Document:

<PAGE>

                                                                   EXHIBIT 10(b)

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

                                 $1,500,000,000

                                     5-YEAR
                           SECOND AMENDED AND RESTATED
                COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY

                                      among

                               DELPHI CORPORATION,

                               The Several Lenders
                        from Time to Time Parties Hereto,

                                 CITIBANK, N.A.,
                              as Syndication Agent,

                               BARCLAYS BANK PLC,
                        DEUTSCHE BANK SECURITIES INC. and
                                 HSBC BANK USA,
                             as Documentation Agents

                                       and

                              JPMORGAN CHASE BANK,
                             as Administrative Agent

                            Dated as of June 18, 2004

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

         J.P. MORGAN SECURITIES INC. and CITIGROUP GLOBAL MARKETS INC.,
                 as Joint Lead Arrangers and Joint Bookrunners

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

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                                TABLE OF CONTENTS

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SECTION 1.   DEFINITIONS.........................................................................................    1

         1.1        Defined Terms................................................................................    1
         1.2        Other Definitional Provisions................................................................   18

SECTION 2.   AMOUNT AND TERMS OF THE FACILITIES..................................................................   18

         2.1        Amount and Terms of the U.S. Commitments.....................................................   18
         2.2        Amounts and Terms of the Multicurrency Commitments...........................................   20
         2.3        Competitive Borrowings.......................................................................   20
         2.4        Terms of Swing Line Commitment...............................................................   23
         2.5        Extension of Termination Date................................................................   26
         2.6        Termination or Reduction of Commitments......................................................   28
         2.7        Prepayments..................................................................................   28
         2.8        Conversion and Continuation Options..........................................................   29
         2.9        Minimum Amounts of Tranches..................................................................   30
         2.10       Repayment of Loans; Evidence of Debt.........................................................   30
         2.11       Interest Rates and Payment Dates.............................................................   31
         2.12       Facility Fee.................................................................................   33
         2.13       Computation of Interest and Fees.............................................................   33
         2.14       Inability to Determine Interest Rate.........................................................   34
         2.15       Pro Rata Treatment and Payments..............................................................   35
         2.16       Illegality...................................................................................   36
         2.17       Increased Costs..............................................................................   37
         2.18       Taxes........................................................................................   38
         2.19       Indemnity....................................................................................   39
         2.20       Notice of Amounts Payable; Relocation of Lending Office; Mandatory Assignment................   40

SECTION 3.   LETTERS OF CREDIT...................................................................................   41

         3.1        L/C Commitment...............................................................................   41
         3.2        Procedure for Issuance of Letter of Credit...................................................   41
         3.3        Fees and Other Charges.......................................................................   42
         3.4        L/C Participations...........................................................................   42
         3.5        Reimbursement Obligation of the Borrower.....................................................   43
         3.6        Obligations Absolute.........................................................................   43
         3.7        Letter of Credit Payments....................................................................   43
         3.8        Applications.................................................................................   44

SECTION 4.   REPRESENTATIONS AND WARRANTIES......................................................................   44

         4.1        Financial Condition..........................................................................   44
         4.2        Corporate Existence; Compliance with Law.....................................................   44
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                                      -i-
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         4.3        Corporate Power; Authorization; Enforceable Obligations......................................   44
         4.4        No Legal Bar; No Default.....................................................................   45
         4.5        No Material Litigation.......................................................................   45
         4.6        Federal Regulations..........................................................................   45
         4.7        Investment Company Act.......................................................................   45
         4.8        ERISA........................................................................................   45
         4.9        No Material Misstatements....................................................................   45
         4.10       Environmental Matters........................................................................   46
         4.11       Subsidiaries.................................................................................   46
         4.12       Purpose of Loans.............................................................................   46

SECTION 5.   CONDITIONS PRECEDENT................................................................................   46

         5.1        Conditions to Effectiveness..................................................................   46
         5.2        Conditions to Each Extension of Credit.......................................................   47

SECTION 6.   AFFIRMATIVE COVENANTS...............................................................................   48

         6.1        Financial Statements.........................................................................   48
         6.2        Certificates; Other Information..............................................................   48
         6.3        Notices......................................................................................   49
         6.4        Conduct of Business and Maintenance of Existence.............................................   49
         6.5        Books and Records............................................................................   49
         6.6        Environmental Laws...........................................................................   49

SECTION 7.   NEGATIVE COVENANTS..................................................................................   49

         7.1        Consolidated Leverage Ratio..................................................................   49
         7.2        Indebtedness.................................................................................   50
         7.3        Liens  ......................................................................................   50
         7.4        Sale-Leasebacks..............................................................................   50
         7.5        Merger, Consolidation, etc...................................................................   51

SECTION 8.   EVENTS OF DEFAULT...................................................................................   51

SECTION 9.   THE ADMINISTRATIVE AGENT............................................................................   53

         9.1        Appointment..................................................................................   53
         9.2        Delegation of Duties.........................................................................   53
         9.3        Exculpatory Provisions.......................................................................   53
         9.4        Reliance by Administrative Agent.............................................................   54
         9.5        Notice of Default............................................................................   54
         9.6        Non-Reliance on Administrative Agent and Other Lenders.......................................   55
         9.7        Indemnification..............................................................................   55
         9.8        Administrative Agent in Its Individual Capacity..............................................   55
         9.9        Successor Administrative Agent...............................................................   56
         9.10       Syndication Agent and Documentation Agents...................................................   56
</TABLE>

                                      -ii-
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SECTION 10.   MISCELLANEOUS......................................................................................   56

         10.1       Amendments and Waivers.......................................................................   56
         10.2       Notices......................................................................................   57
         10.3       No Waiver; Cumulative Remedies...............................................................   58
         10.4       Survival of Representations and Warranties...................................................   59
         10.5       Payment of Expenses and Taxes................................................................   59
         10.6       Successors and Assigns; Participations and Assignments.......................................   59
         10.7       Adjustments..................................................................................   63
         10.8       Loan Conversion/Participations...............................................................   63
         10.9       Counterparts.................................................................................   65
         10.10      Severability.................................................................................   66
         10.11      GOVERNING LAW................................................................................   66
         10.11      WAIVERS OF JURY TRIAL........................................................................   66
         10.13      Confidentiality..............................................................................   66
         10.14      USA PATRIOT Act..............................................................................   67
</TABLE>

SCHEDULES

I        Commitments; Competitive Bid Lenders; Swing Line Lenders
II       Addresses for Notices
III      Administrative Schedule
4.11     Subsidiaries

EXHIBITS

A        Competitive Bid Request
B        Invitation for Competitive Bids
C        Competitive Bid
D        Competitive Bid Accept/Reject Letter
E        Assignment and Assumption
F-1      Opinion of Assistant General Counsel - Commercial & Transactional of
          the Borrower
F-2      Opinion of Heller Ehrman White & Mcauliffe LLP, New York counsel to the
          Borrower
F-3      Opinion of Simpson Thacher & Bartlett LLP

                                     -iii-
<PAGE>

            SECOND AMENDED AND RESTATED COMPETITIVE ADVANCE AND REVOLVING CREDIT
FACILITY, dated as of June 18, 2004 (amending and restating the Amended and
Restated Competitive Advance and Revolving Credit Facility dated as of June 23,
2000, which in turn amended and restated the Competitive Advance and Revolving
Credit Facility dated as of January 4, 1999), among DELPHI CORPORATION, a
Delaware corporation (the "Borrower"), the several banks and other financial
institutions from time to time parties to this Agreement (the "Lenders"),
CITIBANK, N.A., as syndication agent (the "Syndication Agent"), BARCLAYS BANK
PLC, DEUTSCHE BANK SECURITIES INC. and HSBC BANK USA, as documentation agents
(collectively, the "Documentation Agents"), and JPMORGAN CHASE BANK, as
administrative agent for the Lenders hereunder (in such capacity, the
"Administrative Agent").

            The parties hereto hereby agree as follows:

                             SECTION 1. DEFINITIONS

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

            "ABR": for any day, a rate per annum (rounded upwards, if necessary,
      to the next 1/100 of 1%) 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%. If for any reason the Administrative Agent shall
      have determined (which determination shall be conclusive absent manifest
      error) that it is unable to ascertain the Federal Funds Effective Rate for
      any reason, the ABR shall be determined without regard to clause (b) of
      the first sentence of this definition until the circumstances giving rise
      to such inability no longer exist. Any change in the ABR due to a change
      in the Prime Rate or the Federal Funds Effective Rate shall be effective
      as of the opening of business on the effective day of such change in the
      Prime Rate or the Federal Funds Effective Rate, respectively.

            "ABR Loans": Loans the rate of interest applicable to which is based
      upon the ABR.

            "Adjusted Aggregate Committed Outstandings": with respect to each
      Lender, the Aggregate R/C Outstandings of such Lender, plus the amount of
      any participating interests purchased by such Lender pursuant to
      subsection 10.8, minus the amount of any participating interests sold by
      such Lender pursuant to subsection 10.8.

            "Administrative Questionnaire": an Administrative Questionnaire in a
      form supplied by the Administrative Agent, requesting contact information
      and other administrative details for each Lender.

            "Administrative Schedule": Schedule III, which contains interest
      rate definitions and administrative information in respect of each
      Available Foreign Currency.

            "Aggregate Available Multicurrency Commitments": as at any date of
      determination with respect to all Multicurrency Lenders, an amount in
      Dollars equal to the Available Multicurrency Commitments of all
      Multicurrency Lenders on such date.

<PAGE>

                                                                               2

            "Aggregate Available U.S. Commitments": as at any date of
      determination with respect to all U.S. Lenders, an amount in Dollars equal
      to the Available U.S. Commitments of all U.S. Lenders on such date.

            "Aggregate Multicurrency Outstandings": as at any date of
      determination with respect to any Multicurrency Lender, an amount in the
      applicable Available Foreign Currencies equal to the aggregate unpaid
      principal amount of such Lender's Multicurrency Loans.

            "Aggregate R/C Outstandings": as at any date of determination with
      respect to any Lender, an amount in Dollars equal to the sum of (a) the
      Aggregate U.S. R/C Outstandings of such Lender and (b) the Dollar
      Equivalent of the Aggregate Multicurrency Outstandings of such Lender.

            "Aggregate Total Outstandings": as at any date of determination with
      respect to any Lender, the sum of such Lender's Aggregate R/C Outstandings
      and such Lender's Competitive Loans then outstanding.

            "Aggregate U.S. Commitments": the aggregate amount of the U.S.
      Commitments of all the Lenders. As of the date of this Agreement, the
      Aggregate U.S. Commitments are U.S.$1,500,000,000.

            "Aggregate U.S. R/C Outstandings": as at any date of determination
      with respect to any U.S. Lender, an amount in Dollars equal to the sum of
      (a) the aggregate unpaid principal amount of such U.S. Lender's U.S.
      Revolving Credit Loans on such date, (b) such U.S. Lender's U.S.
      Commitment Percentage of the aggregate unpaid principal amount of all
      Swing Line Loans denominated in Dollars on such date, (c) such U.S.
      Lender's U.S. Commitment Percentage of the Dollar Equivalent of the
      aggregate unpaid principal amount of all Swing Line Loans denominated in
      Euro, Sterling and any Alternate Swing Line Foreign Currency on such date
      and (d) such U.S. Lender's U.S. Commitment Percentage of the aggregate L/C
      Obligations.

            "Agreement": this Agreement, as amended, supplemented or otherwise
      modified from time to time.

            "Alternate Swing Line Foreign Currencies": Any available and
      freely-convertible non-Dollar currency other than Pounds Sterling and
      Euro, selected by the Borrower and approved by the Administrative Agent
      and all of the Swing Line Lenders.

            "Alternate Swing Line Currency Cost of Funds Loan": Swing Line Loans
      denominated in any Alternate Swing Line Foreign Currency the rate of
      interest applicable to which is based upon the Cost of Funds.

            "Applicable Margin": as defined in subsection 2.11(g).

            "Application": an application, in such form as the Issuing Lender
      may specify from time to time, requesting the Issuing Lender to open a
      Letter of Credit.

<PAGE>

                                                                               3

            "Assignee": any assignee of a Lender's rights and obligations
      hereunder pursuant to an assignment entered into in accordance with
      subsection 10.6(b).

            "Assignment and Assumption": means an assignment entered into by a
      Lender and an Assignee, and accepted by the Administrative Agent, in the
      form of Exhibit E or any other form approved by the Administrative Agent
      and the Borrower.

            "Available Foreign Currencies": Pounds Sterling, Euro, and any other
      available and freely-convertible non-Dollar currency selected by the
      Borrower and approved by the Administrative Agent and the Majority
      Multicurrency Lenders in the manner described in subsection 10.1(b).

            "Available Multicurrency Commitment": as at any date of
      determination with respect to any Multicurrency Lender (after giving
      effect to the making and payment of any U.S. Revolving Credit Loans
      required to be made on such date pursuant to subsection 2.1(c)), an amount
      in U.S. Dollars equal to the lesser of (a) the excess, if any, of (i) the
      amount of such Multicurrency Lender's Multicurrency Commitment in effect
      on such date over (ii) the Dollar Equivalent of the Aggregate
      Multicurrency Outstandings of such Multicurrency Lender on such date and
      (b) the excess, if any, of (i) the amount of such Multicurrency Lender's
      U.S. Commitment in effect on such date over (ii) the Aggregate R/C
      Outstandings of such Multicurrency Lender on such date.

            "Available U.S. Commitment": as at any date of determination with
      respect to any U.S. Lender (after giving effect to the making and payment
      of any U.S. Revolving Credit Loans required to be made on such date
      pursuant to subsection 2.1(c)), an amount in Dollars equal to the excess,
      if any, of (a) the amount of such U.S. Lender's U.S. Commitment in effect
      on such date over (b) the Aggregate R/C Outstandings of such U.S. Lender
      on such date.

            "Board": the Board of Governors of the Federal Reserve System of the
      United States (or any successor).

            "Borrowing": a group of Loans of a single Type made by the Lenders
      (or, in the case of a Competitive Borrowing, by the Lender or Lenders
      whose Competitive Bids have been accepted pursuant to subsection 2.3).

            "Borrowing Date": a date on which a Borrowing is made hereunder.

            "Business Day": (a) when such term is used in respect of a day on
      which a Loan in an Available Foreign Currency is to be made, a payment is
      to be made in respect of such Loan, a Spot Exchange Rate is to be set in
      respect of such Available Foreign Currency or any other dealing in such
      Available Foreign Currency is to be carried out pursuant to this
      Agreement, such term shall mean a London Banking Day which is also a day
      on which banks are open for general banking business in (x) the city which
      is the principal financial center of the country of issuance of such
      Available Foreign Currency (or, in the case of Multicurrency Loans and
      Swing Line Loans in Pounds Sterling, Paris) or (y) in the case of Euro
      only, Frankfurt am Main, Germany (or such other principal financial center
      as the Administrative Agent may from time to time designate for this
      purpose) and (b) when such term is used in any context in this Agreement
      (including as

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                                                                               4

      described in the foregoing clause (a), such term shall mean a day which,
      in addition to complying with any applicable requirements set forth in the
      foregoing clause (a), is a day other than a Saturday, Sunday or other day
      on which commercial banks in New York City are authorized or required by
      law to close; provided, that when such term is used for the purpose of
      determining the date on which the Eurocurrency Rate is determined under
      this Agreement for any Multicurrency Loan denominated in Euro for any
      Interest Period therefor and for purposes of determining the first and
      last day of any such Interest Period, references in this Agreement to
      Business Days shall be deemed to be references to Target Operating Days.

            "Closing Date": the date hereof, provided that each of the
      conditions precedent set forth in subsection 5.1 shall have been
      satisfied.

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

            "Committed Outstandings Percentage": on any date with respect to any
      Lender, the percentage which the Adjusted Aggregate Committed Outstandings
      of such Lender constitutes of the Adjusted Aggregate Committed
      Outstandings of all Lenders.

            "Commitments": the collective reference to the U.S. Commitments and
      the Multicurrency Commitments.

            "Commitment Period": as to any Lender, the period from and including
      the date hereof to but not including the Termination Date, as such date
      may be extended from time to time with respect to such Lender in
      accordance with subsection 2.5, or such earlier date on which the
      Commitments shall terminate as provided herein.

            "Competitive Bid": an offer by a Lender to make a Competitive Loan
      pursuant to subsection 2.3.

            "Competitive Bid Accept/Reject Letter": a notification made by the
      Borrower pursuant to subsection 2.3(f) in the form of Exhibit D.

            "Competitive Bid Lenders": the U.S. Lenders specified on Schedule I,
      as such Schedule is modified from time to time to add additional
      Competitive Bid Lenders with the consent of the Borrower, as being
      "Competitive Bid Lenders".

            "Competitive Bid Rate": as to any Competitive Bid made by a U.S.
      Lender pursuant to subsection 2.3, (i) in the case of a Eurodollar Rate
      Competitive Loan, the Eurodollar Rate plus (or minus) the Margin, and (ii)
      in the case of a Fixed Rate Loan, the fixed rate of interest offered by
      the U.S. Lender making such Competitive Bid.

            "Competitive Bid Request": a request made pursuant to subsection
      2.3(b) in the form of Exhibit A.

            "Competitive Borrowing": a Borrowing consisting of a Competitive
      Loan or concurrent Competitive Loans from the U.S. Lender or U.S. Lenders
      whose Competitive Bids for such Borrowing have been accepted by a Borrower
      under the bidding procedure described in subsection 2.3.

<PAGE>

                                                                               5

            "Competitive Loan": a Loan (which shall be a Eurodollar Rate
      Competitive Loan or a Fixed Rate Loan denominated in Dollars) made by a
      U.S. Lender pursuant to the bidding procedure described in subsection 2.3.

            "Confidential Information Memorandum": the Confidential Information
      Memorandum dated May 2004 and furnished to the Lenders.

            "Consolidated EBITDA": for any period, Consolidated Net Income for
      such period plus, without duplication and to the extent reflected as a
      charge in the statement of such Consolidated Net Income for such period,
      the sum of (a) income tax expense, (b) interest expense (other than
      interest expense or discount during such period attributable to Permitted
      Receivables Financing with an aggregate principal amount not in excess of
      $1,500,000,000), (c) amortization or writeoff of debt discount and debt
      issuance costs and commissions, discounts and other fees and charges
      associated with Indebtedness (including the Loans), (d) depreciation and
      amortization expense, (e) amortization of intangibles (including, but not
      limited to, goodwill) and organization costs and (f) any extraordinary,
      unusual or non-recurring non-cash expenses or losses, and minus, to the
      extent included in the statement of such Consolidated Net Income for such
      period, the sum of (a) interest income and (b) any extraordinary, unusual
      or non-recurring income or gains, all as determined on a consolidated
      basis. For the purposes of calculating Consolidated EBITDA for any period
      of four consecutive fiscal quarters (each, a "Reference Period") pursuant
      to any determination of the Consolidated Leverage Ratio, if during such
      Reference Period the Borrower or any Subsidiary shall have made a Material
      Acquisition, Consolidated EBITDA for such Reference Period may, at the
      option of the Borrower, be calculated after giving pro forma effect
      thereto as if such Material Acquisition occurred on the first day of such
      Reference Period. As used in this paragraph, "Material Acquisition" means
      any acquisition of property or series of related acquisitions of property
      that involves the payment of consideration (including, without limitation,
      the assumption of debt) by the Borrower and its Subsidiaries in excess of
      $10,000,000.

            "Consolidated Leverage Ratio": as at the end of any fiscal quarter,
      the ratio of (a) Consolidated Total Debt on such day (other than any
      Permitted Receivables Financing outstanding on such date in an aggregate
      principal amount not to exceed $1,500,000,000 and any other Non-Recourse
      Debt not related to accounts receivable of the Borrower or any of its
      Subsidiaries) to (b) Consolidated EBITDA for the four fiscal quarter
      period ending on such day.

            "Consolidated Net Income": for any period, the consolidated net
      income (or loss) of the Borrower and its Subsidiaries, determined on a
      consolidated basis in accordance with GAAP.

            "Consolidated Total Assets": at any date, all amounts that would, in
      conformity with GAAP, be set forth opposite the caption "total assets" (or
      any like caption) on a consolidated balance sheet of the Borrower and its
      Subsidiaries at such date.

            "Consolidated Total Debt": at any date and without duplication, (i)
      the aggregate principal amount of (i) all Indebtedness of the Borrower and
      its Subsidiaries on a

<PAGE>

                                                                               6

      consolidated basis and (ii) all guarantees by the Borrower or any of its
      Subsidiaries of Indebtedness on a consolidated basis of any other Person
      (other than the Borrower or a Subsidiary) at such date.

            "Continuing Lenders": as defined in subsection 2.5(a).

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

            "Conversion Date": any date on which either (a) an Event of Default
      under Section 8(g) has occurred or (b) the Commitments shall have been
      terminated prior to the Termination Date and/or the Loans shall have been
      declared immediately due and payable, in either case pursuant to Section
      8.

            "Converted Loans": as defined in subsection 10.8(a).

            "Cost of Funds": the rate of interest per annum maintained by the
      Swing Line Lender that has advanced or is owed the relevant amount as the
      rate of interest reasonably determined by such Swing Line Lender (after
      consultation with the Borrower, if practicable) to reflect the cost of
      funds in respect of which such determination is made.

            "Default": any of the events specified in Section 8, whether or not
      any requirement for the giving of notice, the lapse of time, or both, or
      any other condition, has been satisfied.

            "Dollar Equivalent": on any date of determination, with respect to
      any amount in any Available Foreign Currency or Alternate Swing Line
      Foreign Currency, the equivalent in Dollars of such amount, determined by
      the Administrative Agent using the Spot Exchange Rate with respect to such
      Available Foreign Currency or Alternate Swing Line Foreign Currency, as
      the case may be, then in effect.

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

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

            "EMU Legislation": legislative measures of the European Council
      (including without limitation European Council regulations) for the
      introduction of, changeover to or operation of the Euro.

            "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 to the environment, preservation or reclamation of
      natural resources, the management, release or threatened release of any
      Hazardous Material or to health and safety matters relating to the
      environment.

<PAGE>

                                                                               7

            "Environmental Liability" means any liability, contingent or
      otherwise (including any liability for damages, costs of environmental
      remediation, fines, penalties or indemnities), of the Borrower 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.

            "Euro" and "(euro)": the single currency of Participating Member
      States introduced in accordance with the provisions of Article 109(1)4 of
      the Treaty and, in respect of all payments to be made under this Agreement
      in Euro, means immediately available, freely transferable funds.

            "Euro Cost of Funds Loan": Swing Line Loans denominated in Euros the
      rate of interest applicable to which is based upon the Cost of Funds.

            "Eurocurrency Rate": with respect to each Interest Period pertaining
      to a Multicurrency Loan, the Eurocurrency Rate determined for such
      Interest Period and the Available Foreign Currency in which such
      Multicurrency Loan is denominated in the manner set forth in the
      Administrative Schedule.

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

            "Eurocurrency Reserve Rate": with respect to each day during each
      Interest Period pertaining to a Multicurrency Loan, a rate per annum
      determined for such day in accordance with the following formula (rounded
      upward to the nearest 1/100th of 1%):

                                Eurocurrency Rate
                         -------------------------------
                         1.00 - Eurocurrency Liabilities

            "Eurodollar Rate Borrowing": a Borrowing comprised of Eurodollar
      Rate Loans.

            "Eurodollar Rate Competitive Loan": any Competitive Loan bearing
      interest at a rate determined by reference to the Eurodollar Rate.

            "Eurodollar Rate Loan": any Eurodollar Rate Competitive Loan or
      Eurodollar Revolving Credit Loan.

            "Eurodollar Rate": with respect to each day during each Interest
      Period pertaining to a Eurodollar Rate Loan, the rate of interest
      determined on the basis of the rate for deposits in Dollars for a period
      equal to such Interest Period commencing on the first day

<PAGE>

                                                                               8

      of such Interest Period appearing on Page 3750 of the Telerate Service as
      of 11:00 A.M., London time, two Business Days prior to the beginning of
      such Interest Period. In the event that such rate does not appear on Page
      3750 of the Telerate Service (or otherwise on such service), the
      "Eurodollar Rate" shall be determined by reference to such other publicly
      available service for displaying eurodollar rates as may be agreed upon by
      the Administrative Agent and the Borrower or, in the absence of such
      agreement, the "Eurodollar Rate" shall instead be the rate per annum equal
      to the average (rounded upward to the nearest 1/100th of 1%) of the
      respective rates notified to the Administrative Agent by each of the
      Reference Lenders as the rate at which such Reference Lender is offered
      Dollar deposits at or about 10:00 A.M., New York City time, two Business
      Days prior to the beginning of such Interest Period in the interbank
      eurodollar market where the eurodollar and foreign currency and exchange
      operations in respect of its Eurodollar Rate Loans are then being
      conducted for delivery on the first day of such Interest Period for the
      number of days comprised therein and in an amount comparable to the amount
      of its Eurodollar Rate Loan to be outstanding during such Interest Period.

            "Eurodollar Reserve Rate": with respect to each day during each
      Interest Period pertaining to a Eurodollar Rate Loan, a rate per annum
      determined for such day in accordance with the following formula (rounded
      upward to the nearest 1/100th of 1%):

                                 Eurodollar Rate
                         -------------------------------
                         1.00 - Eurocurrency Liabilities

            "Eurodollar Revolving Credit Loan": any U.S. Revolving Credit Loan
      bearing interest at a rate determined by reference to the Eurodollar Rate.

            "Event of Default": any of the events specified in Section 8;
      provided that any requirement for the giving of notice, the lapse of time,
      or both, or any other condition, has been satisfied.

            "Existing 364-Day Facility": The 364-Day Fifth Amended and Restated
      Competitive Advance and Revolving Credit Facility, dated as of June 20,
      2003 (as amended and in effect on the date immediately preceding the date
      hereof), among the Borrower and the lenders from time to time parties
      thereto.

            "Extended Termination Date": as defined in subsection 2.5(a).

            "Extension Date": as defined in subsection 2.5(a).

            "Extension Notice": as defined in subsection 2.5(a).

            "Federal Funds Effective Rate" shall mean, for any day, the weighted
      average of the rates on overnight federal funds transactions with members
      of the Federal Reserve System arranged by federal funds brokers, as
      published on the next succeeding Business Day by the Federal Reserve Bank
      of New York, or, if such rate is not so published for any day which is a
      Business Day, the average of the quotations for such day of such rates on
      such transactions received by the Administrative Agent from three federal
      funds brokers of recognized standing selected by it.

<PAGE>

                                                                               9

            "Financial Officer": with respect to any Person, the chief financial
      officer, principal accounting officer, a financial vice president,
      treasurer or assistant treasurer of such Person.

            "First Lender": as defined in subsection 10.8(b).

            "Fixed Rate Borrowing": a Borrowing comprised of Fixed Rate Loans.

            "Fixed Rate Loan": any Competitive Loan bearing interest at a fixed
      percentage rate per annum specified by the Lender making such Loan in its
      Competitive Bid.

            "Funding Commitment Percentage": as at any date of determination
      (after giving effect to the making and payment of any Loans made on such
      date pursuant to subsection 2.1(c)), with respect to any U.S. Lender, that
      percentage which the Available U.S. Commitment of such U.S. Lender then
      constitutes of the Aggregate Available U.S. Commitments.

            "GAAP": generally accepted accounting principles in the United
      States of America as in effect from time to time and as applied by the
      Borrower in the preparation of its most recent financial statements
      delivered pursuant to subsection 4.1(b); provided that, if the Borrower
      notifies the Administrative Agent that the Borrower requests an amendment
      to any provision hereof 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 the
      Borrower that the Majority Lenders request an amendment to any provision
      hereof 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.

            "Governmental Authority": any nation or government, any state or
      other political subdivision thereof and any entity exercising executive,
      legislative, judicial, regulatory or administrative functions of
      government including, without limitation, the European Central Bank.

            "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 substances or wastes of any
      nature regulated pursuant to any Environmental Law.

            "Indebtedness": of any Person at any date, the amount outstanding on
      such date under notes, bonds, debentures or other similar evidences of
      indebtedness for money borrowed (including, without limitation,
      indebtedness for borrowed money evidenced by a loan account).

            "Intercompany Sale-Leasebacks": Sale-Leasebacks involving leases
      between the Borrower and a Subsidiary or between Subsidiaries.

<PAGE>

                                                                              10

            "Interest Payment Date": (a) as to any ABR Loan, Euro Cost of Funds
      Loan or Sterling Cost of Funds Loan, the last day of each March, June,
      September and December to occur while such Loan is outstanding and on the
      date such Loan is paid in full, (b) as to any Eurodollar Rate Loan, Fixed
      Rate Loan or Multicurrency Loan having an Interest Period of three months
      or 90 days, as the case may be, or less, the last day of the Interest
      Period applicable thereto and (c) as to any Eurodollar Rate Loan, Fixed
      Rate Loan or Multicurrency Loan, having an Interest Period longer than
      three months or 90 days, as the case may be, each day which is three
      months or 90 days, as the case may be, and any multiple thereof, after the
      first day of the Interest Period applicable thereto; provided that, in
      addition to the foregoing, each of (x) the date upon which both the
      Commitments have been terminated and the Loans have been paid in full and
      (y) the Termination Date shall be deemed to be an "Interest Payment Date"
      with respect to any interest which is then accrued hereunder.

            "Interest Period": (a) with respect to any Eurodollar Rate Loan or
      Multicurrency Loan:

                  (i) initially, the period commencing on the borrowing or
            conversion date, as the case may be, with respect to such Eurodollar
            Rate Loan or Multicurrency Loan and ending one, two, three or six
            (or if available to all the Lenders (or, in the case of Eurodollar
            Rate Competitive Loans, the Lender making such Loans) nine or
            twelve) months thereafter, as selected by the Borrower in its notice
            of borrowing or notice of conversion, as the case may be, given with
            respect thereto; and

                  (ii) thereafter, each period commencing on the last day of the
            next preceding Interest Period applicable to such Eurodollar Rate
            Loan or Multicurrency Loan and ending one, two, three or six (or if
            available to all the Lenders (or, in the case of Eurodollar Rate
            Competitive Loans, the Lender making such Loans) nine or twelve)
            months thereafter, as selected by the Borrower by irrevocable notice
            to the Administrative Agent not less than three Business Days prior
            to the last day of the then current Interest Period with respect
            thereto; and

            (b) with respect to any Fixed Rate Loan, the period commencing on
      the borrowing date with respect to such Fixed Rate Loan and ending such
      number of days thereafter (which shall be not less than seven days or more
      than 180 days after the date of such borrowing) as selected by the
      Borrower in its Competitive Bid Request given with respect thereto;

      provided that all of the foregoing provisions relating to Interest Periods
      are subject to the following:

                  (1) if any Interest Period would otherwise end on a day that
            is not a Business Day, such Interest Period shall be extended to the
            next succeeding Business Day unless, in the case of an Interest
            Period pertaining to a Eurodollar Rate Loan or Multicurrency Loan,
            the result of such extension would be to carry such Interest Period
            into another calendar month in which event such Interest Period
            shall end on the immediately preceding Business Day;

<PAGE>

                                                                              11

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

                  (3) any Interest Period applicable to a Eurodollar Rate Loan
            or Multicurrency Loan that would otherwise extend beyond the
            Termination Date shall end on the Termination Date.

            "Invitation for Competitive Bids": an invitation made by the
      Borrower pursuant to subsection 2.3(c) in the form of Exhibit B.

            "issuance": as defined in subsection 3.1(a).

            "Issuing Lender": the collective reference to JPMCB or any of its
      affiliates, in its capacity as issuer of any Letter of Credit.

            "JPMCB" JPMorgan Chase Bank.

            "L/C Commitment": $250,000,000.

            "L/C Fee Payment Date": the last day of each March, June, September
      and December and the last day of the Commitment Period.

            "L/C Obligations": at any time, an amount equal to the sum of (a)
      the aggregate then undrawn and unexpired amount of the then outstanding
      Letters of Credit and (b) the aggregate amount of drawings under Letters
      of Credit which have not then been reimbursed pursuant to subsection 3.5.

            "L/C Participants": the collective reference to all the U.S. Lenders
      other than the Issuing Lender.

            "Lender": a U.S. Lender or a Multicurrency Lender, as the context
      shall require; collectively, the "Lenders."

            "Letters of Credit": as defined in subsection 3.1(a).

            "Level I Status": exists at any date if, at such date, the Borrower
      has senior unsecured long-term debt outstanding, without third-party
      credit enhancement, which is either rated A- or better by S&P or A3 or
      better by Moody's (it being understood that the higher rating prevails);
      provided that if either S&P or Moody's shall cease to issue ratings of
      debt securities generally, then the Administrative Agent and the Borrower
      shall negotiate in good faith to agree upon a substitute rating agency
      (and to correlate the system of ratings of such substitute rating agency
      with that of the rating agency for which it is substituting) and (a) until
      such substitute rating agency is agreed upon, the foregoing test may be
      satisfied on the basis of the rating assigned by the other such rating
      agency and (b) after such substitute rating agency is agreed upon, the
      foregoing test may be satisfied on the basis of the rating assigned by the
      other rating agency or such substitute rating agency.

<PAGE>

                                                                              12

            "Level II Status": exists at any date if, at such date, Level I
      Status does not exist and the Borrower has senior unsecured long-term debt
      outstanding, without third-party credit enhancement, which is either rated
      BBB+ or better by S&P or Baa1 or better by Moody's (it being understood
      that the higher rating prevails); provided that if either S&P or Moody's
      shall cease to issue ratings of debt securities generally, then the
      Administrative Agent and the Borrower shall negotiate in good faith to
      agree upon a substitute rating agency (and to correlate the system of
      ratings of such substitute rating agency with that of the rating agency
      for which it is substituting) and (a) until such substitute rating agency
      is agreed upon, the foregoing test may be satisfied on the basis of the
      rating assigned by the other such rating agency and (b) after such
      substitute rating agency is agreed upon, the foregoing test may be
      satisfied on the basis of the rating assigned by the other rating agency
      or such substitute rating agency.

            "Level III Status": exists at any date if, at such date, neither
      Level I Status nor Level II Status exists and the Borrower has senior
      unsecured long-term debt outstanding, without third party credit
      enhancement, which is either rated BBB or better by S&P or Baa2 or better
      by Moody's (it being understood that the higher rating prevails); provided
      that if either S&P or Moody's shall cease to issue ratings of debt
      securities generally, then the Administrative Agent and the Borrower shall
      negotiate in good faith to agree upon a substitute rating agency (and to
      correlate the system of ratings of such substitute rating agency with that
      of the rating agency for which it is substituting) and (a) until such
      substitute rating agency is agreed upon, the foregoing test may be
      satisfied on the basis of the rating assigned by the other such rating
      agency and (b) after such substitute rating agency is agreed upon, the
      foregoing test may be satisfied on the basis of the rating assigned by the
      other rating agency or such substitute rating agency.

            "Level IV Status": exists at any date if, at such date, none of
      Level I Status, Level II Status or Level III Status exists and the
      Borrower has senior unsecured long-term debt outstanding, without third
      party credit enhancement, which is either rated BBB- or better by S&P or
      Baa3 or better by Moody's (it being understood that the higher rating
      prevails); provided that if either S&P or Moody's shall cease to issue
      ratings of debt securities generally, then the Administrative Agent and
      the Borrower shall negotiate in good faith to agree upon a substitute
      rating agency (and to correlate the system of ratings of such substitute
      rating agency with that of the rating agency for which it is substituting)
      and (a) until such substitute rating agency is agreed upon, the foregoing
      test may be satisfied on the basis of the rating assigned by the other
      such rating agency and (b) after such substitute rating agency is agreed
      upon, the foregoing test may be satisfied on the basis of the rating
      assigned by the other rating agency or such substitute rating agency.

            "Level V Status": exists at any date if, at such date, none of Level
      I Status, Level II Status, Level III Status or Level IV Status exists.

            "Lien": any mortgage, pledge, lien, security interest, conditional
      sale or other title retention agreement or other similar encumbrance.

            "Loan": a Competitive Loan, a U.S. Revolving Credit Loan, a
      Multicurrency Loan or a Swing Line Loan, as the context shall require;
      collectively, the "Loans."

<PAGE>

                                                                              13

            "Loans to be Converted": as defined in subsection 10.8(a).

            "London Banking Day": any day on which banks in London are open for
      general banking business, including dealings in foreign currency and
      exchange.

            "Majority Lenders": (a) at any time prior to the termination of the
      U.S. Commitments, the Majority U.S. Lenders; and (b) at any time after the
      termination of the U.S. Commitments, Lenders whose Aggregate Total
      Outstandings aggregate more than 50% of the Aggregate Total Outstandings
      of all Lenders; provided that for purposes of this definition the
      Aggregate Total Outstandings of each Lender shall be adjusted up or down
      so as to give effect to any participations purchased or sold pursuant to
      subsection 10.8.

            "Majority Multicurrency Lenders": at any time, Multicurrency Lenders
      whose Multicurrency Commitment Percentages aggregate more than 50%.

            "Majority U.S. Lenders": at any time, U.S. Lenders whose U.S.
      Commitment Percentages aggregate more than 50%.

            "Margin": as to any Eurodollar Rate Competitive Loan, the margin to
      be added to or subtracted from the Eurodollar Rate in order to determine
      the interest rate applicable to such Loan, as specified in the Competitive
      Bid relating to such Loan.

            "Material Adverse Effect": a material adverse effect on (a) the
      financial condition of the Borrower and its Subsidiaries taken as a whole
      or (b) the validity or enforceability of this Agreement or the rights or
      remedies of the Administrative Agent and the Lenders hereunder.

            "Material Agreements": the material contracts of the Borrower, as
      such term is defined in Item 601 of SEC Regulation S-K (excluding
      agreements with officers and directors) and included in Borrower's most
      recently filed Form 10-K.

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

            "Multicurrency Commitment": as to any Multicurrency Lender at any
      time, its obligation to make Multicurrency Loans to the Borrower in an
      aggregate amount in Available Foreign Currencies of which the Dollar
      Equivalent does not exceed at any time outstanding the lesser of (a) the
      amount set forth opposite such Multicurrency Lender's name in Schedule I
      under the heading "Multicurrency Commitment", and (b) the U.S. Commitment
      of such Multicurrency Lender, in each case as such amount may be changed
      from time to time pursuant to the terms hereof. As of the date of this
      Agreement, the maximum aggregate amount of the Multicurrency Commitments
      of the Multicurrency Lenders is U.S.$750,000,000.

            "Multicurrency Commitment Percentage": as to any Multicurrency
      Lender at any time, the percentage which such Multicurrency Lender's
      Multicurrency Commitment then constitutes of the aggregate Multicurrency
      Commitments (or, if the Multicurrency Commitments have terminated or
      expired, the percentage which (a) the Dollar Equivalent of the Aggregate
      Multicurrency Outstandings of such Multicurrency Lender at such time

<PAGE>

                                                                              14

      constitutes of (b) the Dollar Equivalent of the Aggregate Multicurrency
      Outstandings of all Multicurrency Lenders at such time).

            "Multicurrency Lender": each Lender having an amount greater than
      zero set forth opposite such Lender's name in Schedule I under the heading
      "Multicurrency Commitment."

            "Multicurrency Loans": as defined in subsection 2.2(a).

            "Non-Extending Lenders": as defined in subsection 2.5(a).

            "Non-Multicurrency Lender": each U.S. Lender which is not a
      Multicurrency Lender.

            "Non-Recourse Debt": all Indebtedness which, in accordance with
      GAAP, is not required to be recognized on a consolidated balance sheet of
      the Borrower as a liability.

            "Notice of Multicurrency Loan Borrowing": with respect to a
      Multicurrency Loan, a notice from the Borrower in respect of such Loan,
      containing the information in respect of such Loan and delivered to the
      Person, in the manner and by the time, specified for a Notice of
      Multicurrency Loan Borrowing in respect of the currency of such Loan in
      the Administrative Schedule.

            "Original Closing Date": January 4, 1999.

            "Other Lender": as defined in subsection 10.8(b).

            "Participant": as defined in subsection 10.6(c).

            "Participating Member State": each state as described in any EMU
      Legislation.

            "Permitted Receivables Financing": at any date of determination, the
      aggregate amount of any Non-Recourse Debt outstanding on such date
      relating to securitizations or other similar off-balance sheet financings
      of accounts receivable of the Borrower or any of its Subsidiaries.

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

            "Prime Rate": the rate of interest per annum equal to the prime rate
      publicly announced by the majority of the Reference Lenders as its prime
      rate (or similar base rate) in effect at its principal office.

            "Quotation Day": in respect of the determination of the Eurocurrency
      Rate for any Interest Period for Multicurrency Loans in any Available
      Foreign Currency, the day on which quotations would ordinarily be given by
      prime banks in the London interbank market (or, if such Available Foreign
      Currency is Pounds Sterling, in the Paris interbank market) for deposits
      in such Available Foreign Currency for delivery on the first day of

<PAGE>

                                                                              15

      such Interest Period; provided, that if quotations would ordinarily be
      given on more than one date, the Quotation Day for such Interest Period
      shall be the last of such dates. On the date hereof, the Quotation Day in
      respect of any Interest Period for any Available Foreign Currency (other
      than Euros) is customarily the last London Banking Day prior to the
      beginning of such Interest Period which is (a) at least two London Banking
      Days prior to the beginning of such Interest Period and (b) a day on which
      banks are open for general banking business in the city which is the
      principal financial center of the country of issue of such Available
      Foreign Currency (and, in the case of Pounds Sterling, in Paris); and the
      Quotation Day in respect of any Interest Period for Euros is the day which
      is two Target Operating Days prior to the first day of such Interest
      Period.

            "Reference Lenders": JPMCB, Barclays Bank PLC, Citibank, N.A.,
      Deutsche Bank AG New York Branch and HSBC Bank USA.

            "Refunded Swing Line Loans": as defined in subsection 2.4(b).

            "Refunding Date": as defined in subsection 2.4(b).

            "Register": as defined in subsection 10.6(d).

            "Reimbursement Obligation": the obligation of the Borrower to
      reimburse the Issuing Lender pursuant to subsection 3.5 for amounts drawn
      under Letters of Credit.

            "Related Parties": means, with respect to any specified Person, such
      Person's affiliates and the respective directors, officers, employees,
      agents and advisors of such Person and such Person's affiliates.

            "Requested Multicurrency Loans": as defined in subsection 2.1(c).

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

            "Sale-Leasebacks": as defined in subsection 7.4.

            "S&P": Standard & Poor's Ratings Services and its successors.

            "Significant Subsidiary": as defined in Rule 1-02 of Regulation S-X
      promulgated by the U.S. Securities and Exchange Commission and included in
      the Borrower's most recently filed Form 10-K.

            "Spot Exchange Rate": with respect to any Available Foreign Currency
      or Alternate Swing Line Foreign Currency on a particular date, the rate at
      which such Available Foreign Currency or Alternate Swing Line Foreign
      Currency, as the case may be, may be exchanged into Dollars in London, as
      set forth on the relevant page of the Telerate Screen applicable to such
      Available Foreign Currency or Alternate Swing Line Foreign Currency, as
      the case may be, as reasonably determined by the Administrative Agent. In
      the event that such rate does not appear on any such page, the Spot
      Exchange

<PAGE>

                                                                              16

      Rate with respect to such Available Foreign Currency or Alternate Swing
      Line Foreign Currency, as the case may be, shall be determined by
      reference to such other publicly available service for displaying exchange
      rates as may be agreed upon by the Administrative Agent and the Borrower
      or, in the absence of such agreement, such Spot Exchange Rate shall
      instead be determined by reference to the Administrative Agent's spot rate
      of exchange quoted to prime banks in London in the London interbank market
      where its foreign currency exchange operations in respect of such
      Available Foreign Currency or Alternate Swing Line Foreign Currency, as
      the case may be, are then being conducted, at or about noon, local time,
      at such date for the purchase of Dollars with such Available Foreign
      Currency or Alternate Swing Line Foreign Currency, as the case may be, for
      delivery on a spot basis; provided, however, that if at the time of any
      such determination, for any reason, no such spot rate is being quoted and
      no other methods for determining the Spot Exchange Rate can be determined
      as set forth above, the Administrative Agent may use any reasonable method
      it deems applicable (after consultation with the Borrower if practicable)
      to determine such rate, and such determination shall be conclusive absent
      manifest error.

            "Status": as to the Borrower, the existence of Level I Status, Level
      II Status, Level III Status, Level IV Status or Level V Status, as the
      case may be.

            "Sterling" and "(pound)": pounds Sterling in lawful currency of the
      United Kingdom.

            "Sterling Cost of Funds Loan": Swing Line Loans denominated in
      Sterling the rate of interest applicable to which is based upon the Cost
      of Funds.

            "Subsidiary": as to any Person, a corporation, partnership, limited
      liability company or other entity of which shares of stock or other
      ownership interests having ordinary voting power (other than stock or such
      other ownership interests having such power only by reason of the
      happening of a contingency) to elect a majority of the board of directors
      or other managers of such corporation, partnership or other entity are at
      the time owned by such Person, or by one or more Subsidiaries, or by such
      Person and one or more Subsidiaries. Unless otherwise qualified, all
      references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall
      refer to a Subsidiary or Subsidiaries of the Borrower.

            "Swing Line Commitment": the obligation of the Swing Line Lenders to
      make Swing Line Loans pursuant to subsection 2.4 in an aggregate principal
      amount for all Swing Line Loans of all Swing Line Lenders at any one time
      outstanding not to exceed $500,000,000.

            "Swing Line Lenders": JPMCB and the other Lenders specified on
      Schedule I along with the corresponding allocations of the Swing Line
      Commitment for each such Lender, as such Schedule is modified from time to
      time to adjust such allocations and add additional Swing Line Lenders
      selected by the Borrower and acceptable to the Administrative Agent as
      being "Swing Line Lenders".

            "Swing Line Loans": as defined in subsection 2.4(a).

            "Swing Line Participation Amount": as defined in subsection 2.4(b).

<PAGE>

                                                                              17

            "Target Operating Day": any day that is not (a) a Saturday or
      Sunday, (b) Christmas Day or New Year's Day or (c) any other day on which
      the Trans-European Real-time Gross Settlement Operating System (or any
      successor settlement system) is not operating (as determined by the
      Administrative Agent).

            "Termination Date": June 18, 2009, as such date may be extended from
      time to time in accordance with subsection 2.5.

            "Tranche": the collective reference to Eurodollar Rate Loans or
      Multicurrency Loans the then current Interest Periods with respect to all
      of which begin on the same date and end on the same later date (whether or
      not such Loans shall originally have been made on the same day).

            "Transferee": as defined in subsection 10.6(e).

            "Treaty": the Treaty establishing the European Economic Community,
      being the Treaty of Rome of March 25, 1957 as amended by the Single
      European Act 1987 and the Maastricht Treaty (the Treaty on European Union)
      (which was signed on February 7, 1992 and came into force on November 1,
      1993) and as may, from time to time, be further amended, supplemented or
      otherwise modified.

            "Type": as to any U.S. Revolving Credit Loan, its nature as an ABR
      Loan or a Eurodollar Rate Loan, and as to any Competitive Loan, its nature
      as a Eurodollar Rate Competitive Loan or a Fixed Rate Loan.

            "Uniform Customs": in the case of (a) standby letters of credit, the
      International Standby Practices -- ISP 98 (1998), International Chamber of
      Commerce Publication No. 590, as the same may be amended or revised from
      time to time and (b) commercial letters of credit, the Uniform Customs and
      Practice for Documentary Credits (1993 Revision), International Chamber of
      Commerce Publication No. 500, as the same may be amended or revised from
      time to time.

            "U.S. Commitment": as to any U.S. Lender, the obligation of such
      U.S. Lender to make U.S. Revolving Credit Loans to the Borrower and
      participate in Swing Line Loans and Letters of Credit hereunder in an
      aggregate principal and/or stated amount at any one time outstanding not
      to exceed the Dollar amount set forth opposite such U.S. Lender's name on
      Schedule I under the heading U.S. Commitment, as the same may be changed
      from time to time pursuant to the terms hereof.

            "U.S. Commitment Percentage": as to any U.S. Lender at any time, the
      percentage which such U.S. Lender's U.S. Commitment then constitutes of
      the aggregate U.S. Commitments of all U.S. Lenders (or, if the U.S.
      Commitments have terminated or expired, the percentage which (a) the sum
      of the Aggregate U.S. R/C Outstandings and the Competitive Loans of such
      U.S. Lender at such time then constitutes of (b) the sum of the Aggregate
      U.S. R/C Outstandings and the Competitive Loans of all U.S. Lenders at
      such time).

            "U.S. Lenders": the banks and other financial institutions from time
      to time holding U.S. Commitments.

<PAGE>

                                                                              18

            "U.S. Revolving Credit Loans": as defined in subsection 2.1(a).

            "Utilization": as of the last day of any fiscal quarter of the
      Borrower, the percentage equivalent of a fraction (i) the numerator of
      which is the sum of (a) the average daily principal amount of Loans (or
      the Dollar Equivalent thereof) outstanding (after giving effect to any
      borrowing or payment on such date) during such quarter and (b) the average
      daily face amount of Letters of Credit outstanding during such quarter and
      (ii) the denominator of which is the average daily amount of the aggregate
      Commitments of all Lenders during such quarter, after giving effect to any
      reduction of the Commitments on such day. For purposes of subsection
      2.11(f), if for any reason any Loans remain outstanding after termination
      of the Commitments, the Utilization for each day on or after the date of
      such termination shall be deemed to be greater than 66%.

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

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

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

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

                 SECTION 2. AMOUNT AND TERMS OF THE FACILITIES

            2.1 Amount and Terms of the U.S. Commitments.

            (a) U.S. Commitments. (i) Subject to the terms and conditions
hereof, each U.S. Lender severally agrees to make revolving credit loans in
Dollars ("U.S. Revolving Credit Loans") to the Borrower from time to time during
the Commitment Period so long as after giving effect thereto (x) the Available
U.S. Commitment of each U.S. Lender is greater than or equal to zero and (y) the
Aggregate Total Outstandings of all Lenders do not exceed the Aggregate U.S.
Commitments. During the Commitment Period the Borrower may use the U.S.
Commitments by borrowing, prepaying the U.S. Revolving Credit Loans in whole or
in part, and reborrowing, all in accordance with the terms and conditions
hereof.

            (ii) The U.S. Revolving Credit Loans may from time to time be (A)
Eurodollar Rate Loans, (B) ABR Loans or (C) a combination thereof, as determined
by the Borrower and notified to the Administrative Agent in accordance with
subsections 2.1(b) and 2.8; provided that no U.S. Revolving Credit Loan shall be
made as a Eurodollar Rate Loan after the day that is one month prior to the
Termination Date.

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                                                                              19

            (b) Procedure for U.S. Revolving Credit Borrowing. The Borrower may
borrow U.S. Revolving Credit Loans under the U.S. Commitments during the
Commitment Period on any Business Day; provided that the Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, (i) three Business
Days prior to the requested borrowing date, if all or any part of the requested
U.S. Revolving Credit Loans are to be Eurodollar Rate Loans, or (ii) one
Business Day prior to the requested borrowing date, otherwise), specifying (A)
the amount to be borrowed, (B) the requested borrowing date, (C) whether the
Borrowing is to be of Eurodollar Rate Loans, ABR Loans or a combination thereof
and (D) if the Borrowing is to be entirely or partly of Eurodollar Rate Loans,
the respective amounts of each such Type of Loan and the respective lengths of
the initial Interest Periods therefor. Each Borrowing under the U.S. Commitments
shall be in an amount equal to $10,000,000 or a multiple of $1,000,000 in excess
thereof. Upon receipt of any such notice from the Borrower, the Administrative
Agent shall promptly notify each Lender thereof. Each Lender will make an amount
equal to its Funding Commitment Percentage of the principal amount of each
Borrowing available to the Administrative Agent for the account of the Borrower
at the office of the Administrative Agent specified in subsection 10.2 prior to
11:00 a.m., New York City time, on the borrowing date requested by the Borrower
in funds immediately available to the Administrative Agent. Such Borrowing will
then immediately be made available to the Borrower by the Administrative Agent
crediting the account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Administrative Agent by the U.S.
Lenders and in like funds as received by the Administrative Agent.

            (c) Borrowings of U.S. Revolving Credit Loans and Refunding of
Loans. If on any Borrowing Date on which the Borrower has requested the
Multicurrency Lenders to make Multicurrency Loans (the "Requested Multicurrency
Loans"), (i) the principal amount of the Requested Multicurrency Loans to be
made by any Multicurrency Lender exceeds the Available Multicurrency Commitment
of such Multicurrency Lender on such Borrowing Date (before giving effect to the
making and payment of any Loans required to be made pursuant to this subsection
2.1(c) on such Borrowing Date) and (ii) the Dollar Equivalent of the amount of
such excess is less than or equal to the Aggregate Available U.S. Commitments of
all Non-Multicurrency Lenders (before giving effect to the making and payment of
any Loans pursuant to this subsection 2.1(c) on such Borrowing Date), each
Non-Multicurrency Lender shall make a U.S. Revolving Credit Loan to the Borrower
on such Borrowing Date, and the proceeds of such U.S. Revolving Credit Loans
shall be simultaneously applied to repay outstanding U.S. Revolving Credit Loans
of the Multicurrency Lenders in each case in amounts such that, after giving
effect to (1) such borrowings and repayments and (2) the borrowing from the
Multicurrency Lenders of the Requested Multicurrency Loans, the Committed
Outstandings Percentage of each U.S. Lender will equal (as nearly as possible)
the percentage which such U.S. Lender's U.S. Commitment then constitutes of the
Aggregate U.S. Commitments of all U.S. Lenders. To effect such borrowings and
repayments, (x) not later than 12:00 Noon, New York City time, on such Borrowing
Date, the proceeds of such U.S. Revolving Credit Loans shall be made available
by each Non-Multicurrency Lender to the Administrative Agent at its office
specified in subsection 10.2 in U.S. Dollars and in immediately available funds
and the Administrative Agent shall apply the proceeds of such U.S. Revolving
Credit Loans toward repayment of outstanding U.S. Revolving Credit Loans and/or
Multicurrency Loans of the Multicurrency Lenders and (y) concurrently with the
repayment of such Loans on such Borrowing Date, (I) the Multicurrency Lenders
shall, in accordance with the applicable

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                                                                              20

provisions hereof, make the Requested Multicurrency Loans in an aggregate amount
equal to the amount so requested by the Borrower (but not in any event greater
than the Aggregate Available Multicurrency Commitments after giving effect to
the making of such repayment of any Loans on such Borrowing Date) and (II) the
Borrower shall pay to the Administrative Agent for the account of the Lenders
whose Loans to the Borrower are repaid on the Borrowing Date pursuant to this
subsection 2.1(c) all interest accrued on the amounts repaid to the date of
repayment, together with any amounts payable pursuant to subsection 2.19 in
connection with such repayment.

            2.2 Amounts and Terms of the Multicurrency Commitments.

            (a) Multicurrency Commitments. Subject to the terms and conditions
hereof, each Multicurrency Lender severally agrees to make revolving credit
loans (each, a "Multicurrency Loan") in any Available Foreign Currency to the
Borrower from time to time during the Commitment Period so long as after giving
effect thereto (A) the Available Multicurrency Commitment of such Multicurrency
Lender is greater than or equal to zero, (B) the Dollar Equivalent of the
Aggregate Multicurrency Outstandings for all Multicurrency Lenders does not
exceed $750,000,000 and (C) the Aggregate Total Outstandings of all Lenders do
not exceed the Aggregate U.S. Commitments. During the Commitment Period, the
Borrower may use the Multicurrency Commitments by borrowing, prepaying the
Multicurrency Loans in whole or in part, and reborrowing, all in accordance with
the terms and conditions hereof.

            (b) Procedure for Multicurrency Borrowing. The Borrower may request
the Multicurrency Lenders to make Multicurrency Loans during the Commitment
Period on any Business Day by delivering an irrevocable Notice of Multicurrency
Loan Borrowing. Each borrowing under the Multicurrency Commitments shall be in
an amount in an Available Foreign Currency of which the Dollar Equivalent is
equal to at least $10,000,000 (or, if the then Aggregate Available Multicurrency
Commitments are less than $10,000,000, such lesser amount). Upon receipt of any
such Notice of Multicurrency Borrowing from the Borrower, the Administrative
Agent shall promptly notify each Multicurrency Lender thereof. Not later than
the funding time for the relevant Available Foreign Currency set forth in the
Administrative Schedule, each Multicurrency Lender shall make an amount equal to
its Multicurrency Commitment Percentage of the principal amount of Multicurrency
Loans requested to be made on such Borrowing Date available to the
Administrative Agent at the funding office for the relevant Available Foreign
Currency set forth in the Administrative Schedule in the relevant Available
Foreign Currency and in immediately available funds. The amounts made available
by each Multicurrency Lender will then be made available on such Borrowing Date
to the Borrower at the funding office for the relevant Available Foreign
Currency set forth in the Administrative Schedule and in like funds as received
by the Administrative Agent.

            2.3 Competitive Borrowings.

            (a) The Competitive Bid Option. In addition to the U.S. Revolving
Credit Loans which may be made available pursuant to subsection 2.1, the
Borrower may, as set forth in this subsection 2.3, request the U.S. Lenders to
make offers to make Competitive Loans to the Borrower during the Commitment
Period. The U.S. Lenders may, but shall have no obligation to, make such offers,
and the Borrower may, but shall have no obligation to, accept any such offers in
the manner set forth in this subsection 2.3.

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                                                                              21

            (b) Competitive Bid Request. When the Borrower wishes to request
offers to make Competitive Loans under this subsection 2.3, it shall transmit to
the Administrative Agent a Competitive Bid Request to be received no later than
12:00 Noon (New York City time) on (x) the fourth Business Day prior to the date
of Borrowing proposed therein, in the case of a Borrowing of Eurodollar Rate
Competitive Loans or (y) the Business Day immediately preceding the date of
Borrowing proposed therein, in the case of a Fixed Rate Borrowing, specifying:

            (i) the proposed date of Borrowing, which shall be a Business Day,

            (ii) the aggregate principal amount of such Borrowing, which shall
be $5,000,000 or a multiple of $1,000,000 in excess thereof,

            (iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period contained in
subsection 1.1, and

            (iv) whether the Borrowing then being requested is to be of
Eurodollar Rate Competitive Loans or Fixed Rate Loans.

A Competitive Bid Request that does not conform substantially to the format of
Exhibit A may be rejected by the Administrative Agent in its sole discretion,
and the Administrative Agent shall promptly notify the Borrower of such
rejection. The Borrower may request offers to make Competitive Loans for more
than one Interest Period in a single Competitive Bid Request. No Competitive Bid
Request shall be given within three Business Days of any other Competitive Bid
Request pursuant to which the Borrower has made a Competitive Borrowing.

            (c) Invitation for Competitive Bids. Promptly after its receipt of a
Competitive Bid Request (but, in any event, no later than 3:00 p.m., New York
City time, on the date of such receipt) conforming to the requirements of
paragraph (b) above, the Administrative Agent shall send to each of the
Competitive Bid Lenders an Invitation for Competitive Bids which shall
constitute an invitation by the Borrower to each such Lender to bid, on the
terms and conditions of this Agreement, to make Competitive Loans pursuant to
the Competitive Bid Request.

            (d) Submission and Contents of Competitive Bids. (i) Each U.S.
Lender to which an Invitation for Competitive Bids is sent may submit a
Competitive Bid containing an offer or offers to make Competitive Loans in
response to such Invitation for Competitive Bids. Each Competitive Bid must
comply with the requirements of this paragraph (d) and must be submitted to the
Administrative Agent at its offices specified in subsection 10.2 not later than
(x) 9:30 a.m. (New York City time) on the third Business Day prior to the
proposed date of Borrowing, in the case of a Borrowing of Eurodollar Rate
Competitive Loans or (y) 9:30 a.m. (New York City time) on the date of the
proposed Borrowing, in the case of a Fixed Rate Borrowing; provided that any
Competitive Bids submitted by the Administrative Agent in the capacity of a U.S.
Lender may only be submitted if the Administrative Agent notifies the Borrower
of the terms of the offer or offers contained therein not later than fifteen
minutes prior to the deadline for the other U.S. Lenders. A Competitive Bid
submitted by a U.S. Lender pursuant to this paragraph (d) shall be irrevocable.

<PAGE>

                                                                              22

            (ii) Each Competitive Bid shall be in substantially the form of
Exhibit C and shall specify:

            (A) the date of the proposed Borrowing,

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

            (C) in the case of a Borrowing of Eurodollar Rate Competitive Loans,
      the Margin offered for each such Competitive Loan, expressed as a
      percentage (specified in increments of 1/10,000th of 1%) to be added to or
      subtracted from such base rate,

            (D) in the case of a Fixed Rate Borrowing, the rate of interest per
      annum (specified in increments of 1/10,000th of 1%) offered for each such
      Competitive Loan, and

            (E) the identity of the quoting U.S. Lender.

A Competitive Bid may set forth up to five separate offers by the quoting U.S.
Lender with respect to each Interest Period specified in the related Invitation
for Competitive Bids. Any Competitive Bid shall be disregarded by the
Administrative Agent if the Administrative Agent determines that it: (A) is not
substantially in the form of Exhibit C or does not specify all of the
information required by subsection 2.3(d)(ii); (B) contains qualifying,
conditional or similar language (except for a limitation on the maximum
principal amount which may be accepted); (C) proposes terms other than or in
addition to those set forth in the applicable Invitation for Competitive Bids or
(D) arrives after the time set forth in subsection 2.3(d)(i).

            (e) Notice to Borrower. The Administrative Agent shall promptly
(and, in any event, by 10:00 a.m., New York City time) notify the Borrower, by
telecopy, of all the Competitive Bids made (including all disregarded bids), the
Competitive Bid Rate and the principal amount of each Competitive Loan in
respect of which a Competitive Bid was made and the identity of the Lender that
made each bid. The Administrative Agent shall send a copy of all Competitive
Bids (including all disregarded bids) to the Borrower for its records as soon as
practicable after completion of the bidding process set forth in this subsection
2.3.

            (f) Acceptance and Notice by Borrower. The Borrower may in its sole
discretion, subject only to the provisions of this paragraph (f), accept or
reject any Competitive Bid (other than any disregarded bid) referred to in
paragraph (e) above. The Borrower shall notify the Administrative Agent by
telephone, confirmed immediately thereafter by telecopy in the form of a
Competitive Bid Accept/Reject Letter, whether and to what extent it wishes to
accept any or all of the bids referred to in paragraph (e) above not later than
(x) 10:30 a.m. (New York City time) on the third Business Day prior to the
proposed date of Borrowing, in the case of

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                                                                              23

a Eurodollar Rate Competitive Loan or (y) 10:30 a.m. (New York City time) on the
proposed date of Borrowing, in the case of a Fixed Rate Borrowing; provided
that:

            (i) the failure by the Borrower to give such notice shall be deemed
to be a rejection of all the bids referred to in paragraph (e) above;

            (ii) the aggregate principal amount of the Competitive Bids accepted
by the Borrower may not exceed the lesser of (A) the principal amount set forth
in the related Competitive Bid Request and (B) the excess, if any, of the
Aggregate U.S. Commitments then in effect over the Aggregate Total Outstandings
of all Lenders immediately prior to the making of such Competitive Loans (and
after giving effect to the use of proceeds thereof),

            (iii) the principal amount of each Competitive Borrowing must be
$5,000,000 or a multiple of $1,000,000 in excess thereof,

            (iv) unless there are any limitations contained in a quoting U.S.
Lender's Competitive Bid, the Borrower may not accept a Competitive Bid made at
a particular Competitive Bid Rate if it has decided to reject any portion of a
bid made at a lower Competitive Bid Rate for the same Interest Period, and

            (v) the Borrower may not accept any Competitive Bid that is
disregarded by the Administrative Agent pursuant to subsection 2.3(d)(ii) or
that otherwise fails to comply with the requirements of this Agreement.

A notice given by the Borrower pursuant to this paragraph (f) shall be
irrevocable.

            (g) Allocation by Administrative Agent. If offers are made by two or
more U.S. Lenders with the same Competitive Bid Rates for a greater aggregate
principal amount than the amount in respect of which such offers are accepted
for the related Interest Period, the principal amount of Competitive Loans in
respect of which such offers are accepted shall be allocated by the
Administrative Agent among such U.S. Lenders as nearly as possible (in integral
multiples of $1,000,000, as the Administrative Agent may deem appropriate) in
proportion to the aggregate principal amounts of such offers.

            (h) Notification of Acceptance. The Administrative Agent shall
promptly (and, in any event, by 11:00 a.m., New York City time) notify each
bidding U.S. Lender whether or not its Competitive Bid has been accepted (and if
so, in what amount and at what Competitive Bid Rate), and each successful bidder
will thereupon become bound, subject to the other applicable conditions hereof,
to make the Competitive Loan in respect of which its bid has been accepted.

            2.4 Terms of Swing Line Commitment.

            (a) Swing Line Commitment. (i) Subject to the terms and conditions
hereof, each Swing Line Lender agrees to make a portion of the credit otherwise
available to the Borrower under the Commitments from time to time during the
Commitment Period by making swing line loans in Dollars Euro, Sterling or any
Alternate Swing Line Foreign Currency ("Swing Line Loans") to the Borrower;
provided that (A) the sum of (x) the aggregate principal amount of Swing Line
Loans denominated in Dollars and (y) the Dollar Equivalent of the

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                                                                              24

aggregate principal amount of Swing Line Loans denominated in Euro, Sterling and
such Alternate Swing Line Foreign Currency, outstanding as at the date any Swing
Line Loan is made shall not exceed the Swing Line Commitment then in effect
(notwithstanding that the Swing Line Loans outstanding at any time, when
aggregated with any Swing Line Lender's other outstanding U.S. Revolving Credit
Loans hereunder, may exceed the Swing Line Commitment then in effect) and (B)
the Borrower shall not request, and no Swing Line Lender shall make, any Swing
Line Loan if, after giving effect to the making of such Swing Line Loan, the
Aggregate Available U.S. Commitments would be less than zero or the Aggregate
Total Outstandings of all the Lenders would exceed the Aggregate U.S.
Commitments; provided, further, that the Swing Line Lender shall not be required
to (but it may) make a Swing Line Loan to refinance an outstanding Swing Line
Loan. During the Commitment Period, the Borrower may use the Swing Line
Commitment by borrowing, repaying and reborrowing, all in accordance with the
terms and conditions hereof. Swing Line Loans shall be ABR Loans, Euro Cost of
Funds Loans, Sterling Cost of Funds Loans or Alternate Swing Line Foreign
Currency Cost of Funds Loans only.

            (ii) The Borrower shall repay all outstanding Swing Line Loans on
the Termination Date.

            (b) Procedure for Swing Line Borrowing; Refunding of Swing Line
Loans. (i) Whenever the Borrower desires that a Swing Line Lender make Swing
Line Loans it shall give such Swing Line Lender irrevocable telephonic notice
confirmed promptly in writing (which telephonic notice must be received by such
Swing Line Lender not later than 1:00 p.m., New York City time, in the case of
Swing Line Loans denominated in Dollars, and 2:00 p.m., London time, in the case
of Swing Line Loans denominated in Euro, Sterling or any Alternate Swing Line
Foreign Currency (or such other time as the Administrative Agent and such Swing
Line Lender may consent), on the proposed borrowing date), specifying (x) the
amount and currency to be borrowed and (y) the requested borrowing date (which
shall be a Business Day during the Commitment Period). A copy of each such
notice shall be promptly furnished by the Borrower to the Administrative Agent.
Subject to subsection 2.4(a), each borrowing under the Swing Line Commitment
shall be in an amount equal to $5,000,000 or a whole multiple of $1,000,000 in
excess thereof, in the case of Swing Line Loans denominated in Dollars,
(euro)5,000,000 or a whole multiple of (euro)1,000,000 in excess thereof, in the
case of Swing Line Loans denominated in Euro, (pound)5,000,000 or a whole
multiple of (pound)1,000,000 in excess thereof, in the case of Swing Line Loans
denominated in Sterling and in the case of Swing Line Loans denominated in such
Alternate Swing Line Foreign Currency, an amount in such Alternate Swing Line
Foreign Currency of which the Dollar Equivalent is equal to or greater than
$5,000,000. Not later than 3:00 p.m., New York City time, in the case of Swing
Line Loans denominated in Dollars, and 4:00 p.m., London time, in the case of
Swing Line Loans denominated in Euro, Sterling and such Alternate Swing Line
Foreign Currency, on the borrowing date specified in a notice in respect of
Swing Line Loans, such Swing Line Lender shall make available to the
Administrative Agent at its office specified in subsection 10.2 an amount in
immediately available funds equal to the amount of the Swing Line Loan to be
made by such Swing Line Lender. The Administrative Agent shall make the proceeds
of such Swing Line Loan available to the Borrower on such Borrowing Date by
crediting the account of the Borrower on the books of such office in immediately
available funds.

            (ii) Subject to subsection 2.4(b)(vii), each Swing Line Lender, at
any time and from time to time in its sole and absolute discretion may, on
behalf of the Borrower (which

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                                                                              25

hereby irrevocably directs such Swing Line Lender to act on its behalf), on one
Business Day's notice given by such Swing Line Lender no later than 12:00 Noon,
New York City time, request each U.S. Lender to make, and each U.S. Lender
hereby agrees to make, a U.S. Revolving Credit Loan, in an amount equal to such
Lender's Funding Commitment Percentage of the aggregate amount of the Swing Line
Loans made by such Swing Line Lender (the "Refunded Swing Line Loans")
outstanding on the date of such notice, to repay such Swing Line Lender;
provided, that unless any Swing Line Lender otherwise agrees in its sole
discretion, any Swing Line Loan outstanding for five Business Days shall be
automatically so refunded on such fifth Business Day. Each U.S. Lender shall
make the amount of such U.S. Revolving Credit Loan available to the
Administrative Agent at its office set forth in subsection 10.2 in immediately
available funds, not later than 10:00 a.m., New York City time, one Business Day
after the date of such notice. The proceeds of such U.S. Revolving Credit Loans
shall be immediately applied by such Swing Line Lender to repay its Refunded
Swing Line Loans.

            (iii) If prior to the time a U.S. Revolving Credit Loan would have
otherwise been made pursuant to subsection 2.4(b)(ii), one of the events
described in Section 8(g) shall have occurred and be continuing with respect to
the Borrower or if for any other reason, as determined by a Swing Line Lender in
its sole discretion, U.S. Revolving Credit Loans may not be made as contemplated
by subsection 2.4(b)(ii), each U.S. Lender shall, on the date such U.S.
Revolving Credit Loan was to have been made pursuant to the notice referred to
in Section 2.4(b)(ii) (the "Refunding Date"), purchase for cash an undivided
participating interest in an amount equal to (A) its Funding Commitment
Percentage times (B) the aggregate principal amount of Swing Line Loans of each
Swing Line Lender then outstanding which were to have been repaid with such U.S.
Revolving Credit Loans (the "Swing Line Participation Amount").

            (iv) Whenever, at any time after a Swing Line Lender has received
from any U.S. Lender such U.S. Lender's Swing Line Participation Amount, such
Swing Line Lender receives any payment on account of the Swing Line Loans of
such Swing Line Lender, such Swing Line Lender will distribute to such U.S.
Lender its Swing Line Participation Amount (appropriately adjusted, in the case
of interest payments, to reflect the period of time during which such U.S.
Lender's participating interest was outstanding and funded and, in the case of
principal and interest payments, to reflect such U.S. Lender's pro rata portion
of such payment if such payment is not sufficient to pay the principal of and
interest on all Swing Line Loans then due); provided, however, that in the event
that such payment received by such Swing Line Lender is required to be returned,
such U.S. Lender will return to such Swing Line Lender any portion thereof
previously distributed to it by such Swing Line Lender.

            (v) Each U.S. Lender's obligation to make the Loans referred to in
subsection 2.4(b)(ii) and to purchase participating interests pursuant to
subsection 2.4(b)(iii) shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation, (A) any setoff,
counterclaim, recoupment, defense or other right which such U.S. Lender or the
Borrower may have against any Swing Line Lender, the Borrower or any other
Person for any reason whatsoever; (B) the occurrence or continuance of a Default
or an Event of Default or the failure to satisfy any of the other conditions
specified in Section 5; (C) any adverse change in the condition (financial or
otherwise) of the Borrower; (D) any breach of this Agreement by the Borrower or
any other Lender; or (E) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.

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                                                                              26

            (vi) Within two Business Days following the last day of each
calendar month, each Swing Line Lender shall deliver to the Administrative Agent
and the Borrower a statement showing the average daily principal amount of the
Swing Line Loans outstanding during the calendar quarter most recently ended.

            (vii) The Borrower hereby irrevocably and unconditionally authorizes
each Swing Line Lender immediately prior to the time that any Swing Line Loan is
to be refunded pursuant to subsection 2.4(b)(ii) or a participating interest is
to be purchased pursuant to subsection 2.4(b)(iii) to convert into Dollars (at
the actual exchange rate then available to it, provided that it shall use its
reasonable best efforts to obtain a rate as least as favorable to the Borrower
as the Spot Exchange Rate) all amounts then owing to it on account of any Swing
Line Loan denominated in Euro, Sterling and any Alternate Swing Line Foreign
Currency. Such Swing Line Lender and each U.S. Lender hereby irrevocably and
unconditionally agrees that (A) no U.S. Lender shall have any obligation to make
any U.S. Revolving Credit Loans pursuant to subsection 2.4(b)(ii) or purchase
any participating interests in Swing Line Loans pursuant to subsection
2.4(b)(iii) on account of such Euro-denominated, Sterling-denominated or such
Alternate Swing Line Foreign Currency-denominated Swing Line Loans until such
time as such Swing Line Lender has effected the conversion described above and
provided written notice to the Administrative Agent (which shall promptly
forward such notice to the Lenders) of the amount of Dollars owing to it as a
result of such conversion and (B) from and after the date upon which such
conversion is effected, the obligations of the U.S. Lenders under clauses (ii)
and (iii) of subsection 2.4(b) shall be satisfied only by the payment to such
Swing Line Lender of such U.S. Lender's U.S. Commitment Percentage of the amount
of Dollars so notified to the Administrative Agent.

            (viii) Subject to the terms of this Agreement, the Borrower may, at
any time and from time to time, prepay a Euro Cost of Funds Loan in Euro, a
Sterling Cost of Funds Loan in Sterling or any Alternate Swing Line Foreign
Currency Cost of Funds Loan in such Alternate Swing Line Foreign Currency, other
than with the proceeds of another Swing Line Loan.

            2.5 Extension of Termination Date.

            (a) The Borrower may, by written notice to the Administrative Agent
(such notice being an "Extension Notice") given at any time, from time to time
but in any event, no later than sixty days prior to the Termination Date (the
date of such notice, the "Notice Date"), request the Lenders to consider an
extension of the then applicable Termination Date to a date specified in the
Extension Notice (the "Extended Termination Date"). The Administrative Agent
shall promptly transmit any Extension Notice to each Lender. Each Lender shall
notify the Administrative Agent whether it wishes to extend the then applicable
Termination Date no later than twenty days after the Notice Date, and any such
notice given by a Lender to the Administrative Agent, once given, shall be
irrevocable as to such Lender. The Administrative Agent shall promptly notify
the Borrower of each Lender's notice that it wishes to extend (each, an
"Extension Acceptance Notice"). At the end of such twenty day period, the
Borrower may, at its option, elect to extend the period in which Extension
Acceptance Notices may be received for an additional twenty days. Any Lender
which does not expressly notify the Administrative Agent during such twenty day
period or forty day period, as the case may be, that it wishes to so extend the
then applicable Termination Date shall be deemed to have rejected the Borrower's
request for extension of such Termination Date. Lenders consenting to extend the
then

<PAGE>

                                                                              27

applicable Termination Date are hereinafter referred to as "Continuing Lenders",
and Lenders declining to consent to extend such Termination Date (or Lenders
deemed to have so declined) are hereinafter referred to as "Non-Extending
Lenders". If the Majority Lenders have elected (in their sole and absolute
discretion) to so extend the Termination Date, the Administrative Agent shall
notify the Borrower of such election by such Majority Lenders no later than five
days after the date when Extension Acceptance Notices are due, and effective on
the date of such notice by the Administrative Agent to the Borrower (the
"Extension Date"), the Termination Date shall be automatically and immediately
so extended to the Extended Termination Date. No extension will be permitted
hereunder without the consent of the Majority Lenders and in no event shall the
period from the Extension Date to the Extended Termination Date exceed five
years. Upon the delivery of an Extension Notice and upon the extension of the
Termination Date pursuant to this subsection 2.5, the Borrower shall be deemed
to have represented and warranted on and as of the Notice Date and the Extension
Date, as the case may be, that no Default or Event of Default has occurred and
is continuing. Notwithstanding anything contained in this Agreement to the
contrary, no Lender shall have any obligation to extend the Termination Date,
and each Lender may at its option, unconditionally and without cause, decline to
extend the Termination Date.

            (b) If the Termination Date shall have been extended in accordance
with subsection 2.5(a), all references herein to the "Termination Date" shall
refer to the Extended Termination Date.

            (c) If any Lender shall determine not to extend the Termination Date
as requested by any Extension Notice given by the Borrower pursuant to
subsection 2.5(a), the Commitment of such Lender shall terminate on the
Termination Date without giving any effect to such proposed extension, and the
Borrower shall on such date pay to the Administrative Agent, for the account of
such Lender, the principal amount of, and accrued interest on, such Lender's
Loans, together with any amounts payable to such Lender pursuant to subsection
2.19 and any fees or other amounts owing to such Lender under this Agreement;
provided that if the Borrower has replaced such Non-Extending Lender pursuant to
subsection 2.5(d) below then the provisions of such subsection shall apply. The
aggregate U.S. Commitments and/or the aggregate Multicurrency Commitments shall
be reduced by the amount of the U.S. Commitment and/or the Multicurrency
Commitment, as the case may be, of such Non-Extending Lender to the extent the
U.S. Commitment and/or the Multicurrency Commitment, as the case may be, of such
Non-Extending Lender has not been transferred to one or more Continuing Lenders
pursuant to subsection 2.5(d) below.

            (d) A Non-Extending Lender shall be obligated, at the request of the
Borrower and subject to payment by the Borrower to the Administrative Agent for
the account of such Non-Extending Lender of the principal amount of, and accrued
interest on, such Lender's Loans, together with any amounts payable to such
Lender pursuant to subsection 2.19 and any fees or other amounts owing to such
Lender under this Agreement, to transfer without recourse, representation or
warranty (other than good title to its Loans) to such Non-Extending Lender, at
any time prior to the Termination Date applicable to such Non-Extending Lender,
all of its rights and obligations hereunder to another financial institution or
group of financial institutions nominated by the Borrower and willing to
participate in the facility in the place of such Non-Extending Lender; provided
that, if such transferee is not a Lender, such transferee(s) satisfies all the
requirements of this Agreement and the Administrative Agent shall have consented
to such transfer, which consent shall not be unreasonably withheld. Each such

<PAGE>

                                                                              28

transferee shall become a Continuing Lender hereunder in replacement of the
Non-Extending Lender, with the Termination Date applicable to such Continuing
Lender's Commitments being the Extended Termination Date, and shall enjoy all
rights and assume all obligations on the part of the Lenders set forth in this
Agreement. Simultaneously with such transfer, each such transferee shall execute
and deliver to the Administrative Agent a written agreement assuming all
obligations of the Lenders set forth in this Agreement, which agreement shall be
reasonably satisfactory in form and substance to the Administrative Agent.

            (e) If the Termination Date shall have been extended in respect of
the Continuing Lenders in accordance with subsection 2.5(a), any notice of
borrowing pursuant to subsection 2.1(b), 2.2(b) or 2.3 specifying a Borrowing
Date occurring after the Termination Date applicable to a Non-Extending Lender
or requesting an Interest Period extending beyond such date (a) shall have no
effect in respect of such Non-Extending Lender and (b) shall not specify a
requested aggregate principal amount exceeding the Aggregate Available U.S.
Commitment and/or the Aggregate Available Multicurrency Commitment (calculated
on the basis of the U.S. Commitments and/or the Multicurrency Commitments, as
the case may be, of the Continuing Lenders).

            2.6 Termination or Reduction of Commitments. The Borrower shall
have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the U.S. Commitments and/or the Multicurrency
Commitments when no Loans or Letters of Credit are than outstanding or, from
time to time, to reduce the unutilized portion of the U.S. Commitments and/or
the Multicurrency Commitments. Any such reduction shall be in an amount equal to
$10,000,000 or a multiple of $1,000,000 in excess thereof, or the Dollar
Equivalent thereof (or, if the unutilized portion of the U.S. Commitments and/or
the Multicurrency Commitments is less than $10,000,000 or the Dollar Equivalent
thereof, such lesser amount), and shall reduce permanently the U.S. Commitments
and/or the Multicurrency Commitments, as the case may be then in effect.

            2.7 Prepayments. (a) The Borrower may, at any time and from time to
time, prepay the U.S. Revolving Credit Loans, in whole or in part, without
premium or penalty (but subject to the provisions of subsection 2.19), upon: at
least two Business Days' irrevocable notice to the Administrative Agent
specifying the date and amount of prepayment and whether the prepayment is of
Eurodollar Rate Loans, ABR Loans or a combination thereof, and, if of a
combination thereof, the amount allocable to each. Upon receipt of any such
notice the Administrative Agent shall promptly notify each U.S. Lender thereof.
If any such notice is given, the amount specified in such notice shall be due
and payable on the date specified therein. Partial prepayments shall be in an
aggregate principal amount of $10,000,000 or a multiple of $1,000,000 in excess
thereof.

            (b) Unless any Swing Line Lender otherwise agrees in its sole
discretion, the Borrower shall prepay all Swing Line Loans then outstanding
simultaneously with each Borrowing of U.S. Revolving Credit Loans and may prepay
(without premium or penalty) any Swing Line Loans then outstanding upon one
Business Day's notice.

            (c) The Borrower may at any time and from time to time prepay,
without premium or penalty (but subject to the provisions of subsection 2.19),
the Multicurrency Loans, in whole or in part, upon at least three Business Days'
irrevocable notice to the Administrative

<PAGE>

                                                                              29

Agent specifying the date and amount of prepayment. Upon the receipt of any such
notice, the Administrative Agent shall promptly notify each Multicurrency Lender
thereof. If any such notice is given, the amount specified in such notice shall
be due and payable on the date specified therein. Partial prepayments of
Multicurrency Loans shall be in an aggregate principal amount of which the
Dollar Equivalent is at least $10,000,000 or a whole multiple of $1,000,000 in
excess thereof (or such lesser amount equal to the Dollar Equivalent of all
Multicurrency Loans in any Available Foreign Currency then outstanding).

            (d) If, at any time during the Commitment Period, for any reason (i)
the Aggregate Total Outstandings of all Lenders exceed the Aggregate U.S.
Commitments then in effect by more than 5% for five consecutive Business Days,
or (ii) the Aggregate R/C Outstandings of any Lender exceeds the U.S. Commitment
of such Lender then in effect by more than 5% for five consecutive Business
Days, then the Borrower shall, upon the request of the Administrative Agent, (i)
immediately prepay the Swing Line Loans and the U.S. Revolving Credit Loans
and/or (ii) immediately prepay the Multicurrency Loans, in an aggregate
principal amount at least sufficient to reduce any such excess to 0%.

            (e) Each prepayment of Loans pursuant to this subsection 2.7 shall
be accompanied by accrued and unpaid interest on the amount prepaid to the date
of prepayment and any amounts payable under subsection 2.19 in connection with
such prepayment.

            (f) Notwithstanding the foregoing, mandatory prepayments of U.S.
Revolving Credit Loans or Multicurrency Loans that would otherwise be required
pursuant to this subsection 2.7 solely as a result of fluctuations in Spot
Exchange Rates from time to time shall only be required to be made pursuant to
this subsection 2.7 on the last Business Day of each month on the basis of the
Spot Exchange Rate in effect on such Business Day.

            2.8 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Revolving Credit Loans to ABR Loans by
giving the Administrative Agent at least one Business Day's prior irrevocable
notice of such election; provided that any such conversion of Eurodollar
Revolving Credit Loans may only be made on the last day of an Interest Period
with respect thereto. The Borrower may elect from time to time to convert ABR
Loans to Eurodollar Revolving Credit Loans by giving the Administrative Agent at
least three Business Days' prior irrevocable notice of such election. Any such
notice of conversion to Eurodollar Revolving Credit Loans shall specify the
length of the initial Interest Period or Interest Periods therefor. Upon receipt
of any such notice the Administrative Agent shall promptly notify each Lender
thereof. All or any part of outstanding Eurodollar Revolving Credit Loans and
ABR Loans may be converted as provided herein; provided that (i) no Loan may be
converted into a Eurodollar Revolving Credit Loan when any Event of Default has
occurred and is continuing and (ii) no Loan may be converted into a Eurodollar
Revolving Credit Loan after the date that is one month prior to the Termination
Date.

            (b) Any Eurodollar Revolving Credit Loans may be continued as such
upon the expiration of the then current Interest Period with respect thereto by
the Borrower giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection 1.1,
of the length of the next Interest Period to be applicable to such Eurodollar
Revolving Credit Loans; provided that no Eurodollar Revolving Credit Loan may be
continued as such (i) when any Event of Default has occurred and is

<PAGE>

                                                                              30

continuing or (ii) after the date that is one month prior to the Termination
Date and provided, further, that if the Borrower shall fail to give any required
notice as described above in this paragraph, or if such continuation is not
permitted pursuant to the preceding proviso, such Eurodollar Revolving Credit
Loans shall be automatically converted to ABR Loans on the last day of such then
expiring Interest Period.

            (c) Any Multicurrency Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection 1.1,
of the length of the next Interest Period to be applicable to such Multicurrency
Loans, provided, that if the Borrower shall fail to (i) give any required notice
as described above in this paragraph or to (ii) provide at least 3 Business
Days' notice that such Loans will be repaid at the end of such Interest Period,
such Multicurrency Loans shall automatically be continued for an Interest Period
of one month.

            2.9 Minimum Amounts of Tranches. All borrowings, conversions and
continuations of U.S. Revolving Credit Loans and Multicurrency Loans (other than
Competitive Bid Loans and Revolving Credit Loans into which Swing Line Loans
were converted) hereunder and all selections of Interest Periods hereunder shall
be in such amounts and be made pursuant to such elections so that, after giving
effect thereto, (i) the aggregate principal amount of the Eurodollar Rate Loans
comprising each Tranche shall be equal to $10,000,000 or a whole multiple of
$1,000,000 in excess thereof, (ii) the aggregate principal amount of the
Multicurrency Loans comprising each Tranche shall be in an amount of which the
Dollar Equivalent is at least $10,000,000 (determined at the time of borrowing
or continuation), provided that Multicurrency Loans in any Tranche which were in
such minimum amount at the times of borrowing may be continued as such at less
than such minimum amount if such reduction is solely a result of currency
fluctuations, and (iii) there shall not be more than 20 Tranches at any one time
outstanding.

            2.10 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay to each Lender (i) on the Termination Date (or
such earlier date as the Loans become due and payable pursuant to Section 8 or
subsection 2.7), the unpaid principal amount of each Loan made by such Lender
and (ii) on the last day of the applicable Interest Period, the unpaid principal
amount of each Competitive Loan made by such Lender. The Borrower hereby further
agrees to pay interest in immediately available funds at the office of the
Administrative Agent on the unpaid principal amount of such Loans from time to
time from the date hereof until payment in full thereof at the rates per annum,
and on the dates, set forth in subsection 2.11. Except as otherwise specified in
this Agreement, amounts owing hereunder on account of principal and interest on
Loans shall be paid in the currency in which such Loan was borrowed and amounts
owing hereunder on account of fees shall be paid in Dollars.

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

<PAGE>

                                                                              31

            (c) The Administrative Agent shall maintain the Register pursuant to
subsection 10.6(d), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount of each Loan made
hereunder, the Type of each Loan made and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to each Lender hereunder and (iii) the
amount of any sum received by the Administrative Agent hereunder from the
Borrower and each Lender's share thereof.

            (d) The entries made in the Register and accounts maintained
pursuant to paragraphs (b) and (c) of this subsection 2.10 shall, to the extent
permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded; provided, however,
that the failure of any Lender or the Administrative Agent to maintain such
account, such Register or such subaccount, as applicable, or any error therein,
shall not in any manner affect the obligation of the Borrower to repay (with
applicable interest) the Loans made to the Borrower by such Lender in accordance
with the terms of this Agreement.

            (e) If, on any date on which the U.S. Lenders are obligated to make
the Loans referred to in subsection 2.4(b)(ii) or purchase participating
interests pursuant to subsection 2.4(b)(iii), the aggregate amount of such Loans
or participating interests, as the case may be, is less than the amount of the
related Swing Line Loans which are being refunded or in which participating
interests are being purchased, as the case may be, because changes in currency
exchange rates shall cause one or more of the U.S. Lenders to not have an
Available U.S. Commitment, the Borrower shall on any such date repay such
related Swing Line Loans by the amount of such difference.

            2.11 Interest Rates and Payment Dates. (a) Each ABR Loan shall bear
interest at a rate per annum equal to the ABR.

            (b) The Loans comprising each Eurodollar Rate Borrowing shall bear
interest at a rate per annum equal to (i) in the case of each Eurodollar
Revolving Credit Loan, the Eurodollar Rate for the Interest Period in effect for
such Borrowing plus the Applicable Margin and (ii) in the case of each
Eurodollar Rate Competitive Loan, the Eurodollar Rate for the Interest Period in
effect for such Borrowing plus (or minus, as the case may be) the Margin offered
by the Lender making such Loan and accepted by the Borrower pursuant to
subsection 2.3.

            (c) Each Euro Cost of Funds Loan, Sterling Cost of Funds Loan and
Alternate Swing Line Foreign Currency Loan shall bear interest at a rate per
annum equal to the Cost of Funds for such Loan plus the Applicable Margin.

            (d) Each Multicurrency Loan shall bear interest for each day during
each Interest Period with respect thereto at a rate per annum equal to the
Eurocurrency Rate determined for such Interest Period plus the Applicable Margin
in effect for such day.

            (e) Each Fixed Rate Loan shall bear interest at a rate per annum
equal to the fixed rate of interest offered by the Lender making such Loan and
accepted by the Borrower pursuant to subsection 2.3.

<PAGE>

                                                                              32

            (f) Subject to the provisions of the following sentence, interest
shall be payable in arrears on each Interest Payment Date; provided that
interest accruing pursuant to paragraph (h) of this subsection 2.11 shall be
payable from time to time on demand. The amount of interest on U.S. Revolving
Credit Loans and Multicurrency Loans to be paid on any Interest Payment Date
shall be the amount which would be due and payable if the Utilization for the
period for which such interest is paid was less than 33%. On the first Business
Day following the last day of each fiscal quarter of the Borrower and on the
Termination Date (or, if earlier, on the date upon which both the Commitments
are terminated and the Loans are paid in full), the Borrower shall pay to the
Administrative Agent, for the ratable benefit of the Lenders, an additional
amount of interest equal to the difference (if any) between (i) the amount of
interest which would have been payable during such fiscal quarter (or, in the
case of the payment due on the Termination Date, the portion thereof ending on
such date) after giving effect to the actual Utilization during such period and
(ii) the amount of interest which actually was paid during such period.

            (g) The "Applicable Margin" with respect to each Type of Eurodollar
Revolving Credit Loan and each Multicurrency Loan at any date and with respect
to each Euro Cost of Funds Loan, Sterling Cost of Funds Loan and Alternate Swing
Line Foreign Currency Loan shall be the applicable percentage amount set forth
in the table below based upon the Utilization and Status on such date:

<TABLE>
<CAPTION>
                                                 Level I     Level II    Level III  Level IV    Level V
                                                 Status       Status      Status     Status     Status
                                                 ------       ------      ------     ------     ------
<S>                                              <C>         <C>         <C>        <C>         <C>
If Utilization is less than 33%:

   Eurodollar Rate Loans                          0.275%      0.375%      0.700%     1.050%      1.200%
   Euro Cost of Funds Loans                       0.275%      0.375%      0.700%     1.050%      1.200%
   Sterling Cost of Funds Loans                   0.275%      0.375%      0.700%     1.050%      1.200%
   Alternate Swing Line Foreign
     Currency Cost of Funds Loans                 0.275%      0.375%      0.700%     1.050%      1.200%
   ABR Loans                                          0%          0%          0%         0%          0%
   Multicurrency Loans                            0.275%      0.375%      0.700%     1.050%      1.200%

If Utilization is equal to or
  greater than 33% but less
  than 66%:

   Eurodollar Rate Loans                          0.400%      0.500%      0.825%     1.050%      1.200%
   Euro Cost of Funds Loans                       0.400%      0.500%      0.825%     1.050%      1.200%
   Sterling Cost of Funds Loans                   0.400%      0.500%      0.825%     1.050%      1.200%
   Alternate Swing Line Foreign
     Currency Cost of Funds Loans                 0.400%      0.500%      0.825%     1.050%      1.200%
   ABR Loans                                          0%          0%          0%         0%          0%
   Multicurrency Loans                            0.400%      0.500%      0.825%     1.050%      1.200%
</TABLE>

<PAGE>

                                                                              33

<TABLE>
<CAPTION>
                                                 Level I     Level II    Level III  Level IV    Level V
                                                 Status       Status      Status     Status     Status
                                                 ------       ------      ------     ------     ------
<S>                                              <C>         <C>         <C>        <C>         <C>
If Utilization is equal to or greater
  than 66%:

   Eurodollar Rate Loans                          0.525%      0.625%      0.950%     1.050%      1.200%
   Euro Cost of Funds Loans                       0.525%      0.625%      0.950%     1.050%      1.200%
   Sterling Cost of Funds Loans                   0.525%      0.625%      0.950%     1.050%      1.200%
   Alternate Swing Line Foreign
     Currency Cost of Funds Loans                 0.525%      0.625%      0.950%     1.050%      1.200%
   ABR Loans                                          0%          0%          0%         0%          0%
   Multicurrency Loans                            0.525%      0.625%      0.950%     1.050%      1.200%
</TABLE>

            (h) If all or a portion of (i) the principal amount of any Loan,
(ii) any interest payable thereon or (iii) any facility fee or other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum which is (x) in the case of overdue principal, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
subsection 2.11 plus 2% or (y) in the case of overdue interest, facility fee or
other amount, the rate described in paragraph (a) of this subsection 2.11 plus
2%, in each case from the date of such non-payment until such amount is paid in
full (as well after as before judgment). For purposes of this Agreement,
principal shall be "overdue" only if not paid in accordance with the provisions
of subsection 2.10.

            2.12 Facility Fee. The Borrower shall pay to the Administrative
Agent, for the ratable account of the Lenders, a facility fee in Dollars at the
rate per annum equal to (a) for each day that the Borrower has Level I Status,
0.100% of the aggregate Commitments on such day, (b) for each day that the
Borrower has Level II Status, 0.125% of the aggregate Commitments, (c) for each
day that the Borrower has Level III Status, 0.175% of the aggregate Commitments,
(d) for each day that the Borrower has Level IV Status, 0.200% of the aggregate
Commitments and (e) for each day that the Borrower has Level V Status, 0.300% of
the aggregate Commitments. On the first Business Day following the last day of
each fiscal quarter of the Borrower and on the Termination Date (or, if earlier,
on the date upon which both the Commitments are terminated and the Loans are
paid in full), the Borrower shall pay to the Administrative Agent, for the
ratable benefit of the Lenders, the portion of such facility fee which accrued
during the fiscal quarter most recently ended (or, in the case of the payment
due on the Termination Date, the portion thereof ending on such date). Such
facility fee shall be based upon the aggregate Commitments of the Lenders from
time to time, regardless of the Utilization from time to time thereunder.

            2.13 Computation of Interest and Fees. (a) Interest on all Loans
shall be computed on the basis of the actual number of days elapsed over a year
of 360 days, except that interest on ABR Loans which are determined by reference
to the Prime Rate shall be computed over a year of 365 or 366 days as
appropriate (in each case including the first day but excluding the last day).
Each determination of an interest rate by the Administrative Agent pursuant to
any

<PAGE>

                                                                              34

provision of this Agreement shall be conclusive and binding on the Borrower and
the Lenders in the absence of manifest error. All fees shall be computed on the
basis of a year composed of twelve 30-day months. At any time and from time to
time upon request of the Borrower, (i) the Administrative Agent shall deliver to
the Borrower a statement showing the quotations used by the Administrative Agent
in determining any interest rate applicable to U.S. Revolving Credit Loans
and/or the Multicurrency Loans pursuant to this Agreement and (ii) the relevant
Swing Line Lender shall deliver to the Borrower a statement showing the
quotations used by such Swing Line Lender in determining any interest rate
applicable to Swing Line Loans made by such Swing Line Lender pursuant to this
Agreement. Each change in the Applicable Margin applicable to Loans or the
Facility Fee as a result of a change in the Borrower's Status shall become
effective on the date upon which such change in Status occurs.

            (b) If any Reference Lender shall for any reason no longer have a
Commitment, such Reference Lender shall thereupon cease to be a Reference
Lender, and if, as a result thereof, there shall only be one Reference Lender
remaining, the Borrower and the Administrative Agent (after consultation with
the Lenders) shall, by notice to the Lenders, designate another Lender as a
Reference Lender so that there shall at all times be at least two Reference
Lenders.

            (c) Each Reference Lender shall use its best efforts to furnish
quotations of rates to the Administrative Agent as contemplated hereby. If any
of the Reference Lenders shall be unable or shall otherwise fail to supply such
rates to the Administrative Agent upon its request, the rate of interest shall,
subject to the provisions of subsection 2.14, be determined on the basis of the
quotations of the remaining Reference Lenders.

            2.14 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:

            (a) the Administrative Agent shall have reasonably determined (which
reasonable determination shall be conclusive and binding upon the Borrower)
that, by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate or the
Eurocurrency Rate, as the case may be, for such Interest Period, or

            (b) the Administrative Agent has received notice from (i) the
Majority U.S. Lenders that the Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the cost to such
U.S. Lenders of making or maintaining their Eurodollar Rate Loans or (ii) the
Majority Multicurrency Lenders that the Eurocurrency Rate determined (or to be
determined) for such Interest Period will not adequately and fairly reflect the
cost to such Multicurrency Lenders of making or maintaining their Multicurrency
Loans,

            then the Administrative Agent shall give telecopy or telephonic
notice thereof to the Borrower and the relevant Lenders as soon as practicable
thereafter. Until such time as the Eurodollar Rate or the Eurocurrency Rate, as
the case may be, can be determined by the Administrative Agent in the manner
specified in the definitions of such terms in subsection 1.1, no further
Eurodollar Rate Loans or, as the case may be, Multicurrency Loans (with respect
to the Available Foreign Currency for which the Eurocurrency Rate cannot be
determined only) shall be continued as such at the end of the then current
Interest Periods or (other than any

<PAGE>

                                                                              35

Eurodollar Rate Loans or Multicurrency Loans previously requested and with
respect to which the Eurodollar Rate or Eurocurrency Rate, as the case may be,
was determined) shall be made, nor shall the Borrower have the right to convert
ABR Loans into Eurodollar Rate Loans.

            2.15 Pro Rata Treatment and Payments. (a) (i) Except as provided in
subsection 2.1(c), each borrowing of U.S. Revolving Credit Loans by the Borrower
from the U.S. Lenders hereunder shall be made pro rata according to the Funding
Commitment Percentages of the U.S. Lenders in effect on the date of such
borrowing. Each payment by the Borrower on account of any facility fee hereunder
shall be allocated by the Administrative Agent among the U.S. Lenders in
accordance with the respective amounts which such U.S. Lenders are entitled to
receive pursuant to subsection 2.12. Any reduction of the U.S. Commitments of
the U.S. Lenders shall be allocated by the Administrative Agent among the U.S.
Lenders pro rata according to the U.S. Commitment Percentages of the U.S.
Lenders. Except as provided in subsection 2.1(c), 2.7 or 2.20, each payment
(other than any optional prepayment) by the Borrower on account of principal of
and interest on the U.S. Revolving Credit Loans shall be allocated by the
Administrative Agent pro rata according to the respective principal amounts
thereof then due and owing to each U.S. Lender. Each optional prepayment by the
Borrower on account of principal of or interest on the U.S. Revolving Credit
Loans shall be allocated by the Administrative Agent pro rata according to the
respective outstanding principal amounts thereof. Each payment by the Borrower
on account of principal of and interest on any Borrowing of Competitive Loans
shall be made pro rata among the Lenders participating in such Borrowing
according to the respective principal amounts of their outstanding Competitive
Loans comprising such Borrowing. Each payment by the Borrower on account of
principal of or interest on the Swing Line Loans shall be made pro rata
according to the respective outstanding principal amounts of the Swing Line
Loans then held by the Swing Line Lenders. All payments (including prepayments)
to be made by the Borrower hereunder (other than with respect to Multicurrency
Loans), whether on account of principal, interest, fees or otherwise, shall be
made without set-off or counterclaim and shall be made prior to 2:00 p.m., New
York City time, or, in the case of Euro Cost of Funds Loans and Sterling Cost of
Funds Loans, 2:00 p.m., London time, on the due date thereof to the
Administrative Agent, for the account of the relevant Lenders, at the
Administrative Agent's office specified in subsection 10.2, in Dollars and in
immediately available funds. Notwithstanding the foregoing, the failure by the
Borrower to make a payment (or prepayment) prior to 12:00 Noon, New York City
time or 2:00 p.m. London time, as the case may be, on the due date thereof shall
not constitute a Default or Event of Default if such payment is made on such due
date; provided, however, that any payment (or prepayment) made after such time
on such due date shall be deemed made on the next Business Day for the purposes
of interest and reimbursement calculations. The Administrative Agent shall
distribute such payments to the relevant Lenders promptly upon receipt in like
funds as received.

            (ii) Each borrowing of Multicurrency Loans by the Borrower shall be
made, and any reduction of the Multicurrency Commitments shall be allocated by
the Administrative Agent, pro rata according to the Multicurrency Commitment
Percentages of the Multicurrency Lenders. Except as provided in subsection
2.7(d), each payment (including each prepayment) by the Borrower on account of
principal of and interest on Multicurrency Loans shall be allocated by the
Administrative Agent pro rata according to the respective principal amounts of
the Multicurrency Loans then due and owing by the Borrower to each Multicurrency
Lender. Except as otherwise provided in this Agreement, all payments (including
prepayments) to be made by the Borrower hereunder in respect of Multicurrency
Loans, whether on account of

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                                                                              36

principal, interest, fees or otherwise, shall be made without set-off or
counterclaim and shall be made at or before the payment time for the currency of
such Multicurrency Loan set forth in the Administrative Schedule, on the due
date thereof to the Administrative Agent, for the account of the Multicurrency
Lenders, at the payment office for the currency of such Multicurrency Loan set
forth in the Administrative Schedule, in the currency of such Multicurrency Loan
and in immediately available funds. The Administrative Agent shall distribute
such payments to the Multicurrency Lenders entitled to receive the same promptly
upon receipt in like funds as received.

            (iii) If any payment hereunder (other than payments on the
Eurodollar Rate Loans, the Euro Cost of Funds Loans, the Sterling Cost of Funds
Loans, the Alternate Swing Line Currency Cost of Funds Loans and the
Multicurrency Loans) becomes due and payable on a day other than a Business Day,
the maturity of such payment shall be extended to the next succeeding Business
Day, and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension. If any payment on a
Eurodollar Rate Loan, a Euro Cost of Funds Loan, a Sterling Cost of Funds Loan
or a Multicurrency Loan becomes due and payable on a day other than a Business
Day, the maturity of such payment shall be extended to the next succeeding
Business Day (and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension) unless the result
of such extension would be to extend such payment into another calendar month,
in which event such payment shall be made on the immediately preceding Business
Day.

            (b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to the deadline for funding a Borrowing that such
Lender will not make the amount that would constitute its share of such
Borrowing available to the Administrative Agent, the Administrative Agent may
assume that such Lender is making such amount available to the Administrative
Agent, and the Administrative Agent may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such amount is not made
available to the Administrative Agent by the required time on the borrowing date
therefor, such Lender shall pay to the Administrative Agent, on demand, such
amount with interest thereon at a rate equal to (i) in the case of a borrowing
of U.S. Revolving Credit Loans, the daily average Federal Funds Effective Rate
and (ii) in the case of a borrowing of Multicurrency Loans, the interest rate
reasonably determined by the Administrative Agent to reflect its cost of funds
for the amount advanced by the Administrative Agent on behalf of such Lender,
(in each such case) for the period until such Lender makes such amount
immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this subsection 2.15 shall be conclusive in the absence of manifest error.
If such Lender's share of such Borrowing is not made available to the
Administrative Agent by such Lender within three Business Days of such borrowing
date, the Administrative Agent shall be entitled to recover such amount with
interest thereon at (x) the Federal Funds Effective Rate (in the case of a
borrowing of U.S. Revolving Credit Loans) and (y) the Administrative Agent's
reasonable estimate of its average daily cost of funds plus the Applicable
Margin applicable to Multicurrency Loans (in case of a borrowing of
Multicurrency Loans), on demand, from the Borrower.

            2.16 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Rate Loans, Multicurrency

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                                                                              37

Loans, Euro Cost of Funds Loans, Sterling Cost of Funds Loans or Alternate Swing
Line Currency Cost of Funds Loans as contemplated by this Agreement, such Lender
shall give notice thereof to the Administrative Agent and the Borrower
describing the relevant provisions of such Requirement of Law (and, if the
Borrower shall so request, provide the Borrower with a memorandum or opinion of
counsel of recognized standing (as selected by such Lender) as to such
illegality), following which (a) the commitment of such Lender hereunder to make
Eurodollar Rate Loans, Multicurrency Loans, Euro Cost of Funds Loans or Sterling
Cost of Funds Loans, continue Eurodollar Rate Loans, Multicurrency Loans, Euro
Cost of Funds Loans or Sterling Cost of Funds Loans as such and convert ABR
Loans to Eurodollar Rate Loans shall forthwith be canceled, (b) such Lender's
Loans then outstanding as Eurodollar Rate Loans (including, without limitation,
such Lender's Eurodollar Rate Competitive Loans in the case of clause (ii), if
any, shall be converted automatically to ABR Loans (i) on the respective last
days of the then current Interest Periods with respect to such Loans or (ii)
within such earlier period as required by law, (c) such Lender's Multicurrency
Loans shall be prepaid on the last day of the then current Interest Period with
respect thereto or such earlier period as required by law and (d) such Lender's
Loans then outstanding as Euro Cost of Funds Loans and Sterling Cost of Funds
Loans shall, at the Borrower's option, either be due and payable in full or
shall be converted into Dollars at the Spot Exchange Rate and shall be deemed to
be made as a Swing Line Loan denominated in Dollars. If any such conversion or
repayment of a Eurodollar Rate Loan, Multicurrency Loan, a Euro Cost of Funds
Loan or a Sterling Cost of Funds Loan occurs on a day which is not the last day
of the then current Interest Period with respect thereto, the Borrower shall pay
to such Lender such amounts, if any, as may be required pursuant to subsection
2.19.

            2.17 Increased Costs. (a) If (i) there shall be any increase in the
cost to any Lender of agreeing to make or making, funding or maintaining any
Loans or Letters of Credit or (ii) any reduction in any amount receivable in
respect thereof, and such increased cost or reduced amount receivable is due to
either:

            (x) the introduction of or any change in or in the interpretation of
      any law or regulation after the date hereof; or

            (y) the compliance with any guideline or request made after the date
      hereof from any central bank or other Governmental Authority (whether or
      not having the force of law),

then (subject to the provisions of subsection 2.20) the Borrower shall from time
to time, upon demand by such Lender pay such Lender additional amounts
sufficient to compensate such Lender for such increased cost or reduced amount
receivable.

            (b) If any Lender shall have reasonably determined that (i) the
applicability of any law, rule, regulation or guideline adopted after the date
hereof pursuant to or arising out of the July 1988 paper of the Basle Committee
on Banking Regulations and Supervisory Practices entitled "International
Convergence of Capital Measurement and Capital Standards," or (ii) the adoption
after the date hereof of any other law, rule, regulation or guideline regarding
capital adequacy affecting such Lender, or (iii) any change arising after the
date hereof in the foregoing or in the interpretation or administration of any
of the foregoing by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or

<PAGE>

                                                                              38

(iv) compliance by such Lender (or any lending office of such Lender), or any
holding company for such Lender which is subject to any of the capital
requirements described above, with any request or directive of general
application issued after the date hereof regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of any such holding company as a direct
consequence of such Lender's obligations hereunder or under any Letter of Credit
to a level below that which such Lender or any such holding company could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's policies and the policies of such holding company with respect to
capital adequacy) by an amount deemed by such Lender to be material, then
(subject to the provisions of subsection 2.19) from time to time such Lender may
request the Borrower to pay to such Lender such additional amounts as will
compensate such Lender or any such holding company for any such reduction
suffered, net of the savings (if any) which may be reasonably projected to be
associated with such increased capital requirement. Any certificate as to such
amounts which is delivered pursuant to subsection 2.20(a) shall, in addition to
any items required by subsection 2.20(a), include the calculation of the savings
(if any) which may be reasonably projected to be associated with such increased
capital requirement; provided that in no event shall any Lender be obligated to
pay or refund any amounts to the Borrower on account of such savings.

            (c) In the event that any Governmental Authority shall impose any
Eurocurrency Liabilities which increase the cost to any Lender of making or
maintaining Eurodollar Rate Loans or Multicurrency Loans, then (subject to the
provisions of subsection 2.20) the Borrower shall thereafter pay in respect of
the Eurodollar Rate Loans or Multicurrency Loans, as the case may be, of such
Lender a rate of interest based upon (i) for Eurodollar Rate Loans, the
Eurodollar Reserve Rate (rather than the Eurodollar Rate) and (ii) for
Multicurrency Loans, the Eurocurrency Reserve Rate (rather than the Eurocurrency
Rate). From and after the delivery to the Borrower of the certificate required
by subsection 2.20(a), all references contained in this Agreement to the (i)
Eurodollar Rate shall be deemed to be references to the Eurodollar Reserve Rate
with respect to each such affected Lender and (ii) the Eurocurrency Rate shall
be deemed to be references to the Eurocurrency Reserve Rate with respect to each
such affected Lender.

            2.18 Taxes. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes or any other tax based
upon net income imposed on the Administrative Agent or any Lender as a result of
a present or former connection between the Administrative Agent or such Lender
and the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement). If any such non-excluded taxes, levies,
imposts, duties, charges, fees deductions or withholdings ("Non-Excluded Taxes")
are required to be withheld from any amounts payable to the Administrative Agent
or any Lender hereunder, the amounts so payable to the Administrative Agent or
such Lender shall be increased to the extent necessary to yield to the
Administrative Agent or such Lender (after payment of all Non-Excluded Taxes)

<PAGE>

                                                                              39

interest or any such other amounts payable hereunder at the rates or in the
amounts specified in or pursuant to this Agreement; provided, however, that the
Borrower shall not be required to increase any such amounts payable to any
Lender that is not organized under the laws of the United States of America or a
state thereof if such Lender fails to comply with the requirements of paragraph
(b) of this subsection 2.18. Whenever any Non-Excluded Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of such Lender, as
the case may be, a certified copy of an original official receipt received by
the Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this subsection 2.18 shall survive the termination of
this Agreement and the payment of all other amounts payable hereunder.

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

            (i) deliver to each of the Borrower and the Administrative Agent a
duly completed copy of United States Internal Revenue Service Form W-8BEN,
W-8EXP or W-8ECI, or successor applicable form, as the case may be, with respect
to payments under this Agreement;

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

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

unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the
Administrative Agent. Such Lender shall certify (i) in the case of a Form
W-8BEN, W-8EXP or W-8ECI, that it is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes and (ii) in the case of a Form W-8BEN or W-8EXP, that it is entitled to an
exemption from United States backup withholding tax. Each Person not
incorporated under the laws of the United States of America or a state thereof
that is an Assignee shall, upon the effectiveness of the related transfer, be
required to provide all of the forms and statements required pursuant to this
subsection 2.18.

            2.19 Indemnity. Subject to the provisions of subsection 2.20(a), the
Borrower agrees to indemnify each Lender and to hold each Lender harmless from
any loss or reasonable expense which such Lender may sustain or incur as a
consequence of (a) default by the Borrower in making a borrowing of, conversion
into or continuation of any Loan hereunder after the Borrower has given a notice
requesting the same in accordance with the provisions of this

<PAGE>

                                                                              40

Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement, (c) the making of a prepayment of Eurodollar Rate Loans,
Multicurrency Loans, Euro Cost of Funds Loans or Sterling Cost of Funds Loans on
a day which is not the last day of an Interest Period with respect thereto or
(d) the making of a prepayment of Fixed Rate Loans at any time. Such
indemnification shall be in an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding the Applicable Margin or Margin included therein) over
(ii) the amount of interest (as determined by such Lender) which would have
accrued to such Lender on such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank eurodollar market. This
covenant shall survive the termination of this Agreement and the payment of all
other amounts payable hereunder.

            2.20 Notice of Amounts Payable; Relocation of Lending Office;
Mandatory Assignment. (a) In the event that any Lender becomes aware that any
amounts are or will be owed to it pursuant to subsection 2.16, 2.17, 2.18(a) or
2.19, then it shall promptly notify the Borrower thereof and, as soon as
possible thereafter, such Lender shall submit to the Borrower a certificate
indicating the amount owing to it and the calculation thereof. The amounts set
forth in such certificate shall be prima facie evidence of the obligations of
the Borrower hereunder; provided, however, that the failure of the Borrower to
pay any amount owing to any Lender pursuant to subsection 2.16, 2.17, 2.18(a) or
2.19 shall not be deemed to constitute a Default or an Event of Default
hereunder to the extent that the Borrower is contesting in good faith its
obligation to pay such amount by ongoing discussions diligently pursued with
such Lender or by appropriate proceedings.

            (b) If a Lender claims any additional amounts payable pursuant to
subsection 2.16, 2.17 or 2.18(a), it shall use its reasonable efforts
(consistent with legal and regulatory restrictions) to avoid the need for paying
such additional amounts, including changing the jurisdiction of its applicable
lending office, provided that the taking of any such action would not, in the
reasonable judgment of the Lender, be disadvantageous to such Lender.

            (c) In the event that any Lender delivers to the Borrower a
certificate in accordance with subsection 2.20(a) (other than a certificate as
to amounts payable pursuant to subsection 2.19), or the Borrower is required to
pay any additional amounts or other payments in accordance with subsection 2.16,
2.17 or 2.18(a) or any Lender fails to make its share of any Borrowing available
in accordance with the terms hereof, the Borrower may, at its own expense and in
its sole discretion, (i) require such Lender to transfer or assign, in whole or
in part, without recourse (in accordance with subsection 10.6), all or part of
its interests, rights and obligations under this Agreement (other than any
outstanding Competitive Loans) to another Person (provided that the Borrower,
with the full cooperation of such Lender, can identify a Person who is ready,
willing and able to be an Assignee with respect to thereto) which shall assume
such assigned obligations (which Assignee may be another Lender, if such
assignee Lender accepts such assignment) or (ii) during such time as no Default
or Event of Default has occurred and is continuing, terminate the Commitment of
such Lender and prepay all outstanding

<PAGE>

                                                                              41

Loans (other than Competitive Loans) of such Lender; provided that (x) the
Borrower or the Assignee, as the case may be, shall have paid to such Lender in
immediately available funds the principal of and interest accrued to the date of
such payment on the Loans (other than Competitive Loans) made by it hereunder
and (subject to subsection 2.19) all other amounts owed to it hereunder and (y)
such assignment or termination of the Commitment of such Lender and prepayment
of Loans does not conflict with any law, rule or regulation or order of any
court or Governmental Authority.

                          SECTION 3. LETTERS OF CREDIT

            3.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
the Issuing Lender, in reliance on the agreements of the other U.S. Lenders set
forth in subsection 3.4(a), agrees to issue letters of credit ("Letters of
Credit") in Dollars for the account of the Borrower on any Business Day during
the Commitment Period in such form as may be approved from time to time by the
Issuing Lender; provided that the Issuing Lender shall not issue, increase or
extend (each, for purposes of Section 3, an "issuance") any Letter of Credit if,
after giving effect to such issuance, (i) the L/C Obligations would exceed the
L/C Commitment or (ii) the aggregate amount of the Aggregate Available U.S.
Commitments would be less than zero or the Aggregate Total Outstandings of all
the Lenders would exceed the Aggregate U.S. Commitments. Letters of Credit may
be either standby letters of credit or commercial letters of credit. Each Letter
of Credit shall (i) be denominated in Dollars and (ii) expire no later than the
earlier of (x) the first anniversary of its date of issuance and (y) the date
that is five Business Days prior to the Termination Date, provided that any
Letter of Credit with a one-year term may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above), provided, however, that any Letter of Credit
which is a commercial letter of credit shall expire no later than 360 days after
its date of issuance.

            (b) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York.

            (c) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.

            3.2 Procedure for Issuance of Letter of Credit. The Borrower may
from time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender and the Administrative Agent at their
respective addresses for notices specified herein (or to such other address
provided by such Issuing Lender) an Application therefor, completed to the
reasonable satisfaction of the Issuing Lender, and such other certificates,
documents and other papers and information as the Issuing Lender may reasonably
request. Upon receipt of any Application, the Issuing Lender will process such
Application and the certificates, documents and other papers and information
delivered to it in connection therewith in accordance with its customary
procedures and shall promptly issue the Letter of Credit requested thereby (but
in no event shall the Issuing Lender be required to issue any Letter of Credit
earlier than three Business Days after its receipt of the Application therefor
and all such other certificates, documents and other papers and information
relating thereto) by issuing the original of such Letter of Credit to the
beneficiary thereof or as otherwise may be agreed to by the Issuing Lender

<PAGE>

                                                                              42

and the Borrower. The Issuing Lender shall furnish a copy of such Letter of
Credit to the Borrower promptly following the issuance thereof. The Issuing
Lender shall promptly furnish to the Administrative Agent, which shall in turn
promptly furnish to the U.S. Lenders, notice of the issuance of each Letter of
Credit (including the amount thereof).

            3.3 Fees and Other Charges. (a) The Borrower will pay a fee on all
outstanding Letters of Credit at a per annum rate equal to (i) the Applicable
Margin then in effect with respect to Eurodollar Rate Loans times (ii) the
average daily undrawn face amount of all such Letters of Credit, shared ratably
among the U.S. Lenders and payable quarterly in arrears on each L/C Fee Payment
Date after the issuance date. In addition, the Borrower shall pay to the Issuing
Lender for its own account a fronting fee at a rate to be agreed upon between
the Borrower and the Issuing Lender, payable quarterly in arrears on each L/C
Fee Payment Date after the issuance date.

            (b) In addition to the foregoing fees, the Borrower shall pay or
reimburse the Issuing Lender for such normal and customary reasonable costs and
expenses as are incurred or charged by the Issuing Lender in issuing,
negotiating, effecting payment under or amending any Letter of Credit or normal
and customary reasonable costs and expenses as are incurred or charged by the
Issuing Lender in otherwise administering any Letter of Credit.

            3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's U.S. Commitment Percentage in the Issuing Lender's obligations and
rights under each Letter of Credit issued hereunder and the amount of each draft
paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Issuing Lender upon demand at the Issuing Lender's address for
notices specified herein an amount equal to such L/C Participant's U.S.
Commitment Percentage of the amount of such draft, or any part thereof, that is
not so reimbursed.

            (b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to subsection 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Lender under any Letter of Credit is
paid to the Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Issuing Lender on demand
an amount equal to the product of such amount, times the daily average Federal
Funds Effective Rate during the period from and including the date such payment
is required to the date on which such payment is immediately available to the
Issuing Lender, times a fraction the numerator of which is the number of days
that elapse during such period and the denominator of which is 360. If any such
amount required to be paid by any L/C Participant pursuant to subsection 3.4(a)
is not made available to the Issuing Lender by such L/C Participant within three
Business Days after the date such payment is due, the Issuing Lender shall be
entitled to recover from such L/C Participant, on demand, such amount with
interest thereon calculated from such due date at the rate per annum applicable
to ABR Loans. A certificate of

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                                                                              43

the Issuing Lender submitted to any L/C Participant with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.

            (c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with subsection 3.4(a), the Issuing
Lender receives any payment related to such Letter of Credit (whether directly
from the Borrower or otherwise, including proceeds of collateral applied thereto
by the Issuing Lender), or any payment of interest on account thereof, the
Issuing Lender will distribute to such L/C Participant its pro rata share
thereof; provided, however, that in the event that any such payment received by
the Issuing Lender shall be required to be returned by the Issuing Lender, such
L/C Participant shall return to the Issuing Lender the portion thereof
previously distributed by the Issuing Lender to it.

            3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to
reimburse the Issuing Lender not later than the next Business Day following each
date on which the Issuing Lender notifies the Borrower of the date and amount of
a draft presented under any Letter of Credit and paid by the Issuing Lender for
the amount of (a) such draft so paid and (b) any taxes, fees, charges or other
reasonable costs or expenses incurred by the Issuing Lender in connection with
such payment. Each such payment shall be made to the Issuing Lender at its
address for notices specified herein in lawful money of the United States of
America and in immediately available funds. Interest shall be payable on any and
all amounts remaining unpaid by the Borrower under this Section from the date
such amounts were paid by the Issuing Lender (whether at stated maturity, by
acceleration or otherwise) until payment in full at the rate set forth in
subsection 2.11(h).

            3.6 Obligations Absolute. The Borrower's obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment that the
Borrower may have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with the Issuing
Lender that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under subsection 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged (subject to the immediately succeeding sentence), or any
dispute between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
any claims whatsoever of the Borrower against any beneficiary of such Letter of
Credit or any such transferee. The Issuing Lender shall not be liable for any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions resulting from the gross negligence or
willful misconduct of the Issuing Lender. The Borrower agrees that any action
taken or omitted by the Issuing Lender under or in connection with any Letter of
Credit or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards of care
specified in the Uniform Commercial Code of the State of New York, shall be
binding on the Borrower and shall not result in any liability of the Issuing
Lender to the Borrower.

            3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and

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                                                                              44

amount thereof. The responsibility of the Issuing Lender to the Borrower in
connection with any draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment
are substantially in conformity with such Letter of Credit.

            3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.

                   SECTION 4. REPRESENTATIONS AND WARRANTIES

            To induce the Administrative Agent and the Lenders to enter into
this Agreement and to make the Loans and issue or participate in the Letters of
Credit, the Borrower hereby represents and warrants to the Administrative Agent
and each Lender that:

            4.1 Financial Condition. The Borrower has heretofore furnished to
each Lender a copy of the audited consolidated financial statements of the
Borrower for the fiscal years ended December 31, 2002 and December 31, 2003 and
unaudited consolidated financial statements of the Borrower for the quarterly
period ended March 31, 2004 . Such financial statements present fairly the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries as of, and for the fiscal years and fiscal quarters
ended on, such dates in accordance with GAAP (subject, in the case of such
quarterly statements, to normal year-end audit adjustments). Other than as
disclosed in the Borrower's 10-K dated January 28, 2004 or in the Confidential
Information Memorandum, between December 31, 2003 and the Closing Date, there
has been no development or event which has had a Material Adverse Effect.

            4.2 Corporate Existence; Compliance with Law. The Borrower (a) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the corporate power and authority, and
the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged,
(c) is duly qualified as a foreign corporation and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification, except to the extent
that all failures to be duly qualified and in good standing could not, in the
aggregate, have a Material Adverse Effect and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.

            4.3 Corporate Power; Authorization; Enforceable Obligations. The
Borrower has the corporate power and authority, and the legal right, to make,
deliver and perform this Agreement and the Applications and to borrow hereunder
and has taken all necessary corporate action to authorize the borrowings on the
terms and conditions of this Agreement and to authorize the execution, delivery
and performance of this Agreement and the Applications. No consent or
authorization of any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or the Applications.
This Agreement has been, and each Application will be, duly executed and
delivered on behalf of the Borrower. This Agreement constitutes, and each
Application when executed and delivered will constitute, a legal, valid and

<PAGE>

                                                                              45

binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).

            4.4 No Legal Bar; No Default. The execution, delivery and
performance of this Agreement, the Applications, the borrowings hereunder and
the use of the proceeds thereof will not violate any Requirement of Law or
Contractual Obligation of the Borrower and will not result in, or require, the
creation or imposition of any Lien on any of its properties or revenues pursuant
to any such Requirement of Law or Contractual Obligation, except to the extent
that all such violations and creation or imposition of Liens could not, in the
aggregate, have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.

            4.5 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
of its Subsidiaries or against any of its or their respective properties or
revenues as of the Closing Date (a) with respect to this Agreement or any of the
actions contemplated hereby, or (b) which involves a probable risk of an adverse
decision which would materially restrict the ability of the Borrower to comply
with its obligations under this Agreement.

            4.6 Federal Regulations. No part of the proceeds of any Loans will
be used for "buying," "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect or for any purpose which violates the provisions of the
Regulations of such Board of Governors.

            4.7 Investment Company Act. The Borrower is not an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.

            4.8 ERISA. The Borrower is in compliance with all material
provisions of ERISA, except to the extent that all failures to be in compliance
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.

            4.9 No Material Misstatements. No report, financial statement or
other written information furnished by or on behalf of such Borrower to the
Administrative Agent or any Lender pursuant to subsection 4.1 or subsection
6.1(a) contains or will contain any material misstatement of fact or omits or
will omit to state any material fact necessary to make the statements therein,
in light of the circumstances under which they were, are or will be made, not
misleading, except to the extent that the facts (whether misstated or omitted)
do not result in a Material Adverse Effect. No report, financial statement or
other written information furnished by or on behalf of the Borrower for
inclusion in the Confidential Information Memorandum contained as of the Closing
Date any material misstatement of fact or omitted to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except to the extent that the facts
(whether misstated or omitted) do not result in a Material Adverse Effect. Any
forward-looking information contained in the

<PAGE>

                                                                              46

Confidential Information Memorandum is based upon good faith judgment believed
by management of the Borrower to be reasonable at the time made, it being
recognized by the Lenders that such information as it relates to future events
is not to be viewed as fact and that actual results during the period or periods
covered by such information may differ from the projected results set forth
therein by a material amount.

            4.10 Environmental Matters. Except with respect to any matters that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, neither the Borrower nor any of its Subsidiaries (i)
has failed to comply with any Environmental Law or to obtain, maintain or comply
with any permit, license or other approval required under any Environmental Law,
(ii) has become subject to any Environmental Liability, (iii) has received
notice of any claim with respect to any Environmental Liability or (iv) knows of
any basis for any Environmental Liability.

            4.11 Subsidiaries. The Subsidiaries listed on Schedule 4.11
constitute all the Subsidiaries of the Borrower on the date hereof which are
"significant subsidiaries" within the meaning of Regulation S-X of the U.S.
Securities and Exchange Commission (other than as set forth in such schedule).

            4.12 Purpose of Loans. The proceeds of the Loans shall be used by
the Borrower for its general corporate purposes including, without limitation,
to support its issuance of commercial paper and for transactions with its
Subsidiaries.

                        SECTION 5. CONDITIONS PRECEDENT

            5.1 Conditions to Effectiveness. This Agreement, and the obligations
of the Lenders to make extensions of credit hereunder, shall become effective on
the date on which the following conditions precedent are satisfied (and the
Administrative Agent shall notify the Borrower and each Lender promptly after
the receipt of the documents and funds described in paragraphs (a) through (d)
and (f) below):

            (a) Credit Agreement. The Administrative Agent shall have received
this Agreement, executed and delivered (including, without limitation, by way of
a telecopied signature page) by a duly authorized officer of the Borrower and,
subject to the provisions of subsection 10.9, each Lender.

            (b) Secretary's Certificate. The Administrative Agent shall have
received a certificate of the Secretary or Assistant Secretary of the Borrower,
in form and substance satisfactory to the Administrative Agent, which
certificate shall (i) certify as to the incumbency and signature of the officers
of the Borrower executing this Agreement (with the President or a Vice President
of the Borrower attesting to the incumbency and signature of the Secretary or
Assistant Secretary providing such certificate), (ii) have attached to it a
true, complete and correct copy of each of the certificate of incorporation and
by-laws of the Borrower or a statement that there have been no changes since
those previously delivered in connection with the Original Closing Date, (iii)
have attached to it a true and correct copy of the resolutions of the Board of
Directors of the Borrower or a duly authorized committee thereof or a duly
authorized officer thereof, which resolutions shall authorize the execution,
delivery and performance of this Agreement and the borrowings by the Borrower
hereunder and (iv) certify

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                                                                              47

that, as of the date of such certificate (which shall not be earlier than the
date hereof), none of such certificate of incorporation, by-laws or resolutions
shall have been amended, supplemented, modified, revoked or rescinded.

            (c) Fees. All fees payable by the Borrower to J.P. Morgan Securities
Inc., Citigroup Global Markets Inc., the Administrative Agent or any Lender on
the Closing Date and all expenses payable under subsection 10.5 for which
invoices have been received before the Closing Date shall have been paid.

            (d) Legal Opinions. The Administrative Agent shall have received,
(i) the executed legal opinion of Sean Corcoran, Esq., Assistant General Counsel
- Commercial & Transactional of the Borrower, substantially in the form of
Exhibit F-1, (ii) the executed legal opinion of Heller Ehrman White & Mcauliffe
LLP, New York counsel to the Borrower, substantially in the form of Exhibit F-2,
and (iii) the executed legal opinion of Simpson Thacher & Bartlett LLP, counsel
to the Administrative Agent, substantially in the form of Exhibit F-3. The
Borrower hereby instructs the counsel referenced in clause (i) to deliver its
opinion for the benefit of the Administrative Agent and each of the Lenders.

            (e) No Material Adverse Effect. As of the Closing Date, other than
as disclosed in the Borrower's 10-K dated January 28, 2004 or in the
Confidential Information Memorandum, since December 31, 2003, no development or
event shall have occurred that has had a Material Adverse Effect.

            (f) 364-Day Facility. The Administrative Agent shall have received
satisfactory evidence that the Borrower has executed and delivered definitive
financing documentation with respect to a new 364-day revolving credit facility
replacing the Existing 364-Day Facility, and such documentation shall be in form
and substance reasonably satisfactory to the Administrative Agent.

            5.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit and any
Competitive Loan to be made by it) is subject to the satisfaction of the
following conditions:

            (a) Notice of Borrowing. The Administrative Agent shall have
received a notice of borrowing, as required by subsection 2.2 or 2.3, as the
case may be or, in the case of a Letter of Credit, an Application as required by
subsection 3.2.

            (b) Representations and Warranties. Each of the representations and
warranties made by the Borrower in or pursuant to this Agreement shall be true
and correct in all material respects on and as of such date as if made on and as
of such date, except to the extent any such representation and warranty
specifically relates to an earlier date, in which case such representation and
warranty shall have been true and correct as of such earlier date.

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

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                                                                              48

Each borrowing by and Letter of Credit issued on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such Loan or Letter of Credit that the conditions contained in this
subsection 5.2 have been satisfied.

                        SECTION 6. AFFIRMATIVE COVENANTS

            The Borrower hereby agrees that, so long as the Commitments remain
in effect, or any amount is owing to any Lender or the Administrative Agent
hereunder, the Borrower shall:

            6.1 Financial Statements. Furnish to each Lender:

            (a) as soon as available, but in any event within 110 days after the
end of each fiscal year of the Borrower, a copy of the audited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the end of
such year and the related audited consolidated statements of income and retained
earnings and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year; and

            (b) as soon as available, but in any event not later than 60 days
after the end of each of the first three quarterly periods of each fiscal year
of the Borrower, the unaudited consolidated balance sheet of the Borrower and
its consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and retained earnings and of cash
flows of the Borrower and its consolidated Subsidiaries for such quarter and the
portion of the fiscal year through the end of such quarter, setting forth in
each case in comparative form the figures for the previous year;

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

            6.2 Certificates; Other Information. Furnish to:

            (a) each Lender, concurrently with the delivery of the financial
statements referred to in subsections 6.1(a) and 6.1(b), a certificate of a
Financial Officer (i) stating that, to the best of such Officer's knowledge, (A)
such financial statements present fairly the financial condition and results of
operations of the Borrower and its Subsidiaries for the period referred to
therein (subject, in the case of interim statements, to normal year-end audit
adjustments) and (B) during such period the Borrower has performed all of its
covenants and other agreements contained in this Agreement to be performed by
it, and that no Default or Event of Default has occurred, except as specified in
such certificate, and (ii) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the provisions
of subsection 7.1 on the date of such financial statements;

            (b) each Lender, within 15 days after the same become public, copies
of all financial statements and reports which the Borrower may make to, or file
with, the Securities and Exchange Commission or any successor or analogous
Governmental Authority;

            (c) the Administrative Agent, within ten Business Days after the
occurrence thereof, written notice of any change in Status; provided that the
failure to provide such notice

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                                                                              49

shall not delay or otherwise affect any change in the Applicable Margin or other
amount payable hereunder which is to occur upon a change in Status pursuant to
the terms of this Agreement; and

            (d) the Administrative Agent, promptly, such additional financial
and other information as the Administrative Agent, on behalf of any Lender, may
from time to time reasonably request and that is reasonably related to such
Lender's credit analysis of the Borrower and which request does not impose an
unreasonable burden on the Borrower to satisfy.

            6.3 Notices. Promptly give notice to the Administrative Agent and
each Lender of (a) the occurrence of any Default or Event of Default,
accompanied by a statement of a Financial Officer setting forth details of the
occurrence referred to therein and stating what action the Borrower proposes to
take with respect thereto and (b) so long as the Borrower is not subject to the
periodic reporting requirements of the Securities Exchange Act of 1934, as
amended, (i) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any affiliate thereof that could reasonably be expected to result in
a Material Adverse Effect and (ii) any other development that results in, or
could reasonably be expected to result in, a Material Adverse Effect.

            6.4 Conduct of Business and Maintenance of Existence. (a) Continue
to engage in its principal line of business as now conducted by it, (b)
preserve, renew and keep in full force and effect its corporate existence and
(c) take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its principal line of business,
except, in any such case, as otherwise permitted pursuant to subsection 7.5 or
to the extent that failure to do so would not have a Material Adverse Effect.

            6.5 Books and Records. The Borrower will, and will cause each of its
Subsidiaries to, keep proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its
business and activities.

            6.6 Environmental Laws. Except as could not in the aggregate
reasonably be expected to result in a Material Adverse Effect:

            (a) comply with all applicable Environmental Laws, and obtain and
comply with and maintain any and all permits, licenses or other approvals
required by applicable Environmental Laws; and

            (b) conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities regarding Environmental Laws.

                         SECTION 7. NEGATIVE COVENANTS

            The Borrower hereby agrees that, so long as the Commitments remain
in effect or any amount is owing to any Lender or the Administrative Agent
hereunder:

            7.1 Consolidated Leverage Ratio. The Borrower shall not, directly or
indirectly, permit the Consolidated Leverage Ratio to exceed 3.25 to 1.0 at the
end of any fiscal quarter.

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                                                                              50

            7.2 Indebtedness. The Borrower shall not, directly or indirectly,
permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness or any guarantee of Indebtedness (other than Indebtedness of any
Subsidiary to the Borrower or to any other Subsidiary and other than Permitted
Receivables Financings), except Indebtedness and guarantees in an aggregate
principal amount at any one time outstanding, which when combined with (but
without duplication) (i) the aggregate outstanding principal amount of
obligations secured by a Lien upon any of the property or revenues of the
Borrower or any of its Subsidiaries at such time (other than Liens securing
Indebtedness of any Subsidiary to the Borrower or to any other Subsidiary and
other than Liens securing Permitted Receivables Financings) and (ii) the
aggregate amount of Sale-Leasebacks consummated since the Original Closing Date
and which are outstanding on the relevant date of determination (other than
Sale-Leasebacks to the extent the proceeds thereof are used to refinance any
Sale-Leaseback which was in existence on the Original Closing Date and other
than Intercompany Sale-Leasebacks), shall not exceed 15% of Consolidated Total
Assets as reflected in the most recent annual audited consolidated financial
statements of the Borrower delivered pursuant to subsection 6.1(a).

            7.3 Liens. The Borrower shall not nor shall it permit any Subsidiary
to, directly or indirectly, create, incur, assume or suffer to exist any Lien
upon any of its property or revenues, whether now owned or hereafter acquired
(other than Liens securing Indebtedness of any Subsidiary to the Borrower or to
any other Subsidiary and other than Liens securing Permitted Receivables
Financings), except Liens at any one time outstanding with respect to which the
aggregate outstanding principal amount of the obligations secured thereby, which
when combined with (but without duplication) (i) the aggregate principal amount
of Indebtedness and guarantees of Indebtedness of any Subsidiary outstanding at
such time (other than Indebtedness of any Subsidiary to the Borrower or to any
other Subsidiary and other than Permitted Receivables Financings) and (ii) the
aggregate amount of Sale-Leasebacks consummated since the Original Closing Date
and which are outstanding on the relevant date of determination (other than
Sale-Leasebacks to the extent the proceeds thereof are used to refinance any
Sale-Leaseback which was in existence on the Original Closing Date and other
than Intercompany Sale-Leasebacks), shall not exceed 15% of Consolidated Total
Assets as reflected in the most recent annual audited consolidated financial
statements of the Borrower delivered pursuant to subsection 6.1(a).

            7.4 Sale-Leasebacks. The Borrower shall not nor shall it permit any
Subsidiary to, directly or indirectly, enter into any arrangement with any
Person providing for the leasing by the Borrower or any Subsidiary of any
property owned by the Borrower or any Subsidiary (except for Intercompany
Sale-Leasebacks), which property has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person ("Sale-Leasebacks"), except for
Sale-Leasebacks consummated since the Original Closing Date and which are
outstanding on the relevant date of determination (other than Sale-Leasebacks to
the extent the proceeds thereof are used to refinance any Sale-Leaseback which
was in existence on the Original Closing Date) in an aggregate amount, which
when combined with (but without duplication) (i) the aggregate outstanding
principal amount of obligations secured by a Lien upon any of the property or
revenues of the Borrower or any of its Subsidiaries at the time of entering into
any such Sale-Leaseback (other than Liens securing Indebtedness of any
Subsidiary to the Borrower or to any other Subsidiary and other than Liens
securing Permitted Receivables Financings) and (ii) the aggregate principal
amount of Indebtedness and guarantees of Indebtedness of any Subsidiary
outstanding at such time (other than Indebtedness of any Subsidiary to the
Borrower

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                                                                              51

or to any other Subsidiary and other than Permitted Receivables Financings),
shall not exceed 15% of Consolidated Total Assets as reflected in the most
recent annual audited consolidated financial statements of the Borrower
delivered pursuant to subsection 6.1(a).

            7.5 Merger, Consolidation, etc. The Borrower shall not, directly or
indirectly, merge or consolidate with any other Person, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution) or sell or convey all
or substantially all of its assets to any Person unless, in the case of mergers
and consolidations, (a) the Borrower shall be the continuing corporation and (b)
immediately before and immediately after giving effect to such merger or
consolidation, no Default or Event of Default shall have occurred and be
continuing.

                          SECTION 8. EVENTS OF DEFAULT

            If any of the following events shall occur and be continuing:

            (a) The Borrower shall (i) fail to pay any principal of any Loan or
any Reimbursement Obligation when due in accordance with the terms hereof or
(ii) fail to pay any interest on any Loan or any Reimbursement Obligation or any
other amount which is payable hereunder and (in the case of this clause (ii)
only) such failure shall continue unremedied for more than five Business Days
after written notice thereof has been given to the Borrower by the
Administrative Agent or the Majority Lenders; or

            (b) Any representation or warranty made or deemed made by the
Borrower in Section 4 or any certified statement furnished pursuant to
subsection 6.2(b) shall prove to have been incorrect on or as of the date made
or deemed made or certified if the facts or circumstances incorrectly
represented or certified result in a Material Adverse Effect; or

            (c) The Borrower shall default in the observance of the agreement
contained in subsection 6.3(a) or subsection 6.4(a) or (b) or Section 7; or

            (d) The Borrower shall default in the observance or performance of
any other agreement contained in this Agreement (other than as provided in
paragraphs (a), (b) and (c) of this Section 8), and such default shall continue
unremedied for a period of 30 days after written notice thereof shall have been
given to the Borrower by the Administrative Agent or the Majority Lenders; or

            (e) The Borrower or any Significant Subsidiary shall default in any
payment of $50,000,000 or more of principal of or interest on any Indebtedness
or in the payment of $50,000,000 or more on account of any guarantee in respect
of Indebtedness, beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness or guarantee was created; or

            (f) Any event or condition occurs that results in any Indebtedness
or any guarantee of Indebtedness of the Borrower or any of its Significant
Subsidiaries of an aggregate principal amount of $50,000,000 or more becoming
due in full or payable in full prior to the scheduled maturity of such
Indebtedness or guarantee or that requires the prepayment, repurchase,
redemption or defeasance thereof in full, prior to the scheduled maturity of
such Indebtedness or guarantee (other than pursuant to any voluntary
prepayments, customary due-on-sale clause or any provision requiring prepayment
of such Indebtedness based on excess

<PAGE>

                                                                              52

cash flow, permitted asset sales or permitted debt or equity issuances, in each
case contained in the terms of such Indebtedness); provided that this clause (f)
shall not apply to secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets securing such Indebtedness;
or

            (g) (i) The Borrower or any of its Significant Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or the Borrower or any of its Significant Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Significant Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
90 days; or (iii) there shall be commenced against the Borrower or any of its
Significant Subsidiaries any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 90 days from the entry thereof; or

            (h) One or more judgments or decrees shall (i) be entered against
the Borrower, (ii) not have been vacated, discharged, satisfied, stayed or
bonded pending appeal within 60 days from the entry thereof and (iii) involve a
liability (not paid or fully covered by insurance) of either (A) $40,000,000 or
more, in the case of any single judgment or decree or (B) $100,000,000 or more
in the aggregate, in the case of all such judgments and decrees; or

            (i) The Borrower or any of its Significant Subsidiaries shall
default in the performance of any of its obligations under, or otherwise fail to
observe or perform any covenant, condition or agreement contained in, any of the
Material Agreements, to the extent the consequences of any such default or
failure could reasonably be expected to result in a Material Adverse Effect;

then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (g) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) shall immediately become due
and payable, and (B) if such event is any other Event of Default, either or both
of the following actions may be taken: (i) with the consent of the Majority
Lenders, the Administrative Agent may, or upon the request of the Majority
Lenders, the Administrative Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Majority Lenders, the
Administrative Agent may, or upon the request of the Majority Lenders, the
Administrative Agent shall, by notice to the Borrower, declare the Loans
hereunder (with accrued interest thereon) and all other

<PAGE>

                                                                              53

amounts owing under this Agreement (including, without limitation, all amounts
of L/C Obligations, whether or not the beneficiaries of the then outstanding
Letters of Credit shall have presented the documents required thereunder) to be
due and payable forthwith, whereupon the same shall immediately become due and
payable. Except as expressly provided above in this Section 8, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.

            With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash collateral account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of such Letters of Credit. The
Borrower hereby grants to the Administrative Agent, for the benefit of the
Issuing Lender and the L/C Participants, a security interest in such cash
collateral to secure all obligations of the Borrower under this Agreement and
the other Loan Documents. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder. After all such Letters of
Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other obligations of the Borrower
hereunder shall have been paid in full, the balance, if any, in such cash
collateral account shall be returned to the Borrower. The Borrower shall execute
and deliver to the Administrative Agent, for the account of the Issuing Lender
and the L/C Participants, such further documents and instruments as the
Administrative Agent may reasonably request to evidence the creation and
perfection of the within security interest in such cash collateral account.

                      SECTION 9. THE ADMINISTRATIVE AGENT

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

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

            9.3 Exculpatory Provisions. Neither the Administrative Agent nor any
of its officers, directors, employees or affiliates shall be (i) liable for any
action lawfully taken or

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                                                                              54

omitted to be taken by it or such Person under or in connection with this
Agreement (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or any
officer thereof contained in this Agreement or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or for any failure of the Borrower to perform its obligations
hereunder. The Administrative Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Borrower.

            9.4 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it in good faith to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the Lender specified in the Register
with respect to any amount owing hereunder as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Administrative Agent. The Administrative Agent shall be
fully justified in failing or refusing to take any action under this Agreement
unless it shall first receive such advice or concurrence of the Majority Lenders
as it deems appropriate or it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement in accordance with a request of the Majority
Lenders (or, to the extent that this Agreement expressly requires a higher
percentage of Lenders, such higher percentage), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders
and all future holders of the obligations owing by the Borrower hereunder.

            9.5 Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder other than a Default or Event of Default under Section 8(a) unless the
Administrative Agent has received written notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall
promptly notify the Borrower (unless the Borrower shall have delivered such
notice to the Administrative Agent) and then give notice thereof to the Lenders
(provided that the failure to notify the Borrower shall not impair any of the
rights of the Administrative Agent and the Lenders with respect to the events
and circumstances specified in such notice). The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Majority Lenders; provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.

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                                                                              55

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

            9.7 Indemnification. The U.S. Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective U.S. Commitment Percentages in effect on
the date on which indemnification is sought under this subsection 9.7 (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with their U.S. Commitment Percentages immediately prior to such date of payment
in full), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the amounts owing hereunder) be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of this Agreement or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Administrative Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful misconduct. The
Administrative Agent shall have the right to deduct any amount owed to it by any
Lender under this subsection 9.7 from any payment made by it to such Lender
hereunder and shall provide notice of such calculation to such Lender. The
agreements in this subsection 9.7 shall survive the payment of the Loans and all
other amounts payable hereunder.

            9.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower as though the
Administrative Agent were not the

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                                                                              56

Administrative Agent hereunder. With respect to its Loans made or renewed by it
and with respect to any Letter of Credit issued or participated in by it, the
Administrative Agent shall have the same rights and powers under this Agreement
as any Lender and may exercise the same as though it were not the Administrative
Agent, and the terms "Lender" and "Lenders" shall include the Administrative
Agent in its individual capacity.

            9.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 90 days' notice to the Lenders and the
Borrower and following the appointment of a successor Administrative Agent in
accordance with the provisions of this subsection 9.9. If the Administrative
Agent shall resign as Administrative Agent under this Agreement, then the
Majority Lenders shall appoint from among the Lenders willing to serve as
Administrative Agent a successor Administrative Agent for the Lenders, which
successor Administrative Agent shall be approved by the Borrower (which approval
shall not be unreasonably withheld), whereupon such successor Administrative
Agent shall succeed to the rights, powers and duties of the Administrative
Agent, and the term "Administrative Agent" shall mean such successor
Administrative Agent effective upon such appointment and approval, and the
former Administrative Agent's rights, powers and duties as Administrative Agent
shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or any of the parties to this Agreement or any
holders of the obligations owing hereunder. If no successor agent has accepted
appointment as Administrative Agent by the date that is 90 days following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall assume and perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Majority Lenders appoint a
successor agent as provided for above. After any retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this Section 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement.

            9.10 Syndication Agent and Documentation Agents. Neither of the
Syndication Agent nor the Documentation Agents shall have any duties or
responsibilities hereunder in their capacities as such.

                           SECTION 10. MISCELLANEOUS

            10.1 Amendments and Waivers. (a) Neither this Agreement, nor any
terms hereof may be amended, supplemented or modified except in accordance with
the provisions of this subsection 10.1. The Majority Lenders may, or, with the
written consent of the Majority Lenders, the Administrative Agent may, from time
to time, (i) enter into with the Borrower written amendments, supplements or
modifications hereto for the purpose of adding any provisions to this Agreement
or changing in any manner the rights of the Lenders or of the Borrower hereunder
or (ii) waive, on such terms and conditions as the Majority Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any of
the requirements of this Agreement or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (A) reduce the principal amount of any Loan or
L/C Obligation, or reduce the stated rate of any interest or fee payable
hereunder, or extend the scheduled date of any payment thereof, or increase the
amount or extend the expiration date of any Lender's Commitment or amend, modify
or waive any provision of subsection 2.15 or 10.7, in each case without the
consent of

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                                                                              57

each Lender directly affected thereby, or (B) amend, modify or waive any
provision of this subsection 10.1 or reduce the percentage specified in the
definition of Majority Lenders, or consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement, in each case
without the written consent of all the Lenders, or reduce the percentage
specified in the definition of "Majority U.S. Lenders" without the written
consent of all the U.S. Lenders, or the percentage specified in the definition
of "Majority Multicurrency Lenders" without the written consent of all the
Multicurrency Lenders, or (C) amend, modify or waive any provision of Section 9
or any other provision of this Agreement governing the rights or obligations of
the Administrative Agent without the written consent of the then Administrative
Agent, or (D) amend, modify or waive any provision of subsection 2.4 without the
written consent of the Swing Line Lenders at such time; or (E) amend, modify or
waive any provision of Section 3 without the written consent of the Issuing
Lender. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon the Borrower, the
Lenders, the Administrative Agent and all future holders of the obligations
owing hereunder. In the case of any waiver, the Borrower, the Lenders and the
Administrative Agent shall be restored to their former position and rights
hereunder, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon.

            (b) In addition to amendments effected pursuant to the foregoing
paragraph (a), Schedule III may be amended as follows:

            (i) (A) to change administrative information contained therein
(other than any interest rate definition, funding time, payment time or notice
time contained therein) or (B) to add Available Foreign Currencies (and related
interest rate definitions and administrative information) with the approval of
the Majority Multicurrency Lenders, in each case, upon execution and delivery by
the Borrower and the Administrative Agent of a written amendment providing for
such amendment;

            (ii) to conform any funding time, payment time or notice time
contained therein to then-prevailing market practices, upon execution and
delivery by the Borrower and the Administrative Agent of a written amendment
providing for such amendment; and

            (iii) to change any interest rate definition contained therein, upon
execution and delivery by the Borrower, all the Multicurrency Lenders and the
Administrative Agent of a written amendment providing for such amendment.

            (c) The Administrative Agent shall give prompt notice to each U.S.
Lender of any amendment effected pursuant to subsection 10.1(b).

            10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or four days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth in Schedule II in the case of the other
parties hereto, or to such other

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                                                                              58

address as may be hereafter notified by the respective parties hereto and any
future holders of the obligations owing hereunder:

      The Borrower:                Delphi Corporation
                                   5725 Delphi Drive
                                   Troy, Michigan 48098
                                   Attention: Treasurer
                                   Facsimile: (248) 813-2590
                                   Telephone: (248) 813-2592

      The Administrative Agent:    with respect to Loans denominated in Dollars
                                   and other matters:

                                   JPMorgan Chase Bank
                                   Loan Agency Services Group
                                   1111 Fannin
                                   10th Floor
                                   Houston, TX 77002
                                   Attention: Glenn Hector
                                   Facsimile: 713-750-2938
                                   Telephone: 713-750-7910

                                   and in the case of and with respect to Loans
                                   denominated in Available Foreign Currencies
                                   and Swing Line Loans denominated in Euro,
                                   Sterling or any Alternate Swing Line Foreign
                                   Currency:

                                   JPMorgan Chase Bank
                                   Trinity Tower
                                   9 Thomas Moore Street
                                   London, EY91T
                                   Attention: Caroline Walsh
                                   Facsimile: 011-44-20-7-777-2360
                                   Telephone: 011-44-20-7-777-2350

      with a copy to:              JP Morgan Chase Bank
                                   270 Park Avenue
                                   47th Floor
                                   New York, New York 10017
                                   Attention: Richard Duker
                                   Facsimile: (212) 270-5127
                                   Telephone: (212) 270-3057

provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.1(b), 2.2(b), 2.3, 2.4, 2.5, 2.6, 2.7,
2.8 and 3.2 shall not be effective until received.

            10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or

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                                                                              59

privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

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

            10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
or reimburse the Administrative Agent for all its reasonable out-of-pocket costs
and expenses reasonably incurred in connection with the development, preparation
and execution of, and any amendment, supplement or modification to, this
Agreement and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees, disbursements
and other reasonable charges of counsel to the Administrative Agent, (b) to pay
or reimburse each Lender and the Administrative Agent for all its reasonable
costs and expenses reasonably incurred in connection with the enforcement of any
rights under this Agreement, including, without limitation, the reasonable fees,
disbursements and other reasonable charges of counsel to the Administrative
Agent and to the several Lenders (other than those incurred in connection with
the compliance by the relevant Lender with the provisions of subsection
2.20(a)), and (c) to pay, indemnify, and hold each Lender and the Administrative
Agent harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay by the Borrower in
paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, and (d) to pay, indemnify, and hold each Lender,
the Administrative Agent, their affiliates, and their respective directors,
officers, employees, advisors and agents (each, an "indemnified person")
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, reasonable expenses or
disbursements of any kind or nature whatsoever (it being understood that this
shall not include the fees and disbursements of counsel to any of the Lenders
(other than JPMCB) in connection with (i) their review of this Agreement prior
to the Closing Date or (ii) prior to the occurrence of a Default or an Event of
Default, any amendment or waiver to this Agreement or any assignment to another
Lender pursuant to the terms hereof) with respect to the execution, delivery,
enforcement, performance and administration of this Agreement (all the foregoing
in this clause (d), collectively, the "indemnified liabilities"); provided that
the Borrower shall have no obligation hereunder to any indemnified person with
respect to indemnified liabilities arising from the gross negligence or willful
misconduct of such indemnified person or any of its affiliates, directors,
officers, employees, advisers or agents. The agreements in this subsection 10.5
shall survive repayment of the Loans and all other amounts payable hereunder.

            10.6 Successors and Assigns; Participations and Assignments. (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,
except that (i) the Borrower may

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                                                                              60

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 the 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 subsection (and any attempted
assignment or transfer by a Lender without the consent of the Borrower or the
Administrative Agent, if such consent is required by this subsection, shall be
null and void). 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, Participants (to the extent
provided in paragraph (c) of this subsection) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the Issuing Bank 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 and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:

            (A) the Borrower, provided that no consent of the Borrower shall be
      required for an assignment to (x) a Lender or an affiliate of a Lender
      unless such assignment would result in increased costs to the Borrower or,
      (y) if an Event of Default under clause (a) or (g) of Section 8 has
      occurred and is continuing, any other Assignee;

            (B) the Administrative Agent, provided that no consent of the
      Administrative Agent shall be required for an assignment to an Assignee
      that is a Lender immediately prior to giving effect to such assignment;

            (C) the Issuing Lender, provided that no consent of the Issuing
      Lender shall be required for an assignment to an Assignee that is a Lender
      immediately prior to giving effect to such assignment; and

            (D) in the case of an assignment of all or a portion of a Commitment
      or any Lender's obligation in respect of its Swing Line Commitment, the
      Swing Line Lenders, provided that no consent of the Swing Line Lenders
      shall be required for an assignment to a Lender or an affiliate of a
      Lender.

            (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, the amount of the Commitment 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 and, in the case
      of a partial assignment by a Lender the amount of the Commitment of the
      assigning Lender after giving effect thereto may not be less than
      $5,000,000, unless, in either case, each of the Borrower and the
      Administrative Agent otherwise consent (such consent not to be
      unreasonably withheld), provided that no such consent of the Borrower
      shall be required if an Event of Default under clause (a) or (g) of
      Section 8 has occurred and is continuing;

<PAGE>

                                                                              61

            (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 (i) this clause shall not apply to
      rights in respect of outstanding Competitive Loans and (ii) with the
      consent of the Borrower and the Administrative Agent (such consent not to
      be unreasonably withheld), a Lender may assign portions of its U.S.
      Commitment without assigning a proportionate share of its Multicurrency
      Commitment if either (x) such proportionate share of such Multicurrency
      Commitment shall be assumed by another Lender or (y) if the Borrower so
      agrees, such proportionate share of such Multicurrency Commitment shall be
      terminated;

            (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; and

            (D) the Assignee, if it shall not be a Lender, shall deliver to the
      Administrative Agent an Administrative Questionnaire.

            (iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this subsection, 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 subsections 2.17, 2.18, 2.19 and 10.5). Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply
with this subsection 10.6 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 subsection provided that it otherwise
satisfies the requirements of such paragraph.

            (iv) The Administrative Agent, acting for this purpose as an agent
of the Borrower, 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 owing to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be prima facie evidence of the
existence and amounts of the obligations therein recorded, and the Borrower, the
Administrative Agent, the Issuing Bank 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. The Register shall be available
for inspection and copying by the Borrower and any Lender, at any reasonable
time and from time to time upon reasonable prior notice. The Administrative
Agent shall provide a copy of the Register to the Borrower on a monthly basis.

            (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 subsection and any written consent to such assignment required by paragraph
(b) of this subsection, the Administrative Agent shall accept

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                                                                              62

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.

            (c) (i) Any Lender may, without the consent of the Borrower, the
Administrative Agent, the Issuing Bank or the Swing Line Lenders, in the
ordinary course of business and in accordance with applicable law, sell
participating interests 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 and the Loans owing to it);
provided that (A) such Lender's obligations under this Agreement shall remain
unchanged and such Lender shall, for all purposes of this Agreement, remain the
holder of any obligation owing to it hereunder, (B) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (C) the Borrower, the Administrative Agent, the Issuing Bank 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 shall have given prior written notice to the Borrower of the
identity of such Participant. In no event shall any Participant have any right,
and each agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right, to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; 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 clause (A) of the proviso
to subsection 10.1(a) that directly affects such Lender or in clause (B) of the
proviso to subsection 10.1(a). Subject to paragraph (c)(ii) of this subsection,
the Borrower agrees that each Participant shall be entitled to the benefits of
subsections 2.17, 2.18 and 2.19 to the same extent as if it were a Lender and
had acquired its interest by assignment pursuant to paragraph (b) of this
subsection.

            (ii) A Participant shall not be entitled to receive any greater
payment under subsection 2.17 or 2.18 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
Borrower's prior written consent. A Participant that is not organized under the
laws of the United States of America or a state thereof shall not be entitled to
the benefits of subsection 2.18 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with subsection 2.18(b) as though it were a
Lender.

            (d) Any Lender may 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 the other paragraphs of this subsection 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 or otherwise permit such pledgee or assignee to
exercise the rights of a Lender hereunder.

            (e) The Borrower authorizes each Lender to disclose to any
prospective Participant, any Participant, any prospective assignee (each, a
"Transferee") or any actual or proposed contractual counterparty (or its
advisors) to any securitization, hedge, or other

<PAGE>

                                                                              63

derivative transaction relating to the parties' obligations hereunder (each, a
"Counterparty") any and all financial information in such Lender's possession
concerning the Borrower and its affiliates which has been delivered to such
Lender by or on behalf of the Borrower pursuant to this Agreement or which has
been delivered to all Lenders by or on behalf of the Borrower in connection with
their respective credit evaluations of the Borrower and its affiliates prior to
becoming a party to this Agreement; provided that (i) such Transferee or
Counterparty has executed and delivered to the Borrower a written
confidentiality agreement substantially in the form of that which has been
executed and delivered by each Lender prior to the date hereof and (ii) in the
case of any information other than that contained in the Confidential
Information Memorandum, the Borrower has been informed of the identity of such
Transferee or Counterparty and has consented to the disclosure of such
information thereto. Nothing contained in this subsection 10.6(e) shall be
deemed to prohibit the delivery to any Transferee or Counterparty of any
financial information which is otherwise publicly available.

            10.7 Adjustments. If any Lender (a "benefitted Lender") shall at any
time receive any payment of all or part of its Loans or the Reimbursement
Obligations owing to it, or interest thereon, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 8(g), or otherwise),
such that it has received aggregate payments or collateral on account of its
Loans or the Reimbursement Obligations owing to it in a greater proportion than
any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Loans which are then due and payable, or interest
thereon, such benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loans or the
Reimbursement Obligations owing to it, or shall provide such other Lenders with
the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest (unless the Lender from which such payment is
recovered is required to pay interest thereon, in which case each Lender
returning funds to such Lender shall pay its pro rata share of such interest).

            10.8 Loan Conversion/Participations. (a) On the Conversion Date, if
the ratio (expressed as a percentage) of (i) the aggregate amount of the Dollar
Equivalent (determined on the basis of the Spot Exchange Rates as of such date)
of the Multicurrency Loans, the U.S. Revolving Credit Loans and the Swing Line
Participation Amounts of the Multicurrency Lenders plus the Dollar Equivalent
(determined on the basis of the Spot Exchange Rates as of such date) of the L/C
Obligations owed to the Multicurrency Lenders to (ii) the aggregate amount of
the Dollar Equivalent (determined on the basis of the Spot Exchange Rates as of
such date) of the Multicurrency Loans, the U.S. Revolving Credit Loans and the
Swing Line Participation Amounts of all Lenders plus the L/C Obligations owed to
all the Lenders exceeds the U.S. Commitment Percentage of all Multicurrency
Lenders (immediately prior to the termination of the Commitment), then the
excess amount (the "Excess Loans") shall be subject to the following
adjustments;

            (A) To the extent that on the Conversion Date any Multicurrency
      Lender has any U.S. Revolving Credit Loans outstanding or has any Swing
      Line Participation Amounts denominated in Dollars, each Non-Multicurrency
      Lender severally

<PAGE>

                                                                              64

      unconditionally and irrevocably agrees that it shall purchase in Dollars a
      participating interest in such Multicurrency Lenders' U.S. Revolving
      Credit Loans then outstanding and Swing Line Participation Amounts
      denominated in Dollars in an amount as may be necessary to cause each
      Lender's interest in the aggregate amount of all Loans (other than the
      Competitive Bid Loans, if any) and L/C Obligations after giving effect to
      the purchase contemplated by this clause (A) to be equal to its U.S.
      Commitment Percentage (immediately before the termination of the
      Commitments) or as near thereto as practicable; provided that the
      aggregate amount purchased by all Non-Multicurrency Lenders shall not
      exceed the lesser of (1) the Excess Loans and (2) the total aggregate
      amount of all L/C Obligations owed to Multicurrency Lenders plus all
      Multicurrency Lenders' U.S. Revolving Credit Loans and Swing Line
      Participation Amounts denominated in Dollars.

            (B) To the extent that there remain any Excess Loans not purchased
      by the Non-Multicurrency Lenders pursuant to the preceding clause (A) (the
      "Loans to be Converted") and to the extent not otherwise prohibited by a
      Requirement of Law, all Loans to be Converted shall be converted into
      Dollars (calculated on the basis of the relevant Spot Exchange Rates as of
      the Conversion Date) ("Converted Loans"), and each Non-Multicurrency
      Lender severally, unconditionally and irrevocably agrees that it shall
      purchase in Dollars a participating interest in such Converted Loans in
      such amounts as may be necessary to cause each Lender's interest in the
      aggregate amount of all Loans (other than the Competitive Bid Loans, if
      any) after giving effect to the purchase contemplated by this clause (B)
      to be equal to its U.S. Commitment Percentage (immediately before the
      termination of the Commitments).

            (C) Each U.S. Lender will immediately transfer to the Administrative
      Agent, in immediately available funds, the amounts of its
      participation(s), and the proceeds of such participation(s) shall be
      distributed by the Administrative Agent to each Lender from which a
      participating interest is being purchased in the amount(s) provided for in
      the preceding clauses (A) and (B). All Converted Loans shall bear interest
      at the rate which would otherwise be applicable to ABR Loans.

            (D) If, for any reason, the Loans to be Converted, may not be
      converted into Dollars in the manner contemplated by paragraph (a) of this
      subsection 10.8, (i) the Administrative Agent shall determine the Dollar
      Equivalent of the Loans to be Converted, (calculated on the basis of the
      Spot Exchange Rate as of the Business Day immediately preceding the date
      on which such conversion would otherwise occur pursuant to paragraph (a)
      of this subsection 10.8), (ii) effective on such Conversion Date, each
      Non-Multicurrency Lender severally, unconditionally and irrevocably agrees
      that it shall purchase in Dollars a participating interest in such Loans
      to be Converted, in an amount equal to the amount it would have purchased
      pursuant to clause (B) of paragraph (a) above. Each Non-Multicurrency
      Lender will immediately transfer to the Administrative Agent, in
      immediately available funds, the amount(s) of its participation(s), and
      the proceeds of such participation(s) shall be distributed by the
      Administrative Agent to each relevant Lender in the amount(s) provided for
      in the preceding sentence.

<PAGE>

                                                                              65

            (b) If any Non-Excluded Taxes are required to be withheld from any
amounts payable by a Lender (the "First Lender") to another Lender (the "Other
Lender") in connection with its participating interest in any Converted Loan,
the Borrower, with respect to the relevant Loans made to it, shall be required
to pay increased amounts to the Other Lender receiving such payments from the
First Lender but only to the extent the Borrower would have been required under
subsection 2.18 to pay such increased amounts if the Borrower had made such
payments with respect to the participating interest directly to the Other
Lender; provided, however, that the Borrower shall not be required to pay any
such amounts to the Other Lender that is not organized under the laws of the
United States of America or a state thereof if such Other Lender fails to comply
with the requirements of paragraph (b) of subsection 2.18.

            (c) Each Non-Multicurrency Lender's obligation to purchase
participating interests pursuant to subsection 10.8(a) shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (A) any setoff, counterclaim, recoupment, defense or other right
which such Lender or the Borrower may have against any Lender, the Borrower or
any other Person for any reason whatsoever; (B) the occurrence or continuance of
a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5; (C) any adverse change in the condition
(financial or otherwise) of the Borrower; (D) any breach of this Agreement by
the Borrower or any other Lender; or (E) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.

            (d) The Borrower consents to the purchases set forth in paragraphs
(a) and (b) of this subsection.

            10.9 Counterparts. (a) This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.

            (b) By its signature hereto, each Lender hereby agrees that this
Agreement shall become effective immediately upon (i) the execution and delivery
on June 18, 2004 by the Borrower and the Administrative Agent of this Agreement
and (ii) the satisfaction of the conditions set forth in paragraphs (b), (c),
(d), (e) and (f) of subsection 5.1. In the event that this Agreement has not
been duly executed and delivered by each Person listed on the signature pages
hereto (other than the Borrower and the Administrative Agent, with respect to
which the execution and delivery of this Agreement shall be a condition
precedent to its effectiveness) on or before the date upon which this Agreement
becomes effective in accordance with the immediately preceding sentence, this
Agreement shall nevertheless become effective with respect to those Persons who
have executed and delivered it on or before such effective date and those
Persons who have not executed and delivered it (such Persons, the "Non-Executing
Banks") shall be deemed not to be Lenders hereunder.

            (c) On the date of effectiveness of this Agreement, the Borrower may
(after consultation with the Administrative Agent) designate one or more Lenders
(the "Designated Lenders") to assume the Commitments which would have been held
by the Non-Executing Banks and, if the Designated Lenders agree to assume such
Commitments, (i) Schedules I and II

<PAGE>

                                                                              66

shall be deemed to be amended to reflect such increase in the U.S. Commitment
and/or the Multicurrency Commitment of each Designated Lender and the omission
of each Non-Executing Bank as a Lender hereunder and (ii) the U.S. Commitment
and/or the Multicurrency Commitment of each Designated Lender shall be deemed to
be such increased amount for all purposes hereunder.

            (d) Notwithstanding anything to the contrary contained herein, (i)
neither the U.S. Commitment nor the Multicurrency Commitment of a Lender shall
be increased (without the prior written consent of such Lender) as a result of
the failure of any other Person to execute and deliver this Agreement or
otherwise and (ii) in no event shall the aggregate Commitments of all Lenders
exceed $1,500,000,000.

            10.10 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

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

            10.12 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

            10.13 Confidentiality. Each of the Administrative Agent, the Issuing
Lender 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 informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent required 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 the enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this subsection, to any
Participant in, or any prospective assignee of or prospective Participant in,
any of its rights or obligations under this Agreement, or any actual or proposed
contractual counterparty (or its advisors) to any securitization, hedge, or
other derivative transaction relating to the parties' obligations hereunder, (g)
with the consent of the Borrower or (h) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this subsection
or (ii) becomes available to the Administrative Agent, the Issuing Lender or any
Lender on a nonconfidential basis from a source other than the Borrower. For the
purposes of this Section, "Information" means all information received from the
Borrower relating to the Borrower or its business, other than any

<PAGE>

                                                                              67

such information that is available to the Administrative Agent, the Issuing
Lender or any Lender on a nonconfidential basis prior to disclosure by the
Borrower; provided that, in the case of information received from the Borrower
after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this subsection 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.

            10.14 USA PATRIOT Act. Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the "Act"), it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender to identify the Borrower in accordance with the Act.

                    [Rest of page left intentionally blank.]

<PAGE>

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

                                         DELPHI CORPORATION

                                         By: ___________________________________
                                             Name:
                                             Title:

                                             Address: 5725 Delphi Drive
                                                      Troy, Michigan 48098
                                             Taxpayer I.D. No:

<PAGE>

                                         JPMORGAN CHASE BANK, as
                                           Administrative Agent and as a Lender

                                         By: ___________________________________
                                             Name:
                                             Title:

<PAGE>

                                       CITIBANK, N.A., as Syndication Agent and
                                         as a Lender

                                       By: _____________________________________
                                           Name:
                                           Title:

<PAGE>

                                       BARCLAYS BANK PLC, as Documentation Agent
                                         and as a Lender

                                       By: _____________________________________
                                           Name:
                                           Title:

<PAGE>

                                       DEUTSCHE BANK SECURITIES INC., as
                                         Documentation Agent and as a Lender

                                       By: _____________________________________
                                           Name:
                                           Title:

<PAGE>

                                       HSBC BANK USA, as Documentation Agent and
                                         as a Lender

                                       By: _____________________________________
                                           Name:
                                           Title:

<PAGE>

                                             Signature page for the 5-Year
                                             Second Amended and Restated
                                             Competitive Advance and Revolving
                                             Credit Facility, dated as of June
                                             18, 2004 among Delphi Corporation
                                             and the lenders party thereto

                                       _________________________________________
                                       [Name of Lender]

                                       By: _____________________________________
                                           Name:
                                           Title:<PAGE>

                                                                   EXHIBIT 10.14

CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

                              AMENDED AND RESTATED

                       COLLABORATION AND LICENSE AGREEMENT

            This Amended and Restated Collaboration and License Agreement (the
"Agreement") is executed as of the 19 day of November, 2003 and made effective
as of the 17 day of December, 2002 (the "Effective Date") between Genentech,
Inc., a Delaware corporation having its principal place of business at 1 DNA
Way, South San Francisco, California 94080 ("Genentech"), and Lexicon Genetics
Incorporated, a Delaware corporation having its principal place of business at
8800 Technology Forest Place, The Woodlands, TX 77381-1160 ("Lexicon"). The
Agreement amends and restates that certain Collaboration and License Agreement
between Genentech and Lexicon dated as of December 17, 2002 (the "Original
Agreement"). Throughout the Agreement, Genentech and Lexicon are sometimes
referred to individually as a "Party" and collectively as "Parties."

                                    RECITALS

            WHEREAS, Genentech is in the business of using human genetic
information to discover, develop, manufacture and market pharmaceutical
products; and

            WHEREAS, Lexicon possesses certain knowledge and experience in the
design, generation, and phenotypic analysis of Knock-Out Mice and ES Cell Lines;
and

            WHEREAS, Genentech desires, on the terms and conditions contained
herein, for Lexicon to generate Knock-Out Mice and ES Cell Lines for Genentech
based on human gene sequences provided by Genentech and then to analyze such
Knock-Out Mice and ES Cell Lines, and Lexicon desires, on the terms and
conditions, and for the consideration, contained herein, to undertake such
activities; and

            NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained in this Agreement, the Parties agree as follows:

                                   ARTICLE 1

                                   DEFINITIONS

Terms defined in this Article 1 and parenthetically elsewhere, including in the
introductory paragraph and recitals, will have the same meaning throughout this
Agreement, unless otherwise specified. Defined terms are capitalized and may be
used in the singular or plural.

<PAGE>

1.1   "ACADEMIC COLLABORATOR" means a principal investigator, employed at
a university or other not-for-profit academic research institution that has
entered into a material transfer agreement with Genentech pursuant to Section
5.10, who is performing collaborative research with Genentech involving use of a
Knock-Out Mouse or Progeny.

1.2   "ACTUAL KNOWLEDGE" of a Party means knowledge or awareness of a fact by
any board member or officer of such Party or of an Affiliate of such Party, or
any employee or agent of such Party that a board member or officer would
reasonably consult with regard to a particular fact, in each case after making
reasonable inquiries and investigations.

1.3   "AFFILIATE" of a Party means any person or corporation, joint venture, or
other business entity which directly (or indirectly through one or more
intermediaries) controls, is controlled by, or is under common control with such
Party, as the case may be. For purposes of this definition only, the terms
"controls," "controlled," and "control" mean the direct or indirect ability or
power to direct or cause the direction of the management and policies of an
entity or otherwise direct the affairs of such entity, whether through ownership
of equity, voting securities, or beneficial interest, by contract, or otherwise.
Notwithstanding the foregoing, F. Hoffmann-La Roche Ltd and its affiliates shall
not be considered Affiliates of Genentech for purposes of this Agreement.

1.4   "APPLICABLE LAWS" means all applicable statutes, ordinances, regulations,
rules, or orders of any kind whatsoever of any government authority or court of
competent jurisdiction.

1.5   "BLA" means a Biologics License Application filed with the FDA in the
United States or a corresponding application filed with a governmental authority
in any other country, together with all additions, deletions and supplements
thereto.

1.6   "CALENDAR QUARTER" means a period of three (3) consecutive calendar months
ending on either March 31, June 30, September 30, or December 31.

1.7   "CALENDAR YEAR" means the respective period of a year commencing on
January 1 and ending on December 31.

1.8   "COMMERCIALLY REASONABLE EFFORTS" or "commercially reasonable efforts"
means those diligent efforts consistent with the exercise of prudent scientific
and business judgment, as applied to its own high priority research projects or
pharmaceutical products by the Party in question. With regard to the creation
and generation of Knock-Out Mice for a Project, such efforts shall be deemed to
have been exhausted if Lexicon has [**] and (i) [**] or (ii) [**].

1.9   "CONFIDENTIAL INFORMATION" means Lexicon Confidential Information, Project
Confidential Information and/or Genentech Confidential Information, as
applicable.

                                       2

<PAGE>

1.10  "CONTRACT SERVICE PROVIDER" means any Third Person that enters into an
agreement with Genentech providing for the performance of services for
Genentech, on a fee for service basis, relating to the [**].

1.11  "DERIVATIVE PROTEIN" means (i) [**] or (ii) [**].

1.12  "DOLLARS" means United States dollars.

1.13  "EFFECTIVE DATE" has the meaning set forth in the introductory paragraph
of the Agreement.

1.14  "ES CELL LINE" means the embryonic stem cell line used to produce a line
of Knock-Out Mice containing within their genome the corresponding mutated gene.
With regard to ES Cell Lines to be delivered to Genentech pursuant to this
Agreement, the term ES Cell Line, with respect to each Project Gene, shall refer
to [**].

1.15  "FDA" means the U.S. Food and Drug Administration or corresponding
governmental authority in another country.

1.16  "FIELD" means any human or animal healthcare applications including,
without limitation, the diagnosis, prevention and treatment of diseases or
conditions.

1.17  "FIRST PASS PHENOTYPIC ANALYSIS" means the tests, observations, and
analyses listed on Exhibit A that Lexicon will use Commercially Reasonable
Efforts to perform, under Section 3.3, on the Knock-Out Mice of each Project.

1.18  "FORCE MAJEURE" means acts of God, strikes, civil disturbances,
earthquakes, fires, floods, explosions, riots, war, rebellion, sabotage, acts or
failure to act of governmental authority, or any other cause beyond the
reasonable control and without negligence of the defaulting Party, provided that
the Party claiming force majeure has exerted all reasonable efforts to promptly
remedy such force majeure.

1.19  "GAAP" shall mean United States generally accepted accounting principles,
consistently applied.

1.20  "GENENTECH CONFIDENTIAL INFORMATION" means all proprietary discoveries,
trade secrets, inventions (whether or not patentable), data, materials and
information disclosed or provided by, or on behalf of, Genentech to Lexicon or
its designees in connection with this Agreement (including, but not limited to,
Genentech Gene Patents and Know-How) other than Project Confidential
Information, whether provided prior to, or after, the Effective Date and whether
provided orally, electronically, visually, or in writing, except such
discoveries, trade secrets, inventions, data, materials or information that
Lexicon can demonstrate, through its contemporaneous written records:

      (i)   was known to Lexicon or to the public prior to Genentech's
            disclosure hereunder;

                                       3

<PAGE>

      (ii)  became known to the public, after Genentech's disclosure hereunder,
            other than through an unauthorized act of Lexicon or of any person
            to whom Lexicon disclosed such information;

      (iii) was subsequently disclosed to Lexicon by a person having lawful
            possession of, and a legal right to disclose without any
            restrictions, such information; or

      (iv)  was developed by Lexicon without use, and independent, of Genentech
            Confidential Information.

1.21  "GENENTECH GENE PATENTS AND KNOW HOW" means (i) all Patents which are
owned, controlled or licensed by Genentech as of the Effective Date or which are
created or acquired by Genentech during the course of this Agreement and which
claim a Project Gene, polypeptides encoded by such genes and/or antibodies
directed toward such polypeptides and/or methods of treatment employing such
genes, polypeptides and/or antibodies (also referred to herein as a "Genentech
Gene Patent") and (ii) all Know-How which is owned, controlled or licensed by
Genentech as of the Effective Date or which is created or acquired by Genentech
during the course of this Agreement which relates to any of the Project Genes
(also referred to herein as "Genentech Gene Know-How"); provided that Genentech
Gene Patents and Know-How shall not include Project Patents and Know-How.
Without limiting the generality of the foregoing, Genentech Gene Know How
includes any Genentech Confidential Information regarding Project Genes [**]
supplied by Genentech to Lexicon hereunder. Except as expressly set forth
herein, Genentech shall have no obligation to transfer Genentech Gene Know-How
to Lexicon.

1.22  "GROSS SALES" means, with respect to a Licensed Product, the gross amount
invoiced by Genentech, its Affiliates and Product Licensees, as applicable, for
sales of such Licensed Product to Third Persons.

1.23  "IND" means an Investigational New Drug Application filed with the FDA in
the United States, or a corresponding application filed with a regulatory agency
in any other country, together with all additions, deletions, and supplements
thereto.

1.24  "KNOCK-OUT MOUSE" means a mouse made by Lexicon pursuant to this Agreement
in which Lexicon has interrupted, disrupted, or deleted a specific gene or
portion thereof, homologous to a Project Gene, to inactivate the function of
such gene in such mouse.

1.25  "KNOW-HOW" means all proprietary information, trade secrets, techniques
and data (including Confidential Information) of a Party that are owned,
controlled or licensed by such a Party as of the Effective Date or thereafter
during the term of this Agreement, including but not limited to, discoveries,
formulae, materials, practices, methods, knowledge, processes, experience, test
data (including pharmacological, toxicological and clinical information and test
data), analytical and quality control data, marketing, pricing, distribution,
cost and sales data or descriptions. Know-How may be

                                       4

<PAGE>

made prior to the Effective Date or after the Effective Date whether or not
during the course of, in furtherance of, and as a direct result of the
activities of one or more Parties hereunder. Know-How may be made by employees
of Lexicon, solely or jointly with a Third Person, by employees of Genentech,
solely or jointly with a Third Person, or jointly by employees of Lexicon and
Genentech, alone or together with a Third Person. Know-How does not include
Patents.

1.26  "LEXICON CONFIDENTIAL INFORMATION" means all proprietary discoveries,
trade secrets, inventions (whether or not patentable), data, materials, and
information disclosed or provided by, or on behalf of, Lexicon to Genentech or
its designees in connection with this Agreement (including, but not limited to,
Lexicon Knock-Out Technology), other than Project Confidential Information,
whether provided prior to, or after, the Effective Date and whether provided
orally, electronically, visually, or in writing, except such discoveries, trade
secrets, inventions, materials, data, or information that Genentech can
demonstrate, through its contemporaneous written records:

      (i)   was known to Genentech or to the public prior to Lexicon's
            disclosure hereunder;

      (ii)  became known to the public, after Lexicon's disclosure hereunder,
            other than through an unauthorized act of Genentech or of any person
            to whom Genentech disclosed such information;

      (iii) was subsequently disclosed to Genentech by a person having lawful
            possession of, and a legal right to disclose without any
            restrictions, such information; or

      (iv)  was developed by Genentech without use, and independent, of Lexicon
            Confidential Information.

1.27  "LEXICON KNOCK-OUT TECHNOLOGY" means all Patents and Know How which are
(i) owned, controlled or licensed by Lexicon as of the Effective Date or created
or acquired by Lexicon during the course of this Agreement and (ii) related to a
process or method used in the creation or generation of Knock-Out or transgenic
mice, including the process for creating Knock-Out Mice and Overexpression Mice.
"Lexicon Knock-out Technology" shall also include (A) the Know-How consisting of
the Knock-Out Mice and the Overexpression Mice; the Know-How consisting of ES
Cell Lines; and the Know-How consisting of biological materials (such as nucleic
acid sequences, RNA, DNA, organisms, proteins, polypeptides, plasmids and
vectors) used for the creation of such Knock-Out Mice and Overexpression Mice,
but not the Know-How related to the biological materials and/or sequence
information provided by Genentech to Lexicon or known to Genentech (as evidenced
by written records) prior to the Effective Date; and (B) Patents claiming such
Know How. "Lexicon Knock-Out Technology" shall not include Patents claiming
Know-How to the extent that such Patents claim methods of making or methods of
use of Proteins or nucleic acids encoding such Proteins.

                                       5

<PAGE>

1.28  "LEXICON PRE-EXISTING PATENTS AND KNOW-HOW" means all Patents ("Lexicon
Pre-Existing Patents") and Know-How ("Lexicon Pre-Existing Know-How") which are
(i) owned, controlled or licensed by Lexicon as of the Effective Date, or
involve a Project Gene for which Lexicon had already [**] prior to the initial
proposal of such Project Gene by Genentech and (ii) related to a Pre-Existing
Project, a Project Gene, a Protein Candidate or a Licensed Product, provided in
each case that Lexicon Pre-Existing Patents and Know-How shall not include (a)
Lexicon Knock-Out Technology, (b) Genentech Gene Patents and Know How, (c)
Project Patents and Know How, (d) Restricted Rights Project Patents and
Know-How, (e) general Patents that cover inventions that could be used for
products other than products under which Genentech has a license pursuant to
Article 5, including, without limitation, Patents covering manufacturing or
process inventions, or (f) that portion of any such Patent or Know-How which is
beyond the scope of the work performed by Lexicon for Projects other than
Pre-Existing Projects.

1.29  "LICENSED PRODUCT" means a pharmaceutical preparation other than a Small
Molecule Drug that is ready for administration to the ultimate consumer and that
(i) contains as the active pharmaceutical ingredient a Protein Candidate or (ii)
that directly modulates a Protein Candidate, or the gene that encodes a Protein
Candidate.

1.30  "NDA" means a New Drug Application filed with the FDA in the United
States, or a corresponding application filed with a regulatory agency in any
other country, together with all additions, deletions, and supplements thereto.

1.31  "NET SALES" means, with respect to a Licensed Product, Gross Sales of such
Licensed Product less Sales Returns and Allowances for such Licensed Product.

1.32  "NOTE AGREEMENT" shall have the meaning set forth in Section 7.14.

1.33  "OVEREXPRESSION ANALYSIS" has the meaning set forth in Section 3.6.

1.34  "OVEREXPRESSION MOUSE" means a mouse made by Lexicon under this Agreement
in which Lexicon has overexpressed a specific gene or portion thereof,
homologous to a Project Gene, [**], to exaggerate the function of such gene in
such mouse.

1.35  "PATENT" means:

      (i)   a U.S. and corresponding foreign patent application (including
            provisional application, division, refiling, continuation,
            continuation-in-part, reissue and re-examination thereof); and

      (ii)  any patent (including without limitation, any substitution,
            extension, reissue, renewal, re-examination, patent of addition,
            supplementary protection certificate and inventors' certificate)
            that has issued or may issue in the future from any patent
            application described in Subsection (i).

                                       6

<PAGE>

1.36  "PHASE III CLINICAL TRIAL" means, as to a specific Licensed Product, a
controlled and lawful study in humans of the efficacy and safety of such
Licensed Product, which is prospectively designed to demonstrate statistically
whether such Licensed Product is effective and safe for use in a particular
indication in a manner sufficient to file a BLA or NDA to obtain regulatory
approval to market and sell that Licensed Product in the United States or
another country for the indication being investigated by the study, as further
defined in Federal Regulation 21 C.F.R. 312.21.

1.37  "PIPELINE PROJECT" means a Project involving a Project Gene for which
Lexicon had already created or begun to create (i.e., to the stage of targeting
vector generation or beyond), prior to the proposal of such Project Gene by
Genentech, a Knock-Out Mouse involving a mouse or human gene sequence, as the
case may be, with [**] to the full length sequence of any Proposed Gene, as
determined at the protein level using [**].

1.38  "PRE-EXISTING PROJECT" means a Pipeline Project involving a Project Gene
for which Lexicon had already [**] prior to the proposal of such Project Gene by
Genentech.

1.39  "PRODUCT LICENSEE" means any Third Person which enters into an agreement
with Genentech or its Affiliates involving the grant to such Third Person of a
license to sell a Licensed Product.

1.40  "PROGENY" means mice, including successive generations thereof, that are
produced or developed by Genentech, its Affiliates or Academic Collaborators by
breeding a Knock-Out Mouse with any other mouse (including, without limitation,
any other Knock-Out Mouse).

1.41  "PROJECT" has the meaning set forth in Section 3.1(e).

1.42  "PROJECT CONFIDENTIAL INFORMATION" means all discoveries, trade secrets,
inventions (whether or not patentable), data, materials, and information created
by either Party, or created jointly by both Parties, in connection with this
Agreement (including, but not limited to, Project Patents and Project Know How)
and that are created during the course of performing the activities contemplated
by this Agreement, and whether provided orally, electronically, visually or in
writing, except such discoveries, trade secrets, inventions, materials, data, or
information that a Party can demonstrate, through its contemporaneous written
records:

      (i)   was known to such Party or to the public prior to its creation
            hereunder;

      (ii)  became known to the public, after its creation hereunder, other than
            through an unauthorized act of such Party or of any person to whom
            such Party disclosed such information;

      (iii) was subsequently disclosed to such Party by a person having lawful
            possession of, and a legal right to disclose without any
            restrictions, such information; or

                                       7

<PAGE>

      (iv)  was developed by such Party without use, and independent, of the
            Project Confidential Information.

1.43  "PROJECT GENE" has the meaning set forth in Section 3.1(e); provided that
a Rejected Proposed Gene shall not be a Project Gene.

1.44  "PROJECT MATERIALS" means, with respect to a Project, (i) the Knock-Out
Mice made in the course of such Project, [**], and, if applicable, [**], (ii)
the data from the First Pass Phenotypic Analysis of such Knock-Out Mice, (iii)
the Overexpression Mice, if any, made in the course of such Project and (iv) the
data, if any, from the Overexpression Analysis of such Overexpression Mice.

1.45  "PROJECT PATENTS AND KNOW-HOW" means all Patents (also referred to herein
as "Project Patents") and Know How (also referred to herein as "Project Know
How") (i) created or acquired by either Party during the course of and in
connection with this Agreement and (ii) which are based upon data and other
information reviewed by the Steering Committee related to a Project Gene or
Protein Candidate; provided in each case that Project Patents and Know How shall
not include (A) Lexicon Knock-Out Technology, (B) Genentech Gene Patents and
Know-How, (C) Lexicon Pre-Existing Patents and Know-How, (D) Restricted Rights
Project Patents and Know-How, (E) general Patents that cover inventions that
could be used for products other than a Licensed Product, including, without
limitation, Patents covering manufacturing or process inventions, or (F) any
Patent or Know-How arising from work performed not in relation to this
Agreement. Any Know-How created or acquired by Genentech after a Project Gene
has been designated as a Rejected Project Gene (or Patents claiming any such
Know-How) shall not be included in the definition of Project Patents and
Know-How and shall not be subject to this Agreement.

1.46  "PROPOSED GENE" means a human gene sequence proposed by Genentech under
Section 3.1(a), (i) that Genentech believes is the full-length gene sequence for
a Protein and (ii) for which a patent application owned or controlled by
Genentech has been filed claiming such full-length human gene sequence and the
Protein believed to be produced by such gene.

1.47  "PROTEIN" means a high molecular weight [**], polymer compound composed of
a variety of amino acids joined by peptide linkages, including allelic variants
thereof and post-translationally modified variants thereof (e.g., glycosylated
proteins) that is produced by a Proposed Gene or a Project Gene.

1.48  "PROTEIN CANDIDATE" has the meaning set forth in Section 3.5, and shall
include Derivative Proteins.

1.49  "REGULATORY APPROVAL" means any and all approvals (including pricing and
reimbursement approvals), licenses, registrations or authorizations of any kind
of the FDA (or foreign equivalent) necessary for the marketing and sale of a
Licensed Product in any country or other regulatory jurisdiction. "Regulatory
Approval" shall include,

                                       8

<PAGE>

without limitation, approval granted with respect to any BLA, NDA or other
foreign equivalent.

1.50  "REJECTED PROJECT GENE" means a Project Gene whose Protein is not
designated as a Protein Candidate under Section 3.5(c).

1.51  "REJECTED PROPOSED GENE" means a Proposed Gene (i) that is rejected under
Section 3.1(b), (c) or (d), (ii) that is removed from the collaboration under
Section 3.1(f), (iii) that is deemed a Rejected Gene pursuant to Section 3.2(a),
(iv) for which the Steering Committee does not vote, under Section 3.2(b), to
proceed or (v) that is designated a Rejected Proposed Gene under Section 3.3(a).

1.52  "RESTRICTED RIGHTS PROJECT" means a Project involving a Project Gene which
is subject to [**] prior to the initial proposal of such Project Gene by
Genentech.

1.53  "RESTRICTED RIGHTS PROJECT PATENTS AND KNOW-HOW" means all Patents (also
referred to herein as "Restricted Rights Project Patents") and Know How (also
referred to herein as "Restricted Rights Project Know How") which are (i) owned,
controlled or licensed by Lexicon as of the Effective Date or created or
acquired by Lexicon during the course of and in connection with this Agreement
and (ii) which are based upon data and other information reviewed by the
Steering Committee related to a Project Gene or Protein Candidate in connection
with a Restricted Rights Project; provided in each case that Restricted Rights
Project Patents and Know How shall not include (A) Lexicon Knock-Out Technology,
(B) Genentech Gene Patents and Know-How, (C) general Patents that cover
inventions that could be used for products other than a Licensed Product,
including, without limitation, Patents covering manufacturing or process
inventions, or (D) any Patent claims or Know-How arising from work performed not
in relation to this Agreement.

1.54  "SALES RETURNS AND ALLOWANCES" means, with respect to a Licensed Product,
the sum of (a) and (b), where: (a) is a provision, [**] for sales of such
Licensed Product under GAAP as provided hereinabove for (i) cash and quantity
discounts or rebates on such Licensed Product (other than price discounts
granted at the time of invoicing and which are included in the determination of
Gross Sales), (ii) credits or allowances given or made for rejection or return
of previously sold Licensed Product or for retroactive price reductions
(including Medicare and similar types of rebates and chargebacks), (iii) sales
taxes, duties or other governmental charges levied on or measured by the billing
amount for such Licensed Product, as adjusted for rebates and refunds, (iv)
charges for freight and insurance directly related to the distribution of such
Licensed Product, to the extent included in the invoice to the customer, and (v)
credits for allowances given or made for wastage replacement, indigent patient
and any other sales programs agreed to by the Parties for such Licensed Product;
and (b) is a periodic adjustment of the provision determined in (a) to reflect
amounts actually incurred by Genentech, its Affiliates and Product Licensees, as
applicable, for items (i), (ii), (iii), (iv) and (v) in clause (a).

                                       9

<PAGE>

1.55  "SMALL MOLECULE DRUG" means any pharmaceutical compound for the treatment
of any human or animal disease or condition, the active ingredient of which is a
synthetically prepared, or a naturally derived chemical compound [**]; provided,
however, that "Small Molecule Drug" specifically excludes any compound which
consists of or incorporates as an active ingredient a Protein, a Derivative
Protein, a nucleic acid oligomer, or an antibody or any fragment thereof.

1.56  "STEERING COMMITTEE" means the committee established and described in
Article 2.

1.57  "THIRD PERSON" means any person or entity other than Lexicon, Genentech or
any Affiliate of Lexicon or Genentech.

                                   ARTICLE 2

                             GOVERNANCE OF RESEARCH

2.1   CREATION OF A STEERING COMMITTEE. Within [**] of the Effective Date, the
Parties shall establish a Steering Committee to oversee the Parties' activities
under Article 3 of this Agreement. The Steering Committee shall be comprised of
[**], but each Party may change its Steering Committee members at any time by
giving prior written notice to the other Party.

2.2   STEERING COMMITTEE RESPONSIBILITIES. The Steering Committee shall have the
following responsibilities, as well as any additional responsibilities expressly
set forth in this Agreement:

      (i)   receiving and reviewing reports and data received from a Party from
            time to time as set forth herein, including without limitation the
            submission of Proposed Genes, data related to the murine homology of
            Proposed Genes, results of the First Pass Phenotypic Analysis and
            Overexpression Analysis;

      (ii)  receiving notices from the Parties as set forth herein, including
            without limitation notices of delays or stalled research pursuant to
            Section 3.3(a);

      (iii) the designation of Project Genes and Protein Candidates under
            Sections 3.1 and 3.5, respectively;

      (iv)  coordinating the activities of the Parties hereunder;

      (v)   developing and implementing a publicity strategy and policy for the
            review and approval of press releases and publications in accordance
            with Section 9.4;

                                       10

<PAGE>

      (vi)  settling disputes or disagreements that arise between the parties as
            set forth in Article 13; and

      (vii) performing such other functions as appropriate to further the
            purposes of this Agreement, as determined by the Parties.

2.3   STEERING COMMITTEE DECISIONS. All Steering Committee decisions will be
made by [**] of all the Steering Committee's members, except as expressly stated
otherwise in this Agreement. Each Steering Committee member will have one vote,
and a Steering Committee member need not be present in order to vote; the
Steering Committee member(s) of a Party that are present for, or participating
in, a decision shall have the authority to vote on behalf of the Steering
Committee member(s) of such Party who are not present for, or participating in,
such decision.

2.4   STEERING COMMITTEE MEETINGS. Within [**] after the Effective Date, the
Steering Committee will hold an in-person organizational meeting to establish
the Committee's operating procedures. After such initial meeting, the Steering
Committee will meet at such other times as are unanimously agreed to by the
Steering Committee members, but no less than once each Calendar Quarter. Such
meetings may be in-person, via videoconference, or via teleconference, provided
that at least one meeting per Calendar Year shall be held in person. The
location of in-person Steering Committee meetings will alternate between South
San Francisco, California and The Woodlands, Texas. Each Party will bear the
expense of its respective Committee members' participation in Steering Committee
meetings. Minutes will be kept of all Steering Committee meetings.
Responsibility for keeping minutes will alternate between the Parties, beginning
with Genentech. Meeting minutes will be sent to each member of the Steering
Committee for review as soon as practicable after a meeting.

2.5   DISSOLUTION OF THE STEERING COMMITTEE. Upon the expiration of [**] after
all of the activities of Lexicon that have been approved by the Steering
Committee have been completed, the Steering Committee will have no further
responsibilities or authority under this Agreement and will be considered
dissolved by the Parties.

                                   ARTICLE 3

                             KNOCK-OUT MICE PROJECTS

3.1   GENENTECH SUBMISSION OF PROPOSED GENES.

      (a)   Initial Submission of Proposed Genes. Genentech, within [**], will
provide the Steering Committee with a written list of up to five hundred (500)
Proposed Genes, together with the date of Genentech's initial Patent filing with
regard to each such Proposed Gene.

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<PAGE>

      (b)   Delivery of Notice by Lexicon. Within [**] of the delivery by
Genentech of the list of Proposed Genes (or, with respect to replacement
Proposed Genes proposed by Genentech under Section 3.1(b), (c) or (f) or Section
3.2(a), within [**] of the delivery by Genentech of notice to the Steering
Committee of such replacement), Lexicon will notify the Steering Committee in
writing as to whether or not: (i) to Lexicon's Actual Knowledge, Lexicon's
conducting the activities contemplated by this Agreement with regard to such
Proposed Gene would infringe patents or other intellectual property rights under
which Lexicon is not licensed through this Agreement or otherwise; or (ii)
Lexicon is working (or under contractual obligation to begin work) for, or on
behalf of, any other person or entity or for itself involving a mouse or human
gene sequence, as the case may be, with [**] to any Proposed Gene, as determined
at the protein level using [**]. If so, Lexicon shall additionally notify
Genentech which Proposed Gene(s) are the subject of such patents or intellectual
property rights or such work, as the case may be, and whether such work is under
an exclusive or non-exclusive license or arrangement for any Proposed Gene. Any
Proposed Gene for which Lexicon is working for a Third Person under an exclusive
license or arrangement shall automatically be deemed a Rejected Proposed Gene;
provided, however, that Genentech may propose [**], in which case Lexicon will
[**] and, if the Steering Committee elects to [**], the Parties will [**]. In
the event Genentech does not [**], Genentech shall have the sole right, but not
the obligation, to propose another Proposed Gene in the place of such Rejected
Proposed Gene for the Steering Committee's review and approval, by notice to the
Steering Committee within [**] of Lexicon's notice.

      (c)   Rejection of Proposed Genes by Lexicon; Proposal of Replacement
Proposed Genes by Genentech. Lexicon shall not be obligated to develop, produce
or deliver a Knock-Out Mouse related to a Proposed Gene where Lexicon reasonably
believes, with the advice of its counsel and the Steering Committee, that such
action would infringe the intellectual property rights of a Third Person. Such
Proposed Gene shall become a Rejected Proposed Gene and the Steering Committee
shall adopt an acceptable solution including, but not limited to, the
identification by Genentech of an alternative Proposed Gene. Lexicon shall
further have the sole right, but not the obligation, to reject any Proposed Gene
for which Lexicon reasonably believes, with the advice of its counsel and the
Steering Committee, that Genentech was not the first to file a patent
application, but only in cases where the Steering Committee reasonably believes
[**], by notice to the Steering Committee within the period specified in Section
3.1(b), in which case Lexicon shall have the right to designate such Proposed
Gene as a Rejected Proposed Gene. In such event, Genentech shall have the sole
right, but not the obligation, to propose another Proposed Gene in the place of
such Rejected Proposed Gene for the Steering Committee's review and approval, by
notice to the Steering Committee within [**] of Lexicon's notice.

      (d)   Removal of Proposed Genes by Genentech. Within [**] of Genentech's
receipt of Lexicon's notice under Section 3.1(b), Genentech shall inform Lexicon
which, if any, of the Proposed Genes referenced in Lexicon's notice (and not
automatically deemed a Rejected Proposed Gene under Section 3.1(b)) Genentech
elects to remove

                                       12

<PAGE>

from the collaboration and, thereafter, all such removed
Proposed Genes shall constitute Rejected Proposed Genes. Genentech shall have no
right to propose a replacement Proposed Gene for any Proposed Gene that it
elects to remove from the collaboration under this Section 3.1(d).

      (e)   Designation of Project Genes. Following Genentech's notice pursuant
to Section 3.1(d), the remaining Proposed Genes shall constitute "Project Genes"
(and the work performed hereunder with regard to such Project Gene shall be
deemed a corresponding "Project"), and be deemed to be submitted to the
collaboration for Lexicon to begin determining, as fully described in Section
3.2(a), the murine gene that is homologous to each such Project Gene. Except as
set forth in this Section 3.1, Lexicon, acting through the Steering Committee or
otherwise, shall not have the ability to prevent the submission of a Project
Gene to the collaboration for Lexicon to conduct its activities under Section
3.2(a) regarding such Project Gene. To the extent that the total number of
Project Genes is less than (i) 500 minus (ii) the number of Proposed Genes
removed by Genentech under Section 3.1(d), Genentech shall have the right,
during the period ending [**], to propose up to [**] additional Proposed Genes,
until the aggregate number of Project Genes is (x) 500 minus (y) the number of
Proposed Genes removed by Genentech under Section 3.1(d). Within [**] following
each designation of Proposed Genes as Project Genes hereunder, Lexicon shall
provide Genentech with a list of the Projects, if any, that are Pipeline
Projects and/or Pre-Existing Projects, and the stage of each such Pipeline
Project or Pre-Existing Project, as the case may be.

      (f)   Removal and Replacement of Project Genes by Genentech. At any time
prior to [**], Genentech shall have the sole right, but not the obligation, to
remove such Project Gene and/or propose another Proposed Gene for the Steering
Committee's review and approval, by delivering notice thereof to the Steering
Committee; provided, however, that Genentech shall not be permitted to remove
more than [**] Project Genes pursuant to this Section 3.1(f); and provided,
further, that Genentech shall reimburse Lexicon for all reasonable costs and
expenses, including allocable overhead, incurred by Lexicon under this Agreement
prior to the date of Genentech's notice under this subsection 3.1(f) in respect
of the Project Gene being removed (for purposes of which, "allocable overhead"
shall mean costs incurred by Lexicon or for its account which are attributable
to its supervisory functions, services functions, occupancy costs, corporate
bonus (to the extent not charged directly to departments), and its payroll,
information systems, human relations or purchasing functions and which are
allocated to company departments based on space occupied or headcount or other
activity-based method, but shall not include any costs attributable to [**]. Any
such removed Project Gene shall be considered a Rejected Proposed Gene for
purposes of this Agreement.

3.2   LEXICON IDENTIFICATION OF HOMOLOGOUS MURINE GENE; STEERING COMMITTEE
REVIEW AND APPROVAL OF PROJECTS.

      (a)   Lexicon Efforts to Determine Homologous Murine Gene. For each
Project Gene submitted to the collaboration under Section 3.1(e), Lexicon will
use Commercially Reasonable Efforts to identify the homologous murine gene as
soon as

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<PAGE>

practicable, and in any event within [**], after such Project Gene was submitted
to it, and will provide Genentech with [**] reports regarding its efforts. To
identify the homologous murine gene, Lexicon will use its standard resources
and, if applicable, [**]. Upon identifying what it believes to be the homologous
murine gene(s) for a Project Gene, Lexicon will provide the Steering Committee
with written evidence of such gene's (or, if applicable, genes') homology. If
Lexicon is unable to identify a homologous murine gene for a Project Gene,
Lexicon will report all of the results related to such Project Gene obtained
during the course of its search to the Steering Committee as well, and such
Project Gene shall thereafter be deemed a Rejected Proposed Gene under this
Agreement. Genentech shall have the sole right, but not the obligation, to
propose another Proposed Gene in the place of such Rejected Proposed Gene for
the Steering Committee's review and approval, by notice to the Steering
Committee within [**] of Lexicon's report of its failure to identify a
homologous murine gene.

      (b)   Steering Committee Review and Approval of Projects. The Steering
Committee will review the information provided by Lexicon under Sections 3.2(a)
with respect to a Project Gene and will confirm that Lexicon has identified the
homologous murine gene, and therefore to proceed with such Project Gene under
Section 3.3 hereof. If the Steering Committee determines that Lexicon has not
identified a homologous murine gene for a Project Gene, such Project Gene shall
thereafter be deemed a Rejected Proposed Gene under this Agreement.

      (c)   Project Development Plan. Concurrently with its delivery of the
information contemplated by Section 3.2(a), Lexicon will provide the Steering
Committee (i) for Pipeline Projects, information (as set forth in Exhibit A)
regarding [**], and (ii) for Projects other than Pipeline Projects, [**]. With
regard to Pipeline Projects involving the use of an ES Cell Line generated
through Lexicon's gene trapping technology in the creation of a Knock-Out Mouse,
[**], Lexicon will [**]; provided that [**]. For all Projects that are not
Pipeline Projects, Lexicon will [**]

3.3   LEXICON'S CREATION AND TESTING OF KNOCK-OUT MICE AND ES CELL LINES.

      (a)   Activities Performed by Lexicon. Once the Steering Committee
approves proceeding with a Project Gene under Section 3.2(b), Lexicon, in
accordance with the recommendation from Genentech as to desired priority, will,
at Lexicon's sole expense, use Commercially Reasonable Efforts to perform the
following activities on such Project: (i) create and generate, [**] Knock-Out
Mice using the Project Gene's homologous murine gene; (ii) conduct a First Pass
Phenotypic Analysis of such Knock-Out Mice; and (iii) if requested by the
Steering Committee pursuant to Section 3.6, create Overexpression Mice for some
or all Project Genes corresponding to Protein Candidates. Lexicon agrees to use
Commercially Reasonable Efforts to perform and complete such activities on a
Project within [**] after the approval of a Project Gene by the Steering
Committee under Section 3.2(b). If a Project is delayed or stalled due to
technological or scientific difficulties, Lexicon will so notify Genentech and
the Steering Committee. The Parties will consult with each other to determine
whether such difficulties can be resolved or remedied. The Steering Committee
shall decide, based on input from Lexicon,

                                       14

<PAGE>

whether such Project's problems can be remedied within the scope of commercially
reasonable efforts for such Project or whether to terminate such Project and
designate such Project Gene a Rejected Proposed Gene. Genentech shall have the
right to terminate this Agreement under certain circumstances, as set forth in
Section 10.2.

      (b)   Reports; Consultation and Site Visits. Within [**] after the end of
[**], Lexicon will provide each Steering Committee member with a written report
describing the status of its work on each Project, and, [**], Lexicon will
provide a Genentech Steering Committee member with the same [**] report
generated for Lexicon's internal purposes. Upon reasonable advance written
notice from the Steering Committee or Genentech, Lexicon will make persons
working on its behalf on a Project available during normal business hours for a
reasonable number of consultations with the Steering Committee or Genentech
regarding such Project. Such consultations will either be in-person at such
person's place of employment or via videoconference or teleconference. Upon
reasonable notice, Genentech representatives may visit during normal business
hours the facilities where Lexicon is performing services on Projects. All
Genentech representatives will be advised of, and be bound by, Genentech's
confidentiality obligations in Article 9 and will follow such security and
facility access procedures as are reasonably designated by Lexicon. Lexicon may
require that at all times the Genentech representatives be accompanied by a
Lexicon representative.

3.4   SAFEGUARDS TO PROTECT CONFIDENTIALITY OF PROJECTS.

      (a)   Lexicon hereby agrees that each person working on a Project on its
behalf (whether as an employee, subcontractor, or otherwise) has or will, prior
to commencing work on a Project, have executed an instrument:

      (i)   assigning to Lexicon all of his, her, or its rights, title, and
            interest in inventions or intellectual property arising during the
            course, and as a result, of his, her, or its association with
            Lexicon; and

      (ii)  agreeing to abide by confidentiality and non-use restrictions
            regarding Confidential Information and the existence and terms of
            this Agreement no less stringent than Lexicon's confidentiality and
            non-use obligations under Article 9.

Lexicon also agrees to maintain appropriate security measures no less stringent
than measures that are customary in the industry.

      (b)   Genentech hereby agrees that each person working on a Project on its
behalf (whether as an employee, subcontractor, or otherwise) has or will, prior
to commencing work on a Project, have executed an instrument:

      (i)   assigning to Genentech all of his, her, or its rights, title, and
            interest in inventions or intellectual property arising during the
            course, and as a result, of his, her, or its association with
            Genentech; and

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<PAGE>

      (ii)  agreeing to abide by confidentiality and non-use restrictions
            regarding Confidential Information and the existence and terms of
            this Agreement no less stringent than Genentech's confidentiality
            and non-use obligations under Article 9.

Genentech also agrees to maintain appropriate security measures no less
stringent than measures that are customary in the industry.

3.5   REVIEW OF FIRST PASS PHENOTYPIC ANALYSIS; DESIGNATION OF PROTEIN
CANDIDATES.

      (a)   Review of First Pass Phenotypic Analysis. Once Lexicon completes the
First Pass Phenotypic Analysis on each of the Project Genes, it will submit to
Genentech, through the Steering Committee, the data from such Projects. After
reviewing this information from a Project, the Steering Committee will determine
by [**], within [**] following the submission of the First Pass Phenotypic
Analysis on such Project, whether Lexicon has [**] for such Project Gene.

      (b)   Designation of Protein Candidates. The Protein produced by each such
Project Gene for which the Steering Committee [**] votes that Lexicon has [**]
shall be designated as a "Protein Candidate." In the event that the Steering
Committee designates [**] Proteins produced by Project Genes as Protein
Candidates, then Lexicon shall have the right to designate an additional number
of Proteins produced by Project Genes as Protein Candidates, so that there are a
total of [**] Protein Candidates; provided that Lexicon shall make such
designations no later than [**] following the submission to the Steering
Committee of the last First Pass Phenotypic Analysis to be submitted under this
Agreement. Genentech shall have the rights and obligations set forth in Article
4 and 6 with regard to such Protein Candidates.

      (c)   Rejected Project Genes. Any Project Gene the Protein product of
which has not been designated as a Protein Candidate pursuant to subsection (b)
above, shall be deemed a Rejected Project Gene for purposes of this Agreement.
Genentech shall have the rights and obligations set forth in Articles 5 and 6
with regard to such Rejected Project Genes.

3.6   CREATION OF OVEREXPRESSION MICE; OVEREXPRESSION ANALYSIS. With respect to
a Protein Candidate that is designated by the Steering Committee or Lexicon in
accordance with Section 3.5, the Steering Committee may elect to have Lexicon
produce an Overexpression Mouse which overexpresses the Project Gene
corresponding to such Protein Candidate for further testing, by voting to make
such election no later than [**] following the designation of such Protein
Candidate. Lexicon agrees, at its own expense, to promptly use Commercially
Reasonable Efforts to create such Overexpression Mouse, and to promptly perform
phenotypic tests, observations, or analyses ("Overexpression Analysis") for up
to [**] Protein Candidates similar to those performed in the First Pass
Phenotypic Analysis for such Project Genes. Alternately, Genentech may elect to
perform Overexpression Analysis on any Overexpression Mouse

                                       16

<PAGE>

itself. Once Lexicon or Genentech, as the case may be, has completed such
Overexpression Analysis on a Project, it will submit to the Steering Committee
for the Steering Committee's review of the Project the data from such
Overexpression Analysis. The Party performing such Overexpression Analysis shall
use Commercially Reasonable Efforts to complete such Overexpression Analysis no
later than [**] after the creation of such Overexpression Mouse, subject to
unanimous decision by the Steering Committee for any subsequent extension of
time, but in any event will submit to the Steering Committee all available data
related to such Overexpression Analysis, whether complete or not, within such
time period.

                                   ARTICLE 4

                                LICENSED PRODUCTS

4.1   GENENTECH'S EXCLUSIVE RIGHT TO DEVELOP AND COMMERCIALIZE LICENSED
PRODUCTS. Genentech shall have the sole right and responsibility for, and
control over, developing and commercializing Licensed Products; provided,
however, that with regard to Restricted Rights Projects, nothing in this Section
will be deemed to grant Genentech rights beyond the scope of the licenses
granted to Genentech (or limit the rights of Lexicon, its collaborators or
licensees) with regard to such Restricted Rights Project.

4.2   TRANSFER TO GENENTECH OF LEXICON PRE-EXISTING KNOW-HOW AND PROJECT
KNOW-HOW RELATED TO PROTEIN CANDIDATES. Within [**] after designation of a
Protein Candidate pursuant to Section 3.5, Lexicon will provide Genentech, to
the extent not previously provided, with a copy of all Lexicon Pre-Existing
Know-How, Project Know-How and Restricted Rights Know-How related to such
Protein Candidate in Lexicon's possession or control.

4.3   GENENTECH RESPONSIBLE FOR DEVELOPMENT COSTS. Genentech shall bear all
costs and expenses associated with, and shall have sole control over, developing
and commercializing Licensed Products.

4.4 PRODUCT LICENSEES. Genentech agrees to notify Lexicon promptly of any
(sub)license that it enters into with a Product Licensee, and Genentech further
covenants that any such (sub)licence shall contain terms and conditions
consistent with Genentech's obligations under this Agreement.

                                   ARTICLE 5

                             GRANT OF LICENSE RIGHTS

5.1   EXCLUSIVE LICENSE UNDER LEXICON PRE-EXISTING PATENTS AND KNOW-HOW AND
RESTRICTED RIGHTS PROJECT PATENTS AND KNOW-HOW FOR THE RESEARCH, DEVELOPMENT AND
COMMERCIALIZATION OF LICENSED PRODUCTS. Subject to the terms of this Agreement,
Lexicon hereby grants to Genentech (i) an exclusive (even as to Lexicon),
world-wide

                                       17

<PAGE>

right and license under the Lexicon Pre-Existing Patents and Know-How and (ii),
to the extent specified in the Parties' designation(s) of Restricted Rights
Project(s), an exclusive (even as to Lexicon) or non-exclusive, world-wide right
and license under the Restricted Rights Project Patents and Know-How, in each
case to research, develop, make (or have made), use, sell, offer for sale, and
import Licensed Products in the Field. Such license includes the right to grant
sublicenses of all or part of such rights without Lexicon's consent; provided
that the grant of any such sublicense shall be consistent with the terms and
conditions of this Agreement and that no such sublicense to a Product Licensee
shall relieve Genentech of primary responsibility for all payments and royalties
due to Lexicon under Article 7 with respect to Licensed Product(s) licensed to
such Product Licensee.

5.2   LICENSE UNDER LEXICON PRE-EXISTING PATENTS AND KNOW-HOW AND RESTRICTED
RIGHTS PROJECT PATENTS AND KNOW-HOW FOR THE RESEARCH, DEVELOPMENT AND
COMMERCIALIZATION OF PRODUCTS OTHER THAN LICENSED PRODUCTS IN THE FIELD. Subject
to the terms of this Agreement, Lexicon hereby grants to Genentech a
royalty-free, worldwide right and license under the Lexicon Pre-Existing Patents
and Know-How and, to the extent specified in the Parties' designation(s) of
Restricted Rights Project(s), the Restricted Rights Project Patents and Know-How
to research, develop, make (or have made), use, offer for sale, sell, and import
products (including, but not limited to Small Molecule Drugs) other than
Licensed Products for use in the Field. Such right and license (i) shall be
exclusive (even as to Lexicon) under the Lexicon Pre-Existing Patents and
Know-How with respect to products in the Field other than Small Molecule Drugs,
(ii) shall be exclusive (even as to Lexicon) or non-exclusive under the
Restricted Rights Project Patents and Know-How, to the extent specified in the
Parties' designation(s) of Restricted Rights Project(s), with respect to
products in the Field other than Small Molecule Drugs and (iii) shall be
non-exclusive with regard to Small Molecule Drugs. Lexicon hereby grants
Genentech the right to grant sublicenses under the right and license granted by
Lexicon pursuant to this Section 5.2, on a Project Gene-by-Project Gene basis;
provided, however, that with respect to a Small Molecule Drug related to a
Project Gene, without the prior written consent of Lexicon, no such sublicense
under the Lexicon Pre-Existing Patents or Know-How or Restricted Rights Project
Patents or Know-How may be granted to any Third Person in the absence of (x) a
corresponding license or sublicense of right to a given Small Molecule Drug that
directly modulates the Protein produced by such Project Gene or Derivative
Protein thereof and discovered, researched and under bona fide commercial
development (at least through the stage of the demonstration of preclinical
efficacy in animal studies) by Genentech and (y) the license or sublicense of
Patent rights pertaining thereto owned by, licensed to or controlled by
Genentech.

5.3   LICENSE UNDER PROJECT PATENTS AND KNOW-HOW FOR THE RESEARCH, DEVELOPMENT
AND COMMERCIALIZATION OF SMALL MOLECULE DRUGS IN THE FIELD. Subject to the terms
of this Agreement, Genentech hereby grants to Lexicon a royalty-free,
non-exclusive, worldwide right and license under the Project Patents and
Know-How to research, develop, make (or have made), use, offer for sale, sell,
and import Small Molecule Drugs for use in the Field. Such right and license
shall be exclusive; provided

                                       18

<PAGE>

that Genentech retains rights under the Genentech Project Patents and Know How
(i) to research, develop, make (or have made), use, offer for sale, sell, and
import Small Molecule Drugs for use in the Field and (ii) to grant licenses to
Third Persons under the Genentech Project Patents and Know How to research,
develop, make (or have made), use, offer for sale, sell, and import Small
Molecule Drugs for use in the Field in connection with (A) a corresponding
license or sublicense of right to a given Small Molecule Drug that directly
modulates the Protein produced by a Project Gene or Derivative Protein thereof
and discovered, researched and under bona fide commercial development (at least
through the stage of the demonstration of preclinical efficacy in animal
studies) by Genentech and (B) the license or sublicense of Patent rights
pertaining thereto owned by, licensed to or controlled by Genentech. Genentech
hereby grants Lexicon the right to grant sublicenses under the right and license
granted by Genentech pursuant to this Section 5.3, subject to the restrictions,
if any, on Project Materials set forth in Section 5.5.

5.4   NON-EXCLUSIVE RESEARCH LICENSE GRANT UNDER LEXICON KNOCK-OUT TECHNOLOGY TO
KNOCK-OUT MICE AND PROGENY. Subject to the terms of this Agreement and the
restrictions, if any, on Project Materials set forth in Section 5.5, Lexicon
hereby grants to Genentech a worldwide, non-exclusive right and license under
the Lexicon Knock-Out Technology to use, breed, cross-breed and have bred and
cross-bred Knock-Out Mice and Progeny, at the internal research facilities of
Genentech and its Academic Collaborators or Contract Service Providers, for
research directed toward the discovery, identification, selection,
characterization, development or commercialization of products for use in the
Field. Except as provided in Section 5.10, Genentech agrees to use Knock-Out
Mice and Progeny solely for its own internal research purposes in accordance
with the terms and conditions of this Agreement, and not to use any Knock-Out
Mice or Progeny for any purposes for any Third Person, or to transfer, license
the use of or make available to any Third Person any Knock-Out Mice or Progeny.

5.5   EXCLUSIVITY PERIOD FOR PROJECT MATERIALS. Notwithstanding the provisions
of Sections 5.2, 5.3 and 5.4:

      (a)   Lexicon shall not [**] unless [**] (and then only to the extent
permitted under Section 5.5(b) below); and

      (b)   Lexicon shall not provide Project Materials from a Project to any
Third Person before the expiration of (i) [**] following the submission to the
Steering Committee of the data from the First Pass Phenotypic Analysis for such
Project Gene in accordance with Section 3.5(a), for Project Genes that become
Rejected Project Genes, and (ii) [**] following the submission to the Steering
Committee of the data from the First Pass Phenotypic Analysis for such Project
Gene in accordance with Section 3.5(a), for Project Genes that become Protein
Candidates; provided, that no such restriction shall apply to Project Materials
generated in the course of Projects that qualify as Pre-Existing Projects unless
Genentech shall have exercised the option specified below; provided, further,
that the restriction set forth in clause (ii) shall nevertheless apply to a
Pre-Existing Project in the event that, at the time such Project Gene becomes a
Protein

                                       19

<PAGE>

Candidate, Lexicon has no obligation to a Third Person with respect to such
Pre-Existing Project or the Project Materials generated in the course thereof..
In addition to the foregoing, for Pre-Existing Projects with respect to which
Lexicon has no obligation to a Third Person, at any time prior to designation of
such Pre-Existing Project as a Protein Candidate, Genentech shall have the
option to obtain the foregoing exclusivity period by delivering notice of such
exercise to Lexicon, together with payment of the option fee specified in
Section 7.3; provided that such option is exercised at a time when Lexicon has
no obligation to a Third Person with respect to such Pre-Existing Project. Such
option fee shall be credited against next performance or milestone payment
payable by Genentech in the event the Project Gene to which such Pre-Existing
Project relates shall be designated as a Protein Candidate. Nothing herein shall
be deemed to restrict, at any time (except as provided in Section 5.6 below),
Lexicon's right to develop for a Third Person a transgenic or Knock-Out mouse
with a mutation in a Project Gene independently requested by such Third Person
or provide such Third Person with phenotypic data derived therefrom; provided,
that [**].

5.6   EXCLUSIVITY PERIOD FOR SPECIFIED PROJECTS. At any time after the initial
designation of Project Genes under Section 3.1(e), Genentech may designate as
[**], by delivering written notice of such designations to Lexicon. Except as
may be independently requested under agreements with Lexicon in effect on [**],
Lexicon shall not [**] prior to the submission to the Steering Committee of the
data from the First Pass Phenotypic Analysis for such Project Gene in accordance
with Section 3.5(a).

5.7   RESERVATION OF RIGHTS. Notwithstanding the non-exclusive rights and
licenses granted to Genentech under Sections 5.2 and 5.4, but subject to the
exclusive rights and licenses granted to Genentech under Sections 5.1 and 5.2
and the restrictions, if any, on Project Materials set forth in Section 5.5 and
on the [**] set forth in Section 5.6:

      (a)   Lexicon reserves the right under the Lexicon Knock-Out Technology to
make and use, and to permit others to use, (i) Project Materials and (ii) other
transgenic and Knock-Out Mice (including, without limitation, transgenic and
Knock-Out Mice with a mutation in the same gene as a Knock-Out Mouse or
Overexpression Mouse) and phenotypic data with respect thereto, including the
right to grant licenses with respect to any applicable intellectual property
rights for such purpose.

(b) Lexicon reserves the right under the Lexicon Pre-Existing Patents and
Know-How and Restricted Rights Project Patents and Know-How (i) to discover,
research, develop, make, have made, import, use, have used, offer for sale, sell
and have sold Small Molecule Drugs and (ii) to grant licenses to Third Persons
to discover, research, develop, make, have made, import, use, have used, offer
for sale, sell and have sold Small Molecule Drugs.

5.8   LIMITED LICENSE TO GENENTECH GENE KNOW-HOW. For each Project Gene,
Genentech hereby grants Lexicon a non-exclusive, royalty-free license under the
Genentech Gene Patents and Know-How related to such Project Gene solely for
Lexicon to perform the following activities under this Agreement:

                                       20

<PAGE>

      (i)   identify, under Section 3.2(a), the homologous murine gene;

      (ii)  create, under Section 3.3, Knock-Out Mice with such homologous
            murine gene;

      (iii) test, under Section 3.3 and, if applicable, Section 3.6, such
            Knock-Out Mice;

      (iv)  conduct a First Pass Phenotypic Analysis on such Project Gene under
            Section 3.3(a); and

      (v)   create Overexpression Mice and do additional testing under Section
            3.6.

Lexicon has no right to sublicense under this license grant, which shall be
considered personal to Lexicon. Such license will terminate with regard to a
Project Gene upon the earliest to occur of such Project Gene becoming a Rejected
Proposed Gene, a Rejected Project Gene, a Protein Candidate, or the completion
of Lexicon's activities under this article 5.8.

5.9   NO GRANT OF OTHER TECHNOLOGY OR PATENT RIGHTS. Except as otherwise
expressly provided in this Agreement, under no circumstances shall a party
hereto, as a result of this Agreement, obtain any ownership interest in or other
right to any technology, know-how, patents, patent applications, gene or genomic
sequence data or information, products, or biological materials of the other
party, including items owned, controlled or developed by, or licensed to, the
other party, or transferred by the other party to said party, at any time
pursuant to this Agreement.

5.10  TRANSFERS TO ACADEMIC COLLABORATOR OR CONTRACT SERVICE PROVIDERS.
Genentech shall have the right to transfer a Knock-Out Mouse or Progeny made
pursuant to this Agreement to an Academic Collaborator or Contract Service
Providers, provided that such Academic Collaborator or Contract Service
Providers shall have entered into a material transfer agreement with Genentech
containing terms relating to the transfer of such material that expressly (i)
prohibit the use of such Knock-Out Mice or Progeny thereof for any purpose other
than such Academic Collaborator's collaborative research with, or Contract
Service Provider's service for, Genentech in the Field and (ii) prohibit the
transfer of such Knock-Out Mice thereof by such Academic Collaborator or
Contract Service Provider to any Third Party. Within [**] of entering into any
such material transfer agreement, Genentech shall provide Lexicon with a copy
thereof.

5.11  LICENSE TO LEXICON ISOGENIC TECHNOLOGY. On the Effective Date, Lexicon and
Genentech shall enter into the Sublicense Agreement attached hereto as Exhibit
B.

                                       21

<PAGE>

                                   ARTICLE 6

                   REQUEST FOR AND DELIVERY OF KNOCK-OUT MICE

6.1   REQUESTS FOR PROJECT MATERIALS BY GENENTECH. During the period of [**]
following the submission to the Steering Committee of the data from the First
Pass Phenotypic Analysis for a Project Gene in accordance with Section 3.5(a),
Genentech shall have the option, subject to the terms and conditions of this
Agreement, to have Lexicon deliver to Genentech [**] the Knock-Out Mice for such
Project Gene, by delivering written notice of such request to Lexicon. During
the period beginning on the date of the submission to the Steering Committee of
the data from the First Pass Phenotypic Analysis for a Project Gene in
accordance with Section 3.5(a) and ending on [**], Genentech shall have the
option, subject to the terms and conditions of this Agreement, to have Lexicon
deliver to Genentech Project Materials and Project Know-How (to the extent not
already provided), including without limitation [**], for such Project Gene.
Genentech may also have, during such period, [**]. Lexicon shall have no further
obligation to deliver Project Materials to Genentech following such period;
provided that, following such period, Genentech may [**].

6.2   MAINTENANCE OF BACK-UP COLONIES. For a period of at least [**] after the
delivery of a particular Knock-Out Mouse requested by Genentech under Section
6.1, Lexicon shall retain a small back-up colony of [**] such Knock-Out Mice
[**], for the purpose of replacing mice shipped to Genentech under this Article
6 which die or are otherwise unable to breed during or within [**] after
shipment to Genentech hereunder. Thereafter, until the expiration of six (6)
months following the submission to the Steering Committee of the data from the
last First Pass Phenotypic Analysis to be submitted under this Agreement,
Lexicon shall [**], if requested by Genentech. In the event Genentech requests
that Lexicon maintain any such colony for a period of more than [**], Genentech
shall pay Lexicon a storage and maintenance charge of [**] for such requested
line of Knock-Out Mice for each [**] that Lexicon maintains such colony at
Genentech's request.

6.3   DELIVERY TERMS AND CONDITIONS. Lexicon shall be responsible for making
shipping arrangements for all Knock-Out Mice to be shipped to Genentech from
Lexicon; provided that Genentech shall be responsible for (i) paying all
shipment and delivery charges in connection therewith and (ii) obtaining, if
desired, and paying for any insurance for Knock-Out Mice shipped to Genentech
from Lexicon. Genentech shall also be responsible for complying with all
customs, regulations, veterinary handling procedures and protocols, and
obtaining any and all permits, forms or permissions that may be required for
Genentech to accept shipment of Knock-Out Mice from Lexicon. Lexicon shall ship
to Genentech [**] Knock-Out Mice, [**], promptly following its receipt of
written notice that Genentech is prepared to accept shipment. Risk of loss with
respect to any Knock-Out Mice to be transferred under this Section 6.3 shall
pass to Genentech upon delivery thereof to the shipping company designated as
specified herein. If Genentech fails to complete the necessary arrangements to
accept shipment and provide such notice within [**] after delivery of its
request for such Knock-Out Mice

                                       22

<PAGE>

pursuant to Section 6.1, Genentech shall pay Lexicon a storage and maintenance
charge of [**] for such requested line of Knock-Out Mice for each week
thereafter until Lexicon receives such notice.

                                   ARTICLE 7

                                    PAYMENTS

7.1   UP-FRONT FEE. As partial consideration for the work to be performed by
Lexicon under this Agreement, Genentech shall pay Lexicon a fee of Nine Million
Dollars (U.S.$9,000,000), which fee shall be payable within ten (10) days of the
Effective Date.

7.2   PERFORMANCE PAYMENTS. Within [**] of achieving each of the research
milestones listed below, Genentech shall pay to Lexicon the following amounts:

      [**]

7.3   OPTION FEE. In the event Genentech exercises its option under Section 5.5
with respect to a Pre-Existing Project, Genentech shall pay Lexicon an option
fee of [**] concurrently with its delivery of its notice exercising such option.

7.4   OVEREXPRESSION FUNDING. To the extent the Steering Committee elects to
have Lexicon produce an Overexpression Mouse for more than [**] Project Genes,
Genentech shall pay Lexicon funding of [**] for each additional Project Gene for
which the Steering Committee elects to have Lexicon produce an Overexpression
Mouse, which funding shall be payable within [**] of such election.

7.5   FEE FOR [**] KNOCK-OUT MICE. In the event Genentech requests, more than
[**] following the submission to the Steering Committee of the data from the
First Pass Phenotypic Analysis for a Project Gene in accordance with Section
3.5(a), that Lexicon [**], Genentech shall pay Lexicon a fee of [**]
concurrently with its delivery of such request.

7.6   FEE FOR DELIVERY OF MATERIALS [**]. In the event Genentech requests, after
the later of (i) the date of submission to the Steering Committee of the data
from the last First Pass Phenotypic Analysis to be submitted under this
Agreement and (ii) [**] following the date of submission to the Steering
Committee of the data from the First Pass Phenotypic Analysis for a Project
Gene, that [**], Genentech shall pay Lexicon a fee of [**] within [**] of
Lexicon's notice that [**].

7.7   MILESTONE PAYMENTS. With respect to the first Licensed Product relating to
a specified Protein Candidate to achieve the following development milestones
listed below, within [**] of achieving each such development milestones,
Genentech shall pay Lexicon the following amounts:

                                       23

<PAGE>

<TABLE>
<CAPTION>
                 MILESTONE EVENT                                                          AMOUNT
                 ---------------                                                          ------
<S>                                                                                  <C>
Filing of an IND for such Licensed Product                                           U.S.$       [**]

Commencement (i.e., first patient enrolled) of the first
  Phase III  Clinical Trial for such Licensed Product                                U.S.$       [**]

 Receipt of the first Regulatory Approval of such Licensed Product                   U.S.$       [**]
                                                                                     ----------------
   TOTAL                                                                             U.S.$ 17,000,000
</TABLE>

For purposes of clarification, with respect to each Project Gene whose Protein
is designated as a Protein Candidate, Genentech shall only be required to pay
Lexicon for each of the above development milestones once upon the first
occurrence of the respective event. All milestone payments hereunder are to be
made by wire transfer of immediately available funds. Such milestone payments
are non-refundable and non-creditable against any other payments hereunder.
Genentech shall give Lexicon written notice of the achievement of any milestone
event no later than [**] after such achievement.

7.8   ROYALTIES ON LICENSED PRODUCTS. As consideration for its exclusive rights
with respect to Licensed Products and the other rights provided and activities
performed by Lexicon hereunder, Genentech agrees to pay Lexicon a royalty of
[**] of Net Sales of each Licensed Product by Genentech, its Affiliates and
Product Licensees, on a country-by-country basis, during the period commencing
with the first sale for use or consumption by the general public of a Product in
a country after Regulatory Approval in such country and ending on the date that
is [**] from the date of such first commercial sale of such Licensed Product in
such country; provided that, in the event the worldwide Net Sales of such
Licensed Product for which a royalty is payable to Lexicon hereunder exceeds
[**] in any Calendar Year, Genentech shall pay Lexicon a royalty of [**] on that
portion of such Net Sales of such Licensed Product that exceeds [**] in such
Calendar Year. The royalty payable hereunder shall be payable only once with
respect to the same unit of Licensed Product.

7.9   PAYMENT OF ROYALTY; REPORTING; EXCHANGE RATES. Within [**] after the end
of each [**], Genentech will pay (and/or cause its Affiliates and/or Product
Licensees to pay) the royalty owed under this Agreement, if any, on applicable
Net Sales invoiced during such just-ended [**]. Such payment will be accompanied
by the report showing: (i) the Gross Sales and Net Sales of Products sold during
the reporting period and the calculation of Net Sales from such Gross Sales;
(ii) the royalties payable in Dollars which shall have accrued hereunder in
respect of such Net Sales; (iii) withholding taxes, if any, required by law to
be deducted in respect of such royalties; (iv) the dates of the first commercial
sales of Licensed Products in any country during the reporting period, if
applicable; and (v) the exchange rates used in determining the amount of Dollars
payable hereunder. Royalties payable on sales in countries other than the United
States shall be calculated in accordance with the standard exchange rate
conversion practices used by Genentech, its Affiliates or the Product Licensee,
as applicable, for financial accounting

                                       24

<PAGE>

purposes. If no royalty or payment is due for any royalty period hereunder,
Genentech shall so report. Genentech shall keep, and shall require its
Affiliates and Product Licensees to keep (all in accordance with GAAP), complete
and accurate records in sufficient detail to properly reflect all gross sales
and Net Sales and to enable the royalties payable hereunder to be determined.

7.10  U.S. CURRENCY; WIRE TRANSFERS. All payments, including any interest
pursuant to Section 7.12, payable by Genentech, its Affiliates and Product
Licensees to Lexicon under this Agreement will be paid in Dollars and will be
made by wire transfer, in immediately available funds, to an account designated
in writing by Lexicon.

7.11  TAXES. Any and all taxes levied on any payments from Genentech to Lexicon
under this Agreement will be the liability of, and paid by, Lexicon. However, if
Applicable Laws require the withholding of such taxes, Genentech will deduct
such taxes from its payment to Lexicon and remit such withheld amount to the
proper tax authority. Genentech will provide proof of payment to Lexicon within
[**] of such payment. This Agreement shall not be considered a partnership for
tax reporting purposes.

7.12  INTEREST ON OVERDUE PAYMENTS. In the event a royalty or other payment
under this Agreement is not made within [**] of when due, such outstanding
payment will accrue interest (from the date such payment is due through and
including the date upon which full payment is made) at the annual rate equal to
the [**]. Payment of accrued interest will accompany payment of the outstanding
payment.

7.13  ROYALTY RECORDS; AUDIT RIGHTS. Genentech will keep, and maintain for a
period of [**] following the end of a Calendar Year, accurate records in
sufficient detail to enable royalties under this Agreement for such Calendar
Year to be determined. Lexicon has the right, upon prior written notice to
Genentech, not more than [**], through an independent certified public
accountant selected by Lexicon and acceptable to Genentech (which acceptance
shall not be unreasonably refused) to have access during normal business hours
to those records of Genentech as may be reasonably necessary to verify the
accuracy of the royalty reports furnished by Genentech under this Agreement for
the previous Calendar Year. Prior to implementing an audit, Lexicon agrees to
submit an audit plan, including audit scope, to Genentech for Genentech's
approval (which shall not be unreasonably withheld). Lexicon's independent
certified public accountant will keep confidential all information obtained
during such audit and will report to Lexicon only the amount of Genentech's
Gross Sales and Net Sales made during, and royalties due for, the Calendar Year
in question. Genentech shall have the right, at its own expense, to have its own
independent certified public accountant review and confirm the results of the
audit performed by Lexicon's accountants. In the event that the Parties'
accountants do not agree as to the results of the audit, the Parties agree that
such accountants shall attempt in good faith to resolve any discrepancies
between their results according to GAAP and the terms of this Agreement.

Lexicon is solely responsible for all the expenses of an audit, unless the
independent certified public accountant's report correctly shows any
underpayment of royalties by

                                       25

<PAGE>

Genentech exceeding [**] of the total royalties it owed for the Calendar Year
then being reviewed. If the independent certified public accountant's report
correctly shows that Genentech underpaid its royalties by more than [**],
Genentech is responsible for the reasonable expenses incurred by Lexicon for the
independent certified public accountant's services.

If the independent certified public accountant's report correctly shows any
underpayment of royalties by Genentech, Genentech shall remit to Lexicon within
[**] after the Genentech receipt of such report:

      (i)   the amount of such royalty underpayment;

      (ii)  interest on the amount being paid in (i), which interest shall be
            calculated pursuant to Section 7.12; and

      (iii) if such royalty underpayment exceeds [**] of Genentech's total
            royalties owed for the Calendar Year then being reviewed, the
            reasonable expenses incurred by Lexicon for the independent
            certified public accountant's services.

If the independent certified public accountant's report correctly shows any
overpayment of royalties by Genentech, such overpayment shall be fully
creditable against future royalties payable by Genentech in subsequent royalty
periods.

The calculation of royalties payable with respect to a Calendar Year will be
binding and conclusive on the Parties upon the expiration of [**] following the
end of such Calendar Year, unless (i) an audit of such Calendar Year, initiated
before the expiration of such [**], is on-going or (ii) Lexicon has, in good
faith and through written notice to Genentech, disputed such calculation before
the expiration of such [**] or, if applicable, within [**] after receipt of the
audit report.

7.14  CONVERTIBLE NOTE. Simultaneously with the execution and delivery of
this Agreement, the parties hereto shall enter into a Note Agreement (the "Note
Agreement"), dated as of the date hereof, substantially in the form attached as
Exhibit C hereto. Under the Note Agreement, Genentech shall loan Lexicon Four
Million Dollars (U.S.$4,000,000), on or before December 31, 2002, pursuant to
the terms and conditions set forth in such Note Agreement.

                                   ARTICLE 8

                     INTELLECTUAL PROPERTY RESPONSIBILITIES

8.1   OWNERSHIP.

                                       26

<PAGE>

      (a)   Lexicon shall own all Lexicon Knock-Out Technology, Lexicon
Pre-Existing Patents and Know-How and Restricted Rights Project Patents and
Know-How. Genentech shall own all Genentech Gene Patents and Know-How and
Project Patents and Know-How.

      (b)   Lexicon shall assign all right, title and interest in inventions
encompassed within Project Patents and Know-How to Genentech by taking, and
causing its employees and agents to take, all necessary actions and executing,
and causing its employees and agents to execute, all necessary documents to
assign such rights, title and interest to Genentech. Moreover, Lexicon covenants
and agrees to cooperate, and cause its employees and agents to cooperate, with
Genentech to enable Genentech to enjoy to the fullest extent the right, title
and interest herein conveyed in the United States and foreign countries. Such
cooperation shall include prompt production of pertinent facts and documents,
giving of testimony, execution of petitions, oaths, specifications, declarations
or other papers, and other assistance all to the extent deemed necessary or
desirable by Genentech (a) for perfecting the right, title and interest herein
conveyed; (b) for prosecuting any of said applications; (c) for filing and
prosecuting applications for reissuance of any of said patents; (d) for
interference or other priority proceedings involving said invention; and (e) for
legal proceedings involving said invention and any applications therefor and any
patents granted thereon, including without limitation opposition proceedings,
cancellation proceedings, priority contests, public use proceedings,
infringement actions and court actions; provided, however, that the expense
incurred by Lexicon, its employees and agents in providing such cooperation
shall be paid for by Genentech.

8.2   PATENT PROSECUTION OF LEXICON KNOCK-OUT TECHNOLOGY, LEXICON PRE-EXISTING
PATENTS AND RESTRICTED RIGHTS PROJECT PATENTS.

      (a)   Patentable Inventions. Lexicon shall be responsible, at its sole
discretion and expense, for filing, prosecuting, and maintaining Lexicon
Knock-Out Technology, Lexicon Pre-Existing Patents and Restricted Rights Project
Patents; provided that Genentech shall be responsible, at its sole discretion,
for filing, prosecuting, and maintaining Lexicon Pre-Existing Patents and
Restricted Rights Project Patents (to the extent exclusively licensed to
Genentech) claiming Protein Candidates and uses thereof following their
designation as Protein Candidates.

      (b)   Review and Comment. Lexicon shall provide Genentech with a copy of
any patent application (including any provisional applications) within Lexicon
Knock-Out Technology specifically related to a Protein Candidate prior to filing
in any jurisdiction, for review and comment by Genentech. Lexicon shall
reasonably consider comments and suggestions provided in a timely manner by
Genentech. Genentech shall maintain any such applications in confidence.

      (c)   Notice of Decision. If Lexicon decides not to file an application
within Lexicon Knock-Out Technology specifically related to a Protein Candidate
in any country, it shall give Genentech prompt notice to this effect. After such
notice,

                                       27

<PAGE>

Genentech may file, prosecute (including any interference), and maintain, at its
own expense, such application in such country, and Lexicon shall execute such
documents and perform such acts as may be reasonably necessary for Genentech to
continue such filing, prosecution, or maintenance.

      (d)   Prosecution and Maintenance. Lexicon agrees to use reasonable
diligence to prosecute and maintain the Lexicon Knock-Out Technology
specifically related to a Protein Candidate it filed and to prosecute any
interference proceedings with respect thereto, unless it provides Genentech
notice under Subsection (c) or (e). Upon Genentech's request, Lexicon shall
provide Genentech with (i) a copy of communications with any patent office with
respect to any Lexicon Knock-Out Technology specifically related to a Protein
Candidate and (ii) the opportunity to review and comment on any or all such
communications. Genentech shall provide its comments on any such communication
within [**] after receipt of such communication, and should no comments be
received by Lexicon on or before the [**], then it shall be deemed that
Genentech has no comment to make on such communication. Lexicon shall reasonably
consider comments and suggestions provided in a timely manner by Genentech.
Genentech shall maintain any such communications in confidence. All such
communications provided to Genentech pursuant to this Section shall be sent to a
person to be designated by Genentech by written notice to Lexicon.

      (e)   Cessation of Prosecution or Maintenance. Lexicon shall give prior
written notice to Genentech of any decision by Lexicon to cease the prosecution
(including any interference) and maintenance of Lexicon Knock-Out Technology
specifically related to a Protein Candidate and, in such case, Genentech shall
have the right at its sole discretion and expense to continue such prosecution
(including any interference) or maintenance. If Genentech continues such
prosecution or maintenance, Lexicon shall execute such documents and perform
such acts as may be reasonably necessary for Genentech to continue such
prosecution or maintenance.

8.3   PATENT PROSECUTION OF GENENTECH GENE PATENTS, PROJECT PATENTS AND LEXICON
PRE-EXISTING PATENTS AND RESTRICTED RIGHTS PROJECT PATENTS CLAIMING PROTEIN
CANDIDATES.

      (a)   Patentable Inventions. Genentech shall be responsible, at its sole
discretion and expense, for filing, prosecuting, and maintaining Genentech Gene
Patents, Project Patents and, following designation of a Protein Candidate, any
Lexicon Pre-Existing Patents and Restricted Rights Project Patents (to the
extent exclusively licensed to Genentech) related to such Protein Candidate.

      (b)   Review and Comment. Genentech shall provide Lexicon with a copy of
any patent application (including any provisional applications) within (i)
Project Patents and (ii) Lexicon Pre-Existing Patents or Restricted Rights
Project Patents relating to Protein Candidates prior to filing in any
jurisdiction for review and comment by Lexicon. Genentech shall reasonably
consider comments and suggestions provided in a timely manner by Lexicon.
Lexicon shall maintain any such applications in confidence.

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<PAGE>

      (c)   Notice of Decision. If Genentech decides not to file an application
within (i) Project Patents related to a specific Project or (ii) Lexicon
Pre-Existing Patents or Restricted Rights Project Patents related to a Protein
Candidate in any country, it shall give Lexicon prompt notice to this effect.
After such notice, Lexicon may file, prosecute (including any interference), and
maintain, at its own expense, such application in such country, and Genentech
shall execute such documents and perform such acts as may be reasonably
necessary for Lexicon to continue such filing, prosecution, or maintenance.

      (d)   Prosecution and Maintenance. Genentech agrees to use reasonable
diligence to prosecute and maintain (i) Project Patents and (ii) Lexicon
Pre-Existing Patents and Restricted Rights Project Patents related to Protein
Candidates it filed and to prosecute any interference proceedings with respect
thereto, unless it provides Lexicon notice under Subsection (c) or (e). Upon
Lexicon's request, Genentech shall provide Lexicon with (i) a copy of
communications with any patent office with respect to any (A) Project Patents
and (B) Lexicon Pre-Existing Patents and Restricted Rights Project Patents
related to Protein Candidates and (ii) the opportunity to review and comment on
any or all such communications. Lexicon shall provide its comments on any such
communication within [**] after receipt of such communication, and should no
comments be received by Genentech on or before the [**], then it shall be deemed
that Lexicon has no comment to make on such communication. Genentech shall
reasonably consider comments and suggestions provided in a timely manner by
Lexicon. Lexicon shall maintain any such communications in confidence. All such
communications provided to Lexicon pursuant to this Section shall be sent to a
person to be designated by Lexicon by written notice to Genentech.

(e) Cessation of Prosecution or Maintenance. Genentech shall give prior written
notice to Lexicon of any decision by Genentech to cease the prosecution
(including any interference) and maintenance of (i) Project Patents related to a
specific Project or (ii) Lexicon Pre-Existing Patents or Restricted Rights
Project Patents related to a Protein Candidate and, in such case, Lexicon shall
have the right at its sole discretion and expense to continue such prosecution
(including any interference) or maintenance. If Lexicon continues such
prosecution or maintenance, Genentech shall execute such documents and perform
such acts as may be reasonably necessary for Lexicon to continue such
prosecution or maintenance.

8.4      INFRINGEMENT AND MISAPPROPRIATION.

(a) Notice. Each Party shall promptly notify the other Party in writing of any
alleged infringement or misappropriation, of which it becomes aware, by any
person of any intellectual property licensed or sublicensed to a Party under
this Agreement.

(b) Infringement of Lexicon Knock-Out Technology, Project Patents and Lexicon
Pre-Existing Patents involving Small Molecule Drugs, and Restricted Rights
Project Patents. Lexicon shall have the sole right, but not the obligation, to
take appropriate steps to remove the infringement or alleged infringement of (i)
Lexicon Knock-Out Technology, (ii) Project Patents and Lexicon Pre-Existing
Patents involving

                                       29

<PAGE>

infringement or alleged infringement of a Small Molecule Drug, and (iii)
Restricted Rights Project Patents (except to the extent exclusively licensed to
Genentech), including, without limitation, by initiation, prosecution and
control, at its own expense, of any suit, proceeding or other legal action by
counsel of its own choice. Any damages or other monetary awards recovered by
Lexicon shall be owned by Lexicon.

      (c)   Notwithstanding the above, if the infringement or alleged
infringement relates to Lexicon Knock-Out Technology specifically related to a
Protein Candidate or to Project Patents and Lexicon Pre-Existing Patents
involving infringement or alleged infringement of a Small Molecule Drug, Lexicon
shall have the first right, but not the obligation, to take appropriate steps to
remove the infringement or alleged infringement, including, without limitation,
by initiation, prosecution and control, at its own expense, of any suit,
proceeding or other legal action by counsel of its own choice, provided that
Lexicon keeps Genentech reasonably informed of the progress of such suit,
proceeding or legal action and provides Genentech with copies of any substantive
documents related to such suit, proceeding or legal action and reasonable notice
thereof. Lexicon shall notify Genentech of its decision to exercise its right to
enforce Lexicon Knock-Out Technology specifically related to a Protein Candidate
or to Project Patents and Lexicon Pre-Existing Patents involving infringement or
alleged infringement of a Small Molecule Drug not later than [**] following its
discovery or notice of alleged infringement of Lexicon Knock-Out Technology
specifically related to a Protein Candidate or to Project Patents and Lexicon
Pre-Existing Patents involving infringement or alleged infringement of a Small
Molecule Drug. Genentech shall have the right, at its own expense, to be
represented in any such action by counsel of its own choice. If Lexicon decides
not to institute an infringement suit, proceeding or other legal action that
Genentech feels is reasonably required to protect such Lexicon Knock-Out
Technology specifically related to a Protein Candidate or to Project Patents and
Lexicon Pre-Existing Patents involving infringement or alleged infringement of a
Small Molecule Drug, Genentech shall have the right, at its sole discretion, to
institute such suit, proceeding or other legal action and Lexicon shall have the
right to be represented in such suit, proceeding or legal action, at its own
expense, by counsel of its own choice. For this purpose, the Party not bringing
the suit shall execute such legal papers necessary for such suit as may be
reasonably requested by the Party bringing suit.

In the case of infringement or alleged infringement of a Project Patent,
Genentech in its sole discretion, may elect to assign such a Project Patent to
Lexicon so that Lexicon may maintain such suit, proceding or legal action in its
own name. In such event, the licenses to Genentech under such a Project Patent
shall remain unaffected.

If Lexicon brings an action under this Subsection, any damages or other monetary
awards recovered by Lexicon shall be applied proportionately first to defray the
unreimbursed costs and expenses (including actual and reasonable attorneys'
fees) incurred by the Parties in the action. If any balance remains, such
balance shall be the property of Lexicon. If Lexicon fails to bring an action
under this Subsection, but Genentech brings an action, any damages or other
monetary awards recovered by Genentech shall be applied first to defray the
costs and expenses (including actual and reasonable attorneys'

                                       30
<PAGE>

fees) incurred in the action by the Parties. The balance that remains shall be
the property of Genentech

      (d)   Infringement of Genentech Gene Patents and Know-How, Project Patents
and Know-How, and Lexicon Pre-Existing Patents and Know-How and Restricted
Rights Project Patents related to Protein Candidates. Genentech shall have the
sole right, but not the obligation, to take appropriate steps to remove the
infringement or alleged infringement of (i) Genentech Gene Patents and Know-How,
and (ii) (A) Project Patents and Know-How and (B) Lexicon Pre-Existing Patents
and Know-How (except to the extent such infringement or alleged infringement
relates to the development of Small Molecule Drugs, which shall be controlled by
subsection (c) above) and Restricted Rights Project Patents and Know-How (to the
extent exclusively licensed to Genentech) related to Protein Candidates,
including, without limitation, by initiation, prosecution and control, at its
own expense, of any suit, proceeding or other legal action by counsel of its own
choice. Any damages or other monetary awards recovered by Genentech shall be
owned by Genentech.

      (e)   If Genentech brings action under Subsection (d) above with respect
to (i) Project Patents and Know-How or (ii) Lexicon Pre-Existing Patents and
Know-How or Restricted Rights Project Patents and Know-How (to the extent
exclusively licensed to Genentech) related to Protein Candidates, any damages or
other monetary awards recovered by Genentech shall be applied proportionately
first to defray the unreimbursed costs and expenses (including actual and
reasonable attorneys' fees) incurred by the Parties in the action. If any
balance remains, Lexicon shall retain as its own property an amount of
compensatory damages equal to the royalty that Lexicon would otherwise be
entitled to under this Agreement if such remaining balance was treated as
Genentech Net Sales. If any balance remains after Lexicon's retained amount,
such balance shall be the property of Genentech.

8.5   NOTICE OF INFRINGEMENT BY A PARTY. If the making, using, importing, offer
for sale, or selling a Licensed Product results in a claim against a Party of
patent infringement by any Third Person, the Party first having notice of that
claim shall promptly notify the other Party in writing. The notice shall set
forth the facts of the claim in reasonable detail.

If any notice of infringement is received by, or a suit is initiated against,
either Party with respect to any Licensed Product, the Parties shall consult in
good faith regarding the best response.

Notwithstanding the foregoing, if the claim involves an allegation of a
violation of the trade secret rights of a Third Person, the Party accused of
such violation shall have the obligation to defend against such claim and shall
indemnify the other Party against all costs associated with such claim.

                                       31
<PAGE>

8.6   LITIGATION EXPENSES. Each Party shall assume and pay all of its own
out-of-pocket expenses incurred in connection with all litigation described in
this Article 8, including without limitation, the fees and expenses of that
Party's counsel.

8.7   SETTLEMENT APPROVAL. No settlement, consent judgment or other voluntary
final disposition of a suit being prosecuted by a Party under this Article may
be entered into without the consent of the other Party if such settlement,
consent judgment or other voluntary final disposition would alter, derogate, or
diminish such other Party's rights under the Agreement, which consent will not
be unreasonably withheld or delayed.

8.8   PATENT TERM EXTENSIONS. When appropriate, the Parties shall cooperate with
each other in gaining patent term extension. All filings for such extension
shall be made by the Party that is the owner of the patent

8.9   AUDIT RIGHTS REGARDING INVOICES. In the event there is a good faith
dispute over an amount owed by a Party under this Article, the disputed payment
may be delayed, and such payment will not be considered delinquent pending a
resolution of the Parties' dispute. Section 7.13 (i.e., "Royalty and Reasonable
Expenses Records; Audit Rights") is applicable with regard to all invoices
submitted by a Party to the other Party under this Article.

                                    ARTICLE 9

                                 CONFIDENTIALITY

9.1   OBLIGATIONS. Except upon obtaining the other Party's prior written consent
to the contrary, each Party agrees that it will, for a period of [**] after the
expiration or early termination of the entire Agreement:

      (i)   maintain in confidence, and not disclose to any person (except as
            provided in Section 9.2), the other Party's Confidential Information
            or any Project Confidential Information; and

      (ii)  not use such Confidential Information for any purpose except as
            contemplated in this Agreement.

9.2   AUTHORIZED DISCLOSURES OF CONFIDENTIAL INFORMATION.

      (a)   Permitted Persons. Each Party may disclose Confidential Information
of the other Party or Project Confidential Information, without such other
Party's prior written consent, to its and its Affiliates' (or the other Party's
and its Affiliates') directors, employees, agents, consultants, permitted
(sub)licensees, suppliers, and other Third Persons who:

                                       32
<PAGE>

      (i)   need to know such Confidential Information to assist the Party in
            fulfilling its obligations or exploiting its rights hereunder (or to
            determine their interest in providing such assistance); and

      (ii)  are bound by written confidentiality and non-use obligations no less
            stringent than those contained herein.

      (b)   Legally Required or Necessary. Each Party may also disclose the
Confidential Information of the other Party or Project Confidential Information,
without such other Party's prior written consent, to any person or to a
government or regulatory authority to the extent that such disclosure is:

      (i)   required by Applicable Law; or

      (ii)  otherwise necessary for filing a patent application, prosecuting,
            maintaining, or enforcing a patent, obtaining or maintaining
            authorizations to conduct pre-clinical or clinical studies regarding
            a product, or obtaining or maintaining a registration regarding a
            product (provided such Party is entitled at the time to engage in
            such activities under this Agreement).

Prior to disclosing the other Party's Confidential Information or Project
Confidential Information under this Subsection (b), the disclosing Party, to the
extent practicable, will give the other Party a copy of the Confidential
Information to be disclosed and provide such Party a reasonable opportunity to
comment on the necessity and the text of the proposed disclosure. The disclosing
Party agrees to consider such comments in good faith and to reasonably avail
itself of available means under the applicable law to minimize the disclosure of
such Confidential Information.

      (c)   Court Orders. Each Party may also disclose the Confidential
Information of the other Party or Project Confidential Information, without such
other Party's prior written consent, pursuant to an order of a regulatory
authority or court of competent jurisdiction, provided that it promptly notifies
the other Party of the required disclosure in order to provide such Party an
opportunity to take legal action to prevent or limit such disclosure and, if
asked, reasonably assists the other Party in pursuing such action.

      (d)   Legal Actions. Each Party may also disclose the Confidential
Information of the other Party or Project Confidential Information, without such
other Party's prior written consent, as is necessary to pursue or defend against
a legal or regulatory action related to this Agreement.

9.3   DISCLOSURE OF THE TERMS OF THE AGREEMENT. Each Party agrees that it will
maintain in confidence, and not to disclose, the terms of this Agreement without
the prior written consent of the other Party, except as authorized under
Subsections (a), (b), (c), or (d) of Section 9.2. In addition, if a Party
receives a request from an authorized representative of a U.S. or foreign tax
authority for a copy of the Agreement, that Party may provide a copy of the
Agreement to such tax authority representative without

                                       33
<PAGE>

advance notice to or the consent or cooperation of the other Party, but the
disclosing Party must notify the other Party of the disclosure as soon as
practical.

9.4   PUBLICITY ABOUT THE AGREEMENT. If a Party desires to issue a press release
or other public statement or announcement concerning this Agreement, the subject
matter hereof, or the research, development or commercial results of the
products hereunder, it must first obtain the other Party's written approval of
the proposed release or announcement; provided that such approval shall not be
unreasonably withheld if required pursuant to the disclosure requirements of the
Securities and Exchange Commission ("SEC") or the national securities exchange
or other stock market on which such Party's securities are traded ("Exchange").
All press releases and other publicity will conform to the publicity strategy
and policy developed by the Steering Committee in accordance with Section
2.2(v). Without limiting the generality of the foregoing, each Party agrees that
the other Party will have no less than [**] to review and provide comment
regarding any such proposed press release or publicity, unless a shorter review
time is agreed to by both Parties. Neither Party may use any trademarks, logos,
or symbols associated with the other Party without the prior written permission
of such other Party. In the event that one Party reasonably concludes that a
given disclosure is required by law and the other Party disagrees with the
substance or extent of the disclosure, then the Party seeking such disclosure
shall either (i) limit said disclosure to address the concerns of the other
Party, or (ii) provide a written opinion from counsel stating that such
disclosure is indeed required by law. With respect to complying with the
disclosure requirements of the SEC, in connection with any required SEC filing
of this Agreement, the filing Party shall seek confidential treatment of
portions of this Agreement from the SEC and the other Party shall have the right
to review and comment on such an application for confidential treatment prior to
its being filed with the SEC. The non-filing Party shall provide its comments,
if any, on such application as soon as practicable and in no event later than
[**] after such application is provided to the non-filing Party. Notwithstanding
the foregoing, Genentech shall not be prohibited from making a statement
regarding the development or commercialization of a Protein Candidate, Licensed
Product or Small Molecule Drug and Lexicon shall not be prohibited from making a
statement regarding the development or commercialization of a Small Molecule
Drug.

9.5   PUBLICATIONS. Genentech and Lexicon (as applicable, the "Publishing
Party") may each publish or present data and/or results generated by or on
behalf of such Publishing Party utilizing Knock-Out Mice or Progeny, subject to
the prior review of the proposed disclosure by the other Party (the "Reviewing
Party") solely to determine (i) whether the proposed disclosure contains
Confidential Information of the Reviewing Party or Project Confidential
Information or (ii) whether information contained in the proposed disclosure
should be the subject of a patent application to be filed by Lexicon or
Genentech prior to such disclosure. The Publishing Party shall provide the
Reviewing Party with the opportunity to review any proposed abstract, manuscript
or presentation which discloses the results of research conducted utilizing the
Knock-Out Mice or Progeny by delivering a copy thereof to the Reviewing Party no
less than [**] before its

                                       34
<PAGE>

intended submission for publication or presentation. The Reviewing Party shall
have [**] from its receipt of any such abstract, manuscript or presentation in
which to notify the Publishing Party in writing of any specific objections to
the disclosure, based on either the need to seek patent protection or concern
regarding the specific disclosure of the Confidential Information of the
Reviewing Party or Project Confidential Information. In the event the Reviewing
Party objects to the disclosure, the Publishing Party agrees not to submit the
publication or abstract or make the presentation containing the objected-to
information until the Reviewing Party is given a reasonable additional period of
time (not to exceed an additional [**]) to seek patent protection for any
material in the disclosure which the Reviewing Party believes is patentable
(subject, in all events, to Article 8) or, in the case of Confidential
Information of the Reviewing Party, to allow the Publishing Party to delete any
Confidential Information of Reviewing Party from the proposed disclosure. Each
Party agrees to delete from the proposed disclosure any Confidential Information
of the Reviewing Party upon request. Notwithstanding the foregoing, publication
of Patent applications shall not be subject to this Section 9.5

                                   ARTICLE 10

                        TERM AND TERMINATION OF AGREEMENT

10.1  TERM. This Agreement commences on the Effective Date and will remain in
full force and effect, unless earlier terminated as provided in this Article 10,
until the later of: (i) [**] after the last Project Gene becomes a Rejected
Project hereunder; or (ii) the expiration of all royalty obligations under this
Agreement between the Parties.

10.2  GENENTECH'S UNILATERAL RIGHT TO TERMINATE.

      (a) In the event that: (I) less than two hundred twenty-five (225) Project
Genes reach chimeric mouse stage within twenty-four (24) months of designation
of Project Genes under Section 3.1(e), or (II) less than sixty-six percent (66%)
of Project Genes have completed First Pass Phenotypic Analysis within thirty-six
(36) months of designation of Project Genes under Section 3.1(e), then in either
case, Genentech shall have the right to terminate this Agreement, and

      (i)   Lexicon will provide Genentech, to the extent not previously
            provided, with a copy of all Project Patents and Know-How, Lexicon
            Pre-Existing Patents and Know-How and deliver Project Materials (to
            the extent not previously provided) related to such Projects;

      (ii)  Lexicon shall refund Genentech a portion of the upfront payment paid
            to Lexicon under Section 7.1 in an amount equal to 1/36th of such
            up-front payment for each month fewer than 36 months after the
            Effective Date have elapsed at the time of such termination, and
            Lexicon shall repay all amounts drawn down under the Note Agreement;

      (iii) all licenses granted by Genentech to Lexicon shall terminate;

                                       35
<PAGE>

      (iv)  all rights and licenses granted by Lexicon to Genentech shall
            continue; and

      (v)   Genentech shall have no further payment obligations to Lexicon under
            this Agreement with respect to milestone payments, royalties or
            otherwise (notwithstanding the continuation of Genentech's rights
            and licenses hereunder).

      (b) In the event that at least sixty-six percent (66%) but less than
eighty percent (80%) of Project Genes have completed First Pass Phenotypic
Analysis within thirty-six (36) months of designation of Project Genes under
Section 3.1(e), then Genentech shall have the right to terminate this Agreement,
and

      (i)   Lexicon will provide Genentech, to the extent not previously
            provided, with a copy of all Project Patents and Know-How, Lexicon
            Pre-Existing Patents and Know-How and deliver Project Materials (to
            the extent not previously provided) related to such Projects;

      (ii)  Lexicon shall repay all amounts drawn down under the Note Agreement;
            and

      (iii) all licenses granted by Genentech to Lexicon shall terminate;

      (iv)  all rights and licenses granted by Lexicon to Genentech shall
            continue; and

      (v)   Genentech shall have no further payment obligations to Lexicon under
            this Agreement with respect to milestone payments, royalties or
            otherwise (notwithstanding the continuation of Genentech's rights
            and licenses hereunder); provided that Lexicon shall have the right
            to select up to ten (10) Protein Candidates for which First Pass
            Phenotypic Analysis has been completed and Lexicon Pre-Existing
            Patents or Project Patents have been filed for which Genentech shall
            have royalty obligations under Section 7.8.

10.3  TERMINATION FOR INSOLVENCY OR BANKRUPTCY. Either Party may, by written
notice, terminate this Agreement with immediate effect if the other Party:

      (i)   makes a general assignment for the benefit of creditors;

      (ii)  files an insolvency petition in bankruptcy;

      (iii) petitions for or acquiesces in the appointment of any receiver,
            trustee or similar officer to liquidate or conserve its business or
            any substantial part of its assets;

                                       36
<PAGE>

      (iv)  commences under the laws of any jurisdiction any proceeding
            involving its insolvency, bankruptcy, reorganization, adjustment of
            debt, dissolution, liquidation or any other similar proceeding for
            the release of financially distressed debtors; or

      (v)   becomes a party to any proceeding or action of the type described
            above in (iii) or (iv), and such proceeding or action remains
            undismissed or unstayed for a period of more than sixty (60) days.

All rights and licenses granted under or pursuant to this Agreement by each
Party as a licensor or sublicensor are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of Title XI, U.S. Code (the "Bankruptcy Code"),
licenses (or, if applicable, sublicenses) of rights to "intellectual property"
as defined under Section 101(35A) of the Bankruptcy Code. The Parties agree that
each licensee (or, if applicable, sublicensee) of such rights under this
Agreement shall retain and may fully exercise all rights and elections it would
have in the case of a licensor (or sublicensor) bankruptcy under the Bankruptcy
Code. Each Party agrees during the term of this Agreement to create or maintain
current copies, or if not amenable to copying, detailed descriptions or other
appropriate embodiments, of all such intellectual property licensed or
sublicensed to the other Party.

10.4  SURVIVING OBLIGATIONS. The rights and obligations of the Parties under
Article 1 (Definitions), Article 9 (Confidentiality), Article 11 (Disclaimers,
Representations and Warranties), Article 12 (Indemnification), and Article 13
(General Provisions) survive the termination or expiration of this Agreement.
Also, termination or expiration of the Agreement shall not affect the rights and
obligations of the Parties that by their nature survive, including, but not
limited to, those in Article 8 (Intellectual Property Responsibilities) and, to
the extent applicable, the effects of termination contained in Sections 10.2
through 10.4. The provisions of Sections 7.8 through 7.13 shall survive
termination of this Agreement under Section 10.2(b) with respect to the Protein
Candidates specified therein. The provisions of Sections 7.7 through 7.13 shall
survive termination of this Agreement under Section 10.3. Finally, except as
specifically provided to the contrary in this Agreement, termination or
expiration of the Agreement shall be without prejudice to any rights that shall
have accrued to the benefit of either Party prior to such termination or
expiration and shall not relieve the Parties of any obligations accrued
hereunder prior to such termination or expiration. This Section survives the
termination or expiration of this Agreement for any reason.

                                   ARTICLE 11

                  DISCLAIMERS, REPRESENTATIONS, AND WARRANTIES

11.1  CORPORATE EXISTENCE AND AUTHORITY. Each Party represents and warrants to
the other Party that:

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<PAGE>

      (i)   it is a corporation or entity duly organized and validly existing
            under the law of the state or country of its incorporation; and

      (ii)  it has the full authority to enter into and perform all of the
            duties and obligations contemplated under this Agreement.

11.2  AUTHORIZED EXECUTION; BINDING OBLIGATION. Each Party represents and
warrants to the other Party that its execution, delivery, and performance of
this Agreement have been duly authorized and approved by all necessary corporate
action and that this Agreement is binding, upon and enforceable against it in
accordance with the Agreement's terms (subject to bankruptcy and similar laws
affecting the rights of creditors generally).

11.3  NO CONFLICTS. Each Party represents and warrants that its execution,
delivery, and performance of this Agreement:

      (i)   does not, except as otherwise described in this Agreement, require
            the approval or consent of any Third Person, which has not already
            been obtained;

      (ii)  does not, to the best of its knowledge, contravene any Applicable
            Law; and

      (iii) does not contravene the provisions of, nor constitutes a default
            under, its Certificate of Incorporation or bylaws or any indenture,
            mortgage, contract or other agreement or instrument to which it is a
            signatory.

11.4  NO DEBARMENT. Each Party represents and warrants to the other that it is
not debarred under the Generic Drug Enforcement Act of 1992 (the "Act") and is
in compliance with the provisions of such Act. Each Party also covenants that,
while this Agreement is in effect, it will comply with such Act, will not become
debarred under the Act, and will not use in connection with this Agreement the
services of any person debarred under such Act. Finally, upon request by the
other Party, a Party will certify its compliance with the Act and this Section
in writing to such other Party. If, at any time, a Party breaches a covenant
under this Section, the breaching Party shall immediately notify the other Party
of such fact.

11.5  REPRESENTATIONS AND WARRANTIES REGARDING LICENSES. With regard to each
license granted under this Agreement, the Party granting such license (the
"Granting Party") will be deemed to represent and warrant to the other Party, at
the time any such license is granted, that, to the Granting Party's Actual
Knowledge:

      (a)   the Granting Party's grant of such license does not require the
approval or consent of any person or entity, which has not already been
obtained;

                                       38
<PAGE>

      (b)   the Granting Party's grant of such license does not contravene any
Applicable Law;

      (c)   the Granting Party's grant of such license does not contravene the
provisions of, nor constitutes a default under, the Granting Party's Certificate
of Incorporation or bylaws or any indenture, mortgage, contract or other
agreement or instrument to which the Granting Party is a signatory;

      (d)   the Granting Party has the ability and right to grant the other
Party such license;

      (e)   except as previously identified in a written notice, the Granting
Party has not received, nor been made aware of, any communications alleging that
its practice of the licensed intellectual property rights has infringed or
misappropriated (or that it, or the other Party, will infringe or misappropriate
in carrying out such license) the intellectual property rights of any person or
entity;

      (f)   except as previously identified in a written notice, there have been
no claims made against the Granting Party asserting the invalidity, abuse,
misuse, or unenforceability of the licensed intellectual property rights; and

      (g)   there are no outstanding encumbrances on, licenses under, or
covenants-not-to-sue with respect to the licensed intellectual property rights,
which, in the case of licenses or covenants not-to-sue, would conflict with the
rights granted herein.

11.6  DISCLAIMER OF IMPLIED WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, STATUTE, OR OTHERWISE, AND EACH
PARTY SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED OR STATUTORY WARRANTIES
INCLUDING WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE.

11.7  LIMITATION OF LIABILITY. NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY
FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, OR SPECIAL DAMAGES INCLUDING, BUT NOT
LIMITED TO, LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS
AGREEMENT, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES. HOWEVER,
NOTHING IN THIS SECTION IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION
RIGHTS OR OBLIGATIONS OF ANY PARTY.

                                       39
<PAGE>

                                   ARTICLE 12

                                 INDEMNIFICATION

12.1  INDEMNIFICATION OBLIGATIONS.

      (a)   Genentech's Obligation. Genentech will defend, indemnify, and hold
harmless Lexicon, its Affiliates and their respective directors, officers,
shareholders, employees, and agents ("Lexicon Indemnitees"), from and against
any and all liabilities, damages, losses, penalties, fines, costs, interest, and
expenses, including, without limitation, reasonable attorneys' fees ("Damages"),
arising from or occurring as a result of a Third Person's claim, action, suit,
judgment, or settlement against a Lexicon Indemnitee that is due to or based
upon:

      (i)   any breach of a representation, warranty, covenant, obligation, or
            agreement of Genentech under this Agreement;

      (ii)  any grossly negligent or more culpable act of Genentech or a
            Genentech Affiliate or sublicensee, or their respective directors,
            officers, shareholders, employees, and agents related to this
            Agreement; or

      (iii) the development, manufacture, marketing, sale or other disposition,
            offer to sell, use, importation, or exportation of a Licensed
            Product, Protein Candidate or other product in the Field by
            Genentech or Genentech's Affiliates, sublicensees, subcontractors,
            or customers, or the customers of Genentech's Affiliates and
            sublicensees (any of clauses of (i) through (iii), a "Lexicon Third
            Person Claim").

However, Genentech shall not indemnify or hold harmless Lexicon Indemnitees from
Damages from a Lexicon Third Person Claim to the extent that such Damages are
finally determined to have resulted from the acts or omissions of a Lexicon
Indemnitee or Third Person. Genentech's obligations under this Subsection shall
survive the expiration or termination of this Agreement for any reason.

      (b)   Lexicon's Obligation. Lexicon will defend, indemnify, and hold
harmless Genentech, its Affiliates and their respective directors, officers,
shareholders, employees and agents ("Genentech Indemnitees"), from and against
any and all Damages arising from or occurring as a result of a Third Person's
claim, action, suit, judgment, or settlement against a Genentech Indemnitee that
is due to or based upon:

      (i)   any breach of a representation, warranty, covenant, obligation, or
            agreement of Lexicon under this Agreement;

      (ii)  any grossly negligent or more culpable act of Lexicon or a Lexicon
            Affiliate or sublicensee, or their respective directors, officers,

                                       40
<PAGE>

            shareholders, employees, and agents related to this Agreement (any
            of clauses (i) through (ii), a "Genentech Third Person Claim"); or

      (iii) the development, manufacture, marketing, sale or other disposition,
            offer to sell, use, importation, or exportation of a Small Molecule
            Drug by Lexicon or Lexicon's Affiliates, sublicensees,
            subcontractors, or customers, or the customers of Lexicon's
            Affiliates and sublicensees.

However, Lexicon shall not indemnify or hold harmless Genentech Indemnitees from
Damages from a Genentech Third Person Claim to the extent that such Damages are
finally determined to have resulted from the acts or omissions of a Genentech
Indemnitee or Third Person. Lexicon's obligations under this Subsection shall
survive expiration or termination of this Agreement for any reason.

12.2  INDEMNIFICATION PROCEDURES.

      (a)   Notice. Promptly after a Genentech Indemnitee or a Lexicon

Indemnitee (each, an "Indemnitee") receives notice of a pending or threatened
Lexicon Third Person Claim or Genentech Third Person Claim, as the case may be
(an "Action"), such Indemnitee shall give written notice of the Action to the
Party to whom the Indemnitee is entitled to look for indemnification pursuant to
this Article 12 (the "Indemnifying Party"). However, an Indemnitee's delay in
providing or failure to provide such notice shall not relieve the Indemnifying
Party of its indemnification obligations, except to the extent it can
demonstrate prejudice due to the delay or lack of notice.

      (b)   Defense. Upon receipt of notice under Subsection (a) from the
Indemnitee, the Indemnifying Party will have the duty to either to compromise or
defend, at its own expense and by counsel (reasonably satisfactory to
Indemnitee), such Action. The Indemnifying Party will promptly (and in any event
not more than [**] after receipt of the Indemnitee's original notice) notify the
Indemnitee in writing of its intention to either compromise or defend such
Action. Once the Indemnifying Party notifies the Indemnitee of its election to
assume the defense of an Action, the Indemnifying Party is not liable to the
Indemnitee for the fees of other counsel or any other expenses subsequently
incurred by the Indemnitee in connection with such defense, other than the
Indemnitee's reasonable costs of investigation and cooperation. However, the
Indemnitee shall have the right to employ separate counsel and to participate in
the defense of an Action (and the Indemnifying Party shall bear the reasonable
fees, costs, and expenses of such counsel) if:

      (i)   the use of the counsel chosen by the Indemnifying Party would
            present such counsel with a conflict of interest;

      (ii)  the actual or potential defendants in, or targets of, such Action
            include both the Indemnifying Party and the Indemnitee, and the
            Indemnitee reasonably concludes that there may be legal defenses
            available to it that are different from or additional to those
            available to the Indemnifying

                                       41
<PAGE>

      Party (in which case the Indemnifying Party shall not have the right to
      assume the defense of such Action on the Indemnitee's behalf);

      (iii) the Indemnifying Party does not employ counsel satisfactory to the
            Indemnitee to represent the Indemnitee within a reasonable time
            after the Indemnitee's notice of such Action;

      (iv)  the Indemnifying Party denies or fails to timely admit its
            obligation to defend and indemnify the Action; or

      (v)   in the reasonable opinion of counsel to the Indemnitee, the claim
            could result in the Indemnitee becoming subject to injunctive relief
            or relief other than the payment of Damages that could have a
            materially adverse effect on the ongoing business of the Indemnitee.

      (c)   Cooperation. The Indemnitee shall cooperate fully with the
Indemnifying Party and its legal representatives in the investigation and
defense of an Action. The Indemnifying Party will keep the Indemnitee informed
on a reasonable and timely basis as to the status of such Action (to the extent
the Indemnitee is not participating jointly in the defense of such Action) and
conduct the defense of such Action in a prudent manner.

      (d)   Settlement. If an Indemnifying Party assumes the defense of an
Action, no compromise or settlement of such Action may be effected by the
Indemnifying Party without the Indemnitee's written consent (which consent shall
not be unreasonably withheld or delayed), unless (i) there is no finding or
admission of any violation of law or any violation of the rights of any person
and no effect on any other claims that may be made against the Indemnitee, (ii)
the sole relief provided is monetary damages that are paid in full by the
Indemnifying Party, and (iii) the Indemnitee's rights under this Agreement are
not adversely affected. In any event, the Indemnitee shall have no right to
settle any such Action without the prior written consent of the Indemnifying
Party, unless (i) there is no finding or admission of any violation of law or
any violation of the rights of any person and no effect on any other claims that
may be made against the Indemnifying Party, (ii) the sole relief provided is
monetary damages that are paid in full by the Indemnitee, and (iii) the
Indemnifying Party's rights under this Agreement are not adversely affected; any
settlement under this Subsection (d) without the prior written consent of the
Indemnifying Party shall relieve the Indemnifying Party of its obligations under
this Article 12.

12.3  INSURANCE.

      (a)   During the term of this Agreement, each Party shall maintain an
ongoing basis, Commercial General Liability ("CGL") insurance, including
contractual liability, in the minimum amount of [**] per occurrence and [**]
annual aggregate combined single limit for bodily injury and property damage
liability; provided that Lexicon may satisfy such requirement by maintaining a
combination of CGL insurance and umbrella insurance in such combined per
occurrence and aggregate amounts. Within [**] of the

                                       42
<PAGE>

Effective Date, the Parties shall provide one another with their respective
certificates of such insurance. The aggregate deductible under CGL shall be
reasonably satisfactory to the other Party. The insurance policy shall be an
occurrence or claims-made form, but if only on a claims made form, the insurance
coverage shall be maintained for at least [**] following completion of the work
performed under this Agreement.

      (b)   Commencing not later than [**] prior to the first use in humans of
the first potential Licensed Product and thereafter for the period of time
required below, Genentech shall obtain and maintain on an ongoing basis Products
Liability insurance (including contractual liability), with a reputable carrier,
in the amount of at least [**] per occurrence and annual aggregate combined
single limit for bodily injury and property damage liability. No later than [**]
prior to the first use in humans of the first potential Licensed Product with
respect to the Product Liability insurance coverage, Genentech shall provide to
Lexicon a certificate evidencing all such coverage required hereunder.
Thereafter Genentech shall maintain such Products Liability insurance coverage
without interruption during the term of this Agreement and for a period of at
least [**] after the expiration or termination of the term, except as provided
under the next paragraph below.

      (c)   In addition, the Parties agree with respect to (a) and (b) above
that:

      (i)   The Parties shall use Commercially Reasonable Efforts to name each
            other as additional insureds under their respective CGL and Products
            Liability insurance;

      (ii)  Each of the above insurance policies shall be primary insurance as
            respects each Party's participation under this Agreement; and

      (iii) Each of the above insurance coverage shall be maintained with an
            insurance company or companies having an A.M. Best rating of "A" or
            better.

                                   ARTICLE 13

                               DISPUTE RESOLUTION

13.1  INTERNAL RESOLUTION. The Parties shall attempt to settle any dispute,
controversy or claim arising out of or relating to the validity, enforceability
or performance of this Agreement, including disputes relating to alleged breach
or termination of this Agreement but excluding any determination as to the
validity of the Parties' patents (hereinafter, the "Dispute"), in accordance
with the provisions of this Section 13.1. The Parties have entered into the
Agreement in good faith and in the belief that it is mutually advantageous to
them. It is with that same spirit of cooperation that they pledge to attempt to
resolve any Dispute amicably. Accordingly, the Parties agree that if any Dispute
should arise, it shall be referred to a member of senior management from each of
the Parties and from any sublicensee (if any).

                                       43
<PAGE>

13.2  ARBITRATION. Should the senior management be unable to resolve the
dispute, any controversy, dispute or claim which may arise out of or in
connection with this Agreement, or the breach, termination or validity thereof,
shall be settled by final and binding arbitration pursuant to the Arbitration
Rules of the American Arbitration Association as hereinafter provided:

      (a)   The arbitration tribunal shall consist of three arbitrators. Each
party shall nominate in the request for arbitration and the answer thereto one
arbitrator and the two arbitrators so named will then jointly appoint the third
arbitrator as chairman of the arbitration tribunal. If one party fails to
nominate its arbitrator or, if the parties' arbitrators cannot agree on the
person to be named as chairman within [**], the President of the American
Arbitration Association shall make the necessary appointments for arbitrator or
chairman.

      (b)   The place of arbitration shall be in a neutral location (i.e., not
California or Texas) to be decided by the Party not initiating such arbitration,
and the arbitration proceedings shall be held in English. The procedural law of
the State of Delaware shall apply where the said Arbitration Rules are silent.

      (c)   The decision of the arbitration tribunal must be in writing and must
specify the basis on which the decision was made, and the award of the
arbitration tribunal shall be final and judgement upon such an award may be
entered in any competent court or application may be made to any competent court
for juridical acceptance of such an award and order of enforcement.

                                   ARTICLE 14

                               GENERAL PROVISIONS

14.1  COMMON INFORMATION TECHNOLOGY. In order to facilitate efficient
communication between Genentech and Lexicon regarding the Projects, the Parties
agree to establish and maintain a secure communication link between Genentech
and Lexicon and work together to identify and support hardware, software, and
services, in accordance with Genentech's platforms and technology architecture,
appropriate for the sharing of Project information. Each Party shall bear its
own costs identifying, acquiring, operating, and maintaining such hardware,
software, and services.

14.2  LEGAL COMPLIANCE. Each Party will comply with all Applicable Laws in the
performance of its obligations or the exercise of its rights hereunder.

14.3  ASSIGNMENT. (a) Neither Party may assign this Agreement (nor any part
thereof) without the prior written consent of the other Party. Notwithstanding
the foregoing, if either Party is a party to a merger and it will not be the
surviving entity of such transaction, such Party may assign, without the other
Party's prior written consent (but

                                       44
<PAGE>

with [**] prior written notice to the other Party) all of its rights and
obligations hereunder to the surviving or new entity resulting from such merger
so long as the surviving or new entity expressly agrees in writing to assume all
obligations of such Party under this Agreement.

      (b)   Any attempted assignment of this Agreement, other than as allowed in
this Section, will be of no force or effect. Subject to the provisions set forth
in this Section, this Agreement will be binding upon and will inure to the
benefit of the successors and permitted assigns of the Parties.

14.4  INDEPENDENT CONTRACTORS. It is understood and agreed that the Parties are
independent contractors and are engaged in the operation of their own respective
businesses, and neither Party is to be considered the agent of the other Party
or to have a fiduciary responsibility to such other Party for any purpose
whatsoever. The rights and obligations of each Party under this Agreement do not
constitute the formation of a partnership for federal, state, or any other tax
purpose. Each Party shall file all income tax returns consistent with that
position. Neither Party will have any authority to enter into any contracts or
assume any obligations for the other Party nor make any warranties or
representations on behalf of that other Party.

14.5  GOVERNING LAW. This Agreement and all amendments, modifications,
alterations, or supplements hereto, and the rights of the Parties hereunder,
will be construed under and governed by the laws of the State of Delaware
exclusive of its conflicts of laws principles.

14.6  ENTIRE AGREEMENT. This Agreement, including all Exhibits, Schedules and
attachments hereto, constitutes the entire agreement between Lexicon and
Genentech with respect to the subject matter hereof, and all previous or other
negotiations, representations and understandings with respect to the subject
matter hereof between Lexicon and Genentech, including without limitation, the
Origianl Agreement, are superceded as of the Effective Date. This Agreement has
been prepared jointly and will not be strictly construed against either Party.

14.7  SEVERABILITY. All rights and restrictions contained herein may be
exercised and will be applicable and binding only to the extent that they do not
violate any applicable laws and are intended to be limited to the extent
necessary so that they will not render this Agreement illegal, invalid or
unenforceable. If any provision or portion of any provision of this Agreement,
not essential to the commercial purpose of this Agreement, will be held to be
illegal, invalid or unenforceable by a court of competent jurisdiction, it is
the intention of the Parties that the remaining provisions or portions thereof
shall constitute their agreement with respect to the subject matter hereof, and
all such remaining provisions, or portions thereof, will remain in full force
and effect. To the extent legally permissible, any illegal, invalid or
unenforceable provision of this Agreement will be replaced by a valid provision
which will implement the commercial purpose of the illegal, invalid, or
unenforceable provision. In the event that any provision essential to the
commercial purpose of this Agreement is held to be illegal, invalid or

                                       45
<PAGE>

unenforceable and cannot be replaced by a valid provision which will implement
the commercial purpose of this Agreement, the Parties will promptly negotiate a
suitable resolution (potentially even termination of the Agreement) in good
faith.

14.8  FORCE MAJEURE. Any delays in, or failure of, performance of any
obligations of a Party will not constitute a default hereunder or give rise to
any claim for damages, if, and to the extent, caused by Force Majeure. The Party
asserting this Section will promptly notify the other Party of the event
constituting Force Majeure, of all relevant details of the occurrence, and an
estimate of how long such Force Majeure event shall continue. The affected Party
will also take reasonable and diligent actions to cure such cause, and the
Parties will consult with each other in order to find a fair solution and shall
use all reasonable endeavors to minimize the consequences of such Force Majeure.

14.9  COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.

14.10 NOTICES. All notices, statements, and reports required to be given under
this Agreement will be in writing, delivered in person, via registered or
certified mail postage prepaid, or through a professional courier service (e.g.,
FedEx or DHL), and addressed as follows:

            To Lexicon:          Lexicon Genetics Incorporated
                                 8800 Technology Forest Place
                                 Woodlands, TX 77381-1160
                                 Fax: (281) 863-8088
                                 Phone: (281) 863-3000
                                 Attn: President, CEO

            With a copy to:      General Counsel

            To Genentech:        Genentech, Inc.
                                 1 DNA Way
                                 South San Francisco, California  94080
                                 Fax: (650) 952-9881
                                 Phone: (650) 225-1000
                                 Attn: Corporate Secretary

            With a copy to:      Vice President, Research

Notice will be deemed to have been given when delivered if personally delivered
on a business day, on the [**] after dispatch if sent by a professional courier,
and on the [**] following the date of mailing if sent by registered or certified
mail. A Party may change the address to which notices to such Party are to be
sent by giving written notice to the other Party at the address and in the
manner provided above. Any notice may be given, in addition to the manner set
forth above, by facsimile or e-mail, provided that the Party

                                       46
<PAGE>

giving such notice obtains acknowledgment by facsimile or e-mail that such
notice has been received by the Party to be notified. Notices made in this
manner will be deemed to have been given when such acknowledgment has been
transmitted.

14.11 WAIVER. The failure of either Party to enforce any provision of this
Agreement at any time will not be construed as a present or future waiver of
such provision or any other provision of this Agreement. The written waiver by
either Party, pursuant to this Section 14.11, of any provision or requirement
hereunder will neither be deemed nor operate as a future waiver of such or any
other provision or requirement.

14.12 MODIFICATIONS. No amendment, waiver or modification of this Agreement will
be valid or binding on either Party unless made in writing and signed by duly
authorized representatives of both Parties.

14.13 HEADINGS. All headings and captions used in this Agreement are for
convenience only, and are not intended to have any substantive effect.

14.14 NO IMPLIED LICENSES. Except as specifically provided for in this
Agreement, neither Party grants, expressed or implied, any license to the other
Party under this Agreement.

14.15 NO THIRD PARTY BENEFICIARIES: Except as expressly provided herein, this
Agreement shall not confer any rights or remedies upon any Third Person other
than the Parties and their respective successors and permitted assigns.

14.16 R&D TAX CREDITS. To the extent permitted by Applicable Law, Genentech will
be entitled to any tax credits due on account of research and development
expenses it pays to Lexicon under this Agreement.

14.17 RESPONSIBLE FOR SUBLICENSEES. If a Party sublicenses to another person any
of the rights it received under this Agreement from the other Party, such Party
agrees to remain responsible to other Party for the performance and compliance
of such sublicensee with all obligations under this Agreement that apply to such
sublicensee.

                        [The rest of this page is blank]

                                       47
<PAGE>

14.18 FURTHER ACTIONS. Each Party agrees to execute, acknowledge, and deliver
such further instruments, and to do all other acts, as may be necessary or
appropriate to carry out the purposes and intent of this Agreement.

            IN WITNESS WHEREOF, each Party has executed this Agreement by its
respective, duly authorized officer as of the day and year herein written.

GENENTECH, INC.                         LEXICON GENETICS INCORPORATED

/s/ Arthur D. Levinson                  /s/ Arthur T. Sands
-------------------------------------   ----------------------------------------
By: Arthur D. Levinson                  By: Arthur T. Sands
Title: CEO                              Title: President and CEO

                                       48
<PAGE>
                                    EXHIBIT A

        Comprehensive Therapeutic Protein Discovery & Validation Program

                 FIRST Pass Phenotypic Analysis of Project Genes

                                      [**]

<PAGE>

                                    EXHIBIT B

                              SUBLICENSE AGREEMENT

      THIS SUBLICENSE AGREEMENT (this "Agreement") is made and entered into this
seventeenth (17th) day of December, 2002 (the "Effective Date") by and between
LEXICON GENETICS INCORPORATED, a Delaware corporation ("Lexicon"), and
GENENTECH, INC., a Delaware corporation ("Genentech").

                                    RECITALS:

      WHEREAS, Lexicon holds a license from GenPharm International Inc.
("GenPharm") under certain Patent Rights (as defined herein) relating to the use
of "isogenic DNA constructs" in gene targeting for the generation of transgenic
and knock-out mice, and has the right to grant sublicenses under said Patent
Rights; and

      WHEREAS, Genentech desires to obtain from Lexicon, and Lexicon desires to
grant to Genentech, a sublicense under the Patent Rights in the Field of Use
upon the terms and conditions hereinafter set forth;

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:

      1.    DEFINITIONS. For the purposes of this Agreement, the following words
and phrases shall have the following meanings:

            1.1   "Academic Collaborator" shall mean a principal investigator,
      employed by a university or other not-for-profit academic research
      institution, who is performing collaborative research with or sponsored
      research for Genentech involving use of a Mutant Mouse or Progeny.

            1.2   "Contract Service Provider" shall mean any Third Party that
      enters into an agreement with Genentech providing for the performance of
      services for Genentech, on a fee-for-service basis, relating to [**] of
      Mutant Mice or Progeny.

            1.3   "Field of Use" shall mean (i) the generation and development
      of Mutant Mice by Genentech at its internal research facilities and (ii)
      the use of Mutant Mice and Progeny, including the breeding thereof, by
      Genentech and, subject to the terms and conditions of Sections 2.2 and
      2.3, by Genentech's Academic Collaborators and Contract Service Providers,
      at the internal research facilities of Genentech, such Academic
      Collaborators or Contract Service Providers, in each case for research
      purposes only, including research directed toward the discovery,
      development and commercialization of human therapeutic and diagnostic
      products. The Field of Use shall specifically exclude (i) the development
      of a library of mouse embryonic stem cells, (ii) the sale, lease or other
      transfer for consideration of any Mutant Mouse or Progeny, (iii) the use
      of any

<PAGE>

      Mutant Mouse or Progeny for consideration (including, without limitation,
      use of any Mutant Mouse or Progeny in contract testing services) and (iv)
      the generation, development, manufacture or importation of any Mutant
      Mouse or Progeny for any of the foregoing. The Field of Use shall further
      exclude the generation, development and use of (i) any transgenic mouse
      containing unrearranged human immunoglobulin DNA or inactivated murine
      immunoglobulin DNA, (ii) any mouse as a model for Alzheimer's disease
      based upon (beta)-amyloid precursor protein coded for by the App gene or
      mutated forms thereof, (iii) any immunomodified mouse model for the study
      of transplanted human cells or (iv) any transgenic immunomodified mouse
      for use in studies of human allergenicity of non-therapeutic proteins or
      peptides and in research directed toward the development of
      non-therapeutic proteins or peptides that demonstrate a reduction in human
      allergenicity (for purposes of which, "non-therapeutic proteins or
      peptides" shall mean proteins or peptides for use in cosmetic, cleaning
      and other non-therapeutic consumer products).

            1.4   "Mutant Mouse" shall mean any mouse cell or mouse generated or

      developed by Genentech through use of any product or process covered by a
      Valid Claim of the Patent Rights. As used herein, a "line of Mutant Mice"
      shall mean all mouse cells and mice with a mutation in the same gene.

            1.5   "Patent Rights" shall mean all of Lexicon's rights and
      interests in and to [**] (i) the United States patents and patent
      applications listed in Exhibit A, (ii) any patents issuing from such
      patent applications, (iii) any continuations, continuations-in-part,
      divisionals, reissues, reexaminations or extensions of any of the
      foregoing, and (iv) all foreign counterparts of any of the foregoing.

            1.6   "Progeny" shall mean any mouse cells or mice, including
      successive generations thereof, that are produced or developed by
      Genentech, its Academic Collaborators or Contract Service Providers by
      breeding a Mutant Mouse with any other mouse (including, without
      limitation, any other Mutant Mouse); provided, however, that Progeny shall
      not include, and the rights and licenses granted under this Agreement
      shall not extend to, any mouse cell or mouse that is produced or developed
      by breeding a Mutant Mouse with any mouse, other than another Mutant
      Mouse, that contains a mutation in its genome which was generated or
      developed, or whose progenitors include a mouse containing such mutation
      which was generated or developed, through use of any product or process
      covered by a Valid Claim of the Patent Rights.

            1.7   [**] shall mean any [**]; provided, however, that [**]
      specifically excludes [**].

            1.8   "Third Party" shall mean any person or entity other than
      Lexicon and Genentech.

            1.9   "Valid Claim" shall mean a claim of an issued and unexpired
      patent which has not been held permanently revoked, unenforceable or
      invalid by a decision of a court

<PAGE>

      or other governmental agency of competent jurisdiction, unappealable or
      unappealed within the time allowed for appeal.

2.    GRANT OF SUBLICENSE AND RELEASE.

            2.1   Subject to the terms and conditions of this Agreement, Lexicon
      hereby grants to Genentech, during the term of this Agreement, a
      worldwide, royalty-free, non-exclusive right and sublicense under the
      Patent Rights in the Field of Use, to the extent not prohibited by other
      patents, (i) to make (but not have made) up to a total of [**] lines of
      Mutant Mice per calendar year during the term of this Agreement, and (ii)
      to breed and use such Mutant Mice and Progeny. Nothing in this Agreement
      shall be construed to confer upon Genentech any rights under the Patent
      Rights outside the Field of Use.

            2.2   Genentech shall have the right to transfer Mutant Mice and
      Progeny to Academic Collaborators subject to the terms and conditions of
      this Section 2.2. Any such transfer shall be made pursuant to a material
      transfer agreement or other agreement containing terms relating to the
      transfer of such material that expressly (i) prohibit the use of such
      Mutant Mice and Progeny thereof for any purpose other than such Academic
      Collaborator's collaborative research with Genentech in the Field of Use
      and (ii) prohibit the transfer of such Mutant Mice or Progeny thereof by
      such Academic Collaborator to any Third Party.

            2.3   Genentech shall have the right to transfer Mutant Mice and
      Progeny to Contract Service Providers subject to the terms and conditions
      of this Section 2.3. Any such transfer shall be made pursuant to a
      material transfer agreement or other agreement containing terms relating
      to the transfer of such material that expressly (i) prohibits the use of
      such Mutant Mice and Progeny thereof for any purpose other than such
      Contract Service Provider's performance of services for Genentech, on a
      fee-for-service basis, relating to [**] of Mutant Mice or Progeny, (ii)
      prohibits the transfer of such Mutant Mice or Progeny thereof by such
      Contract Service Provider to any Third Party, and (iii) obligates such
      Contract Service Provider to return or destroy such Mutant Mice or Progeny
      upon the completion of its services for Genentech.

            2.4   Genentech shall not assert or enforce against Lexicon any
      claims of an issued patent arising from the use by Genentech, its Academic
      Collaborators or Contract Service Providers of a Mutant Mouse or Progeny,
      to the extent, but only to the extent, any such assertion or enforcement
      would, absent a license from Genentech, prevent Lexicon from using or
      permitting others to use, [**] for research purposes directed towards the
      discovery, identification, selection or characterization of [**], any
      transgenic or knockout mouse or phenotypic data derived therefrom.

<PAGE>

            2.5   Nothing in this Agreement shall be construed to confer upon
      Genentech any rights, by implication, estoppel or otherwise, to any
      patent, technology or intellectual property of Lexicon or any other entity
      other than the Patent Rights, regardless of whether such intellectual
      property rights shall be dominant or subordinate to any Patent Rights.

            2.6   Genentech shall be responsible for all development activities
      related to the generation of Mutant Mice and use of the Patent Rights,
      including the compliance with Third Party patent rights.

3.    LICENSE FEE.

            3.1   For the rights, privileges and sublicense granted hereunder,
      Genentech shall pay Lexicon a license fee of [**], payable within [**] of
      the Effective Date.

            3.2   All payments due hereunder shall be paid in full, without
      deduction of taxes or other fees that may be imposed by any government.

            3.3   Any payments by Genentech to Lexicon that are not paid on or
      before [**] the date such payments are due under this Agreement shall bear
      interest, to the extent permitted by applicable law, at one and one half
      percent (1.5%) per month, calculated on the total number of days payment
      is delinquent.

            3.4   Payments to be made by Genentech to Lexicon under this
      Agreement shall be payable in United States dollars and shall be paid by
      check delivered to Lexicon at its principal office at The Woodlands, Texas
      or bank wire transfer in immediately available funds to such bank account
      in the State of Texas as is designated in writing by Lexicon from time to
      time.

      4.    REPORTS AND RECORDS. Within thirty (30) days after the end of each
calendar year, Genentech shall deliver to Lexicon a true and accurate written
report listing the number of lines of Mutant Mice made by Genentech during such
year, and certifying that Genentech has complied with its obligations under this
Agreement.

      5.    INFRINGEMENT OF PATENT RIGHTS. Lexicon shall have the exclusive
right, but shall not be obligated, to prosecute any infringements of the Patent
Rights. The total cost of any such infringement action commenced or defended by
Lexicon shall be borne by Lexicon, and Lexicon shall keep any recovery or
damages for past infringement derived therefrom.

      6.    INDEMNIFICATION AND LIMITATION OF LIABILITY.

            6.1   Genentech shall at all times during the term of this Agreement
      and thereafter, indemnify, defend and hold Lexicon and its directors,
      officers, employees and affiliates harmless from and against all claims,
      proceedings, demands, liabilities and losses of any kind whatsoever that
      are brought by a Third Party, including legal expenses and reasonable
      attorneys' fees, arising out of, based upon or resulting from the use of
      the

<PAGE>

      Patent Rights hereunder [**] or the use, testing, marketing or sale of
      human therapeutic or diagnostic products by Genentech, its Academic
      Collaborators or Contract Service Providers, except to the extent that
      such claims, proceedings, demands, liabilities and losses result from
      Lexicon's gross negligence or willful misconduct.

            6.2   Indemnification Procedures.

                  (a)   Notice. Promptly after a Genentech Indemnitee or a
            Lexicon Indemnitee (each, an "Indemnitee") receives notice of a
            pending or threatened Lexicon Third Person Claim or Genentech Third
            Person Claim, as the case may be (an "Action"), such Indemnitee
            shall give written notice of the Action to the Party to whom the
            Indemnitee is entitled to look for indemnification pursuant to this
            Article 12 (the "Indemnifying Party"). However, an Indemnitee's
            delay in providing or failure to provide such notice shall not
            relieve the Indemnifying Party of its indemnification obligations,
            except to the extent it can demonstrate prejudice due to the delay
            or lack of notice.

                  (b)   Defense. Upon receipt of notice under Subsection (a)
            from the Indemnitee, the Indemnifying Party will have the duty to
            either to compromise or defend, at its own expense and by counsel
            (reasonably satisfactory to Indemnitee), such Action. The
            Indemnifying Party will promptly (and in any event not more than
            twenty (20) days after receipt of the Indemnitee's original notice)
            notify the Indemnitee in writing of its intention to either
            compromise or defend such Action. Once the Indemnifying Party
            notifies the Indemnitee of its election to assume the defense of an
            Action, the Indemnifying Party is not liable to the Indemnitee for
            the fees of other counsel or any other expenses subsequently
            incurred by the Indemnitee in connection with such defense, other
            than the Indemnitee's reasonable costs of investigation and
            cooperation. However, the Indemnitee shall have the right to employ
            separate counsel and to participate in the defense of an Action (and
            the Indemnifying Party shall bear the reasonable fees, costs, and
            expenses of such counsel) if:

                  (i)   the use of the counsel chosen by the Indemnifying Party
                        would present such counsel with a conflict of interest;

                  (ii)  the actual or potential defendants in, or targets of,
                        such Action include both the Indemnifying Party and the
                        Indemnitee, and the Indemnitee reasonably concludes that
                        there may be legal defenses available to it that are
                        different from or additional to those available to the
                        Indemnifying Party (in which case the Indemnifying Party
                        shall not have the right to assume the defense of such
                        Action on the Indemnitee's behalf);

<PAGE>

                  (iii) the Indemnifying Party does not employ counsel
                        satisfactory to the Indemnitee to represent the
                        Indemnitee within a reasonable time after the
                        Indemnitee's notice of such Action;

                  (iv)  the Indemnifying Party denies or fails to timely admit
                        its obligation to defend and indemnify the Action; or

                  (v)   in the reasonable opinion of counsel to the Indemnitee,
                        the claim could result in the Indemnitee becoming
                        subject to injunctive relief or relief other than the
                        payment of Damages that could have a materially adverse
                        effect on the ongoing business of the Indemnitee.

                  (c)   Cooperation. The Indemnitee shall cooperate fully with
            the Indemnifying Party and its legal representatives in the
            investigation and defense of an Action. The Indemnifying Party will
            keep the Indemnitee informed on a reasonable and timely basis as to
            the status of such Action (to the extent the Indemnitee is not
            participating jointly in the defense of such Action) and conduct the
            defense of such Action in a prudent manner.

                  (d)   Settlement. If an Indemnifying Party assumes the defense
            of an Action, no compromise or settlement of such Action may be
            effected by the Indemnifying Party without the Indemnitee's written
            consent (which consent shall not be unreasonably withheld or
            delayed), unless (i) there is no finding or admission of any
            violation of law or any violation of the rights of any person and no
            effect on any other claims that may be made against the Indemnitee,
            (ii) the sole relief provided is monetary damages that are paid in
            full by the Indemnifying Party, and (iii) the Indemnitee's rights
            under this Agreement are not adversely affected. In any event, the
            Indemnitee shall have no right to settle any such Action without the
            prior written consent of the Indemnifying Party, unless (i) there is
            no finding or admission of any violation of law or any violation of
            the rights of any person and no effect on any other claims that may
            be made against the Indemnifying Party, (ii) the sole relief
            provided is monetary damages that are paid in full by the
            Indemnitee, and (iii) the Indemnifying Party's rights under this
            Agreement are not adversely affected; any settlement under this
            Subsection (d) without the prior written consent of the Indemnifying
            Party shall relieve the Indemnifying Party of its obligations under
            this Article 12.

            6.3   Lexicon warrants to Genentech that it has the lawful right to
      grant the rights and licenses set forth in this Agreement. EXCEPT AS
      OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, LEXICON AND ITS
      DIRECTORS, OFFICERS, EMPLOYEES, AND AFFILIATES MAKE NO REPRESENTATIONS AND
      EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT
      NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
      PURPOSE, VALIDITY OF

<PAGE>

      PATENT RIGHTS CLAIMS, ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR
      OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE. NOTHING IN THIS AGREEMENT
      SHALL BE CONSTRUED AS A REPRESENTATION MADE OR WARRANTY GIVEN BY LEXICON
      THAT THE PRACTICE BY GENENTECH OF THE SUBLICENSE RIGHTS GRANTED HEREUNDER
      SHALL NOT INFRINGE THE PATENT RIGHTS OF ANY THIRD PARTY. IN NO EVENT SHALL
      EITHER PARTY OR ITS DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES BE
      LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING
      ECONOMIC DAMAGE OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF
      WHETHER THEY SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT
      SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.

      7.    TERM AND TERMINATION.

            7.1   This Agreement shall become effective on the Effective Date
      and shall remain in effect until the expiration of the last-to-expire
      patent included within the Patent Rights.

            7.2   Upon any material breach or default of this Agreement by
      Genentech (including, but not limited to, breach or default under Section
      2.1 or use of the Patent Rights outside of the Field of Use), Lexicon
      shall have the right to terminate this Agreement and the rights,
      privileges and sublicense granted hereunder, effective on [**] written
      notice, unless Genentech shall have cured any such material breach or
      default prior to the expiration of such [**] period.

            7.3   If Genentech shall liquidate, dissolve, file a voluntary
      petition in bankruptcy, be adjudicated a bankrupt, make a general
      assignment for the benefit of creditors, admit in writing that it is
      insolvent or fail to discharge within [**] an involuntary petition in
      bankruptcy filed against it, this Agreement shall terminate upon written
      notice by Lexicon.

            7.4   No termination of this Agreement shall be construed to release
      either party from any obligation that matured prior to the effective date
      of such termination. The provisions of Sections 2.4, 2.5, 4, 5, 6, 7.4, 9,
      11, 12 and 13 shall survive any termination of this Agreement.

      8.    EXPORT CONTROLS. Genentech acknowledges that it is subject to United
      States laws and regulations controlling the export of technical data,
      computer software, laboratory prototypes and other commodities (including
      the Arms Export Control Act, as amended and the United States Department
      of Commerce Export Administration Regulations). The transfer of such items
      may require a license from the relevant agency of the United States
      Government and/or written assurances by Genentech that Genentech shall not
      export data or commodities to certain foreign countries without prior
      approval

<PAGE>

      of such agency. Lexicon does not represent that a license shall not be
      required nor that, if required, it shall be issued.

      9.    CONFIDENTIALITY OF TERMS; PUBLICITY. The terms of this Agreement
      shall be treated as confidential and shall not be disclosed to anyone
      except for the parties' respective employees, consultants, agents and
      attorneys assisting in the review and negotiation of this Agreement who
      have a need to know the terms of this Agreement and have an obligation to
      keep such terms confidential, or such other attorneys or agents who are
      performing due diligence on either party and who are under an implied
      obligation of confidentiality, without the written permission of the other
      party; provided that each party may disclose that Genentech has obtained a
      sublicense under the Patent Rights hereunder. If either party desires to
      release a public announcement relating to this Agreement, it shall first
      allow the other party to approve in writing such proposed announcement;
      provided that such approval shall not be unreasonably withheld or delayed.

      10.   ASSIGNMENT. This Agreement may not be assigned or otherwise
      transferred by either party without the written consent of the other
      party; provided, however, that Lexicon may, without such consent, assign
      its rights and obligations under this Agreement (i) to any affiliate or
      (ii) in connection with a merger, consolidation or sale of its assets to a
      Third Party; provided, however, that Lexicon's rights and obligations
      under this Agreement shall be assumed by its successor in interest in any
      such merger, consolidation or sale of assets transaction and shall not be
      transferred separate from all or substantially all of its other business
      assets, including those business assets that are the subject of this
      Agreement. Any purported assignment in violation of the preceding sentence
      shall be void. Any permitted assignee shall assume all obligations of its
      assignor under this Agreement.

      11.   DISPUTE RESOLUTION. If any controversy or claim should arise under
      this Agreement, the matter shall be referred to an individual designated
      by the Chief Executive Officer (or equivalent position) of Lexicon and an
      individual designated by the Chief Executive Officer (or equivalent
      position) of Genentech (the "Representatives"), who will attempt in good
      faith to resolve such controversy or claim promptly by negotiations. If
      the matter has not been resolved within [**] of the first meeting of the
      Representatives of the parties (which period may be extended by mutual
      agreement) concerning such matter, the parties shall be free to pursue all
      available recourse both at law and in equity.

      12.   PAYMENTS, NOTICES AND OTHER COMMUNICATIONS. Any payments, notice or
      other communication pursuant to this Agreement shall be sufficiently made
      or given on the date of mailing if sent to such party by certified first
      class mail, return receipt requested, postage prepaid, addressed to it at
      its address below or as it shall designate by written notice given to the
      other party:

      In the case of Genentech:

<PAGE>

      Genentech, Inc.
      1 DNA Way
      South San Francisco, California 94080
      Attention: Corporate Secretary
      cc: Vice President of Research

      In the case of Lexicon:

      Lexicon Genetics Incorporated
      8800 Technology Forest Place
      The Woodlands, Texas 77381
      Attention: President
      cc: Vice President, Intellectual Property

      13.   MISCELLANEOUS.

            13.1  Entire Agreement. The parties hereto acknowledge that this
      Agreement sets forth the entire Agreement and understanding of the parties
      hereto as to the subject matter hereof, and shall not be subject to any
      change or modification except by the execution of a written instrument
      signed by the parties.

            13.2  Severability. The provisions of this Agreement are severable,
      and in the event that any provisions of this Agreement shall be determined
      to be invalid or unenforceable under any controlling body of the law, such
      invalidity or unenforceability shall not in any way affect the validity or
      enforceability of the remaining provisions hereof. The parties shall
      thereafter in good faith amend this Agreement to provide for an acceptable
      provision to replace such invalid or unenforceable provision.

            13.3  No Waiver. The failure of either party to assert a right
      hereunder or to insist upon compliance with any term or condition of this
      Agreement shall not constitute a waiver of that right or excuse a similar
      subsequent failure to perform any such term or condition by the other
      party.

            13.4  Governing Law. All disputes arising out of or related to this
      Agreement, or the performance, enforcement, breach or termination hereof,
      and any remedies relating thereto, shall be construed, governed,
      interpreted and applied in accordance with the laws of the State of
      Delaware, U.S.A., except that questions affecting the construction and
      effect of any patent shall be determined by the law of the country in
      which the patent shall have been granted.

            13.5  No Trademark Rights. Except as otherwise provided herein or
      agreed to in advance in writing, no right, express or implied, is granted
      by this Agreement to a party to use in any manner the names "Lexicon" or
      "Genentech," or any other trade name or trademark of a party or the names
      of any employees thereof, for any purpose.

<PAGE>

            13.6  Captions. The captions to this Agreement are for convenience
      only, and are to be of no force or effect in construing or interpreting
      any of the provisions of this Agreement.

            13.7  Counterparts. This Agreement may be executed in two or more
      counterparts, each of which shall be deemed an original, but all of which
      together shall constitute one and the same instrument.

<PAGE>

            13.8  Independent Contractors. The relationship between Lexicon and
      Genentech is that of independent contractors. Lexicon and Genentech are
      not joint venturers, partners, principal and agent, master and servant,
      employer or employee, and have no other relationship other than
      independent contracting parties. Lexicon shall have no power to bind or
      obligate Genentech in any manner, other than as is expressly set forth in
      this Agreement. Likewise, Genentech shall have no power to bind or
      obligate Lexicon in any manner other than is expressly set forth in this
      Agreement.

      IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the Effective Date.

                                 "GENENTECH"

                                 GENENTECH, INC.

                                 By: ___________________________________________
                                     Arthur D. Levinson
                                     Chief Executive Officer

                                 "LEXICON"

                                 LEXICON GENETICS INCORPORATED

                                 By: ___________________________________________
                                     Arthur T. Sands, M.D., Ph.D.
                                     President and Chief Executive Officer

<PAGE>

                                   APPENDIX A

                                  PATENT RIGHTS

ISOGENIC DNA

U.S. Patent No. 5,789,215 issued August 4, 1998 entitled "Gene Targeting in
Animal Cells Using Isogenic DNA Constructs"

<PAGE>

                                    EXHIBIT C

                                 NOTE AGREEMENT

THIS NOTE AGREEMENT is entered into as of December 17, 2002 (this "Note
Agreement"), between LEXICON GENETICS INCORPORATED, A Delaware corporation
(herein called "Borrower"), and GENENTECH, INC., a Delaware corporation (herein
called "Lender").

      1.    COMMITMENT. Subject to all the terms and conditions of this Note
Agreement and prior to the termination of its commitment as hereinafter
provided, Lender hereby agrees to make a loan (the "Loan"), up to an aggregate
principal amount not to exceed $4,000,000, pursuant to Article 7.14 of the
Collaboration and License Agreement dated as of the date hereof, between
Borrower and Lender (the "Collaboration Agreement"). The Loan shall become
available to Borrower on or before December 31, 2002. The Loan shall be
evidenced by a convertible promissory note, in the form of the Convertible
Promissory Note attached as Exhibit A hereto and incorporated herein by this
reference (the "Note"), which Note shall reflect the date of payment of the Loan
(the "Effective Date"). The Loan will be advanced to Borrower in immediately
available funds by wire transfer to a deposit account of Borrower in accordance
with the wire transfer instructions set forth beneath Borrower's signature to
this Agreement (as the same may be amended by written notice from Borrower to
Lender).

      2.    LOAN.

            A. MATURITY DATE. Borrower promises to pay to Lender the entire
outstanding principal balance (and all accrued interest thereon) of the Loan on
or before the date (the "Maturity Date") that is the earlier of (i) December 31,
2005, (ii) six (6) months after the termination of the Collaboration Agreement
or (iii) the date of an Event of Default as set forth in Section 8 below.

                  (1) PAYMENT IN NOTE SHARES. At Borrower's option, subject to
the limitations set forth in Section 2.A.(3), on the Maturity Date, Borrower may
elect to pay the outstanding principal balance (and all accrued interest
thereon) of the Loan in (a) shares of Borrower's common stock, par value $0.001
per share (the "Common Stock"), pursuant to the Note (the "Note Shares"), (b)
immediately available funds, or (c) a combination of Note Shares and immediately
available funds.

                  (2) OPTIONAL PREPAYMENT. At Borrower's option, subject to the
limitations set forth in Section 2.A.(3), Borrower may at any time, upon fifteen
(15) days written notice to Lender, prepay all or any portion of the outstanding
principal balance (and all accrued interest on the principal amount so prepaid)
of the Loan in (a) Note Shares pursuant to the Note, (b) immediately available
funds, or (c) a combination of Note Shares and immediately available funds.

<PAGE>

                  (3) LIMITATIONS ON PAYMENT IN NOTE SHARES. (a) Borrower shall
have no right to pay in Note Shares any amounts in respect of principal
outstanding under the Loan and accrued interest in respect thereof to the extent
that the number of such Note Shares, calculated pursuant to Section 3 of the
Note, would, when added to all other shares of Common Stock of Borrower then
owned by Lender or issuable to Lender pursuant to the terms of any convertible
securities of Borrower then owned by Lender, cause Lender to own, in the
aggregate, shares of Common Stock equal to more than 15% of Borrower's issued
and outstanding Common Stock plus the Note Shares so contemplated to be issued,
calculated at the time such payment in Note Shares is contemplated. In such
event, then Borrower shall pay in Note Shares only up to such amount as, in
Lender's good faith opinion, based on the advice of legal counsel, would not
exceed 15% of Borrower's issued and outstanding Common Stock plus the Note
Shares so issued unless Lender elects, in its sole discretion, to receive
payment of the entire amount due under the Loan in Note Shares, notwithstanding
the foregoing limitation on repayment in Note Shares. Any remaining balance
payable to Lender in respect of the Loan shall be paid in immediately available
funds. (b) Borrower may make payments in Note Shares only to the extent that
Borrower then has in reserve and available sufficient of its authorized but
unissued shares of Common Stock to effect such payment in Note Shares.

            B. INTEREST ON LOAN. Interest shall accrue on the sum of the daily
unpaid principal balance of the Loan outstanding on each day in lawful money of
the United States of America from the Effective Date until all such principal
amounts shall have been paid in full, which interest shall accrue at a rate
equal to eight percent (8%) per annum. Interest shall be compounded quarterly
and computed at the above rate on the basis of the actual number of days elapsed
year of 365 days; provided, however, that in no event shall Borrower be bound to
pay for the use or forbearance of the money loaned pursuant hereto, interest of
more than the maximum rate permitted by law to be charged by Lender; the right
to demand any such excess being hereby expressly waived by Lender. All accrued
and unpaid interest attributable to the principal amount of the Loan then being
paid shall be payable concurrently with such payment of principal, whether in
connection with any prepayment, on the Maturity Date or otherwise.

            C. USE OF PROCEEDS. The Loan may only be used for the generation and
phenotypic analysis of knock-out mice and Over-Expression Mice for Project Genes
(as such terms are defined in the Collaboration Agreement).

      3.    DELIVERY AND APPLICATION OF PAYMENTS. Payment to Lender of all
amounts due hereunder shall be made in immediately available funds on the date
when due by wire transfer to a deposit account of Lender in accordance with the
wire transfer instructions set forth beneath Lender's signature to this
Agreement (as the same may be amended by written notice from Lender to
Borrower). Payment to Lender of all amounts due hereunder payable in Note Shares
shall be made by delivery of an appropriate stock certificate within two
business days after the Maturity Date (in the case of a payment pursuant to
Section 2.A.(l)) or two business days after the effective date of an election by
Borrower to prepay (in the case of a prepayment pursuant to Section 2.A.(2)), to
the office of Lender at I DNA Way, South San Francisco, California 94080,
Attention: Treasurer, or at such other place as may be designated in writing by
Lender from time to time. If any payment date falls on a day that is not a
business day, the payment due date shall

<PAGE>

be extended to the next business day. Any payment or prepayment received or
deemed received in respect of the Loan shall be applied first, to accrued and
unpaid interest, and then, to the outstanding principal balance of the Note.

      4.    BORROWER REPRESENTATIONS AND COVENANTS. Borrower hereby represents,
warrants and covenants to Lender as follows:

            A. AUTHORITY. Borrower has full right, power, authority and capacity
to enter into this Note Agreement and the Note (collectively, the "Loan
Documents") and to consummate the transactions contemplated hereby and thereby.
Upon due execution and delivery by Borrower, the Loan Documents will constitute
a legal, valid and binding obligation of Borrower enforceable in accordance with
its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies.

            B. GOOD STANDING. Borrower is qualified to do business and is in
good standing in the State of Delaware and each jurisdiction in which the
failure to so qualify would have a material adverse effect on the business,
operations, financial condition or results of operations of Borrower and its
subsidiaries, taken as a whole.

            C. CONSENTS. The execution and delivery of the Loan Documents, and
performance by Borrower of its obligations hereunder and thereunder, have been
duly authorized by all necessary corporate action on the part of Borrower. No
consent, approval, order or authorization of any federal, state or local
governmental authority on the part of Borrower is required in connection with
the consummation of the transactions contemplated by this Note Agreement.

            D. COMPLIANCE WITH SECURITIES LAWS. Assuming the accuracy of the
representations made by Lender in Section 5 hereof, the Note Shares issuable
upon conversion of any portion of the Note will be issued to Lender in
compliance with (i) the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the registration
and qualification requirements of all applicable securities laws of the states
of the United States or (ii) applicable exemptions therefrom.

            E. NO CONFLICTS. The execution and delivery by Borrower of the Loan
Documents and consummation of the transactions contemplated thereby do not and
will not (i) violate the Certificate of Incorporation or Bylaws of Borrower or
any material judgment, order, writ, decree, statute, rule or regulation
applicable to Borrower; (ii) violate any provision of, or result in the breach
of, any material mortgage, indenture, agreement, instrument, contract, judgment
or decrees to which Borrower is a party or by which it is bound; or (iii) result
in the creation or imposition of any lien upon any property, asset or revenue of
Borrower or the suspension, revocation or nonrenewal of any material permit,
license, authorization or approval applicable to Borrower, its business or
operations, or any of its assets or properties.

<PAGE>

            F. DISCLOSURE. No representation or warranty of Borrower contained
in the Loan Documents, the Collaboration Agreement or any other documents,
certificate or statement furnished to Lender by or on behalf of Borrower in
connection with the transactions contemplated hereby or thereby contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statement contained herein or therein nor misleading. To the best of
Borrower's knowledge, there is no fact known to Borrower that materially
adversely affects the business, operations, property, assets, condition or
prospects of Borrower that has not been disclosed in any filing with the
Securities and Exchange Commission.

      5.    LENDER REPRESENTATIONS AND COVENANTS. Lender hereby represents,
warrants and covenants to Borrower as follows:

            A. AUTHORITY. Lender has full right, power, authority and capacity
to enter into this Note Agreement and to consummate the transactions
contemplated hereby. Upon due execution and delivery by Lender, this Note
Agreement will constitute a legal, valid and binding obligation of Lender
enforceable in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.

            B. INVESTMENT EXPERIENCE; INVESTMENT INTENT; ETC. (i) Lender is
knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in shares presenting an investment
decision like that involved in the purchase of the Note and the Note Shares that
may be issued in payment thereof (collectively, the "Securities"); (ii) Lender
has received all the information it considers necessary or appropriate for
deciding whether to purchase the Securities; (iii) Lender is acquiring the
Securities in the ordinary course of its business and for its own account solely
for investment and with no present intention of distributing any of such
Securities, except in accordance with an effective Registration Statement or
otherwise pursuant to an available exemption from registration under the
Securities Act, and no arrangement or understanding exists with any other person
regarding the distribution of such Securities; (iv) Lender will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) the
Securities except in compliance with the Securities Act, and the rules and
regulations promulgated thereunder; and (v) Lender is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act.

            C. LENDER UNDERSTANDING AND AGREEMENTS. Lender acknowledges and
agrees that it will acquire the Securities being purchased by it in transactions
not involving a public offering and that such Securities are subject to certain
restrictions as to resale under the federal and state Securities laws. Lender
agrees and understands that each certificate representing Note Shares issued in
payment of the Note delivered on transfer of or in substitution for any such
certificate, shall bear a legend in substantially the following form:

                  THE SECURiTIES REPRESENTED BY THIS CERTIFICATE
                  ARE SUBJECT TO RESTRICTIONS IMPOSED BY THE

<PAGE>

                  SECURITIES ACT OF 1933, AS AMENDED, AND
                  APPLICABLE STATE SECURITIES LAW. THE SHARES MAY
                  NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
                  REGISTRATION OR AN EXEMPTION THEREFROM UNDER
                  THE SECURITIES ACT OF 1933 AND ANY APPLICABLE
                  STATE SECURITIES LAWS.

      Lender agrees that it will not sell, pledge, assign, transfer or otherwise
dispose (collectively, "Transfer") of any Securities unless the Transfer will be
made pursuant to an exemption from the registration requirements of the
Securities Act or pursuant to an effective registration statement under the
Securities Act and pursuant to an exemption from any applicable state securities
laws or an effective registration or other qualification under any applicable
state securities laws.

            D. CONSENTS. The execution and delivery of this Note Agreement, and
performance by Lender of its obligations hereunder, have been duly authorized by
all necessary corporate action on the part of Lender.

      6.    CONDITIONS TO MAKING OF LOAN. Lender's obligation to make the Loan
to Borrower under the Loan Documents is subject to satisfaction of each of the
following conditions as of the date the Loan is to be made, any of which may be
waived in whole or in part by Lender:

            A.    REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Borrower in Section 4 hereof shall be true and correct as of
the date the Loan is to be made, except that to the extent any representation or
warranty is made as of a specified date, it shall have been true and correct as
of such date.

            B.    NO DEFAULTS. No Event of Default or event which, with notice
or lapse of time or both would become an Event of Default, shall have occurred
and be continuing under the Loan Documents, and no breach shall have occurred
and be continuing under the Collaboration Agreement.

      7.    SUBORDINATION. The indebtedness evidenced by the Note is hereby
subordinated, only in right of payment to the prior payment of (a) the
indebtedness of Borrower outstanding as of the date of this Note Agreement to
banks or commercial finance or other lending institutions regularly engaged in
the business of lending money, whether or not secured ("Senior Indebtedness")
and (b) any indebtedness or debentures, notes or other evidences of indebtedness
issued in exchange for Senior Indebtedness.

      8.    DEFAULT AND REMEDIES. The occurrence of any one or more of the
following shall constitute an "Event of Default": (a) default in the payment of
any obligation by Borrower under the Note within five (5) business days after
the date the same became due and payable; (b) any representation or warranty
made by Borrower in Section 4 of this Note Agreement shall prove to

<PAGE>

have been untrue in any material respect when made or deemed made; (c) except
for any failure to pay as described in clause (a) above, breach of any covenant
contained in the Loan Documents if such breach shall not have been cured to the
reasonable satisfaction of Lender within sixty (60) days after Borrower shall
have received written notice thereof from Lender; (d) Borrower files any
petition or action for relief under any bankruptcy, reorganization, insolvency
or moratorium law or any other law for the relief of, or relating to, debtors,
now or hereafter in effect, or makes any assignment for the benefit of creditors
or takes any corporate action in furtherance of any of the foregoing; (e) an
involuntary petition is filed against Borrower (unless such petition is
dismissed or discharged within sixty (60) days) under any bankruptcy statute now
or hereafter in effect, or a custodian, receiver, trustee, assignee for the
benefit of creditors (or other similar official) is appointed to take
possession, custody or control of any property, of Borrower (provided that no
Loan will be made prior to the dismissal of such proceeding); (f) Lender
terminates the Collaboration Agreement pursuant to Article 10.2 of the
Collaboration Agreement; or (g) failure to pay when due any amount in respect of
Senior Indebtedness, or occurrence of any other default in respect of Senior
Indebtedness that pursuant to which the holder thereof accelerates the due date
thereof. Upon the occurrence and during the continuance of an Event of Default,
Lender may, at its option, upon notice to Borrower, do any one or more of the
following: (i) terminate its obligation to make the Loan to Borrower as provided
in Section 2 hereof if such Loan has not yet been made; provided that in the
case of an Event of Default pursuant to clause (d) or (e) above, Lender's
obligation to make the Loan to Borrower as provided in Section 3 hereof shall
automatically terminate, without notice to Borrower, if such Loan has not yet
been made; (ii) declare all sums evidenced hereby immediately due and payable;
provided that in the case of an Event of Default pursuant to clause (d) or (e)
above, all sums evidenced hereby shall be automatically and immediately due and
payable, without notice to or demand on Borrower; or (iii) exercise any remedies
of an unsecured creditor under applicable law.

      9.    GOVERNING LAW. This Agreement shall be deemed to have been made in
the State of California and the validity, construction, interpretation, and
enforcement hereof, and the rights of the parties hereto, shall be determined
under, governed by, and construed in accordance with the internal laws of the
State of California, without regard to principles of conflicts of law.

      10.   MISCELLANEOUS PROVISIONS.

            A.    Nothing herein shall in any way limit the effect of the
conditions set forth in any other security or other agreement executed by
Borrower, but each and every condition hereof shall be in addition thereto.

            B.    No failure or delay on the part of Lender, in the exercise of
any power, right or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof.

            C.    All rights and remedies existing under this Note Agreement or
any other Loan Document are cumulative to, and not exclusive of, any rights or
remedies otherwise available.

<PAGE>

            D.    All headings and captions in this Note Agreement and any
related documents are for convenience only and shall not have any substantive
effect.

            E.    This Note Agreement may be executed in any number of
counterparts, each of which when so delivered shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. Each
such agreement shall become effective upon the execution of a counterpart hereof
or thereof by each of the parties hereto and telephonic notification that such
executed counterparts has been received by Borrower and Lender.

            F.    Neither party shall assign any of its rights or obligations
hereunder except: (a) as incident to the merger, consolidation, reorganization
or acquisition of stock or assets affecting substantially all of the assets or
voting control of the assigning party; (b) to any wholly-owned Affiliate of such
party; provided, however, that such assignment shall not relieve the assigning
party of its responsibilities for performance of its obligations under this Note
Agreement; or (c) with the prior written consent of the other party (in its sole
discretion). This Note Agreement shall be binding upon the successors and
permitted assigns of the parties, and the name of a party appearing herein shall
be deemed to include the names of such party's successor's and permitted assigns
to the extent necessary to carry out the intent of this Agreement. Any
assignment not in accordance with this section shall be null and void.

                            (Signature page follows)

<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Note Agreement to
be executed as of the date first written above.

LENDER:                                    BORROWER:

GENENTECH, INC.,                           LEXICON GENETICS INCORPORATED,
a Delaware corporation                     a Delaware corporation

By:  ________________________________      By: _________________________________
                                           Name: _______________________________
Name: Thomas T. Thomas                     Title: ______________________________

Title: Treasurer

Wire Transfer Instructions:                Wire Transfer Instructions:

Account Name:   Genentech, Inc.
Account Number: 040-1699
Bank Name:      Mellon Bank, Pittsburgh, PA
ABA Number:     043-000-261

<PAGE>

                                    EXHIBIT A

                       FORM OF CONVERTIBLE PROMISSORY NOTE

THIS CONVERTIBLE PROMISSORY NOTE IS SUBJECT TO RESTRICTIONS IMPOSED BY THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAW. THIS
NOTE MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN
EXEMPTION THEREFROM UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE
SECURITIES LAWS.

                           CONVERTIBLE PROMISSORY NOTE

$4,000,000.00                                                          [DATE]

      FOR VALUE RECEIVED, LEXICON GENETICS INCORPORATED, a Delaware corporation
("Borrower"), hereby promises to pay to the order of GENENTECH, INC., a Delaware
corporation ("Lender"), in lawful money of the United States of America and in
immediately available funds, the principal sum of $4,000,000.00 or such lesser
amount as shall have been advanced by Lender and shall remain outstanding (the
"Loan"), together with accrued and unpaid interest thereon, due and payable on
the date and in the manner set forth below.

      This Convertible Promissory Note ("Note") is the note referred to in and
is executed and delivered in connection with the Note Agreement dated as of
December 17, 2002, between Borrower and Lender (the "Note Agreement").
Additional rights and obligations of Lender and Borrower are set forth in the
Note Agreement. All capitalized terms used herein and not otherwise defined
shall have the respective meanings given to them in the Note Agreement.

      1.    MATURITY DATE. Subject to Section 3 below, all amounts payable
hereunder shall be due and payable on the Maturity Date. This Note may be,
prepaid in whole or in part at any time without penalty, in accordance with the
terms of the Note Agreement.

      2.    INTEREST RATE AND PAYMENT. Borrower further promises to pay interest
on the outstanding Loan amount, which interest shall accrue from the date hereof
and shall be added to the principal balance of the Loan. Interest shall accrue
on the sum of the daily unpaid principal balance of the Loan outstanding on each
day in lawful money of the United States of America, from the Effective Date
until all such principal amounts shall have been paid in full, which interest
shall accrue at a rate equal to eight percent (8%) per annum. Interest shall be
compounded quarterly and computed at the above rate on the basis of the actual
number of days elapsed year of 365 days; provided, however, that in no event
shall Borrower be bound to pay for the use or forbearance of the money loaned
pursuant hereto, interest of more than the maximum rate permitted by law to be
charged by Lender; the right to demand any such excess being hereby expressly
waived by Lender. All accrued and unpaid interest attributable to the principal
amount of the Loan then being paid shall be payable concurrently with such
payment of principal, whether in connection with any prepayment, on the Maturity
Date or otherwise.

<PAGE>

      3.    PAYMENT. At Borrower's sole option and subject to the limitations
contained in Section 2.A.(3) of the Note Agreement, (a) on the Maturity Date,
the outstanding principal balance of, and accrued interest on, this Note shall
be payable in (i) shares of Borrower's Common Stock, (ii) immediately available
funds, or (iii) a combination of Common Stock and immediately available funds;
and (b) on any date upon which Borrower desires to prepay all or any portion of
the outstanding principal balance of, and accrued interest on the amount so
prepaid, such prepayment shall be payable in (i) Common Stock, (ii) immediately
available funds, or (iii) a combination of Common Stock and immediately
available funds. The number of shares of Common Stock which shall be issuable to
make any payment under this Note, including, without limitation, any optional
prepayment amount, which may be made by Borrower shall be determined by dividing
the amount of such payment by the Fair Market Value. "Fair Market Value" shall
mean the average of the closing prices for Borrower's Common Stock as reported
in The Wall Street Journal (Western Edition) for the twenty (20) trading days
immediately preceding the Maturity Date or the date upon which an optional
prepayment amount is paid, as the case may be.

            A.    MECHANICS AND EFFECT OF PAYMENT IN COMMON STOCK. No fractional
shares of Common Stock shall be issued in payment of this Note. In lieu of
Borrower issuing any fractional shares to Lender upon payment of this Note (or
any amount thereof) in Common Stock, Borrower shall pay to Lender in cash the
amount of any such payment that is not so paid in Common Stock, such payment to
be in the form provided below. Upon payment of this Note in full pursuant to
this Section 3, Lender shall surrender this Note, duly endorsed, at the
principal office of Borrower. The payment in Common Stock shall be deemed to
have been made immediately prior to the close of business on the date of such
surrender of this Note or the date any optional prepayment amount is paid, as
the case may be, and the person or persons entitled to receive the shares of
Common Stock issuable upon such payment shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date.
Borrower shall, in accordance with Section 2 of the Note Agreement, issue and
deliver to Lender at such principal office a certificate or certificates for the
number of shares of Common Stock to which Lender shall be entitled upon such
payment bearing such legends as are required by applicable state and federal
securities laws and pursuant to Section S.C. of the Note Agreement, together
with any other securities and property to which Lender is entitled upon such
payment under the terms of this Note, including a check payable to Lender for
any cash amounts payable as described above.

      4.    SUBORDINATION. The indebtedness evidenced by this Note is hereby
subordinated, only to the extent set forth in Section 7 of the Note Agreement,
in right of payment to the prior payment of the Senior Indebtedness.

      5.    PLACE OF PAYMENT. All amounts payable hereunder shall be payable in
accordance with terms of the Note Agreement, unless otherwise specified in
writing by Lender.

      6.    APPLICATION OF PAYMENTS. Payment on this Note shall be applied first
to accrued interest, and thereafter to the outstanding principal balance hereof.

      7.    DEFAULT. The occurrence of an "Event of Default" under and as
defined in the Note Agreement shall constitute an "Event of Default" hereunder.
Upon the occurrence of an Event of

<PAGE>

Default, Lender shall have such rights and remedies as are provided under the
Note Agreement or by law.

      8.    GOVERNING LAW. This Note shall be governed by, and construed and
enforced in accordance with, the laws of the State of California, excluding
conflict of laws principles that would cause the application of laws of any
other jurisdiction.

      9.    SUCCESSORS AND ASSIGNS. Subject to the limitations of Section 10.F.
of the Note Agreement, the provisions of this Note shall inure to the benefit of
and be binding on any successor to Borrower and shall extend to any holder
hereof.

                                 BORROWER:

                                 LEXICON GENETICS INCORPORATED

                                 By: ___________________________________________

                                 Printed Name: _________________________________

                                 Title: ________________________________________

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