before the Final Maturity Date, to pay the entire unpaid
          principal hereof on the Final Maturity Date and to pay interest, which
          is a
          floating rate of LIBOR plus [    ]% per annum, on each
          [     ], [     ],
          [     ] and [     ] or if any such day
          is not a Business Day, the next succeeding Business Day (each a “Payment Date”),
          commencing on [     ] and continuing until the earlier of
          the payment of the principal hereof and the Final Maturity Date, on the
          principal amount of this Tranche [   ] Environmental Control Bond
          outstanding on such Payment Date, after giving effect to any payment of
          principal on such Payment Date. For the Payment Date on [initial Payment
          Date],
          interest will be computed as to the sum of [include details of calculation
          of
          interest to be paid on initial Payment Date]. For each succeeding Payment
          Date,
          interest will be computed on the actual number of days since the preceding
          Payment Date to, but excluding, the current Payment Date, divided by 360,
          multiplied by LIBOR plus [    ]%, multiplied by the Outstanding
          Amount of the Tranche [   ] Environmental Control Bonds as of the
          close of business on the preceding Payment Date after giving effect to
          all
          payments of principal made to the Holders of the Tranche [   ]
          Environmental Control Bonds on such preceding Payment Date. [The termination
          of
          the Tranche [   ] Swap Agreement shall not affect the amount of
          interest paid on the Tranche [   ] Environmental Control Bonds.
          Interest on this Tranche [    ] Environmental Control Bond
          will accrue for each Payment Date from and including the most recent Payment
          Date on which interest has been paid to but excluding such Payment Date
          or, if
          no interest has yet been paid, from [   ]. Such principal of and
          interest on this Tranche [   ] Environmental Control Bond shall be
          paid in the manner specified on the reverse hereof.

         

        The
          principal of and interest on this Tranche [   ] Environmental Control
          Bond are payable in such coin or currency of the United States of America
          as at
          the time of payment is legal tender for payment of public and private debts.
          All
          payments made by the Issuer with respect to this Tranche [   ]
          Environmental Control Bond shall be applied first to interest due and payable
          on
          this Tranche [   ] Environmental Control Bond as provided above and
          then to the unpaid principal of and premium, if any, on this Tranche
          [   ] Environmental Control Bond, all in the manner set forth in
          Section 8.02(e) of the Indenture.

         

        Reference
          is made to the further provisions of this Tranche [   ] Environmental
          Control Bond set forth on the reverse hereof, which shall have the same
          effect
          as though fully set forth on the face of this Tranche [   ]
          Environmental Control Bond.

         

        Unless
          the certificate of authentication hereon has been executed by the Indenture
          Trustee whose name appears below by manual signature, this Tranche [  
] Environmental Control Bond shall not be entitled to any benefit under
          the
          Indenture referred to on the reverse hereof, or be valid or obligatory
          for any
          purpose.

         

        
          
            
            

          

          
            B-2

            
              

            

          

          
            
            

          

        

        IN
          WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually
          or
          in facsimile, by an Authorized Officer of the Issuer.

         

        Date:

         

        
          	 	
                  PE
                    ENVIRONMENTAL FUNDING LLC

                   

                   

                
	 	
                  By:

                	 
	 	 	
                  Name:

                  Title:

                

        

        

        
          
            
            

          

          
            B-3

            
              

            

          

          
            
            

          

        

         

        INDENTURE
          TRUSTEE’S CERTIFICATE OF AUTHENTICATION

         

        Dated: 
          ____________________

         

        This
          is
          one of the [Floating Rate Tranche] of the Series [    ]
          Environmental Control Bonds, designated above and referred to in the
          within-mentioned Indenture.

         

        
          	 	
                  U.S.
                    BANK NATIONAL ASSOCIATION, not in its individual capacity but
                    solely as
                    Indenture
                    Trustee on behalf of the Environmental
                    Control Bondholders,

                   

                   

                
	 	
                  By:

                	 
	 	 	
                  Authorized
                    Signatory

                

        

        

        
          
            
            

          

          
            B-4

            
              

            

          

          
            
            

          

        

        [REVERSE
          OF ENVIRONMENTAL CONTROL BOND]

         

        This
          Series [    ], Tranche [    ] Environmental
          Control Bond is one of a duly authorized issue of Environmental Control
          Bonds of
          the Issuer, designated as its Environmental Control Bonds (herein called
          the
“Environmental Control Bonds”), issued and to be issued in one or more Series,
          which Series are issuable in one or more Tranches, and this Series
          [    ] Environmental Control Bond, in which this Tranche
          [    ] Environmental Control Bond represents an interest,
          consists of [    ] Tranches, including the Tranche
          [    ] Environmental Control Bonds (herein called the “Tranche
          [    ] Environmental Control Bonds”), all issued and to be issued
          under an indenture dated as of [        
], and a series supplement thereto dated as of
          [         ] (such series supplement, as
          supplemented or amended, the “Supplement” and, collectively with such indenture,
          as supplemented or amended, the “Indenture”), each between the Issuer and
          [         ], as Indenture Trustee (the
“Indenture Trustee”, which term includes any successor Indenture Trustee under
          the Indenture), to which Indenture and all indentures supplemental thereto
          reference is hereby made for a statement of the related Series Collateral
          property pledged, the nature and extent of the security, the respective
          rights,
          obligations and immunities thereunder of the Issuer, the Indenture Trustee
          and
          the Holders of the Environmental Control Bonds and the terms and conditions
          under which additional Environmental Control Bonds may be issued. All terms
          used
          in this Tranche [    ] Environmental Control Bond that are
          defined in the Indenture, as supplemented or amended, shall have the meanings
          assigned to them in the Indenture.

         

        The
          Tranche [    ] Environmental Control Bond, the other Tranches of
          Series [    ] Environmental Control Bonds and any other Series of
          Environmental Control Bonds issued by the Issuer are and will be equally
          and
          ratably secured by the related Series Collateral pledged as security therefor
          as
          provided in the Indenture.

         

        The
          principal of this Tranche [    ] Environmental Control Bond shall
          be payable in installments on each Payment Date specified in the Expected
          Sinking Fund Schedule only to the extent that amounts in the related Collection
          Account are available therefor, and only until the outstanding principal
          balance
          thereof on such Payment Date (after giving effect to all payments of principal,
          if any, made on such Payment Date) has been reduced to the principal balance
          specified in the Expected Sinking Fund Schedule which is attached to the
          Supplement as Schedule A, unless payable earlier because an Event of Default
          (other than an Event of Default under Section 5.01(vi) of the Indenture)
          shall
          have occurred and be continuing and the Indenture Trustee or the Holders
          of
          Environmental Control Bonds representing not less than a majority of the
          Outstanding Amount of the Environmental Control Bonds of all Series have
          declared the Environmental Control Bonds to be immediately due and payable
          in
          accordance with Section 5.02 of the Indenture. However, actual principal
          payments may be made in lesser than expected amounts and at later than
          expected
          times as determined pursuant to Section 8.02(e) of the Indenture. The entire
          unpaid principal amount of this Tranche [    ] Environmental
          Control Bond shall be due and payable on the Final Maturity Date hereof.
          Notwithstanding the foregoing, the entire unpaid principal amount of the
          Environmental Control Bonds shall become immediately due and payable, if
          not
          then previously paid, after an Event of Default (other than an Event of
          Default
          under Section 5.01(vi) of the Indenture) shall have occurred and be continuing
          and the Indenture Trustee or the Holders of the Environmental Control Bonds
          representing not less than a majority of the Outstanding Amount of the
          Environmental Control Bonds have declared the Environmental Control Bonds
          to be
          immediately due and payable in the manner provided in

         

        
          
            
            

          

          
            B-5

            
              

            

          

          
            
            

          

        

         

        Section
          5.02 of the Indenture. All principal payments on the Tranche [   
] Environmental Control Bonds shall be made pro rata to the Tranche
          [    ] Environmental Control Bondholders entitled thereto based
          on the respective principal amounts of the Tranche [    ]
          Environmental Control Bonds held by them.

         

        Payments
          of interest on this Tranche [    ] Environmental Control Bond due
          and payable on each Payment Date, together with the installment of principal
          or
          premium, if any, due on this Tranche [    ] Environmental Control
          Bond on such Payment Date shall be made by check mailed first-class, postage
          prepaid, to the Person whose name appears as the Registered Holder of this
          Tranche [    ] Environmental Control Bond (or one or more
          Predecessor Environmental Control Bonds) in the Bond Register as of the
          close of
          business on the applicable Record Date or Special Record Date or in such
          other
          manner as may be provided in the Indenture or the Supplement except that
          (i) upon application to the Indenture Trustee by any Holder owning
          Environmental Control Bonds of any tranche in the principal amount of
          $10,000,000 or more not later than the applicable Record Date payment will
          be
          made by wire transfer to an account maintained by such Holder; (ii) with
          respect to Environmental Control Bonds registered as of the close of business
          on
          the applicable Record Date or Special Record Date in the name of the nominee
          of
          the Clearing Agency, payments will be made by wire transfer in immediately
          available funds to the account designated by such nominee; and (iii) with
          respect to the final installment of principal and premium, if any, payable
          with
          respect to such Environmental Control Bond on a Payment Date, such amounts
          shall
          be payable as provided below. Such checks shall be mailed to the Person
          entitled
          thereto at the address of such Person as it appears in the Bond Register
          as of
          the applicable Record Date or Special record Date without requiring that
          this
          Tranche [    ] Environmental Control Bond be submitted for
          notation of payment. Any reduction in the principal amount of this Tranche
          [    ] Environmental Control Bond (or any one or more Predecessor
          Environmental Control Bonds) effected by any payments made on any Payment
          Date
          shall be binding upon all future Holders of this Tranche [    ]
          Environmental Control Bond and of any Tranche [    ]
          Environmental Control Bond issued upon the registration of transfer hereof
          or in
          exchange hereof or in lieu hereof, whether or not noted hereon. If funds
          are
          expected to be available, as provided in the Indenture, for payment in
          full of
          the then remaining unpaid principal amount of this Tranche [    ]
          Environmental Control Bond on a Payment Date, then the Indenture Trustee,
          in the
          name of and on behalf of the Issuer, will notify the Person who was the
          Registered Holder hereof as of the second preceding Record Date to such
          Payment
          Date by notice mailed no later than ten days prior to such final Payment
          Date
          and shall specify that such final installment will be payable to the Registered
          Holder hereof as of the Record Date immediately preceding such final Payment
          Date and only upon presentation and surrender of this Tranche
          [    ] Environmental Control Bond and shall specify the place
          where this Tranche [    ] Environmental Control Bond may be
          presented and surrendered for payment of such installment.

         

        The
          Issuer shall pay interest on overdue installments of interest on this Tranche
          [    ] Environmental Control Bond at the Tranche
          [    ] Bond Rate to the extent lawful in accordance with Section
          2.08(c) of the Indenture.

         

        As
          provided in the Indenture and subject to certain limitations set forth
          therein,
          the transfer of this Tranche [    ] Environmental Control Bond
          may be registered in the Bond Register upon surrender of this Tranche
          [    ] Environmental Control Bond for registration
          of

         

        
          
            
            

          

          
            B-6

            
              

            

          

          
            
            

          

        

         

        transfer
          at the office or agency designated by the Issuer pursuant to the Indenture,
          duly
          endorsed by, or accompanied by a written instrument of transfer in form
          satisfactory to the Indenture Trustee duly executed by the Holder hereof
          or his
          attorney duly authorized in writing, with such signature guaranteed by
          an
          Eligible Guarantor Institution, and thereupon one or more new Tranche
          [    ] Environmental Control Bonds of any Authorized Initial
          Denominations and in the same aggregate initial principal amount will be
          issued
          to the designated transferee or transferees. No service charge will be
          charged
          for any registration of transfer or exchange of this Tranche [   
] Environmental Control Bond, but the transferor may be required to pay
          a sum
          sufficient to cover any tax or other governmental charge that may be imposed
          in
          connection with any registration of transfer or exchange.

         

        Each
          Tranche [    ] Environmental Control Bondholder, by acceptance of
          a Tranche [    ] Environmental Control Bond, covenants and agrees
          that no recourse may be taken, directly or indirectly, with respect to
          the
          obligations of the Issuer or the Indenture Trustee on the Tranche
          [    ] Environmental Control Bonds or under the Indenture or any
          certificate or other writing delivered in connection herewith or therewith,
          against (i) any owner of a beneficial interest in the Issuer or
          (ii) any partner, owner, beneficiary, agent, officer, director or employee
          of the Indenture Trustee, any holder of a beneficial interest in the Issuer
          or
          the Indenture Trustee or of any successor or assign of the Indenture Trustee,
          except as any such Person may have expressly agreed (it being understood
          that
          all of the Indenture Trustee’s obligations are in its individual
          capacity).

         

        Prior
          to
          the due presentment for registration of transfer of this Tranche
          [    ] Environmental Control Bond, the Issuer, the Indenture
          Trustee and any agent of the Issuer or the Indenture Trustee may treat
          the
          Person in whose name this Tranche [    ] Environmental Control
          Bond is registered (as of the day of determination) as the owner hereof
          for the
          purpose of receiving payments of principal of and premium, if any, and
          interest
          on this Tranche [    ] Environmental Control Bond and for all
          other purposes whatsoever, whether or not this Tranche [    ]
          Environmental Control Bond be overdue, and neither the Issuer, the Indenture
          Trustee nor any such agent shall be affected by notice to the
          contrary.

         

        The
          Indenture permits, with certain exceptions as therein provided, the amendment
          thereof and the modification of the rights and obligations of the Issuer
          and the
          rights of the Holders of the Environmental Control Bonds under the Indenture
          at
          any time by the Issuer with the consent of the Holders of Environmental
          Control
          Bonds representing a majority of the Outstanding Amount of all Environmental
          Control Bonds at the time Outstanding of each Series or Tranche to be affected.
          The Indenture also contains provisions permitting the Holders of Environmental
          Control Bonds representing specified percentages of the Outstanding Amount
          of
          the Environmental Control Bonds of all Series, on behalf of the Holders
          of all
          the Environmental Control Bonds, to waive compliance by the Issuer with
          certain
          provisions of the Indenture and certain past defaults under the Indenture
          and
          their consequences. Any such consent or waiver by the Holder of this Tranche
          [    ] Environmental Control Bond (or any one of more Predecessor
          Environmental Control Bonds) shall be conclusive and binding upon such
          Holder
          and upon all future Holders of this Tranche [    ] Environmental
          Control Bond and of any Tranche [    ] Environmental Control Bond
          issued upon the registration of transfer hereof or in exchange hereof or
          in lieu
          hereof whether or not notation of such consent or waiver is made upon this
          Tranche [    ] Environmental Control Bond. The Indenture also
          permits the Indenture Trustee to

         

        
          
            
            

          

          
            B-7

            
              

            

          

          
            
            

          

        

         

        amend
          or
          waive certain terms and conditions set forth in the Indenture without the
          consent of Holders of the Environmental Control Bonds issued
          thereunder.

         

        The
          term
“Issuer” as used in this Tranche [    ] Environmental Control
          Bond includes any successor to the Issuer under the Indenture.

         

        The
          Issuer is permitted by the Indenture, under certain circumstances, to merge
          or
          consolidate, subject to the rights of the Indenture Trustee and the Holders
          of
          Environmental Control Bonds under the Indenture.

         

        This
          Tranche [    ] Environmental Control Bonds is an Environmental
          Control Bond as such term is defined in the Statute. Principal and interest
          due
          and payable on this Environmental Control Bond are payable from and secured
          primarily by environmental control property authorized by an order issued
          by the
          Public Service Commission of the State of West Virginia pursuant to the
          Statute.
          Environmental control property includes the right to impose, charge, collect
          and
          receive certain non-bypassable charges (defined in the Statute as “environmental
          control charges”) to be included in electric utility bills of all electric
          service retail customers of The Potomac Edison Company, a West Virginia
          electric
          utility doing business as Allegheny Power.

         

        The
          Statute provides that the State of West Virginia pledges to and agrees
          with the
          Environmental Control Bondholders that the State of West Virginia will
          not take
          or permit any action that impairs the value of the Environmental Control
          Property or, except as allowed under subsection (e) of W.Va Code §24-2-4e,
          reduce, alter or impair Environmental Control Charges that are imposed,
          collected and remitted for the benefit of the Environmental Control Bondholders
          until any principal, interest and premium, if any, in respect of the
          Environmental Control Bonds, all financing costs and all amounts to be
          paid to
          any assignee or financing party under an ancillary agreement are paid or
          performed in full.

         

        The
          Tranche [    ] Environmental Control Bonds are issuable only in
          registered form in Authorized Initial Denominations as provided in the
          Indenture
          and the Supplement, subject to certain limitations therein set
          forth.

         

        This
          Tranche [    ] Environmental Control Bond, the Indenture and the
          Supplement shall be construed in accordance with the laws of the State
          of New
          York, without reference to its conflict of law provisions, and the obligations,
          rights and remedies of the parties hereunder and thereunder shall be determined
          in accordance with such laws.

         

        No
          reference herein to the Indenture and no provision of this Tranche
          [    ] Environmental Control Bond or of the Indenture shall alter
          or impair the obligation of the Issuer, which is absolute and unconditional,
          to
          pay the principal of and interest on this Tranche [    ]
          Environmental Control Bond at the times, place, and rate, and in the coin
          or
          currency herein prescribed.

         

        
          
            
            

          

          
            B-8

            
              

            

          

          
            
            

          

        

        ASSIGNMENT

         

        Social
          Security or taxpayer I.D. or other identifying number of assignee
          ___________________________

         

        FOR
          VALUE
          RECEIVED, the undersigned hereby sells, assigns and transfers unto

         

          
            

          

        

         

          
            

          

        

        (name
          and
          address of assignee)

         

        the
          within Tranche [     ] Environmental Control Bond and all
          rights thereunder, and hereby irrevocably constitutes and appoints

         

          
            

          

        

        attorney,
          to transfer said Tranche [    ] Environmental Control Bond on the
          books kept for registration thereof, with full power of substitution in
          the
          premises.

         

        
          	
                  Dated:

                	 	 	
                  *

                
	 	 	 	
                  Signature
                    Guaranteed:

                   

                
	 	 	 

        

        

         

        *
          NOTE:
          The signature to this assignment must correspond with the name of the registered
          owner as it appears on the face of the within Tranche [    
] Environmental Control Bond in every particular, without alteration,
          enlargement or any change whatsoever.

         

        
          
            
            

          

          
            B-9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}]]