For The Quarterly Period Ended June 30,2004

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DV3aMv+f0G3kRbfEprEQxfWLyULrBf7ii2n6stAl38hBCCPrugCyNnYXUPhmgFiP C0FMJlELgdUpAttM8x3Wsw== 0001193125-04-134032.txt : 20040806 0001193125-04-134032.hdr.sgml : 20040806 20040806130322 ACCESSION NUMBER: 0001193125-04-134032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040806 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OLIN CORP CENTRAL INDEX KEY: 0000074303 STANDARD INDUSTRIAL CLASSIFICATION: ROLLING DRAWING & EXTRUDING OF NONFERROUS METALS [3350] IRS NUMBER: 131872319 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01070 FILM NUMBER: 04957084 BUSINESS ADDRESS: STREET 1: 501 MERRITT 7 STREET 2: P O BOX 4500 CITY: NORWALK STATE: CT ZIP: 06856 BUSINESS PHONE: 2037503000 MAIL ADDRESS: STREET 1: OLIN CORP STREET 2: 501 MERRITT 7 PO BOX 4500 CITY: NORWALK STATE: CT ZIP: 06851 FORMER COMPANY: FORMER CONFORMED NAME: OLIN MATHIESON CHEMICAL CORP DATE OF NAME CHANGE: 19691008 10-Q 1 d10q.htm FOR THE QUARTERLY PERIOD ENDED JUNE 30,2004 For The Quarterly Period Ended June 30,2004

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from To

Commission file number 1-1070

Olin Corporation

(Exact name of registrant as specified in its charter)


Virginia		13-1872319
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

501 Merritt 7, Norwalk, CT		06856
(Address of principal executive offices)		(Zip Code)

(203) 750-3000

(Registrant’s telephone number, including area code)

(Former name, address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

As of July 31, 2004, there were outstanding 69,821,486 shares of the registrant’s common stock.

Part I — Financial Information

Item 1. Financial Statements.

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES

Condensed Balance Sheets

(In millions, except per share data)

(Unaudited)


	June 30, 2004			December 31, 2003
ASSETS
Cash and cash equivalents	$	117.8		$	189.8
Accounts receivable, net		283.5			184.8
Inventories, net		253.0			242.4
Other current assets		58.8			62.0

Total current assets		713.1			679.0
Property, plant and equipment (less accumulated depreciation of $1,318.8 and $1,313.4)		476.4			500.6
Prepaid pension costs		226.5			101.5
Deferred income taxes		108.0			71.5
Other assets		12.7			11.0
Goodwill		77.3			79.5

Total assets	$	1,614.0		$	1,443.1

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current installments of long-term debt	$	51.6		$	27.2
Accounts payable		136.8			128.9
Income taxes payable		11.5			11.1
Accrued liabilities		151.4			141.9

Total current liabilities		351.3			309.1
Long-term debt		249.7			300.4
Accrued pension liability		474.6			469.2
Other liabilities		186.6			188.0

Total liabilities		1,262.2			1,266.7

Commitments and contingencies
Shareholders’ equity:
Common stock, par value $1 per share:
Authorized 120.0 shares Issued and outstanding 69.7 shares (59.0 in 2003)		69.7			59.0
Additional paid-in capital		644.3			464.2
Accumulated other comprehensive loss		(247.8	)		(246.8	)
Accumulated deficit		(114.4	)		(100.0	)

Total shareholders’ equity		351.8			176.4

Total liabilities and shareholders’ equity	$	1,614.0		$	1,443.1

The accompanying Notes to Condensed Financial Statements are an integral part of the condensed financial statements.

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES

Condensed Statements of Income

(In millions, except per share amounts)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2004		2003		2004		2003
Sales	$	512.7	$	396.4	$	1,001.7	$	786.6
Operating Expenses:
Cost of goods sold		470.0		348.4		907.3		694.3
Selling and administration		34.4		31.6		67.5		61.9
Research and development		0.9		1.1		1.9		2.3
Restructuring charge		—		—		8.9		29.0
Earnings of non-consolidated affiliates		1.0		3.1		1.5		4.6

Operating income		8.4		18.4		17.6		3.7
Interest expense		5.0		5.1		10.0		10.3
Interest income		0.4		0.3		0.9		0.5
Other income		13.8		1.8		14.3		1.8

Income (loss) before taxes and cumulative effect of accounting change		17.6		15.4		22.8		(4.3	)
Income tax provision		7.2		6.9		9.5		0.8

Income (loss) before cumulative effect of accounting change		10.4		8.5		13.3		(5.1	)
Cumulative effect of accounting change, net		—		—		—		(25.4	)

Net income (loss)	$	10.4	$	8.5	$	13.3	$	(30.5	)

Basic and diluted net income (loss) per common share:
Income (loss) before cumulative effect of accounting change	$	0.15	$	0.15	$	0.20	$	(0.09	)
Cumulative effect of accounting change, net		—		—		—		(0.44	)

Net income (loss)	$	0.15	$	0.15	$	0.20	$	(0.53	)

Dividends per common share	$	0.20	$	0.20	$	0.40	$	0.40

Average common shares outstanding:
Basic		69.5		58.1		66.5		58.0
Diluted		69.7		58.4		66.7		58.0

The accompanying Notes to Condensed Financial Statements are an integral part of the condensed financial statements.

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES

Condensed Statements of Cash Flows

(In millions)

(Unaudited)


	Six Months Ended June 30,
	2004			2003
Operating activities
Net income (loss)	$	13.3		$	(30.5	)
Adjustments to reconcile net income (loss) to net cash and cash equivalents used for operating activities:
Earnings of non-consolidated affiliates		(1.5	)		(4.6	)
Gain on sales of a business and an insurance investment		(7.5	)		—
Depreciation and amortization		36.7			44.1
Deferred income taxes		(34.3	)		7.0
Non-cash portion of restructuring charge		—			22.8
Cumulative effect of accounting change		—			25.4
Pension plan contribution		(125.0	)		—
Qualified pension plan expense		3.2			—
Common stock issued under employee benefit plans		1.4			1.4
Change in:
Receivables		(103.0	)		(40.6	)
Inventories		(14.2	)		(18.2	)
Other current assets		3.1			(3.6	)
Accounts payable and accrued liabilities		19.1			(8.7	)
Income taxes payable		0.4			(6.0	)
Other assets		(1.2	)		2.2
Noncurrent liabilities		1.2			(8.8	)
Other operating activities		(0.5	)		0.9

Net operating activities		(208.8	)		(17.2	)

Investing activities
Capital expenditures		(17.8	)		(21.1	)
Proceeds from sale of short-term investments		—			25.0
Investments and advances-affiliated companies at equity		(0.4	)		4.8
Proceeds from sales of a business and an insurance investment		19.7			—
Disposition of property, plant and equipment		0.7			3.7
Other investing activities		(0.4	)		2.8

Net investing activities		1.8			15.2

Financing activities
Long-term debt repayments		(26.3	)		(0.7	)
Issuance of common stock		184.5			7.4
Stock options exercised		5.0			2.8
Dividends paid		(27.7	)		(23.1	)
Other financing activities		(0.5	)		(0.4	)

Net financing activities		135.0			(14.0	)

Net decrease in cash and cash equivalents		(72.0	)		(16.0	)
Cash and cash equivalents, beginning of period		189.8			110.5

Cash and cash equivalents, end of period	$	117.8		$	94.5

The accompanying Notes to Condensed Financial Statements are an integral part of the condensed financial statements.

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Tabular amounts in millions, except per share data)

(Unaudited)

We have prepared the condensed financial statements included herein, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In our opinion, these financial statements reflect all adjustments (consisting only of normal accruals) which are necessary to present fairly the results for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however, we believe that the disclosures are appropriate. Certain reclassifications were made to prior year amounts to conform to the 2004 presentation. We recommend that you read these condensed financial statements in conjunction with the financial statements, accounting policies and the notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2003.

2.	Inventory consists of the following:


	June 30, 2004			December 31, 2003
Raw materials and supplies	$	131.1		$	120.0
Work in process		150.6			124.3
Finished goods		81.5			75.4

		363.2			319.7
LIFO reserve		(110.2	)		(77.3	)

Inventory, net	$	253.0		$	242.4

Inventories are valued principally by the dollar value last-in, first-out (LIFO) method of inventory accounting; such valuations are not in excess of market. Cost for other inventories has been determined principally by the average cost and first-in, first-out (FIFO) methods. Elements of costs in inventories include raw materials, direct labor and manufacturing overhead. Inventories under the LIFO method are based on annual estimates of quantities and costs as of year-end; therefore, the condensed financial statements at June 30, 2004, reflect certain estimates relating to inventory quantities and costs at December 31, 2004.

Basic and diluted income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted earnings per share for the three months ended June 30, 2004 and 2003 and for the six months ended June 30, 2004 reflect the dilutive effect of stock options. The effect of stock options of 0.2 million shares for the six months ended June 30, 2003 has not been included in the 2003 diluted loss per share as their effect would have been anti-dilutive. Please refer to footnote 6.


	Three Months Ended June 30,				Six Months Ended June 30,
	2004		2003		2004		2003
Basic Income (Loss) Per Share:
Income (loss) before cumulative effect of accounting change	$	10.4	$	8.5	$	13.3	$	(5.1	)
Cumulative effect of accounting change, net		—		—		—		(25.4	)

Net income (loss)	$	10.4	$	8.5	$	13.3	$	(30.5	)

Basic shares		69.5		58.1		66.5		58.0
Basic income (loss) per share:
Income (loss) before cumulative effect of accounting change	$	0.15	$	0.15	$	0.20	$	(0.09	)
Cumulative effect of accounting change, net		—		—		—		(0.44	)

Net income (loss)	$	0.15	$	0.15	$	0.20	$	(0.53	)

Diluted Income (Loss) Per Share:
Income (loss) before cumulative effect of accounting change	$	10.4	$	8.5	$	13.3	$	(5.1	)
Cumulative effect of accounting change, net		—		—		—		(25.4	)

Net income (loss)	$	10.4	$	8.5	$	13.3	$	(30.5	)

Diluted shares:
Basic shares		69.5		58.1		66.5		58.0
Stock options		0.2		0.3		0.2		—

Diluted shares		69.7		58.4		66.7		58.0

Diluted income (loss) per share:
Income (loss) before cumulative effect of accounting change	$	0.15	$	0.15	$	0.20	$	(0.09	)
Cumulative effect of accounting change, net		—		—		—		(0.44	)

Net income (loss)	$	0.15	$	0.15	$	0.20	$	(0.53	)

We are party to various governmental and private environmental actions associated with past manufacturing operations and former waste disposal sites. Environmental provisions charged to income amounted to $6.2 million and $3.7 million for the three-month periods ended June 30, 2004 and 2003, and $12.5 million and $7.4 million for the six-month periods ended June 30, 2004 and 2003, respectively. Charges to income for investigatory and remedial efforts were material to operating results in 2003 and are expected to be material to operating results in 2004. The consolidated balance sheets include reserves for future environmental expenditures to investigate and remediate known sites amounting to $96.9 million at June 30, 2004 and $93.0 million at December 31, 2003, of which $70.9 million and $67.0 million were classified as other noncurrent liabilities, respectively.

Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other potentially responsible parties and our ability to obtain contributions from other parties and the lengthy time periods over which site remediation occurs. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably to us, which could materially adversely affect our financial position or results of operations.

The Board of Directors in April, 1998, authorized a share repurchase program of up to 5 million shares of our common stock. We have repurchased 4,845,924 shares under the April 1998 program. There were no share repurchases during the first six months of 2004 and 2003. At June 30, 2004, approximately 154,000 shares remain to be purchased.

On February 3, 2004, we issued and sold 10 million shares of our common stock at a public offering price of $18.00 per share. Net proceeds from the sale were $177.7 million and were used to make a voluntary contribution of $125 million to our pension plan. In March 2004, we used $17.5 million from the proceeds of the stock offering to repay the Illinois Industrial Pollution Control Revenue Bond, which became due in March of 2004. The remaining balance ($35.2 million) of the proceeds was used in April 2004 to pay a portion of Federal income taxes related to prior periods.

During the first six months of 2004, we issued approximately 0.3 million (2003 — 0.2 million) shares with a total value of $5.0 million (2003 — $2.8 million), representing stock options exercised. In addition, we issued approximately 0.5 million (2003 — 0.6 million) shares with a total value of $8.5 million (2003 — $9.5 million) in connection with our Contributing Employee Ownership Plan and our deferred compensation programs.

We define segment operating income (loss) as earnings (loss) before interest expense, interest income, other income, restructuring charges and income taxes, and include the operating results of non-consolidated affiliates. Intersegment sales of $8.0 million and $9.7 million for the three months ended June 30, 2004 and 2003, respectively, and $17.5 million and $21.2 million for the six months ended June 30, 2004 and 2003, respectively, representing the sale of ammunition cartridge cups to Winchester from Metals have been eliminated from Metals segment sales.


	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
Sales:
Metals	$	335.6		$	218.3		$	650.0		$	440.5
Chlor Alkali Products		106.6			107.4			206.5			204.7
Winchester		70.5			70.7			145.2			141.4

Total sales	$	512.7		$	396.4		$	1,001.7		$	786.6

Segment operating income before restructuring charges:
Metals	$	11.4		$	4.8		$	26.1		$	8.2
Chlor Alkali Products		9.0			19.0			19.4			32.5
Winchester		3.0			4.4			9.1			10.3
Corporate/Other:
Pension income⁽¹⁾		2.9			4.5			4.9			9.0
Environmental provision		(6.2	)		(3.7	)		(12.5	)		(7.4	)
Other corporate and unallocated costs		(11.7	)		(10.6	)		(20.5	)		(19.9	)

Total segment operating income before restructuring charges		8.4			18.4			26.5			32.7
Interest expense		5.0			5.1			10.0			10.3
Interest income		0.4			0.3			0.9			0.5
Other income		13.8			1.8			14.3			1.8
Restructuring charges		—			—			8.9			29.0

Income (loss) before taxes and cumulative effect of accounting change	$	17.6		$	15.4		$	22.8		$	(4.3	)

⁽¹⁾

The service cost and the amortization of prior service cost components of pension expense related to the employees of the operating segments are allocated to the operating segments based on their respective estimated census data. All other components of pension costs are included in Corporate/Other and include items such as the expected return on plan assets, interest cost and recognized actuarial gains and losses.

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 requires that the fair value of a liability for an asset retirement be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. This statement is effective for fiscal years beginning after June 15, 2002. Effective January 1, 2003, we adopted SFAS No. 143, “Accounting for Asset Retirement Obligations,” which addresses financial accounting requirements for retirement obligations associated with tangible long-lived assets. On January 1, 2003 we recorded an asset and a liability of $41.5 million (of which $7.0 million and $34.5 million were in current liabilities and noncurrent liabilities, respectively) to reflect the cost of retirement obligations related to our former operating facilities ($22.1 million, pretax), certain hazardous waste units at operating plant sites ($14.4 million, pretax), and our Indianapolis facility ($5.0 million, pretax). Since these sites do not generate revenue, we recorded an impairment charge on these same assets, which resulted in an after-tax charge of $25.4 million ($0.44 per diluted share). The after-tax charge was recorded as the cumulative effect of an accounting change. Certain other asset retirement obligations associated with production technology and building materials have not been recorded because these retirement obligations have an indeterminate life and, accordingly, the retirement obligation cannot be reasonably estimated. The ongoing annual incremental expense resulting from the adoption of SFAS No. 143 amounted to $0.8 million for the first six months of 2004. At June 30, 2004, the change in the fair value of the liability for asset retirements compared to the original value of the liability recorded at the date of adoption of SFAS No. 143 was immaterial.

On January 29, 2004, we announced that our board of directors approved plans to relocate our corporate offices for organizational, strategic and economic reasons. By the end of the year, we expect to complete the relocation of a portion of our corporate services personnel from Norwalk, Connecticut to our Main Office Building in East Alton, Illinois. We will also establish our new corporate headquarters in nearby Clayton, which is in St. Louis County, Missouri, for logistical and other reasons. The relocation of the corporate offices will be accompanied by a downsized corporate structure more appropriate for us in today’s competitive business environment. When completed, the efficiencies of the corporate services personnel being co-located with the Brass and Winchester businesses will result in total projected savings of approximately $6 million per year. As a result of the relocation, we expect to incur one-time costs of approximately $12 million which will be expensed primarily throughout 2004. We expect to provide severance benefits and outplacement services to all affected employees. The transition began in the second quarter of 2004. As a result of this corporate office relocation, we recorded in the first six months of 2004 a pretax restructuring charge of $8.9 million. This restructuring charge included primarily employee severance and related benefit costs, pension curtailment and the incurred cost for outplacement services. At June 30, 2004, we utilized $2.2 million of the first six months restructuring charge.

In 2003, we made a decision to close our manufacturing plant in Indianapolis, Indiana. The Indianapolis facilities ceased operations on February 14, 2003. The plant manufactured copper and copper alloy sheet and strip products and employed approximately 200 people. Production at the Indianapolis strip mill has been consolidated within our East Alton, Illinois facility. While the Indianapolis strip mill has been an important part of the Metals segment since its acquisition in 1988, reduced domestic consumption of strip products combined with the capacity additions at East Alton have lessened the need to maintain the Indianapolis production base. As a result of this closure and certain other actions, we recorded in the first quarter of 2003 a pretax restructuring charge of $29.0 million.

The major portion of the restructuring was a non-cash charge ($22.8 million) related to the loss on disposal or write-off of equipment and facilities, and goodwill. The balance of the restructuring charge related to severance and job-related benefit costs. At the Indianapolis facility, approximately 190 employees were terminated, while nine employees were transferred to the East Alton facility. In addition to the closing of the Indianapolis facility, the Metals segment had determined that further cost reductions were necessary due to continuing depressed economic conditions. Approximately 55 employees were terminated in order to reduce headcount through a combination of a reduction-in-force program at Metals and the relocation of the segment’s New Haven, Connecticut metals research laboratory activities to two existing manufacturing locations.

10.

For the three months ended June 30, 2004, other income included gains from several transactions. A $5.5 million non-recurring pretax gain was realized from the settlement of a contract matter with an outside third party. In June 2004, we sold our Olin Aegis business to HCC Industries Inc. Olin Aegis, headquartered in New Bedford, Massachusetts, is a manufacturer of high performance, high reliability, hermetic metal packages for the microelectronics industry. In addition, we sold our equity interest in an insurance investment. The sales of our Olin Aegis business and the insurance investment resulted in a pretax gain of $7.5 million and generated proceeds of $19.7 million. A portion of the gain on the sale of Olin Aegis is a capital gain, and the tax will be offset by capital loss carryforwards acquired with the Chase business. The utilization of these loss carryforwards resulted in a $2.2 million reduction in the goodwill recorded as part of the Chase acquisition.

11.

In 1996, we adopted SFAS No. 123, “Accounting for Stock-Based Compensation,” and as permitted by SFAS No. 123, we continue to account for the costs of stock compensation in accordance with Accounting Principles Board Opinion (APBO) No. 25. In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation.” This statement provides alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation. We adopted the disclosure provisions of SFAS No. 148 on January 1, 2003.

Under SFAS No. 148, pro forma net income (loss) and earnings (loss) per share were calculated based on the following assumptions as if we had recorded compensation expense for the stock options granted during the year. We had no compensation expense for stock options granted during the six months ended June 30, 2004 and June 30, 2003. The fair value of each option granted during 2004 and 2003 was estimated on the date of grant, using the Black-Scholes option-pricing model with the following weighted-average assumptions used: dividend yield of 4.32% in 2004 and 5.21% in 2003, risk-free interest rate of 3.18% in 2004 and 3.05% in 2003, expected volatility of 40% in 2004 and 2003 and an expected life of 6 years. The fair value of options granted during 2004 and 2003 was $5.09 and $3.82, respectively. The following table shows the difference between reported and pro forma net income (loss) and income (loss) per share as if we had recorded compensation expense for the stock options granted during the year.


	Three Months Ended June 30,				Six Months Ended June 30,
	2004		2003		2004		2003
Net income (loss)
As reported	$	10.4	$	8.5	$	13.3	$	(30.5	)
Pro forma		9.4		8.0		11.8		(31.5	)

Per Share Data:
Basic
As reported		0.15		0.15		0.20		(0.53	)
Pro forma		0.14		0.14		0.18		(0.54	)
Diluted
As reported		0.15		0.15		0.20		(0.53	)
Pro forma		0.14		0.14		0.18		(0.54	)

12.	We guarantee debt and other obligations under agreements with our affiliated companies and warrant certain products.

The following guarantee applies to our Sunbelt joint venture. We and our partner, PolyOne Corporation (PolyOne) own equally the Sunbelt Chlor Alkali Partnership (Sunbelt joint venture). The construction of this plant and equipment was financed by the issuance of $195 million of Guaranteed Senior Secured Notes due 2017. The Sunbelt joint venture sold $97.5 million of Guaranteed Senior Secured Notes due 2017, Series O, and $97.5 million of Guaranteed Senior Secured Notes due 2017, Series G. We refer to these notes as the Sunbelt Notes. We have guaranteed Series O of the Sunbelt Notes, and PolyOne has guaranteed Series G of the Sunbelt Notes, in both cases pursuant to customary guaranty agreements. Our guarantee and PolyOne’s guarantee are several, rather than joint. Therefore, we are not required to make any payments to satisfy the Series G Notes guaranteed by PolyOne. An insolvency or bankruptcy of PolyOne will not automatically trigger acceleration of the Sunbelt Notes or cause us to be required to make payments under our guarantee, even if PolyOne is required to make payments under its guarantee. However, if the Sunbelt joint venture does not make timely payments on the Sunbelt Notes, whether as a result of a failure to pay on a guarantee or otherwise, the holders of the Sunbelt Notes may proceed against the assets of the Sunbelt joint venture for repayment. If we were to make debt service payments under our guarantee, we would have a right to recover such payments from the Sunbelt joint venture.

Beginning on December 22, 2002 and each year through 2017, our Sunbelt joint venture is required to repay approximately $12.2 million of the Sunbelt Notes, of which approximately $6.1 million is attributable to the Series O Notes. After the payment of approximately $6.1 million on the Series O Notes in December 2003, our guarantee of the notes was approximately $85.3 million at June 30, 2004. In the event our Sunbelt joint venture cannot make any of these payments, we would be required to fund our half of such payment. In certain other circumstances, we may also be required to repay the Sunbelt Notes prior to their maturity. We and PolyOne have agreed that, if we or PolyOne intend to transfer our respective interests in the Sunbelt joint venture and the transferring party is unable to obtain consent from holders of 80% of the aggregate principal amount of the indebtedness related to the guarantee being transferred after good faith negotiations, then we and PolyOne will be required to repay our respective portions of the Sunbelt Notes. In such event, any make whole or similar penalties or costs will be paid by the transferring party.

In the normal course of business, we guarantee the principal and interest under a line of credit, utilized for working capital purposes, of one of our wholly-owned foreign affiliates. At June 30, 2004, our wholly-owned foreign affiliate had no short-term debt outstanding under this line of credit.

13.

Almost all of our domestic pension plans are non-contributory final-average-pay or flat-benefit plans and all domestic employees are covered by a pension plan. Our funding policy is consistent with the requirements of federal laws and regulations. Our foreign subsidiaries maintain pension and other benefit plans, which are consistent with statutory practices and are not significant. We also provide certain postretirement health care (medical) and life insurance benefits for eligible active and retired domestic employees. The health care plans are contributory with participants’ contributions adjusted annually based on medical rates of inflation and plan experience. The impact, if any, of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (DIMA) has not been determined. We are electing to defer recognition of any potential savings on the measure of the Accumulated Postretirement Benefit Obligation or net periodic benefit cost as a result of DIMA until specific authoritative guidance on the federal subsidy is issued.


	Pension Benefits						Other Postretirement Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
	2004			2003			2004			2003
Components of Net Periodic Benefit Cost
Service cost	$	4.1		$	4.2		$	0.4		$	0.5
Interest cost		23.5			23.3			1.2			1.3
Expected return on plans’ assets		(29.4	)		(27.9	)		—			—
Amortization of prior service cost		1.3			1.3			(0.2	)		(0.2	)
Recognized actuarial loss		4.0			0.4			0.9			0.6

Net periodic benefit cost	$	3.5		$	1.3		$	2.3		$	2.2


	Pension Benefits						Other Postretirement Benefits
	Six Months Ended June 30,						Six Months Ended June 30,
Components of Net Periodic Benefit Cost
Service cost	$	8.9		$	8.4		$	0.9		$	1.0
Interest cost		46.6			46.6			2.5			2.6
Expected return on plans’ assets		(58.5	)		(55.8	)		—			—
Amortization of prior service cost		2.5			2.6			(0.4	)		(0.4	)
Recognized actuarial loss		7.3			0.8			1.6			1.2

Subtotal		6.8			2.6			4.6			4.4
Curtailment		1.2			—			—			—

Net periodic benefit cost	$	8.0		$	2.6		$	4.6		$	4.4

For the three months ended March 31, 2004, we recorded a pension curtailment charge of $1.2 million in connection with the corporate relocation restructuring. The 2004 restructuring charge is described under footnote No. 9.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Recent Developments

On January 29, 2004, we announced that our board of directors approved plans to relocate our corporate offices for organizational, strategic and economic reasons. By the end of the year, we expect to complete the relocation of a portion of our corporate services personnel from Norwalk, Connecticut to our Main Office Building in East Alton, Illinois. We will also establish our new corporate headquarters in nearby Clayton, which is in St. Louis County, Missouri, for logistical and other reasons. The relocation of the corporate offices will be accompanied by a downsized corporate structure more appropriate for us in today’s competitive business environment. When completed, the efficiencies of the corporate services personnel being co-located with the Brass and Winchester businesses will result in total projected savings of approximately $6 million per year. As a result of the relocation, we expect to incur one-time costs of approximately $12 million which will be expensed primarily throughout 2004. We expect to provide severance benefits and outplacement services to all affected employees. The transition began in the second quarter of 2004. As a result of this corporate office relocation, we recorded for the first six months of 2004 a pretax restructuring charge of $8.9 million. This restructuring charge included primarily employee severance and related benefit costs, pension curtailment and the incurred cost for outplacement services.

We disclosed in our 2003 Form 10-K that we were accepted to participate in the Internal Revenue Service (IRS) settlement initiative pertaining to tax issues related to our benefits liability management company. In addition, we disclosed a settlement with the IRS relative to our Company Owned Life Insurance (COLI) program. In April 2004, a preliminary settlement agreement was reached with the IRS on these and certain other outstanding issues related to tax audits covering the 1992 through 2000 tax years. In connection with these settlements we made payments in the second quarter of 2004 of approximately $40 million. These payments will resolve all open issues regarding our benefits liability management company and our COLI program. As we disclosed in our Form 10-K, these tax issues had been recorded as a liability prior to 2002.

In May 2004, we announced that a fire occurred in the electrical control room for the hot mill located in East Alton, Illinois on April 29, 2004. The hot mill was returned to full operation in mid May. The full-year costs relative to the fire were incurred in the second quarter and were approximately $4.7 million pretax.

In June 2004, we sold our Olin Aegis business to HCC Industries Inc. Olin Aegis, headquartered in New Bedford, Massachusetts, is a manufacturer of high performance, high reliability, hermetic metal packages for the microelectronics industry. Olin Aegis employed approximately 250 people. In addition, we sold our equity interest in an insurance investment. The sales of our Olin Aegis business and the insurance investment resulted in a pretax gain of $7.5 million and generated proceeds of $19.7 million.

On July 30, 2004, we entered into a new $160 million five-year senior revolving credit facility that replaced the $140 million senior revolving credit facility. The new credit facility expires on July 30, 2009. Borrowing options, restrictive covenants and the letter of credit subfacility are similar to those of the $140 million senior revolving credit facility.

Consolidated Results of Operations


	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions, except per share data)	2004		2003		2004		2003
Sales	$	512.7	$	396.4	$	1,001.7	$	786.6
Gross Margin (sales less cost of goods sold)		42.7		48.0		94.4		92.3
Selling and Administration		34.4		31.6		67.5		61.9
Restructuring Charge		—		—		8.9		29.0
Interest Expense, net		4.6		4.8		9.1		9.8
Other Income		13.8		1.8		14.3		1.8
Income (Loss) before Taxes and Cumulative Effect of Accounting Change		17.6		15.4		22.8		(4.3	)
Income (Loss) before Cumulative Effect of Accounting Change		10.4		8.5		13.3		(5.1	)
Cumulative Effect of Accounting Change, net		—		—		—		(25.4	)
Net Income (Loss)		10.4		8.5		13.3		(30.5	)
Basis and Diluted Net Income (Loss) Per Common Share:
Income (Loss) before Cumulative Effect of Accounting Change		0.15		0.15		0.20		(0.09	)
Accounting Change, net		—		—		—		(0.44	)
Net Income (Loss)		0.15		0.15		0.20		(0.53	)

Three Months Ended June 30, 2004 Compared to the Three Months Ended June 30, 2003

Total company sales in the second quarter were $512.7 million compared with $396.4 million last year, an increase of $116.3 million or 29%. Sales in the Metals segment increased $117.3 million of which $83.3 million was primarily a result of increased copper prices and a product mix containing a higher metal component. Metals volumes increased $34.0 million in the quarter or 16% higher than last year’s Metals volumes. Chlor Alkali Products sales were slightly below last year as higher volumes were offset by lower prices. Winchester sales were approximately equal to last year.

Gross margin percentage decreased from 12% in 2003 to 8% in 2004 primarily due to lower ECU selling prices for chlor alkali products and higher sales from increased metal values.

Selling and administration expenses as a percentage of sales were 7% in 2004 and 8% in 2003. Selling and administration expenses in 2004 were $2.8 million higher than in 2003 primarily due to higher expenses such as consulting expenses and higher legal and pension expenses.

The earnings of non-consolidated affiliates were $1.0 million for the second quarter of 2004, down $2.1 million from 2003, primarily due to lower ECU pricing at the Sunbelt joint venture.

Interest expense, net for the second quarter of 2004 decreased from 2003 primarily due to a lower level of outstanding net debt resulting from the repayment of the $17.5 million Illinois Industrial Pollution Control Revenue Bond in March 2004 and the $8.1 million Illinois Development Finance Authority Bond due June 1, 2004 and the increase in cash and cash equivalents.

Other income increased from 2003 primarily due to a $5.5 million non-recurring pretax gain related to a settlement of a contract matter with an outside third party and a $7.5 million pretax gain on the sales of our Olin Aegis business and our equity interest in an insurance investment.

The tax rate for the second quarter of 2004 was 41%, compared to our tax rate of 45% in the second quarter of 2003. The tax benefits recorded on the losses in 2003 were less than the statutory rate because we were accruing interest on taxes which may become payable in the future.

Six Months Ended June 30, 2004 Compared to the Six Months Ended June 30, 2003

On a year-to-date basis, total company sales were $1,001.7 million compared with $786.6 million last year, an increase of $215.1 million or 27%. Sales in the Metals segment increased $209.5 million of which $144.5 million was primarily a result of increased copper prices and a product mix containing a higher metal component. Metals volumes increased $65.0 million for the six-month period. Chlor Alkali Products sales were slightly over last year as higher volumes offset lower prices. Winchester sales were slightly over last year because of higher commercial sales.

Gross margin percentage decreased from 12% in 2003 to 9% in 2004 primarily due to lower ECU selling prices for chlor alkali products and higher sales from increased metal values.

Selling and administration expenses as a percentage of sales were 7% in 2004 and 8% in 2003. Selling and administration expenses in 2004 were $5.6 million higher than in 2003 primarily due to higher expenses such as consulting expenses and higher pension and legal expenses.

The earnings of non-consolidated affiliates were $1.5 million for the first six months of 2004, down $3.1 million from 2003, primarily due to lower ECU pricing at the Sunbelt joint venture.

Interest expense, net for the first six months of 2004 decreased from 2003 primarily due to a lower level of outstanding net debt resulting from the repayment of the $17.5 million Illinois Industrial Pollution Control Revenue Bond in March 2004 and the $8.1 million Illinois Development Finance Authority Bond due June 1, 2004 and the increase in cash and cash equivalents.

The tax rate for the first six months of 2004 was 41%. In the first six months of 2003, we recorded a tax provision of $0.8 million on a pretax loss of $4.3 million. The tax benefits recorded on the losses in 2003 were less than the statutory rate because we were accruing interest on taxes which may become payable in the future. In addition, the 2003 restructuring charge included a write-off of goodwill, which is not deductible for tax purposes.

Segment Operating Results

We define our segment operating results as earnings (loss) before interest expense, interest income, other income, restructuring charges and income taxes, and include the operating results of non-consolidated affiliates. Intersegment sales of $8.0 million and $9.7 million for the three months ended June 30, 2004 and 2003, respectively, and $17.5 million and $21.2 million for the six months ended June 30, 2004 and 2003, respectively, representing the sale of ammunition cartridge cups to Winchester from Metals have been eliminated from Metals segment sales.


	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2004			2003			2004			2003
Sales:
Metals	$	335.6		$	218.3		$	650.0		$	440.5
Chlor Alkali Products		106.6			107.4			206.5			204.7
Winchester		70.5			70.7			145.2			141.4

Total Sales	$	512.7		$	396.4		$	1,001.7		$	786.6

Operating Income Before Restructuring Charges:
Metals	$	11.4		$	4.8		$	26.1		$	8.2
Chlor Alkali Products		9.0			19.0			19.4			32.5
Winchester		3.0			4.4			9.1			10.3
Corporate/Other:
Pension Income⁽¹⁾		2.9			4.5			4.9			9.0
Environmental		(6.2	)		(3.7	)		(12.5	)		(7.4	)
Other Corporate and Unallocated Costs		(11.7	)		(10.6	)		(20.5	)		(19.9	)

Total Segment Operating Income Before Restructuring Charges		8.4			18.4			26.5			32.7
Interest Expense		5.0			5.1			10.0			10.3
Interest Income		0.4			0.3			0.9			0.5
Other Income		13.8			1.8			14.3			1.8
Restructuring Charges		—			—			8.9			29.0

Income (Loss) before Taxes and Cumulative Effect of Accounting Change	$	17.6		$	15.4		$	22.8		$	(4.3	)

⁽¹⁾

Metals

Three Months Ended June 30, 2004 Compared to the Three Months Ended June 30, 2003

Sales for the second quarter of 2004 were $335.6 million compared to sales in the second quarter of 2003 of $218.3 million, an increase of 54%. With most major segments strengthening over 2003, shipment volumes increased by 16% from the second quarter of 2003. The remaining 38% increase in sales was primarily due to significantly higher copper prices and a product mix containing a higher metal component. During the second quarter of 2004, the average Commodity Metals Exchange (COMEX) copper price was approximately $1.23 per pound compared with $0.75 per pound in the second quarter of 2003, or an increase of 64%. Shipments and earnings were negatively impacted during the quarter by a fire that occurred in the electrical control room for the hot mill located in our East Alton facility.

Shipments to the automotive segment increased in 2004 by 8% over 2003 and have remained strong. Coinage shipments were up 59% from last year primarily due to the U.S. Mint’s introduction of two new nickels commemorating the 200^th anniversary of the Lewis and Clark Expedition. Robust housing starts resulted in increased shipments of 14% to the building products segment. Due to the production outage caused by the fire in East Alton, shipments to the ammunition segment in the second quarter of 2004 decreased from 2003 by 13%. Shipments to our electronics customers were down slightly from last year.

The Metals segment operating income of $11.4 million in the second quarter of 2004 compares to $4.8 million in 2003, an increase of $6.6 million. The impact on the Metals segment earnings due to costs associated with the production outage caused by the fire in the East Alton facility was approximately $4.7 million. The Metals segment improved operating results over last year are primarily the result of increased shipment volumes and improved productivity.

Six Months Ended June 30, 2004 Compared to the Six Months Ended June 30, 2003

Sales for the first half of 2004 were $650.0 million compared to sales in the first half of 2003 of $440.5 million, an increase of 48%. All major segments strengthened over 2003 and shipment volumes increased by 15% from the first half of 2003. The remaining 33% increase in sales was primarily due to significantly higher copper prices and a product mix containing a higher metal component. During the first half of 2004, the average COMEX copper price was approximately $1.23 per pound compared with $0.75 per pound in the first half of 2003, or an increase of 64%.

Shipments to the automotive segment increased in 2004 by 4% over 2003. Coinage shipments were up 68% from last year primarily due the U.S. Mint’s introduction of two new commemorative nickels. Shipments to the building products, ammunition, and electronics segments increased 6%, 24%, and 6%, respectively.

The Metals segment operating income of $26.1 million in the first half of 2004 compares to $8.2 million in 2003, an increase of $17.9 million. The Metals segment improved operating results over last year are primarily the result of increased shipment volumes, improved productivity and the cost savings resulting from the shutdown of our Indianapolis facility in the first quarter last year.

Chlor Alkali Products

Three Months Ended June 30, 2004 Compared to the Three Months Ended June 30, 2003

Chlor Alkali Products’ sales for the second quarter of 2004 were $106.6 million compared to $107.4 million in the second quarter of 2003. The sales decrease was due to lower pricing and was partially offset by higher volumes. The pricing during the quarter reflected low caustic pricing, which was due to low demand and high industry inventory in the previous quarters. Caustic demand lagged behind chlorine demand, but during the quarter volume improved and caustic approached a balance with chlorine production. The increase in caustic demand led to two price increase announcements. Our ECU netbacks (gross selling price less freight and discounts), excluding our Sunbelt joint venture, were approximately $300 in the second quarter of 2004, compared with approximately $330 in the second quarter of 2003.

Chlor Alkali posted operating income of $9.0 million, compared to $19.0 million in the second quarter of 2003. Earnings were lower in 2004 because higher sales volumes were more than offset by lower selling prices and higher costs. The costs are due to increased manufacturing costs resulting from higher electricity and steam costs.

Six Months Ended June 30, 2004 Compared to the Six Months Ended June 30, 2003

Chlor Alkali Products’ sales for the first six months of 2004 were $206.5 million compared to $204.7 million in the first six months of 2003. Our ECU netback, excluding our Sunbelt joint venture, was approximately $300 in the first six months of 2004 compared with approximately $325 in the first six months of 2003. The lower netback was more than offset by higher volumes.

Chlor Alkali posted operating income of $19.4 million, compared to $32.5 million in the first six months of 2003. Earnings were lower in 2004 because higher sales volumes were more than offset by lower selling prices and higher costs. The costs are due to increased manufacturing costs primarily resulting from higher electricity costs.

Winchester

Three Months Ended June 30, 2004 Compared to the Three Months Ended June 30, 2003

Sales of $70.5 million for the second quarter of 2004 were comparable to the sales for the second quarter of 2003. Operating income in the second quarter of 2004 was $3.0 million, compared with $4.4 million in 2003. Lower operating income was primarily due to a less favorable product mix and higher manufacturing costs.

Six Months Ended June 30, 2004 Compared to the Six Months Ended June 30, 2003

Sales of $145.2 million for the first six months of 2004 were up 3% compared to the first six months of 2003, primarily due to higher commercial sales resulting from increased demand. Operating income for the first six months of 2004 decreased to $9.1 million, from $10.3 million in 2003. This decrease was primarily due to higher manufacturing costs.

Corporate/Other

Three Months Ended June 30, 2004 Compared to the Three Months Ended June 30, 2003

In the second quarter of 2004, pension income included in Corporate/Other was $2.9 million compared with $4.5 million in 2003. The reduction in corporate pension income was due to the recognition of actuarial losses, which primarily relate to differences in assumed and actual asset returns, and lower interest rates, partially offset by higher expected investment income on higher plan assets. On a total company basis, pension expense for the second quarter of 2004 was $3.5 million as compared to $1.3 million in 2003.

In the second quarter of 2004, charges to income for environmental investigatory and remedial activities were $6.2 million compared with $3.7 million in 2003. This provision related primarily to expected future remedial and investigatory activities associated with past manufacturing operations and former waste disposal sites.

Six Months Ended June 30, 2004 Compared to the Six Months Ended June 30, 2003

In the first six months of 2004, pension income included in Corporate/Other was $4.9 million compared with $9.0 million in 2003. The reduction in corporate pension income was due to the recognition of actuarial losses, which primarily relate to differences in assumed and actual asset returns, and lower interest rates, partially offset by higher expected investment income on higher plan assets. On a total company basis, pension expense for the first six months of 2004 was $6.8 million as compared to $2.6 million in 2003.

We have updated our pension-related projections based upon the recently released interest rate guidance provided by the Treasury Department following the enactment of the Pension Funding Equity Act of 2004. While the proposed interest rate is subject to comment and, potentially, change, its use causes differences in the timing of future contributions, not their magnitude, from what we had previously projected. As a result, we may make a voluntary contribution to the plan in the $40—$50 million range in 2005, which is an acceleration of contributions we would otherwise have made in 2008 under the previous projections. If such a contribution were made in 2005, no contributions would be required until 2008, at which time approximately $30—$40 million would be required to be contributed to the plan. Among other factors, changes in interest rates and pension fund investment performance could alter these forecasts.

In the first six months of 2004, charges to income for environmental investigatory and remedial activities were $12.5 million compared with $7.4 million in 2003. This provision related primarily to expected future remedial and investigatory activities associated with past manufacturing operations and former waste disposal sites. In 2004, we currently estimate that these charges to income for the full year may be in the $25 million range as compared to $20 million in 2003. This estimate is based on expectations regarding the potential resolution of investigations or remedial actions at certain known sites. The estimated increase in 2004’s annual environmental charges to income is primarily attributable to additional liabilities for alleged groundwater contamination at a former plant site. Environmental costs for ongoing plant operations, for example wastewater treatment, are included in the operating segments and are approximately equal year-over-year.

Outlook

We expect our third quarter 2004 earnings to be in the $0.20 per diluted share range. Chlor Alkali profits are expected to increase significantly over the second quarter driven primarily by higher prices. Winchester profits are also projected to increase significantly from the second quarter due to the seasonal strength in the commercial business and increased levels of military sales. Excluding the financial impact of the fire ($4.7 million pretax) at our East Alton, IL facility in the second quarter, Metals third quarter earnings are expected to be slightly lower than the second quarter because of seasonal customer shutdowns. We continue to be optimistic about the overall pace of business activity as third quarter 2004 Metals earnings are forecast to be significantly higher than the 2003 third quarter.

Within the Metals business, the strong year-over-year increases experienced in the first six months of 2004 in the automotive and especially the coinage segments are expected to moderate in the third quarter. This view reflects increased car inventories and lower automobile build rates, and reduced U.S. Mint nickel demand. Demand in the building products segment is expected to remain strong, driven by the robust housing market. Electronics is expected to increase in the third quarter over 2003 levels. Ammunition shipments are expected to increase in the third quarter from second quarter levels as well as increasing over last year. Ammunition demand has continued to be strong and the third quarter will include some shipments deferred from the second quarter.

Environmental Matters

In the six-month periods ended June 30, 2004 and 2003, we spent approximately $8.6 million and $13.5 million, respectively, for environmental investigatory and remediation activities associated with past manufacturing operations and former waste disposal sites. Spending for investigatory and remedial efforts for the full year 2004 is estimated to be in the $25 million range. Cash outlays for remedial and investigatory activities associated with past manufacturing operations and former waste disposal sites were not charged to income but instead were charged to reserves established for such costs identified and expensed to income in prior periods. Associated costs of investigatory and remedial activities are provided for in accordance with generally accepted accounting principles governing probability and the ability to reasonably estimate future costs. Charges to income for investigatory and remedial activities were $12.5 million and $7.4 million in the six-month periods ended June 30, 2004 and 2003, respectively. Charges to income for investigatory and remedial efforts were material to operating results in 2003, are expected to be material to operating results in 2004 and may be material to operating results in future years.

Our consolidated balance sheets included liabilities for future expenditures to investigate and remediate known sites amounting to $96.9 million at June 30, 2004 and $93.0 million at December 31, 2003, of which $70.9 million and $67.0 million was classified as other noncurrent liabilities, respectively. Those amounts did not take into account any discounting of future expenditures or any consideration of insurance recoveries or advances in technology. Those liabilities are reassessed periodically to determine if environmental circumstances have changed and/or remediation efforts and our estimate of related costs have changed. As a result of these reassessments, future charges to income may be made for additional liabilities.

Annual environmental-related cash outlays for site investigation and remediation, capital projects, and normal plant operations are expected to range between approximately $40 million to $50 million over the next several years, $25 million to $30 million of which is for investigatory and remedial efforts, which are expected to be charged against reserves recorded on our balance sheet. While we do not anticipate a material increase in the projected annual level of our environmental-related costs, there is always the possibility that such increases may occur in the future in view of the uncertainties associated with environmental exposures. Environmental exposures are difficult to assess for numerous reasons, including the identification of new sites, developments at sites resulting from investigatory studies, advances in technology, changes in environmental laws and regulations and their application, the scarcity of reliable data pertaining to identified sites, the difficulty in assessing the involvement and financial capability of other potentially responsible parties and our ability to obtain contributions from other parties and the lengthy time periods over which site remediation occurs. It is possible that some of these matters (the outcomes of which are subject to various uncertainties) may be resolved unfavorably to us, which could materially adversely affect our financial position or results of operations.

Legal Matters

We and our subsidiaries are defendants in various legal actions (including proceedings based on alleged exposures to asbestos, perchlorate and vinyl chloride) incidental to our past and current business activities. We believe that none of these legal actions will materially adversely affect our financial position. In light of the inherent uncertainties of the litigation concerning alleged exposures, we cannot at this time determine whether the financial impact, if any, of these matters will be material to our results of operations.

Liquidity, Investment Activity and Other Financial Data

Cash Flow Data


	Six Months Ended June 30,
Provided By (Used For) ($ in millions)	2004			2003
Pension Plan Contribution	$	(125.0	)	$	—
Net Operating Activities		(208.8	)		(17.2	)
Capital Expenditures		(17.8	)		(21.1	)
Net Investing Activities		1.8			15.2
Net Financing Activities		135.0			(14.0	)

In the first six months of 2004, income exclusive of non-cash charges, cash and cash equivalents on hand, proceeds from the common stock offering and proceeds from sales of businesses and investments were used to make a voluntary contribution to our pension plan, to settle prior years’ tax issues and to finance our working capital requirements, capital and investment projects, long-term debt repayments and dividends.

Operating Activities

In February 2004, we made a voluntary contribution of $125 million from the proceeds of our 2004 common stock offering. In April 2004, we made tax payments of approximately $40 million pertaining to tax issues related to our benefits liability management company, our COLI program and certain other outstanding tax issues. Excluding these pension contribution and tax payments, cash used by operating activities increased over the prior year due primarily to a higher investment in working capital, particularly higher accounts receivables. The investment in accounts receivable was higher in 2004 due to higher sales in Metals. The 65% increase in the average COMEX price of copper from the second quarter of 2003 resulted in increases in both accounts receivables and accounts payables.

Investing Activities

Capital spending of $17.8 million in the first six months of 2004 was $3.3 million lower than in the corresponding period in 2003. For the total year, we expect our capital spending to be at a level of approximately 85% of depreciation, or about $67 million, compared to 68% of depreciation or $55 million in 2003.

Proceeds from the sale of short-term investments of $25 million represented the equity value of the COLI program which we discontinued in the first quarter of 2003. We surrendered the life insurance policies that we purchased under this program, and received these proceeds in March 2003.

In April 2004, we sold our equity interest in an insurance investment. In June 2004, we sold our Olin Aegis business to HCC Industries Inc. The proceeds from these sales approximated $19.7 million.

The 2003 decrease in investments and advances in affiliated companies at equity, represents increased cash distributions in excess of Sunbelt’s operating results.

Financing Activities

At June 30, 2004, we had $101.4 million available under our $140 million senior revolving credit facility with a group of banks because we issued $38.6 million of letters of credit under a subfacility for the purpose of supporting certain long-term debt, self-insurance obligations and plant closure and post-closure obligations. Under the facility, we may select various floating rate borrowing options. It includes various customary restrictive covenants, including restrictions related to the ratio of debt to earnings before interest expense, taxes, depreciation and amortization (leverage ratio) and the ratio of earnings before interest expense, taxes, depreciation and amortization to interest expense (coverage ratio).

On February 3, 2004, we issued and sold 10 million shares of our common stock at a public offering price of $18.00 per share. Net proceeds from the sale were $177.7 million.

In March 2004, we used $17.5 million from the proceeds of the stock offering to repay the Illinois Industrial Pollution Control Revenue Bond, which became due in March of 2004. In June 2004, we repaid the $8.1 million Illinois Environmental Improvement Bond, which became due in June 2004.

During the first six months of 2004 and 2003, we issued 466,477 and 516,020 shares of common stock with a total value of $8.1 million and $8.8 million, respectively, to the Contributing Employee Ownership Plan. These shares were issued to satisfy the investment in our common stock resulting from employee contributions, our matching contributions and re-invested dividends.

There were no stock repurchases during the first six months of 2004 and 2003. Under programs previously approved by our board of directors, approximately 154,000 shares remain to be repurchased as of June 30, 2004.

The percent of total debt to total capitalization decreased to 46% at June 30, 2004, from 65% at year-end 2003. The decrease from year-end 2003 was due primarily to the higher shareholders’ equity resulting from the issuance of 10 million shares of our common stock in February, 2004, along with the repayment of our long-term debt obligations, which became due in March and June of 2004.

In each of the first two quarters of 2004, we paid a quarterly dividend of $0.20 per share. In July 2004, our board of directors declared a quarterly dividend of $0.20 per share on our common stock, which is payable on September 10, 2004, to shareholders of record on August 10, 2004.

The payment of cash dividends is subject to the discretion of our board of directors and will be determined in light of then-current conditions, including our earnings, our operations, our financial condition, our capital requirements and other factors deemed relevant by our board of directors. In the future, our board of directors may change our dividend policy, including the frequency or amount of any dividend, in light of then-existing conditions.

Liquidity and Other Financing Arrangements

Our principal sources of liquidity are from cash and cash equivalents, short-term investments, cash flow from operations and short-term borrowings under our senior revolving credit facility. We also have access to the debt and equity markets.

Cash flow from operations is variable as a result of the cyclical nature of our operating results, which have been affected recently by the economic cycles in many of the industries we serve, such as automotive, electronics and the telecommunications sectors. In addition, cash flow from operations is affected by changes in ECU selling prices caused by the changes in the supply/demand balance of chlorine and caustic, resulting in the chlor alkali business having significant leverage on our earnings. A $10 per ECU selling price change equates to a $12 million annual pretax profit change when we are operating at full capacity.

Our current debt structure is used to fund our business operations, and commitments from banks under our revolving credit facility are a source of liquidity. As of June 30, 2004, we had long-term borrowings, including the current installment, of $301.3 million of which $0.2 million was issued at variable rates. We have entered into interest rate swaps on approximately $131.6 million of our underlying debt obligations, whereby we agree to pay variable rates to a counterparty who, in turn, pays us fixed rates. Annual maturities of long-term debt at June 30, 2004, were $51.6 million in 2005; $1.7 million in 2006; $1.7 million in 2007; $8.3 million in 2008; none in 2009 and a total of $238.0 million thereafter.

We use operating leases for certain purposes, such as railroad cars, distribution, warehousing and office space, data processing and office equipment. Leases covering these properties may contain escalation clauses (except for railroad cars) based on increased costs of the lessor, for primarily property taxes, maintenance and insurance, and have renewal or purchase options. Future minimum rent payments under operating leases having initial or remaining non-cancelable lease terms in excess of one year at December 31, 2003 are as follows: $21.5 million in 2004; $20.5 million in 2005; $18.4 million in 2006; $17.1 million in 2007; $13.5 million in 2008 and a total of $63.9 million thereafter. Assets under capital leases are not significant.

On December 31, 1997, we entered into a long-term, sulfur dioxide supply agreement with Alliance Specialty Chemicals, Inc. (Alliance), formerly known as RFC S0₂, Inc. Alliance has the obligation to deliver annually 36,000 tons of sulfur dioxide. Alliance owns the sulfur dioxide plant, which is located at our Charleston, TN facility and is operated by us. The price for the sulfur dioxide is fixed over the life of the contract, and under the terms of the contract, we are obligated to make a monthly payment of approximately $0.2 million regardless of the amount of sulfur dioxide purchased. Commitments related to this agreement are approximately $2.4 million per year for 2004 through 2006 and a total of $10.0 million thereafter. This supply agreement expires in 2012.

In December 2002, we registered $400 million of securities with the Securities and Exchange Commission whereby from time to time, we may issue debt securities, preferred stock and/or common stock and associated warrants. After the issuance of 10 million shares of our common stock in February 2004, approximately $220 million was available for issuance.

On February 3, 2004, we issued and sold 10 million shares of our common stock at a public offering price of $18.00 per share. Net proceeds from the sale were $177.7 million and were used to make a $125 million voluntary contribution to our pension plan. In March 2004, we used $17.5 million from the proceeds of the stock offering to repay the Illinois Pollution Control Revenue Bond, which became due in March of 2004. The remaining balance ($35.2 million) of the proceeds was used in April 2004 to pay a portion of Federal income taxes related to prior periods.

We and our partner, PolyOne, own equally the Sunbelt joint venture. We market all of the caustic, while 250 thousand tons of the chlorine production is required to be purchased by Oxy Vinyls (a joint venture between OxyChem and PolyOne) based on a formula related to the market price of chlorine. The construction of this plant and equipment was financed by the issuance of $195.0 million of Guaranteed Senior Secured Notes due 2017. The Sunbelt joint venture sold $97.5 million of Guaranteed Senior Secured Notes due 2017, Series O, and $97.5 million of Guaranteed Senior Secured Notes due 2017, Series G. We refer to these notes as the Sunbelt Notes. The Sunbelt Notes bear interest at a rate of 7.23% per annum payable semiannually in arrears on each June 22 and December 22.

We have guaranteed Series O of the Sunbelt Notes, and PolyOne has guaranteed Series G of the Sunbelt Notes, in both cases pursuant to customary guaranty agreements. Our guarantee and PolyOne’s guarantee are several, rather than joint. Therefore, we are not required to make any payments to satisfy the Series G Notes guaranteed by PolyOne. An insolvency or bankruptcy of PolyOne will not automatically trigger acceleration of the Sunbelt Notes or cause us to be required to make payments under our guarantee, even if PolyOne is required to make payments under its guarantee. However, if the Sunbelt joint venture does not make timely payments on the Sunbelt Notes, whether as a result of a failure to pay on a guarantee or otherwise, the holders of the Sunbelt Notes may proceed against the assets of the Sunbelt joint venture for repayment. If we were to make debt service payments under our guarantee, we would have a right to recover such payments from the Sunbelt joint venture.

New Accounting Standards

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 requires that the fair value of a liability for an asset retirement be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. This statement is effective for fiscal years beginning after June 30, 2002. Effective January 1, 2003, we adopted SFAS No. 143, “Accounting for Asset Retirement Obligations,” which addresses financial accounting requirements for retirement obligations associated with tangible long-lived assets. On January 1, 2003, we recorded an after-tax charge of $25 million ($0.44 cents per share) for estimated closure costs related to our former operating facilities ($22.1 million, pretax), certain hazardous waste units at operating plant sites ($14.4 million, pretax), and our Indianapolis facility ($5.0 million, pretax) which was shutdown in the first quarter of 2003. The after-tax charge was recorded as the cumulative effect of an accounting change. Certain other asset retirement obligations associated with production technology and building materials have not been recorded because these retirement obligations have an indeterminate life, and accordingly, the retirement obligation cannot be reasonably estimated. The ongoing annual incremental expense resulting from the adoption of SFAS No. 143 amounted to $0.8 million for the first six months of 2004. At June 30, 2004, the change in fair value of the liability for asset retirements compared to the original value of the liability recorded at the date of adoption of SFAS No. 143 was immaterial.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk in the normal course of our business operations due to our operations that use different foreign currencies, our purchases of certain commodities and our ongoing investing and financing activities. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. We have established policies and procedures governing our management of market risks and the uses of financial instruments to manage exposure to such risks.

Energy costs including electricity used in our Chlor Alkali Products segment, and certain raw materials namely copper, lead, zinc and natural gas used primarily in our Metals and Winchester segments, are subject to price volatility. Depending on market conditions, we may enter into futures contracts and put and call option contracts in order to reduce the impact of metal price fluctuations. As of June 30, 2004, we maintained open positions on futures contracts totaling $15.7 million ($36.3 million at June 30, 2003). Assuming a hypothetical 10% increase in commodity prices which are currently hedged, we would experience a $1.6 million ($3.6 million at June 30, 2003) increase in our cost of related inventory purchased, which would be offset by a corresponding increase in the value of related hedging instruments.

We are exposed to changes in interest rates primarily as a result of our investing and financing activities. Investing activity is not material to our consolidated financial position, results of operations or cash flow. Our existing debt structure is used to fund our business operations, and commitments from banks under our revolving credit facility are a source of liquidity. As of June 30, 2004, we had long-term borrowings of $301.3 million ($328.5 million at June 30, 2003) of which $0.2 million ($0.4 million at June 30, 2003) was issued at variable rates. As a result of our fixed-rate financings, we entered into floating interest rate swaps in order to manage interest expense and floating interest rate exposure to optimal levels. We have entered into approximately $131.6 million of such swaps, whereby we agree to pay variable rates to a counterparty who, in turn, pays us fixed rates. In all cases the underlying index for the variable rates is the six-month London InterBank Offered Rate (LIBOR). Accordingly, payments are settled every six months and the term of the swap is the same as the underlying debt instrument. Assuming no changes in the $131.8 million of variable-rate debt levels from year-end 2003, we estimate that a hypothetical change of 100 basis points in the LIBOR interest rates from year-end 2003 would impact interest expense by $1.3 million on an annualized pretax basis.

In December 2001, we swapped interest payments on $50 million principal amount of our 9.125% Senior Notes to a floating rate (5.325% at June 30, 2004). In February and March 2002, we swapped interest payments on $30 million and $25 million principal amount, respectively, of our 9.125% Senior Notes to floating rates. Terms of these swaps set the floating rate at the end of each six-month reset period. Therefore, the interest rates for the current period will be set on December 15, 2004. We estimate that the rates will be between 5.0% and 6.0%.

In March 2002, we refinanced four variable-rate tax-exempt debt issues totaling $34.7 million, of which $8.1 million was repaid on June 1, 2004. The purpose of the refinancings was to eliminate the need for letter of credit support that used our liquidity. In order to manage interest expense and floating interest rate exposure to optimal levels, we swapped the fixed-rate debt of the newly refinanced bonds back to variable-rate debt through interest rate swaps. At June 30, 2004, the interest rates on the swaps of $21.1 million and $5.5 million were 1.42% and 1.56%, respectively.

These interest rate swaps reduced interest expense, resulting in an increase in pretax income of $3.0 million and a decrease in pretax loss of $3.2 million for the six months ended June 30, 2004 and 2003, respectively.

If the actual change in interest rates or commodities pricing is substantially different than expected, the net impact of interest rate risk or commodity risk on our cash flow may be materially different than that disclosed above.

We do not enter into any derivative financial instruments for speculative purposes.

Item 4. Controls and Procedures

(a)

Evaluation of disclosure controls and procedures.

Our chief executive officer and chief financial officer have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c)) as of June 30, 2004. Based on this review, they have concluded that, as of that date, our disclosure controls and procedures were effective to ensure that material information relating to us and our consolidated subsidiaries would be disclosed on a timely basis in this report.

(b)	Changes in internal controls.

We maintain a system of internal accounting controls that are designed to provide reasonable assurance that our books and records accurately reflect our transactions and that our established policies and procedures are followed. For the three months ended June 30, 2004, there were no significant changes to our internal controls or in other factors that could significantly affect our internal controls.

Cautionary Statement Regarding Forward-Looking Statements

This quarterly report on Form 10-Q includes forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to analyses and other information that are based on management’s beliefs, certain assumptions made by management, forecasts of future results, and current expectations, estimates and projections about the markets and economy in which we and our various segments operate. The statements contained in this quarterly report on Form 10-Q that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties.

We have used the words “anticipate,” “intend,” “may,” “expect,” “believe,” “should,” “plan,” “will,” “estimate,” “project,” and variations of such words and similar expressions in this quarterly report to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward looking-statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise.

The risks, uncertainties and assumptions involved in our forward-looking statements many of which are discussed in more detail in our filings with the S.E.C., including our Annual Report on Form 10-K for the year ended December 31, 2003, include, but are not limited to the following:

•

sensitivity to economic, business and market conditions in the United States and overseas, including economic instability or a downturn in the sectors served by us such as automotive, electronics, coinage, telecommunications, ammunition, housing, vinyls and pulp and paper;

•

extraordinary events, such as additional terrorist attacks or war with one or more countries;

•

continued or additional economic and industry downturns that result in diminished product demand and excess manufacturing capacity in any of our segments and that, in many cases, result in lower selling prices and profits;

•

the cyclical nature of our operating results, particularly declines in average selling prices in the chlor alkali industry and the supply/demand balance for our products, including the impact of excess industry capacity or an imbalance in demand for our chlor alkali products;

•

an increase in our indebtedness or higher-than-expected interest rates, affecting our ability to generate sufficient cash flow for debt service;

•

effects of competition, including the migration by United States customers to low-cost foreign locations;

•

costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings;

•

unexpected litigation outcomes or the impact of changes in laws and regulations;

•

higher-than-expected raw material and utility or transportation and/or logistics costs;

•

the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of production hazards;

•

unexpected additional taxes and related interest as the result of pending income tax audits; and

•

the effects of any declines in global equity markets on asset values and any declines in interest rates used to value the liabilities in our pension plan.

You should consider all of our forward-looking statements in light of these factors. In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of our forward-looking statements.

Part II - Other Information

Item 1. Legal Proceedings.

Not Applicable.

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities.

(a)

Not applicable.

(b)

Not applicable.

(c)

Not applicable.

(d)

The issuer registered $400 million of debt securities, debt warrants, preferred stock ($1 par value), preferred stock warrants, common stock ($1 par value) and common stock warrants on a registration statement on Form S-3 (file no. 333-101027) declared effective on December 20, 2002. The issuer commenced and concluded an offering of 10 million shares of its common stock, $1 par value per share, on February 3, 2004 at a public offering price of $18.00 per share (for an aggregate offering price of $180 million). There were no selling shareholders. Morgan Stanley and Co. Incorporated acted as sole managing underwriter of the offering. From the effective date through June 30, 2004, the issuer has incurred the following amounts in connection with the registration and offering:


	Expenses
	($ in millions)
• Underwriting discounts and commissions	$	2.0
• Finders’ fees		—
• Expenses paid to or for underwriters		—
• Other expenses⁽¹⁾		0.3

Total	$	2.3

⁽¹⁾	Amount includes expenses of $0.1 million related to the $400 million shelf registration and expenses of $0.2 million, which amount includes $7,500 of estimated expenses that have not been billed, related to the offering of 10 million shares of common stock.

None of the expense amounts set forth above were direct or indirect payments to directors, officers or general partners of the issuer or their associates or to 10% shareholders, or to affiliates of the issuer.

The issuer received $177.7 million in net offering proceeds, net of the amounts set forth above. Of those net proceeds, the issuer used:

•

$125 million to make a voluntary contribution to its pension plan on February 6, 2004,

•

$17.5 million to repay debt on March 1, 2004 and

•

the remaining $35.2 million of net proceeds in April 2004 to pay a portion of federal income taxes related to prior periods.

None of the use of proceeds payments were made directly or indirectly to directors, officers or general partners of the issuer or their associates or to 10% shareholders, or to affiliates of the issuer.

(e)

Issuer Purchases of Equity Securities


Period	(a) Total Number of Shares (or Units) Purchased⁽¹⁾⁽²⁾	(b) Average Price Paid per Share (or Unit)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
April 1-30, 2004	—	N/A	—
May 1-31, 2004	—	N/A	—
June 1-30, 2004	—	N/A	—
Total				154,076	⁽³⁾

(1)	Does not include 26,912 shares deducted from shares issued upon option exercises in connection with cashless option exercises.

(2)	Does not include 2,000 shares acquired by directors and executive officers in the open market.

(3)

On April 30, 1998, the issuer announced a share repurchase program approved by the board of directors for the purchase of up to 5 million shares of common stock. Through June 30, 2004, 4,845,924 shares had been repurchased, and 154,076 shares remain available for purchase under that program, which has no termination date.

Item 3. Defaults Upon Senior Securities.

Not Applicable.

Item 4. Submission of Matters to a Vote of Security Holders.

The Company held its Annual Meeting of Shareholders on April 29, 2004. Of the 69,222,977 shares of Common Stock entitled to vote at such meeting, at least 64,595,024 shares were present for purposes of a quorum. At the meeting, shareholders elected to the Board of Directors Donald W. Griffin, Randall W. Larrimore and Anthony W. Ruggiero as Class I directors with terms expiring in 2007, Michael Coleman as a Class II director with a term expiring in 2005 and Philip J. Schulz as a Class III director with a term expiring in 2006. Votes cast for and votes withheld in the election of Directors were as follows:


	Votes For	Votes Withheld
Michael Coleman	62,895,765	1,699,259
Donald W. Griffin	61,635,259	2,959,765
Randall W. Larrimore	62,608,156	1,986,868
Anthony W. Ruggiero	61,075,866	3,519,158
Philip J. Schulz	62,706,082	1,888,942

There were no abstentions or broker nonvotes.

The shareholders ratified the appointment of KPMG LLP as independent auditors for the Corporation for 2004. Voting for the resolution ratifying the appointment were 63,557,165 shares. Voting against were 715,025 shares. Abstaining were 322,834 shares. There were no broker nonvotes.

Item 5. Other Information.

Not Applicable.

Item 6. Exhibits and Reports on Form 8-K.

(a)

Exhibits

4(d)

Credit Agreement dated as of July 30, 2004 among Olin and the banks named therein

Computation of Ratio of Earnings to Fixed Charges (Unaudited)

31.1

Section 302 Certification Statement of Chief Executive Officer

31.2

Section 302 Certification Statement of Chief Financial Officer

Section 906 Certification Statement of Chief Executive Officer and Chief Financial Officer

(b)

Reports on Form 8-K

Form 8-K furnishing April 26, 2004 press release announcing Olin would make a presentation at investor meetings sponsored by Morgan Stanley and Bank of America on May 4 and 5, 2004.

Form 8-K furnishing Olin’s April 29, 2004 first quarter earnings press release.

Form 8-K furnishing Olin’s May 3, 2004 press release regarding the Brass Mill fire and related second quarter earnings guidance.

Form 8-K furnishing slides that would be presented at investor meetings sponsored by Morgan Stanley and Bank of America on May 4 and 5, 2004.

Form 8-K furnishing Olin’s June 15, 2004 press release announcing Olin would make a presentation at the Buckingham Research Chemical Conference on June 23, 2004.

Form 8-K furnishing Olin’s June 21, 2004 press release announcing Olin raised its second quarter earnings estimate.

Form 8-K furnishing slides that would be presented at the Buckingham Research Chemical Conference on June 23, 2004.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


OLIN CORPORATION (Registrant)

By:		/s/ A. W. Ruggiero
		Executive Vice President and Chief Financial Officer (Authorized Officer)

Date: August 6, 2004

EXHIBIT INDEX


Exhibit No.		Description
4(d)		Credit Agreement dated as of July 30, 2004 among Olin and the banks named therein

12		Computation of Ratio of Earnings to Fixed Charges (Unaudited)

31.1		Section 302 Certification Statement of Chief Executive Officer

31.2		Section 302 Certification Statement of Chief Financial Officer

32		Section 906 Certification Statement of Chief Executive Officer and Chief Financial Officer

EX-4.(D) 2 dex4d.htm CREDIT AGREEMENT DATED AS OF JULY 30, 2004 Credit Agreement dated as of July 30, 2004

Exhibit 4(d)

EXECUTION COPY

U.S. $160,000,000

CREDIT AGREEMENT

Dated as of July 30, 2004

Among

OLIN CORPORATION

as Borrower

and

THE BANKS NAMED HEREIN

as Banks

and

CITIBANK, N.A.

as Administrative Agent

and

BANK OF AMERICA, N.A.

as Syndication Agent

and

WACHOVIA BANK, N.A.

and

THE NORTHERN TRUST COMPANY

as Documentation Agents

and

CITIGROUP GLOBAL MARKETS INC.

as Lead Arranger

TABLE OF CONTENTS


		Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Certain Defined Terms		1
SECTION 1.02. Computation of Time Periods		15
SECTION 1.03. Accounting Terms		15
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01. The A Advances and Letters of Credit		15
SECTION 2.02. Making the Advances		16
SECTION 2.03. Fees		24
SECTION 2.04. Reduction, Increase and Extension of the Commitments/Substitution of Banks		24
SECTION 2.05. Repayment		27
SECTION 2.06. Interest		28
SECTION 2.07. Additional Interest on Eurodollar Rate Advances		29
SECTION 2.08. Interest Rate Determination		29
SECTION 2.09. Prepayments		29
SECTION 2.10. Increased Costs		30
SECTION 2.11. Payments and Computations		31
SECTION 2.12. Evidence of Indebtedness		32
SECTION 2.13. Sharing of Payments, Etc		33
SECTION 2.14. Taxes		33
SECTION 2.15. Interest Elections		35
ARTICLE III
CONDITIONS OF LENDING

SECTION 3.01. Condition Precedent to Effectiveness of Sections 2.01 and 2.02		36
SECTION 3.02. Conditions Precedent to Each Borrowing Increasing the Aggregate Amount of Advances and each Letter of Credit Issuance		37
SECTION 3.03. Conditions Precedent to Each B Borrowing		37
SECTION 3.04. Determinations Under Section 3.01		38
ARTICLE IV
REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Borrower		38
ARTICLE V
COVENANTS OF THE BORROWER

SECTION 5.01. Affirmative Covenants		40
SECTION 5.02. Negative Covenants		42


ARTICLE VI
EVENTS OF DEFAULT

SECTION 6.01. Events of Default		45
SECTION 6.02. Actions in Respect of the Letters of Credit upon Event of Default		47
ARTICLE VII
THE AGENT

SECTION 7.01. Authorization and Action		48
SECTION 7.02. Agent’s Reliance, Etc		48
SECTION 7.03. Citibank and Affiliates		49
SECTION 7.04. Lender Credit Decision		49
SECTION 7.05. Indemnification		49
SECTION 7.06. Successor Agent		50
SECTION 7.07. Other Agents		51
ARTICLE VIII
ASSIGNMENTS AND PARTICIPATIONS

SECTION 8.01. Binding Effect		51
SECTION 8.02. Assignments		51
SECTION 8.03. Participations		53
SECTION 8.04. Information		53
ARTICLE IX
MISCELLANEOUS

SECTION 9.01. Amendments, Etc.		54
SECTION 9.02. Notices, Etc		54
SECTION 9.03. No Waiver; Remedies		55
SECTION 9.04. Costs, Expenses and Taxes		55
SECTION 9.05. Right of Set-off		56
SECTION 9.06. Indemnification by Borrower		56
SECTION 9.07. Governing Law		57
SECTION 9.08. Execution in Counterparts		57
SECTION 9.09. Special Prepayment Right		57
SECTION 9.10. Jurisdiction, Etc		58
SECTION 9.11. No Liability of the Issuing Banks		58
SECTION 9.12. Confidentiality		59
SECTION 9.13. Patriot Act		59
SECTION 9.14. Waiver of Jury Trial		61


Schedule I	-	List of Applicable Lending Offices
Exhibit A-1	-	A Promissory Note
Exhibit A-2	-	Form of B Note
Exhibit B-1	-	Notice of A Borrowing
Exhibit B-2	-	Notice of B Borrowing
Exhibit C	-	Assignment and Acceptance
Exhibit D	-	Opinion of Counsel to the Borrower
Exhibit E	-	Assumption Agreement

CREDIT AGREEMENT

Dated as of July 30, 2004

OLIN CORPORATION, a Virginia corporation (the “Borrower”), the banks (the “Banks”) and issuers of letters of credit (“Issuing Banks”) listed on the signature pages hereof and CITIBANK, N.A., as administrative agent (the “Agent”) for the Banks and Issuing Banks, hereby agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

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

“A Advance” means an advance (other than a B Advance) by a Lender to the Borrower pursuant to Section 2.02(a) or (b)(iii), and refers to a Base Rate Advance or a Eurodollar Rate Advance (each of which shall be a “Type” of A Advance).

“A Borrowing” means a borrowing consisting of A Advances of the same Type made on the same day by the Lenders.

“Acquisition” means any acquisition by the Borrower or any of its Subsidiaries of all or substantially all of the capital stock of, or all or a substantial part of the assets of, or of a business unit or division of, any Person.

“A Commitment” means, with respect to any Bank at any time, the amount set forth opposite such Bank’s name on the signature pages hereto under the caption “A Commitment” or, if such Bank has entered into one or more Assignment and Acceptances, set forth for such Bank in the Register maintained by the Agent pursuant to Section 8.02(d) as such Bank’s “A Commitment”, as such amount may be reduced at or prior to such time pursuant to Section 2.04.

“A Note” means a promissory note of the Borrower payable to the order of any Lender, in substantially the form of Exhibit A-1 hereto, evidencing the aggregate Indebtedness of the Borrower to such Lender resulting from the A Advances made by such Lender.

“Advance” means an A Advance or a B Advance.

“Affiliate” means, when used with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. The term “control” (including the terms “controlled by” or “under common control with”) means the possession directly or indirectly of the power, whether or not exercised, to direct or cause the direction of the management and policies of any Person, whether through ownership of voting securities or by contract or otherwise.

“Agent’s Account” means the account of the Agent maintained by the Agent at Citibank at its office at 388 Greenwich Street, New York, New York 10013, Account No. 36852248, Attention: Bank Loan Syndications.

“Applicable Lending Office” means, with respect to each Lender, such Lender’s Domestic Lending Office in the case of a Base Rate Advance, and such Lender’s Eurodollar Lending Office in the case of a Eurodollar Rate Advance.

“Applicable Margin” means, as of any date of determination, a rate per annum determined by reference to the Performance Level applicable on such date as set forth below:


Performance Level	Applicable Margin for Base Rate Advances		Applicable Margin for Eurodollar Rate Advances
I	0.000	%	0.450	%
II	0.000	%	0.600	%
III	0.000	%	0.700	%
IV	0.000	%	0.800	%
V	0.000	%	1.000	%

“Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an assignee, and accepted by the Agent, in substantially the form of Exhibit C hereto and otherwise in accordance with Article VIII.

“Assumption Agreement” has the meaning specified in Section 2.04(c).

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

“B Advance” means an advance by a Lender to the Borrower pursuant to the auction bidding procedure described in Section 2.02(c).

“B Borrowing” means a borrowing consisting of simultaneous B Advances from each of the Lenders whose offer to make such B Advances has been accepted under the auction bidding procedure described in Section 2.02(c).

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

“Base Rate” means, for any Interest Period or any other period, a fluctuating interest rate per annum as shall be in effect from time to time which rate per annum shall at all times be equal to the higher of:

(a) The rate of interest announced publicly by Citibank, N.A. in New York, New York, from time to time, as Citibank, N.A.’s base rate, or

(b) The sum (adjusted to the nearest 1/100 of one percent or, if there is no nearest 1/100 of one percent, to the next higher 1/100 of one percent) of (i) 1/2 of one percent per annum, plus (ii) the rate per annum obtained by dividing (A) the Federal Funds Rate by (B) a percentage equal to 100% minus the average of the daily percentages specified during such period by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, but not limited to, any emergency, supplemental or other marginal reserve requirement) for Citibank, N.A. in respect of liabilities consisting of or including (among other liabilities) three-month U.S. dollar nonpersonal time deposits in the United States, plus (iii) the average during such period of the annual assessment rates estimated by Citibank, N.A. for determining the then current annual assessment payable by Citibank, N.A. to the Federal Deposit Insurance Corporation (or any successor) for insuring U.S. dollar deposits of Citibank, N.A. in the United States.

“Base Rate Advance” means an A Advance which bears interest as provided in Section 2.06(a).

“Business Day” means a day of the year on which banks are not required or authorized to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market.

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

“Change in Law” has the meaning specified in Section 2.10(c).

“Commitment” means an A Commitment or a Letter of Credit Commitment.

“Confidential Information” has the meaning specified in Section 9.12.

“Consolidated EBITDA” means, for any period, Consolidated Net Income for such period (adjusted to exclude all extraordinary or unusual items and any gains or losses on sales of assets outside the ordinary course of business) plus, without duplication and to the extent deducted in calculating such Consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt

discount with respect to Indebtedness (including the Advances), (c) depreciation and amortization expense, (d) amortization of intangibles (including, but not limited to, goodwill) and organization costs, and (e) any other non-cash charges. For the purposes of calculating Consolidated EBITDA for any Reference Period pursuant to any determination of the Consolidated Leverage Ratio, (x) Consolidated EBITDA of the Borrower shall include, without duplication, the Borrower’s pro rata share of the “Consolidated EBITDA” of Sunbelt Chlor Alkali Partnership (determined by reference to the Borrower’s actual ownership therein) and (y) if during such Reference Period the Borrower or any Subsidiary shall have made an Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto and any Indebtedness incurred or assumed in connection therewith as if such Acquisition occurred and such Indebtedness had been incurred or assumed on the first day of such Reference Period.

“Consolidated Interest Coverage Ratio” means, for any Reference Period, the ratio of (a) Consolidated EBITDA for such Reference Period to (b) Consolidated Interest Expense for such Reference Period.

“Consolidated Interest Expense” means, for any period, total interest expense (including that attributable to capitalized lease obligations) of the Borrower and its Subsidiaries for such period with respect to all outstanding Indebtedness of the Borrower and its Subsidiaries (including all commission, discounts and other fees and charges accrued with respect to letters of credit and bankers’ acceptance financing allocable to such period in accordance with GAAP), minus (in the case of net benefits) or plus (in the case of net costs) the net benefits or net costs under all Hedging Agreements in respect of Indebtedness of the Borrower and its Subsidiaries to the extent such net benefits or net costs are allocable to such period in accordance with GAAP.

“Consolidated Leverage Ratio” means, as at the last day of any Reference Period, the ratio of (a) Consolidated Total Debt on such date to (b) Consolidated EBITDA, for such Reference Period. The Consolidated Leverage Ratio shall be calculated on the date on which the Borrower delivers to the Agent the financial statements required to be delivered pursuant to Section 5.01(i)(i) or (ii), as the case may be, and the certificate required to be delivered pursuant to Section 5.01(i)(iv) demonstrating such ratio.

“Consolidated Net Income” means, for any period, the consolidated net income (or loss) of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary of the Borrower) in which the Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Borrower or such Subsidiary in the form of dividends or similar distributions and (c) the undistributed earnings of any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or any law applicable to such Subsidiary.

“Consolidated Net Tangible Assets” means, at any date, the total assets of the Borrower and its Subsidiaries at such date, determined on a consolidated basis, minus (a) the consolidated current liabilities (excluding interest-bearing liabilities) of the Borrower and its Subsidiaries as of such date, (b) unamortized debt discount and expense, goodwill, trademarks, brand names, patents and other intangible assets, and (c) any write-up of the value of any assets (other than an allocation of purchase price in an acquisition) after December 31, 2003; all as determined in accordance with GAAP.

“Consolidated Total Debt” means, at any date, the aggregate principal amount of all Indebtedness of the Borrower and its Subsidiaries at such date (including the Borrower’s Indebtedness in respect of its Guarantee of the Guaranteed Secured Senior Notes due 2017, Series O, of Sunbelt Chlor Alkali Partnership), determined on a consolidated basis in accordance with GAAP.

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

“Domestic Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending office” opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent.

“Domestic Subsidiary” shall mean any Subsidiary organized under the laws of any State of the United States of America, substantially all of the assets of which are located, and substantially all of the business of which is conducted, in the United States of America.

“Eligible Assignee” means (i) a Lender; (ii) an Affiliate of a Lender; and (iii) any other Person approved by the Agent and, unless an Event of Default has occurred and is continuing at the time any assignment is effected in accordance with Section 8.02, the Borrower; provided, however, that neither the Borrower nor any Affiliate of the Borrower shall qualify as an Eligible Assignee.

“Environmental Laws” means any and all applicable federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, injunctions, permits, grants, franchises, licenses or governmental restrictions relating to (i) the effect of the environment on human health, (ii) the environment or (iii) emissions, discharges or releases of Hazardous Substances into the environment including, without limitation, ambient air, surface water, groundwater, or land, or otherwise relating to the effect on the environment of the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances or the remediation thereof.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ERISA Affiliate” means any Person who for purposes of Title IV of ERISA is a member of the Borrower’s controlled group, or under common control with the Borrower, within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ERISA Event” means (i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, unless the 30-day notice requirement with respect thereto has been waived by the PBGC; (ii) the provision by the administrator of any Plan of a notice of intent to terminate such Plan, pursuant to Section 4041(a) (2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (iii) the cessation of operations at a facility in the circumstances described in Section 4068(f) of ERISA; (iv) the withdrawal by the Borrower or an ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (v) the failure by the Borrower or any ERISA Affiliate to make a payment to a Plan required under Section 302(f)(1) of ERISA, which Section imposes a lien for failure to make required payments; (vi) the adoption of an amendment to a Plan requiring the provision of security to such Plan, pursuant to Section 307 of ERISA; or (vii) the institution by the PBGC of proceedings to terminate a Plan, pursuant to Section 4042 of ERISA, or the occurrence of any event or condition which would constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, a Plan.

“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“Eurodollar Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Eurodollar Lending Office” opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending office), or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent.

“Eurodollar Rate” means, for the Interest Period for each Eurodollar Rate Advance comprising part of the same A Borrowing and, in the case of each B Advance comprising part of the same B Borrowing, for the period from the date of such B Advance to its maturity date as specified in the applicable Notice of B Borrowing, an interest rate per annum equal to the rate per annum (rounded upward to the nearest whole multiple of 1/16 of 1% per annum) appearing on Moneyline Telerate Markets Page 3750 (or any successor page) as the London interbank offered rate for deposits in U.S. dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such period for a term comparable to such period or, if for any reason such rate is not available, the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars are offered by the principal office of each of the Reference Banks in London,

England to prime banks in the London interbank market at 10:00 A.M. (New York time) two Business Days before the first day of such Interest Period or, in the case of a B Advance, two Business Days before the date of such B Borrowing in an amount substantially equal to such Reference Bank’s Eurodollar Rate Advance comprising part of such A Borrowing or, in the case of a B Borrowing, in an amount substantially equal to one quarter of the aggregate amount of such B Borrowing and for a period equal to such Interest Period or, in the case of a B Advance, equal to the period from the date of such B Advance to its maturity date as specified in the applicable Notice of B Borrowing. If the Moneyline Telerate Markets Page 3750 (or any successor page) is unavailable, the Eurodollar Rate for such period for each such Advance comprising part of the same A Borrowing or B Borrowing (as applicable) shall be such average as determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Reference Banks two Business Days before the first day of such Interest Period or, in the case of a B Advance, two Business Days before the date of such B Borrowing, subject, however, to the provisions of Section 2.08.

“Eurodollar Rate Advance” means an A Advance which bears interest as provided in Section 2.06(b).

“Eurodollar Rate Reserve Percentage” of any Lender for the Interest Period for any Eurodollar Rate Advance means the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period.

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

“Facility Fee Rate” means, as of any date of determination, a rate per annum determined by reference to the Performance Level applicable on such date as set forth below:


Performance Level	Facility Fee Rate
I	0.100	%
II	0.150	%
III	0.175	%
IV	0.200	%
V	0.250	%

“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published in Federal Reserve Statistical Release H.15(519), for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it.

“Foreign Subsidiary” shall mean any Subsidiary other than a Domestic Subsidiary.

“GAAP” is defined in Section 1.03.

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

“Hazardous Substances” means any toxic, radioactive, caustic or otherwise hazardous substance, material or waste, including petroleum, its derivatives, by-products and other hydrocarbons, in each case regulated by Environmental Law.

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

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, excluding deferred compensation of officers and directors, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect

of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person and all obligations of such Person under synthetic leases, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, other than letters of credit and letters of guaranty issued to support obligations (other than Indebtedness) incurred in the ordinary course of business, (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances and (k) all Invested Amounts. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefore as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

“Indemnified Costs” has the meaning specified in Section 7.05(a).

“Insufficiency” means, with respect to any Plan, the amount, if any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.

“Interest Election Request” means a request by the Borrower to convert or continue an A Borrowing in accordance with Section 2.15.

“Interest Period” means, for each A Advance comprising part of the same A Borrowing, the period commencing on the date of such A Advance (or on the effective date of any election applicable to such A Borrowing pursuant to Section 2.15) and ending the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be (a) in the case of a Base Rate Advance, up to 180 days and (b) in the case of a Eurodollar Rate Advance, 1, 2, 3 or 6 months or, with the consent of all the Lenders, nine or twelve months, in each case as the Borrower may select, upon notice received by the Agent not later than 11:00 A.M. (New York City time) on (i) the third Business Day prior to the first day of such Interest Period in the case of Eurodollar Rate Advances and (ii) the first day of such Interest Period in the case of Base Rate Advances; provided, however, that:

(A) the Borrower may not select any Interest Period which ends after the Termination Date;

(B) Interest Periods commencing on the same date for A Advances comprising part of the same Borrowing shall be of the same duration; and

(C) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day on such Interest Period shall be extended to occur on the next succeeding Business Day, provided, in the case of any Interest Period for a Eurodollar Rate Advance, that if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day.

“Issuing Bank” means each Issuing Bank listed on the signature pages hereof or any Eligible Assignee to which any Letter of Credit Commitment hereunder has been assigned pursuant to Section 8.02 so long as (a) the Borrower has consented to such assignment and (b) such Eligible Assignee expressly agrees to perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as an Issuing Bank and notifies the Agent of its Applicable Lending Office (which information shall be recorded by the Agent in the Register), for so long as such Issuing Bank or Eligible Assignee, as the case may be, shall have a Letter of Credit Commitment.

“Invested Amounts” means the amounts invested by investors that are not Affiliates of the Borrower in connection with a receivables securitization program and paid to the Borrower or any of its Subsidiaries, as reduced by the aggregate amounts received by such investors from the payment of receivables and applied to reduce such invested amounts.

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

“L/C Related Documents” has the meaning specified in Section 2.05(b)(i).

“Lenders” means the Banks and Issuing Banks listed on the signature pages hereof (until such Bank or Issuing Bank shall have assigned or had assumed all interests hereunder as provided in Sections 8.02 or 2.04(c)) and each assignee or Assuming Bank that shall become a party hereto pursuant to Sections 8.02 or 2.04(c).

“Letter of Credit Agreement” has the meaning specified in Section 2.02(b)(i).

“Letter of Credit Commitment” means, with respect to each Issuing Bank at any time, the amount set forth opposite such Issuing Bank’s name on the signature pages hereto under the caption “Letter of Credit Commitment” or, if such Issuing Bank has entered into one or more Assignment and Acceptances, set forth for such Issuing Bank in the Register maintained by the Agent pursuant to Section 8.02(d) as such Issuing Bank’s “Letter of Credit Commitment”, as such amount may be reduced at or prior to such time pursuant to Section 2.04.

“Letter of Credit Facility” means, at any time, an amount equal to the lesser of (a) the aggregate amount of the Issuing Banks’ Letter of Credit Commitments at such time and (b) $80,000,000, as such amount may be reduced at or prior to such time pursuant to Section 2.04.

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

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement).

“Loan Documents” means this Agreement and the Notes.

“Margin Stock” shall have the meaning given such term under Regulation U issued by the Board of Governors of the Federal Reserve System.

“Majority Lenders” means at any time Lenders at least a majority in interest of the then aggregate unpaid principal amount of the A Advances owing to Lenders, or, if no such principal amount is then outstanding, Lenders having at least a majority in interest of the A Commitments.

“Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions, such plan being maintained pursuant to one or more collective bargaining agreements.

“Multiple Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, which (i) is maintained for employees of the Borrower or an ERISA Affiliate and at least one Person other than the Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of which the Borrower or an ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.

“Note” means an A Note or a B Note.

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

“Notice of B Borrowing” has the meaning specified in Section 2.02(c)(i).

“Notice of Issuance” has the meaning specified in Section 2.02(b)(i).

“Officer’s Certificate” means a certificate signed in the name of the Borrower by its President, one of its Vice Presidents, its Treasurer or its Controller.

“PBGC” means the Pension Benefit Guaranty Corporation.

“Performance Level” means, as of any date of determination, the level set forth below as then applicable:

Consolidated Leverage Ratio is less than or equal to 1.00:1.00.

Consolidated Leverage Ratio is greater than 1.00:1.00 but less than or equal to 1.50:1.00.

III

Consolidated Leverage Ratio is greater than 1.50:1.00 but less than or equal to 2.50:1.00.

Consolidated Leverage Ratio is greater than 2.50:1.00 but less than or equal to 3.00:1.00.

Consolidated Leverage Ratio is greater than 3.00:1.00.

For purposes of this definition, the Performance Level shall be determined (i) from the date hereof, until adjusted pursuant to clause (ii) below, by reference to the Consolidated Leverage Ratio calculated for the Reference Period that would have ended June 30, 2004 had this Agreement then been in effect and (ii) as at the end of each Reference Period ended after the date hereof based upon the calculation of the Consolidated Leverage Ratio for such Reference Period. The Applicable Margin, Facility Fee Rate and Utilization Fee Rate shall be adjusted (if necessary) upward or downward on the first day following delivery of the certificate referred to in Section 5.01(i)(iv).

“Permitted Encumbrances” means:

(a) Liens imposed by law for taxes that are not yet due or are being contested in good faith by appropriate proceedings;

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in good faith by appropriate proceedings;

(c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

(d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

(e) judgment liens in respect of judgments that do not constitute an Event of Default under Section 6.01(f); and

(f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary;

provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.

“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.

“Plan” means a Single Employer Plan or a Multiple Employer Plan.

“Pro Rata Share” of any amount means, with respect to any Lender at any time, the product of such amount times a fraction the numerator of which is the amount of such Lender’s A Commitment at such time (or, if the A Commitments shall have been terminated pursuant to Section 2.04 or 6.01, such Lender’s A Commitment as in effect immediately prior to such termination) and the denominator of which is the aggregate amount of all A Commitments at such time (or, if the A Commitments shall have been terminated pursuant to Section 2.04 or 6.01, the aggregate amount of all A Commitments as in effect immediately prior to such termination).

“Reference Banks” means Citibank, N.A., Bank of America, N.A. and Wachovia Bank, National Association.

“Reference Period” means any period of four consecutive fiscal quarters of the Borrower.

“Register” has the meaning specified in Section 8.02(d).

“Regulation FD” has the meaning specified in Section 9.12.

“Significant Subsidiary” means each Subsidiary, but excludes any Subsidiary the United States dollar value (or equivalent thereof) of whose assets is less than 5% of the total assets of the Borrower and the Subsidiaries, on a consolidated basis.

“Single-Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, which (i) is maintained for employees of the Borrower or an ERISA Affiliate and no Person other than the Borrower and its ERISA Affiliates or (ii) was so maintained and in respect of which the Borrower or an ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated.

“Subsidiary” means, as at any particular time, any Person controlled by the Borrower the accounts of which would be consolidated with those of the Borrower in the Borrower’s consolidated financial statements if such financial statements were to be prepared at such time in accordance with GAAP.

“Tax-Exempt Financing” means a transaction with a governmental unit or instrumentality which involves (i) the issuance by such governmental unit or instrumentality to Persons other than the Borrower or a Subsidiary of bonds or other obligations on which the interest is exempt from Federal income taxes under Section 103 of the Internal Revenue Code and the proceeds of which are applied to finance or refinance the cost of acquisition of equipment or facilities of the Borrower or any of its subsidiaries, and (ii) participation in the transaction by the Borrower or a Subsidiary in any manner permitted by this Agreement.

“Termination Date” means (i) July 30, 2009 or (ii) any date to which the Termination Date shall have been extended pursuant to Section 2.04(b); or in each case of (i) and (ii), the earlier date on which the termination in whole of the Commitments occurs pursuant to Section 2.04(a) or 6.01.

“Type” shall have the meaning given such term in the definition of A Advance.

“Unused Commitment” means, with respect to each Lender at any time, (a) such Lender’s A Commitment at such time minus (b) the sum of (i) the aggregate principal amount of all A Advances made by such Lender (in its capacity as a Lender) and outstanding at such time, plus (ii) such Lender’s Pro Rata Share of (A) the aggregate Available Amount of all Letters of Credit outstanding at such time, (B) the aggregate principal amount of all A Advances made by the Issuing Bank pursuant to Section 2.02(b)(iii) that have not been ratably funded by such Lender and outstanding at such time and (C) the aggregate principal amount of B Advances then outstanding.

“Usage” means, at any time, the sum of the aggregate principal amount of the Advances then outstanding plus the Available Amount of the outstanding Letters of Credit.

“Utilization Fee Rate” means, for any date on which the aggregate Usage exceeds 50% of the aggregate A Commitments, a rate per annum determined by reference to the Performance Level applicable on such date as set forth below:


Performance Level	Utilization Fee Rate
I	0.075	%
II	0.125	%
III	0.125	%
IV	0.125	%
V	0.250	%

“Voting Rights” means, as to any corporation or any other entity, ordinary voting power (whether associated with outstanding common stock or outstanding preferred stock, or both, or other outstanding equity interests, as applicable) to elect members of the Board of Directors of such corporation or other entity (irrespective of whether or not at the time capital stock of any class or classes of such corporation or entity shall or might have voting power or additional voting power upon the occurrence of any contingency).

“Wholly Owned” means, with respect to any corporation or other entity, a corporation or other entity of which 100% of the Voting Rights are at the time directly or indirectly owned by the Borrower, by the Borrower and one or more other Wholly Owned Subsidiaries, or by one or more other Wholly Owned Subsidiaries.

“Withdrawal Liability” shall have the meaning given such term under Part I of Subtitle E of Title IV of ERISA.

SECTION 1.02. Computation of Time Periods. (a) In this Agreement and the other Loan Documents in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”.

(b) In this Agreement and the other Loan Documents each reference to a year shall be a reference to the twelve consecutive months beginning January 1 in such year and ending December 31 in such year and each reference to a quarter shall be a reference to one of the three consecutive month periods beginning January 1, April 1, July 1 or October 1, in each year.

SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. “GAAP” shall mean generally accepted accounting principles as in effect from time to time, applied on a basis consistent with the most recent certified consolidated financial statements of the Borrower and its Subsidiaries delivered to the Lenders, except that if the Borrower notifies the Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of a change occurring after the date of this Agreement in GAAP or the application thereof on the operation of such provision (or if the 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 construed and 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 with Section 9.01.

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01. The A Advances and Letters of Credit. (a) A Advances. Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make A Advances to the Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date in an aggregate amount not to exceed at any time such Lender’s Unused Commitment. Each A Borrowing shall be in an aggregate amount not less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof and shall consist of A Advances of the same Type made on the same day by the Lenders ratably according to their

respective A Commitments. Within the limits of each Lender’s A Commitment, the Borrower may borrow, repay pursuant to Section 2.05 or prepay pursuant to Section 2.09(b), and reborrow, prior to the Termination Date, under this Section 2.01.

(b) Letters of Credit. Each Issuing Bank agrees, on the terms and conditions hereinafter set forth, to issue letters of credit (each a “Letter of Credit”) for the account of the Borrower from time to time on any Business Day during the period from the date hereof until 30 days before the Termination Date in an aggregate Available Amount (i) for all Letters of Credit issued by such Issuing Bank not to exceed at any time the lesser of (x) the Letter of Credit Facility at such time and (y) such Issuing Bank’s Letter of Credit Commitment at such time and (ii) for each such Letter of Credit not to exceed an amount equal to the aggregate Unused Commitments of the Lenders at such time. No Letter of Credit shall have an expiration date (including all rights of the Borrower or the beneficiary to require renewal, but excluding “evergreen” renewal provisions that permit the Issuing Bank to decline to renew) later than five Business Days before the Termination Date. Within the limits referred to above, the Borrower may request the issuance of Letters of Credit under this Section 2.01(b), repay any A Advances resulting from drawings thereunder pursuant to Section 2.05 or prepay pursuant to Section 2.09(b) and request the issuance of additional Letters of Credit under this Section 2.01(b).

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

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

(ii) Anything in subsection (i) above to the contrary notwithstanding,

(A) if any Lender shall, at least one Business Day before the date of any requested A Borrowing, notify the Agent (with a copy to the Borrower) that the introduction of or any change in or in the interpretation of any law or regulation by any court, authority or agency, or any other governmental, judicial or regulatory body, makes

it unlawful, or that any central bank or other governmental authority asserts that it is unlawful, for such Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances hereunder, the right of the Borrower to select Eurodollar Rate Advances for such A Borrowing or any subsequent A Borrowing, with respect to such Lender (only), shall be suspended until such Lender shall notify the Agent (with a copy to the Borrower) that the circumstances causing such suspension no longer exist or such Lender shall cease to be a party hereto, and each A Advance comprising such A Borrowing shall, with respect to such Lender (only), be a Base Rate Advance of an equivalent amount and for an approximately equivalent term, provided that if all the Lenders so notify the Agent, the Agent shall so notify the Borrower and the Notice of A Borrowing in respect of such requested A Borrowing shall be automatically revoked. Each Lender giving a notice under this subclause (A) shall, promptly after giving such notice, provide the Borrower (with a copy to the Agent) with an explanation, in reasonable detail, as to the circumstances causing such suspension;

(B) in the event that it is necessary to determine the Eurodollar Rate with reference to the Reference Banks, and if none of the Reference Banks furnish timely information to the Agent for determining the Eurodollar Rate for Eurodollar Rate Advances comprising any requested A Borrowing, the right of the Borrower to select Eurodollar Rate Advances for such A Borrowing or any subsequent A Borrowing shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist, and each A Advance comprising such A Borrowing shall be a Eurodollar Rate Advance, if available (or, if not available or the Borrower so notifies the Lenders, a Base Rate Advance); and

(C) if the Majority Lenders shall, at least one Business Day before the date of any requested A Borrowing, notify the Agent (with a copy to the Borrower) that the Eurodollar Rate for Eurodollar Rate Advances comprising such A Borrowing will not adequately reflect the cost to the Lenders of making or funding their respective Eurodollar Rate Advances for such A Borrowing, the Notice of A Borrowing given in respect of such requested A Borrowing shall be automatically revoked and the right of the Borrower to select Eurodollar Rate Advances for such A Borrowing or any subsequent A Borrowing shall be suspended until the Majority Lenders shall notify the Agent (with a copy to the Borrower) and the other Lenders that the circumstances causing such suspension no longer exist. The Majority Lenders giving a notice under this subclause (C) shall, promptly after giving such notice, provide the Borrower (with a copy to the Agent) with an explanation, in reasonable detail, as to the circumstances causing such suspension.

(D) Anything in subsection (i) above to the contrary notwithstanding, (1) the Borrower may not select Eurodollar Rate Advances for any A Borrowing if the aggregate amount of such A Borrowing is less than $10,000,000 and (2) the Eurodollar Rate Advances may not be outstanding as part of more than ten separate A Borrowings.

(iii) Each Notice of A Borrowing (subject to (ii)(A) and (ii)(C) above) shall be irrevocable and binding on the Borrower. In the case of any A Borrowing which the related

Notice of A Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of A Borrowing for such A Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the A Advance to be made by such Lender as part of such A Borrowing when such A Advance, as a result of such failure, is not made on such date. Each Lender claiming indemnity for any such loss, cost or expense under this clause (iii) shall provide, at the time of making such claim, the Borrower (with a copy to the Agent) with reasonable details, including the basis for the calculation thereof, of such loss, cost or expense, provided that, in the absence of manifest error, the amount of such claims so notified shall be conclusive and binding upon the Borrower.

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

(b) Issuance of and Drawings and Reimbursement Under Letters of Credit. (i) Request for Issuance. (A) Each Letter of Credit shall be issued upon notice, given not later than 11:00 A.M. (New York City time) on the fifth Business Day prior to the date of the proposed issuance of such Letter of Credit, by the Borrower to any Issuing Bank, which shall give the Agent and each Lender prompt notice thereof by telecopier. Each such notice of issuance of a Letter of Credit (a “Notice of Issuance”) shall be by telephone or telecopier, confirmed immediately in writing, specifying therein the requested (I) date of such issuance (which shall be a Business Day), (II) Available Amount of such Letter of Credit, (III) expiration date of such Letter of Credit, (IV) name and address of the beneficiary of such Letter of Credit and (V) form of such Letter of Credit, and shall be accompanied by such application and agreement for letter of credit (if any) as such Issuing Bank may reasonably specify to the Borrower for use in connection with such requested Letter of Credit (a “Letter of Credit Agreement”). If the requested form of such Letter of Credit is acceptable to the applicable Issuing Bank in its reasonable discretion, such Issuing Bank will, upon fulfillment of the applicable conditions set forth in Article III, make such Letter of Credit available to the Borrower at its office referred to in Section 9.02 or as otherwise agreed with the Borrower in connection with such issuance. In the event and to the extent that the provisions of any Letter of Credit Agreement shall conflict with this Agreement, the provisions of this Agreement shall govern.

(ii) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of any Issuing Bank or the Lenders, each Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Pro Rata Share of the aggregate amount available to be drawn under such Letter of Credit. The Borrower hereby agrees to each such participation. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Agent, for the account of the Issuing Bank, such Lender’s Pro Rata Share of each drawing made under a Letter of Credit funded by the Issuing Bank and not reimbursed by the Borrower on the date made, or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of an Event of Default or any event which, with the giving of notice or lapse of time, or both, would constitute an Event of Default, or reduction or termination of the A Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(iii) Drawing and Reimbursement. The payment by any Issuing Bank of a draft drawn under any Letter of Credit shall constitute for all purposes of this Agreement the making by such Issuing Bank of an A Advance, which shall be a Base Rate Advance, in the amount of such draft. Upon written demand by such Issuing Bank, with a copy of such demand to the Agent, each Lender shall pay to the Agent such Lender’s Pro Rata Share of such outstanding A Advance, by making available for the account of its Applicable Lending Office to the Agent for the account of such Issuing Bank, by deposit to the Agent’s Account, in same day funds, an amount equal to the portion of the outstanding principal amount of such A Advance to be funded by such Lender. Promptly after receipt thereof, the Agent shall transfer such funds to such Issuing Bank. Each Lender agrees to fund its Pro Rata Share of an outstanding A Advance made by an Issuing Bank as a result of a drawing under the Letter of Credit on (A) the Business Day on which demand therefor is made by the Issuing Bank, provided that notice of such demand is given not later than 11:00 A.M. (New York City time) on such Business Day, or (B) the first Business Day next succeeding such demand if notice of such demand is given after such time. If and to the extent that any Lender shall not have so made the amount of such A Advance available to the Agent, such Lender agrees to pay to the Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the applicable Issuing Bank until the date such amount is paid to the Agent, at the Federal Funds Rate for its account or the account of such Issuing Bank, as applicable. If such Lender shall pay to the Agent such amount for the account of such Issuing Bank on any Business Day, such amount so paid in respect of principal shall constitute an A Advance made by such Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the A Advance made by the applicable Issuing Bank shall be reduced by such amount on such Business Day.

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

(v) Notice to Borrower. Each Issuing Bank shall notify the Borrower promptly of each request for drawing under a Letter of Credit issued by it and each payment made by it under a Letter of Credit.

(vi) Failure to Make A Advances. The failure of any Lender to make the A Advance to be made by it on the date specified in Section 2.02(b)(iii) shall not relieve any other Lender of its obligation hereunder to make its A Advance on such date, but no Lender shall be responsible for the failure of any other Lender to make the A Advance to be made by such other Lender on such date.

(c) Making the B Advances. Each Lender severally agrees that the Borrower may make B Borrowings under this Section 2.02(c) from time to time on any Business Day during the period from the date hereof until the date occurring one day prior to the Termination Date in the manner set forth below; provided that, following the making of each B Borrowing, the Usage shall not exceed the aggregate amount of the A Commitments of the Lenders.

(i) The Borrower may request a B Borrowing under this Section 2.02(c) by delivering to the Agent, by telephone, confirmed immediately in writing, a notice of a B Borrowing (a “Notice of B Borrowing”), in substantially the form of Exhibit B-2 hereto, specifying (I) the date and aggregate amount of the proposed B Borrowing, (II) the type of interest rate applicable to such B Borrowing (which shall be a margin above or below the Eurodollar Rate or a fixed rate), (III) the interest period or periods applicable to such B Borrowing (which shall be from 14 days up to 12 months in the case of Eurodollar Rate related B Borrowings and from 7 days up to 365 days in the case of fixed rate B Borrowings), (IV) the maturity date for repayment of each B Advance to be made as part of such B Borrowing (which maturity date may not be later than the Termination Date), (V) the interest payment date or dates relating thereto, (VI) the time after which the offer of any Lender bidding for such B Borrowing cannot be accepted by the Borrower (which shall not be later than 10:30 A.M., New York City time, on the date of the proposed B Borrowing in the case of a fixed rate B Borrowing and on the third Business Day prior to the date of the proposed B Borrowing in the case of a Eurodollar Rate B Borrowing), and (VII) any other terms to be applicable to such B Borrowing, not later than 9:00 A.M. (New York City time) (x) at least one Business Day prior to the proposed B Borrowing if the Borrower shall specify in the Notice of B Borrowing that the rates of interest to be offered by Lenders shall be fixed rates and (y) at least three Business Days prior to the proposed B Borrowing, if the Borrower shall instead specify in the Notice of B Borrowing that the rates to be offered by the Lenders shall be a margin above or below

the Eurodollar Rate. The Agent shall in turn notify each Lender of each request for a B Borrowing received by it from the Borrower by sending such Lender a copy of the related Notice of B Borrowing.

(ii) Each Lender shall, if, in its sole discretion, it elects to do so, irrevocably offer to make one or more B Advances to the Borrower as part of such proposed B Borrowing at a rate or rates of interest, with maturity date or dates, and with a maximum principal amount that may be accepted by the Borrower, each as specified by such Lender in its sole discretion, by notifying the Agent (which shall give prompt notice thereof to the Borrower) by telephone before 9:30 A.M. (New York City time), confirmed in writing before 10:30 A.M. (New York City time), (I) on the date of such proposed B Borrowing, if the Borrower shall have specified in the Notice of B Borrowing that the rates of interest to be offered by the Lenders were to be fixed rates per annum and (II) on the second Business Day prior to the proposed B Borrowing, if the Borrower shall have instead specified in the Notice of B Borrowing that the rates of interest to be offered by the Lenders were to be Eurodollar Rates, of the maximum amount of each B Advance which such Lender would be willing to make as part of such proposed B Borrowing (which amounts may, subject to the proviso to the first sentence of this Section 2.02(c), exceed such Lender’s Commitment), the rate or rates of interest and maturity date or dates therefor and such Lender’s Applicable Lending office with respect to such B Advance; provided that if the Agent in its capacity as a Lender shall, in its sole discretion, elect to make any such offer, it shall notify the Borrower of such offer at least 30 minutes before the time and on the date on which notice of such election is to be given to the Agent by the other Lenders. If any Lender shall elect not to make such an offer, such Lender shall so notify the Agent by telephone, confirmed immediately in writing, before 9:30 A.M. (New York City time) on the date on which notice of such election is to be given to the Agent by the other Lenders and such Lender shall not be obligated to, and shall not, make any B Advance as part of such B Borrowing; provided that the failure by any Lender to give such notice shall not cause such Lender to be obligated to make any B Advance as part of such proposed B Borrowing.

(iii) The Borrower shall, in turn, not later than the time after which the Borrower cannot accept the bid of any Lender, as specified by the Borrower in the Notice of B Borrowing delivered by it in respect of such proposed B Borrowing, (I) on the date of such proposed B Borrowing, if the Borrower shall have specified in the Notice of B Borrowing that the rates of interest to be offered by the Lenders were to be fixed rates per annum and (II) on the third Business Day prior to the proposed B Borrowing, if the Borrower shall have instead specified in the Notice of B Borrowing that the rates of interest to be offered by the Lenders were to be Eurodollar Rates, either,

(x) cancel such B Borrowing by giving the Agent notice by telephone, confirmed immediately in writing, to that effect, or

(y) accept one or more of the offers made by any Lender or Lenders pursuant to paragraph (ii) above, in ascending order of the effective cost to the Borrower (and if two or more of such offers have an equal effective cost to the Borrower, the Borrower shall accept each such equal offer in the proportion that

the amount of each such equal offer bears to the aggregate amount of all offers at such equal effective cost made by the Lenders making such equal offers), provided if the order referred to above would result in the acceptance of an offer by any Lender in an aggregate amount of less than $5,000,000, the Borrower shall accept such amounts as, in its discretion, it chooses to ensure that no offer of a Lender is accepted for an aggregate amount of less than $5,000,000; such acceptance shall be made by the Borrower giving notice by telephone, confirmed immediately in writing, to the Agent of the amount of each B Advance (which amount shall be equal to or less than the maximum amount notified to the Borrower by such Lender for such B Advance pursuant to paragraph (ii) above) to be made by such Lender as part of such B Borrowing, and reject any remaining offers made by Lenders pursuant to paragraph (ii) above by giving the Agent notice to that effect.

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

(v) If the Borrower accepts one or more of the offers made by any Lender or Lenders pursuant to paragraph (iii)(y) above, the Agent shall in turn promptly notify by telephone, confirmed immediately in writing, (I) each Lender that has made an offer as described in paragraph (ii) above, of the date and aggregate amount of such B Borrowing and whether or not any offer or offers made by such Lender pursuant to paragraph (ii) above have been accepted by the Borrower, (II) each Lender that is to make a B Advance as part of such B Borrowing, of the amount of each B Advance to be made by such Lender as part of such B Borrowing, and (III) each Lender that is to make a B Advance as part of such B Borrowing, upon receipt, that the Agent has received forms of documents appearing to fulfill the applicable conditions set forth in Article III. Each Lender that is to make a B Advance as part of such B Borrowing shall, before 12:00 noon (New York City time) on the date of such B Borrowing specified in the notice received from the Agent pursuant to clause (I) of the preceding sentence or any later time when such Lender shall have received notice from the Agent pursuant to clause (III) of the preceding sentence, make available for the account of its Applicable Lending Office to the Agent at the Agent’s Account, in same day funds, such Lender’s portion of such B Borrowing. Upon fulfillment of the applicable conditions set forth in Article III and after receipt by the Agent of such funds, the Agent will make such funds available to the Borrower at the Agent’s address referred to in Section 9.02. Promptly after each B Borrowing the Agent will notify each Lender of the amount of the B Borrowing and the dates upon which such B Borrowing commenced and will terminate.

(vi) The Borrower shall indemnify each Lender against any loss, cost, or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified for such B Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired or maintained by such Lender to fund the B Advance to be made by such Lender as part of such B Borrowing when such B Advance, as a result of such failure, is not

made on such date. Each Lender claiming indemnity for such loss, cost or expense under this subclause (iv) shall provide, at the time of making such claim, the Borrower (with a copy to the Agent) with reasonable details, including the basis for the calculation thereof, of such loss, cost or expense, provided that, in the absence of manifest error, the amount of such claim so notified shall be conclusive and binding upon the Borrower.

(vii) In the case of a proposed B Borrowing comprised of Eurodollar Rate related B Advances, the Agent shall, as soon as possible, notify the Borrower and the Lenders of the applicable Eurodollar Rate and, if the Majority Lenders disagree with the calculation of the Eurodollar Rate so notified by the Agent, the Majority Lenders shall promptly notify each other Lender, the Agent and the Borrower of such applicable Eurodollar Rate.

(iii) Each B Borrowing shall be in an aggregate amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and, following the making of such B Borrowing, shall not result in the limitations set forth in the proviso to the first sentence of this Section 2.02(c) being exceeded.

(iv) Within the limits and on the conditions set forth in this Section 2.02(c), the Borrower may from time to time borrow under this Section 2.02(c), repay or prepay pursuant to subsection (v) below, and reborrow prior to the Termination Date under this Section 2.02(c); provided, that a B Borrowing shall not be made within three Business Days of the date of any other B Borrowing.

(v) The Borrower shall repay to the Agent for the account of each Lender which has made a B Advance on the maturity date of each B Advance (such maturity date being that specified by the Borrower for repayment of such B Advance in the related Notice of B Borrowing delivered pursuant to subsection (i) above and provided in the B Note evidencing such B Advance), the then unpaid principal amount of such B Advance. The Borrower shall have no right to prepay any principal amount of any B Advance unless, and then only on the terms, specified by the Borrower for such B Advance in the related Notice of B Borrowing delivered pursuant to subsection (i) above and provided in the B Note evidencing such B Advance.

(vi) The Borrower shall pay interest on the unpaid principal amount of each B Advance from the date of such B Advance to the date the principal amount of such B Advance is repaid in full, at the rate of interest for such B Advance specified by the Lender making such B Advance in its notice with respect thereto delivered pursuant to subsection (ii) above, payable on the interest payment date or dates specified by the Borrower for such B Advance in the related Notice of B Borrowing delivered pursuant to subsection (i) above, as provided in the B Note evidencing such B Advance; provided that any amount of principal which is not paid when due (whether at stated maturity, by acceleration or otherwise) shall bear interest, from the date on which such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal at all times to 1¹/2% per annum above the Base Rate.

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

SECTION 2.03. Fees. (a) Facility Fee. The Borrower agrees to pay to the Agent for the account of each Lender a facility fee on the average daily aggregate amount of the Lenders’ Commitments from the date hereof in the case of each Bank and from the effective date specified in the Assignment and Acceptance or Assumption Agreement pursuant to which it became a Lender in the case of each other Lender until the Termination Date at the Facility Fee Rate, payable quarterly in arrears and on the Termination Date.

(b) Letter of Credit Fees. (i) The Borrower shall pay to the Agent for the account of each Lender a commission on such Lender’s Pro Rata Share of the average daily aggregate Available Amount of all Letters of Credit outstanding from time to time at a rate per annum equal to the sum of the Applicable Margin for Eurodollar Rate Advances plus the Utilization Fee Rate, if applicable, payable quarterly in arrears and on the Termination Date.

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

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

SECTION 2.04. Reduction, Increase and Extension of the Commitments/Substitution of Banks. (a) The Borrower shall have the right, upon at least two Business Days’ notice to the Agent, to terminate in whole or reduce ratably in part the Commitments of the Lenders or of the Issuing Banks, provided that (i) each partial reduction shall be in the aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and (ii) any notice of termination may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Agent) if such condition is not satisfied.

(b) Not later than the date 45 days prior to the Termination Date then in effect, the Borrower may deliver to the Agent a notice requesting that the Commitments be extended to such date as the Borrower may specify in such notice (the “Extended Termination Date”), and the Agent shall promptly forward such notice to the Lenders. Within 10 days after its receipt of any such notice, each Lender shall notify the Agent of its willingness or unwillingness so to extend its Commitment. Any Lender which shall fail so to notify the Agent within such period shall be deemed to have declined to extend its Commitment. In the event that Lenders having Commitments equal to $100,000,000 or more shall be willing to extend its Commitment, the Agent shall so notify the Borrower and each Lender and the Termination Date for each such consenting Lender shall without further action be extended to the Extended Termination Date. In the event that any Lender shall be unwilling to extend its Commitment, the Commitment of such Lender will not be extended and the Termination Date as to that Lender shall remain unchanged.

(c) Optional Termination and Substitution of Lenders. The Borrower may, upon not less than two Business Days prior notice to a Lender or Lenders, terminate in whole the Commitment of such Lender or Lenders and arrange in respect of each terminated Lender for one or more bank or banks (“Assuming Lender or Lenders”), which may include one or more of the Lenders, but no Lender shall have any obligation, to assume a Commitment equal to or Commitments in aggregate amount equal to the amount of the Commitment of the terminated Lender, provided that no such termination shall be made unless, at such time, no event has occurred and is continuing which constitutes an Event of Default. Such termination shall be effective (x) with respect to each such terminated Lender’s Unused Commitment, on the date set forth in such notice, provided, however, that such date shall be no earlier than two Business Days after receipt of such notice or (y) in the event that an Advance is outstanding from such terminated Lender which is to be paid in connection with such termination, on the last day of the then current interest period relating to such Advance. Such assumption shall be effective on the date specified in (x) or (y) above, as the case may be, provided, however, that each Assuming Lender shall have delivered to the other Lenders, on or prior to such date, an agreement in form and substance satisfactory to the Borrower and the Agent (an “Assumption Agreement”) in substantially the form of Exhibit E hereto. (The term “Lender” as used in this Agreement immediately following such assumption shall include an Assuming Lender.) Notwithstanding the provisions of this Section 2.04(c), termination or substitution shall not be effective unless the Assuming Lender meets, at the time of substitution, the criteria set forth in this Agreement for an “Eligible Assignee.”

Upon the termination of a Lender’s Commitment under this subsection 2.04(c), the Borrower will pay or cause to be paid all principal of, and interest accrued to the date of such payment on, Advances owing to such Lender and pay any fees payable to such Lender pursuant to the provisions of Section 2.03 with respect to the Commitment which is terminated, any amounts payable pursuant to the provisions of Section 9.04 and any other amounts payable to such Lender hereunder with respect to the Commitment which is terminated or Advances which are paid; and upon such payments, the obligations of such Lender hereunder shall, by the provisions hereof, be released and discharged, and it shall be deemed to have relinquished its rights under this Agreement (other than any rights under Section 9.06).

(d) Increase in Aggregate of the Commitments. (i) The Borrower may at any time but in any event not more than twice in any calendar year prior to the Termination Date, by notice to the Agent, request that the aggregate amount of the Commitments be increased by an amount of $10,000,000 or an integral multiple thereof (each, a “Commitment Increase”) to be effective as of a date that is at least 90 days prior to the scheduled Termination Date then in effect (the “Increase Date”) as specified in the related notice to the Agent; provided, however, that (A) in no event shall the aggregate amount of the Commitments at any time exceed $180,000,000 and (B) no Event of Default, or any event which, with the giving of notice or lapse of time, or both, would constitute an Event of Default, shall have occurred and be continuing on such Increase Date. The Agent shall notify the Lenders and such other Eligible Assignees as the Borrower may identify thereof promptly of a request by the Borrower for a Commitment Increase, which notice shall include (x) the proposed amount of such requested Commitment Increase, (y) the proposed Increase Date and (iii) the date by which Lenders wishing to

participate in the Commitment Increase must commit to any increase in the amount of their respective commitments, which date shall not be less than ten Business Days from the date of delivery of such notice to the Lenders (the “Commitment Date”). Each such Lender that is willing to increase its Commitment hereunder (an “Increasing Lender”) and each such Eligible Assignee that agrees to participate in such Commitment Increase as an Assuming Lender, in its sole discretion, shall give written notice to the Agent on or prior to the Commitment Date of the amount by which it is willing to increase its commitment or to participate in such Commitment Increase; provided further that the minimum Commitment of each such Assuming Lender that becomes a party to this Agreement pursuant to this Section 2.05(d), shall be at least equal to $5,000,000. If agreement is reached on or prior to the Commitment Date with any Increasing Lenders and Assuming Lenders as to a Commitment Increase (which may be less than but not greater than specified in the applicable notice from the Borrower), such agreement to be evidenced by a notice in reasonable detail from the Borrower to the Agent on or prior to the Commitment Date, such Assuming Lenders, if any, shall become Lenders hereunder as of the Increase Date and the Commitments of such Increasing Lenders and such Assuming Lenders shall become or be, as the case may be, as of the Increase Date, the amounts specified in such notice; provided that:

(1) the Agent shall have received (with copies for each Lender, including each such Assuming Lender) by no later than 10:00 A.M. (New York City time) on the Increase Date a copy, certified on the Increase Date by the Secretary, an Assistant Secretary or a comparable official of the Borrower, of the resolutions adopted by the Board of Directors of the Borrower authorizing such Commitment Increase;

(2) each such Assuming Lender shall have delivered to the Agent, by no later than 10:00 A.M. (New York City time) on the Increase Date, an appropriate Assumption Agreement, duly executed by such Assuming Lender and the Borrower; and

(3) each such Increasing Lender shall have delivered to the Agent by, no later than 10:00 A.M. (New York City time) on the Increase Date, (A) its existing A Note and (B) confirmation in writing satisfactory to the Agent as to its increased Commitment.

(ii) In the event that the Agent shall have received notice from the Borrower as to its agreement to a Commitment Increase on or prior to the Commitment Date and each of the actions provided for in clauses (1) through (3) above shall have occurred prior to 10:00 A.M. (New York City time) on the Increase Date to the satisfaction of the Agent, the Agent shall notify the Lenders (including any Assuming Lenders) and the Borrower of the occurrence of such Commitment Increase by telecopier promptly and in any event no later than 1:00 P.M. (New York City time) on the Increase Date and shall record in the Register the relevant information with respect to each Increasing Lender and Assuming Lender. Each Increasing Lender and each Assuming Lender shall, before 2:00 P.M. (New York City time) on the Increase Date, make available for the account of its Applicable Lending Office to the Agent at the Agent’s Account, in same day funds, in the case of such Assuming Lender, an amount equal to such Assuming Lender’s ratable portion of the A Borrowings then outstanding (calculated based on its Commitment as a percentage of the aggregate Commitments after giving effect to the relevant Commitment Increase) and, in the case of such Increasing Lender, an amount equal to the excess of (i) such Increasing Lender’s ratable portion of the A Borrowings then outstanding (calculated

based on its Commitment as a percentage of the aggregate Commitments outstanding after giving effect to the relevant Commitment Increase) over (ii) such Increasing Lender’s ratable portion of the A Borrowings then outstanding (calculated based on its Commitment (without giving effect to the relevant Commitment Increase) as a percentage of the aggregate Commitments (without giving effect to the relevant Commitment Increase). After the Agent’s receipt of such funds from each such Increasing Lender and each such Assuming Lender, the Agent will promptly thereafter cause to be distributed like funds to the other Lenders for the account of their respective Applicable Lending Offices in an amount to each other Lender such that the aggregate amount of the outstanding A Advances owing to each Lender after giving effect to such distribution equals such Lender’s ratable portion of the A Borrowings then outstanding (calculated based on its Commitment as a percentage of the aggregate Commitments outstanding after giving effect to the relevant Commitment Increase). Within five Business Days after the Borrower receives notice from the Agent, the Borrower, at its own expense, shall execute and deliver to the Agent, A Notes payable to the order of each Assuming Lender, if any, and, each Increasing Lender, dated as of the Increase Date, in a principal amount equal to such Lender’s Commitment after giving effect to the relevant Commitment Increase, and substantially in the form of Exhibit A-1 hereto. The Agent, upon receipt of such A Notes, shall promptly deliver such A Notes to the respective Assuming Lenders and Increasing Lenders.

(iii) In the event that (A) the Agent shall not have received notice from the Borrower as to such agreement on or prior to the Commitment Date, (B) the Borrower shall, by notice to the Agent prior to the Increase Date, withdraw its proposal for a Commitment Increase or (C) any of the actions provided for above in clauses (i)(1) through (i)(3) shall not have occurred by 10:00 A.M. (New York City time) on the Increase Date, such proposal by the Borrower shall be deemed not to have been made. In such event, any actions theretofore taken under clauses (i)(1) through (i)(3) above shall be deemed to be of no effect and all the rights and obligations of the parties shall continue as if no such proposal had been made.

SECTION 2.05. Repayment. (a) The Borrower shall repay to the Agent for the ratable account of the Lenders the principal amount of each A Advance owing to each Lender on the Termination Date.

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

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

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

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

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

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

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

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

SECTION 2.06. Interest. The Borrower shall pay interest on the unpaid principal amount of each A Advance owing to each Lender from the date of such A Advance until such principal amount shall be paid in full, at the following rates per annum:

(a) Base Rate Advances. If such A Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of the Base Rate in effect from time to time, plus the Applicable Margin, plus the Utilization Fee Rate, if applicable, payable in arrears on (i) the last day of each quarter, (ii) the last day of the Interest Period applicable to such Base Rate Advance, and (iii) the date such Base Rate Advance shall be paid in full; provided that any amount of principal which is not paid when due (whether at stated maturity, by acceleration or otherwise) shall bear interest, from the date on which such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal at all times to 1¹/2% per annum above the Base Rate.

(b) Eurodollar Rate Advances. If such A Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during the Interest Period for such A Advance to the sum of the Eurodollar Rate for such Interest Period, plus the Applicable Margin plus the Utilization Fee Rate, if applicable, payable in arrears on (A) if the Interest Period in respect of such Advance is less than or equal to three months, the last day of such Interest Period, or (B) if the Interest Period in respect of such Advance is

greater than three months, the last day of each three-month period (beginning the first day of such Interest Period) occurring during that Interest Period, and also on the last day of such Interest Period; provided that any amount of principal which is not paid when due (whether at stated maturity, by acceleration or otherwise) shall bear interest, from the date on which such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal at all times to 1¹/2% per annum above the Base Rate in effect from time to time.

SECTION 2.07. Additional Interest on Eurodollar Rate Advances. The Borrower shall pay to the Agent for the account of each Lender additional interest on the unpaid principal amount of each Eurodollar Rate Advance of such Lender, from the date of such A Advance until such principal amount is paid in full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (i) the Eurodollar Rate for the Interest Period for such A Advance from (ii) the rate obtained by dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of such Lender for such Interest Period, payable on each date on which interest is payable on such A Advance. Such additional interest shall be determined by such Lender and notified to the Borrower and the Agent. Each Lender notifying the Borrower and the Agent of such additional interest shall provide the Borrower (with a copy to the Agent), at the time of such notification, with reasonable details, including the basis for the calculation thereof, of such additional interest, provided that, in the absence of manifest error, the amount of such additional interest so notified shall be conclusive and binding upon the Borrower.

SECTION 2.08. Interest Rate Determination. (a) If the Eurodollar Rate cannot be determined by reference to the Moneyline Telerate Markets Page 3750 or any successor page (as provided in the definition of “Eurodollar Rate”), each Reference Bank agrees to furnish to the Agent timely information for the purpose of determining each Eurodollar Rate. Subject to Section 2.02(a)(ii)(B), if any of the Reference Banks shall not furnish such timely information to the Agent for the purpose of determining any such interest rate, the Agent shall determine such interest rate on the basis of timely information furnished by the remaining Reference Bank.

(b) The Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.06(a) or (b), and the applicable rate, if any, furnished by each Reference Bank for the purpose of determining the applicable interest rate or, in the case of Section 2.02(c), applicable Eurodollar Rate under Sections 2.02(c) or 2.06(b).

SECTION 2.09. Prepayments. (a) The Borrower shall have no right to prepay any principal amount of any A Advances other than as provided in subsection (b) or (c) below.

(b) The Borrower may, (i) upon same-day notice in the case of Base Rate Advances or (ii) upon at least three Business Days’ notice in the case of Eurodollar Rate Advances, to the Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding principal amounts of the A Advances comprising part of the same A Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that (i) each partial prepayment shall be in an aggregate principal amount not

less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof and (ii) in the event of any such prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the Banks in respect thereof pursuant to Section 9.04(b).

(c) On the date of any termination or reduction of Commitments pursuant to this Agreement, the Borrower shall pay or prepay so much of the Advances as shall be necessary in order that the aggregate Usage will not exceed the aggregate A Commitments of the Lenders after giving effect to such termination or reduction.

SECTION 2.10. Increased Costs. (a) If, due to either (i) the introduction of or any change (other than any change by way of imposition or increase of reserve requirements, in the case of Eurodollar Rate Advances, included in the Eurodollar Rate Reserve Percentage) in or in the interpretation of any law or regulation by any court, authority or agency, or any other governmental, judicial or regulatory body, or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Advances or of agreeing to issue or of issuing or maintaining or participating in Letters of Credit, then the Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. Each Lender demanding payment of such amount shall provide, at the time of making such demand, the Borrower and the Agent with reasonable details, including the basis for the calculation thereof, of such increase, provided that, in the absence of manifest error, the amount so notified shall be conclusive and binding upon the Borrower.

(b) If any Lender determines (in good faith) that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender’s commitment to lend hereunder and other commitments of this type, then, upon demand by such Lender (with a copy of such demand to the Agent), the Borrower shall immediately pay to the Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender’s commitment to lend hereunder. Each Lender demanding payment of such amount shall provide, at the time of making such demand, the Borrower and the Agent with reasonable details, including the basis for the calculation thereof, of such increase, provided that, in the absence of manifest error, the amount so notified shall be conclusive and binding upon the Borrower.

(c) Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs incurred more than 270 days prior to the date that such Lender notifies the Borrower and the Agent of any event described in paragraph (a) or (b) of this Section (a “Change in Law”) which gives rise to such increased costs and of such Lender’s

intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.

(d) Notwithstanding the foregoing provisions of this Section, a Lender shall not be entitled to compensation pursuant to this Section in respect of any B Advances if the Change in Law which would otherwise entitle it to such compensation shall have been publicly announced prior to submission of the Notice of B Borrowing pursuant to which such Advance was made.

(e) If any Lender requests compensation under this Section, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Advances hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to this Section and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(f) If any Lender requests compensation under this Section, then the Borrower may, at its sole expense and effort, upon notice to such Lender require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 8.02), all its interests, rights and obligations under this Agreement (other than any outstanding B Advances held by it) to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) at the time the Borrower requires such an assignment, no event has occurred and is continuing which constitutes an Event of Default, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Advances (other than B Advances), accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under this Section, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

SECTION 2.11. Payments and Computations. (a) The Borrower shall make each payment hereunder and under the Notes, irrespective of any right of counterclaim or set-off, not later than 1:00 P.M. (New York City time) on the day when due in U.S. dollars to the Agent for the account of the applicable Lender at the Agent’s Account in same day funds. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or facility fees ratably (other than amounts payable pursuant to Section 2.02(c), 2.07, 2.10, 2.14 or 9.04(b)) to the Lenders entitled thereto for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to

Section 8.02(d), from and after the effective date specified in each Assignment and Acceptance, the Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

(b) All computations of interest with respect to the A Advances based on clause (a) of the definition of Base Rate and of fees (other than the facility fee) shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest (i) with respect to the B Advances, (ii) with respect to the A Advances based on clause (b) of the definition of Base Rate, the Eurodollar Rate or the Federal Funds Rate, (iii) letter of credit commissions, (iv) the facility fee and (v) pursuant to Section 2.07 shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, fee or commission is payable. Each determination by the Agent (or, in the case of Section 2.07, by a Lender) of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

(c) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest and fees, as the case may be; provided, however, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next following calendar month, such payment, shall be made on the next preceding Business Day.

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

SECTION 2.12. Evidence of Indebtedness. (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each A Advance owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder in respect of A Advances. The Borrower agrees that upon notice by any Lender to the Borrower (with a copy of such notice to the Agent) to the effect that an A Note is required or appropriate in order for such Lender to evidence (whether for purposes of pledge, enforcement or otherwise) the A Advances owing to, or to be made by, such Lender, the Borrower shall promptly execute and deliver to such Lender an A Note payable to the order of such Lender in a principal amount up to the A Commitment of such Lender.

(b) The Register maintained by the Agent pursuant to Section 8.02(d) shall include a control account, and a subsidiary account for each Lender, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, the Type of Advances comprising such Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iv) the amount of any sum received by the Agent from the Borrower hereunder and each Lender’s share thereof.

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

SECTION 2.13. Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the A Advances owing to it (other than pursuant to Section 2.04(b), 2.04(c), 2.07, 2.10 or 2.14) in excess of its ratable share of payments on account of the A Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the A Advances owing to them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them, provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.13 may, to the fullest extent permitted by law, exercise all its rights of payment with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.

SECTION 2.14. Taxes. (a) Any and all payments by the Borrower to or for the account of any Lender or the Agent hereunder or under the Notes shall be made, in accordance with Section 2.11, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and the Agent, (x) taxes imposed on its income, and franchise taxes imposed on it, and any liability arising therefrom or with respect thereto, by the United States or any State or other political subdivision thereof or by the jurisdiction under the laws of which such Lender or the Agent (as the case may be) is organized or any political subdivision thereof and (y) taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction of such Lender’s Applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities

being hereinafter referred to as “Taxes”). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Lender or the Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.14) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.

(b) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as “Other Taxes”).

(c) The Borrower will indemnify each Lender and the Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.14) paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date such Lender or the Agent (as the case may be) makes written demand therefor. If a Lender or the Agent receives an indemnification payment from the Borrower in accordance with this subsection (c) and such Lender subsequently receives from the applicable jurisdiction a payment of all or a portion of the amount of Taxes or Other Taxes or liability with respect to which such indemnity payment was made, such Lender shall promptly turn over (without interest) to the Borrower the amount of such repayment.

(d) Within 30 days after the date of any payment of Taxes, the Borrower will furnish to the Agent, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing payment thereof. If no Taxes are payable in respect of any payment hereunder or under the Notes, the Borrower will, if reasonably requested by a Lender or the Agent furnish to the Agent, at such address, a certificate from each appropriate taxing authority, or an opinion of counsel acceptable to the Agent, in either case stating that such payment is exempt from or not subject to Taxes.

(e) Each Lender shall initially designate an Applicable Lending Office that will avoid the need for payment of additional amounts by the Borrower pursuant to this Section 2.14 and, furthermore, any Lender claiming any additional amounts payable pursuant to this Section 2.14 shall use its best efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts which may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.

(f) Any Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty

to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower, at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate.

(g) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 2.14 shall survive the payment in full of principal and interest hereunder and under the Notes.

SECTION 2.15. Interest Elections. (a) Each A Borrowing initially shall be of the Type specified in the applicable Notice of A Borrowing and, in the case of a Eurodollar Rate A Borrowing, shall have an initial Interest Period as specified in such Notice of A Borrowing, provided, that each A Advance made as a result of a drawing under a Letter of Credit shall be a Base Rate Advance unless and until each Lender shall have acquired participations equal to such Lender’s Pro Rata Share of the amount drawn under such Letter of Credit pursuant to Section 2.02(b)(ii) (after which time the Borrower shall be entitled, pursuant to the immediately succeeding sentence, to convert any such Base Rate Advance to a different Type). Thereafter, the Borrower may elect to convert such A Borrowing to a different Type or to continue such A Borrowing and, in the case of a Eurodollar Rate A Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected A Borrowing, in which case each such A Borrowing shall be allocated ratably among the Lenders having made the A Advances comprising such A Borrowing, and the A Advances comprising each such portion shall be considered a separate A Borrowing. This Section shall not apply to B Borrowings, which may not be converted or continued.

(b) To make an election pursuant to this Section, the Borrower shall notify the Agent of such election by telephone by the time that a Notice of A Borrowing would be required under Section 2.02 if the Borrower were requesting an A Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Agent of a written Interest Election Request signed by the Borrower.

(c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

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

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

(iii) the Type of A Advances comprising such A Borrowing; and

(iv) the Interest Period for each such A Advance.

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

(d) If the Borrower fails to deliver a timely Interest Election Request with respect to an A Borrowing prior to the end of the Interest Period applicable thereto, then, unless such A Borrowing is repaid as provided herein, at the end of such Interest Period such A Borrowing shall be continued as or converted to a Base Rate A Borrowing with an Interest Period ending on the next day that is the last day of a quarter.

ARTICLE III

CONDITIONS OF LENDING

SECTION 3.01. Condition Precedent to Effectiveness of Sections 2.01 and 2.02. The effectiveness of Sections 2.01 and 2.02 is subject to the execution and delivery of counterparts of this Agreement by the Borrower, the Agent and the Lenders and the satisfaction of the following additional conditions precedent:

(i) The Agent shall have received the following, each dated the date hereof, in form and substance satisfactory to the Agent and (except for the A Notes) in sufficient copies for each Lender:

(a) An A Note to the order of any Lender requesting such note pursuant to Section 2.12.

(b) An Officer’s Certificate attaching copies of the resolutions of the Board of Directors of the Borrower (or an authorized committee thereof) approving the Loan Documents, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to the Loan Documents.

(c) An Officer’s Certificate certifying the names and true signatures of the officers of the Borrower authorized to sign the Loan Documents and the other documents to be delivered hereunder.

(d) A favorable opinion of a Senior Counsel of the Borrower, substantially in the form of Exhibit D hereto and as to such other matters as any Lender through the Agent may reasonably request.

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

(ii) The Borrower shall have paid all accrued fees and expenses of the Agent and the Lenders (including the accrued fees and expenses of counsel to the Agent).

(iii) The Borrower shall have terminated the commitments, and paid in full all Indebtedness, interest, fees and other amounts outstanding under the Credit Agreement dated as

of January 3, 2002 among the Borrower and the banks named therein, and each of the Banks that is a party to such Credit Agreement hereby waives the requirement of two Business Days prior notice to the termination of their commitments thereunder as provided in Section 2.04(a) of said agreement.

SECTION 3.02. Conditions Precedent to Each Borrowing Increasing the Aggregate Amount of Advances and each Letter of Credit Issuance. The obligation of each Lender to make an A Advance on the occasion of each A Borrowing (including the initial A Borrowing) which would increase the aggregate outstanding amount of A Advances owing to such Lender over the aggregate outstanding amount of A Advances owing to such Lender immediately prior to the making of such A Advance, and the obligation of each Issuing Bank to issue a Letter of Credit shall be subject to the further conditions precedent that on the date of such A Borrowing or issuance the following statements shall be true (and each of the giving of the applicable Notice of A Borrowing, Notice of Issuance and the acceptance by the Borrower of the proceeds of such A Borrowing or of such Letter of Credit shall constitute a representation and warranty by the Borrower that on the date of such A Borrowing or issuance such statements are true):

(a) The representations and warranties contained in this Agreement (other than the last sentence of Section 4.01(e)) are correct in all material respects on and as of the date of such A Borrowing or Letter of Credit issuance, before and after giving effect to such Borrowing or issuance and to the application of the proceeds therefrom, as though made on and as of such date, and

(b) No event has occurred and is continuing, or would result from such A Borrowing, such issuance or from the application of the proceeds therefrom, which constitutes an Event of Default or which would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

SECTION 3.03. Conditions Precedent to Each B Borrowing. The obligation of each Lender which is to make a B Advance on the occasion of a B Borrowing (including the initial B Borrowing) to make such B Advance as part of such B Borrowing is subject to the conditions precedent that (a) the Agent shall have received the written confirmatory Notice of B Borrowing with respect thereto, (b) on or before the date of such B Borrowing, but prior to such B Borrowing, the Agent shall have received a B Note payable to the order of such Lender for each of the one or more B Advances to be made by such Lender as part of such B Borrowing, in a principal amount equal to the principal amount of the B Advance to be evidenced thereby and otherwise on such terms as were agreed to for such B Advance in accordance with Section 2.02(c), and (c) on the date of such B Borrowing the following statements shall be true (and each of the giving of the applicable Notice of B Borrowing and the acceptance by the Borrower of the proceeds of such B Borrowing shall constitute a representation and warranty by the Borrower that on the date of such B Borrowing such statements are true):

(i) The representations and warranties contained in this Agreement (other than the last sentence of Section 4.01(e)) are correct in all material respects on and as of the date of such B Borrowing, before and after giving effect to such B Borrowing and to the application of the proceeds therefrom, as though made on and as of such date.

(ii) No event has occurred and is continuing, or would result from such B Borrowing or from the application of the proceeds therefrom, which constitutes an Event of Default or which would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

SECTION 3.04. Determinations Under Section 3.01. For purposes of determining compliance with the conditions specified in Section 3.01, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Agent responsible for the transactions contemplated by this Agreement shall have received notice from such Lender prior to the date that the Borrower, by notice to the Lenders, designates as the proposed effective date of Sections 2.01 and 2.02, specifying its objection thereto. The Agent shall promptly notify the Lenders of the occurrence of the effective date of Sections 2.01 and 2.02.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

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

(a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation indicated at the beginning of this Agreement, has all requisite corporate power and authority to conduct its business, to own its properties and assets as it is now conducted and as proposed to be conducted and is qualified or licensed to do business as a foreign corporation in good standing in all jurisdictions in which the conduct of its business requires it to so qualify or be licensed except where the failure to do so, individually or in the aggregate, could not reasonably be expected to materially and adversely affect the ability of the Borrower to perform its obligations under any Loan Document.

(b) The execution, delivery and performance by the Borrower of the Loan Documents, including the Borrower’s use of the proceeds thereof, are within the Borrower’s corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene the Borrower’s charter or by-laws or (ii) contravene law (including, without limitation, Regulations T, U and X issued by the Board of Governors of the Federal Reserve Board) or any material contractual restriction binding on or affecting the Borrower or (iii) result in or require the creation or imposition of any Lien upon or with respect to any of the properties of the Borrower or any of its Subsidiaries.

(c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Borrower of any Loan Documents.

(d) This Agreement is, and each of other Loan Documents when delivered hereunder will be, the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with their respective terms.

(e) The consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2003, and the related consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of KPMG LLP, independent public accountants, and the consolidated balance sheet of the Borrower and its Subsidiaries as at March 31, 2004, and the related consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the three months then ended, duly certified by the chief financial officer of the Borrower, copies of which have been furnished to each Lender, fairly present, subject, in the case of said balance sheet as at March 31, 2004 and said statements of income and cash flows for the three months then ended, to year-end audit adjustments, the consolidated financial condition of the Borrower and its Subsidiaries as at such dates and the consolidated results of the operations of the Borrower and its Subsidiaries for the periods ended on such dates, all in accordance with GAAP. Except as publicly disclosed prior to the date hereof, on and as of the date of this Agreement, since December 31, 2003, there has been no material adverse change in the business, financial condition or results of operations of the Borrower and its Subsidiaries, taken as a whole.

(f) There are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened, against the Borrower or any Subsidiary the reasonably anticipated outcome of which (i) would materially and adversely affect the ability of the Borrower to perform its obligations under the Loan Documents or (ii) purport to affect the legality, validity or enforceability of any Loan Document.

(g) The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any Advance will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock, except in compliance with Regulations T, U and X issued by the Board of Governors of the Federal Reserve Board.

(h) Neither the Borrower nor any Subsidiary is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940.

(i) The Borrower and each Subsidiary have filed all material tax returns (Federal, state and local) required to be filed and paid all taxes shown thereon to be due, including interest and penalties, or provided adequate reserves for payment thereof.

(j) In the ordinary course of its business, the Borrower conducts an ongoing review of the effect of Environmental Laws on the operations and properties of the Borrower, in the course of which it identifies and evaluates associated liabilities and costs (including, without limitation, any capital or operating expenditures required for clean-up or closure of properties presently or previously owned, any liabilities in connection with off-site disposal of Hazardous Substances and any capital or operating expenditures)

required to achieve or maintain compliance with Environmental Laws. On the basis of this review, the Borrower has reasonably concluded that, except with respect to any matter disclosed in Items 1 or 3 in the Borrower’s 2003 Form 10-K or in the Commitments and Contingencies Note to the consolidated financial statements incorporated therein, such associated liabilities and costs, are unlikely to cause a material adverse change in the business, financial condition or results of operations of the Borrower and its Subsidiaries, taken as a whole, from that shown on the consolidated financial statements as at, and for the three-month period ended March 31, 2004, provided that the inclusion of such exception does not indicate that any such matter will cause such a material adverse change.

ARTICLE V

COVENANTS OF THE BORROWER

SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender shall have any Commitment hereunder, the Borrower will, unless the Majority Lenders shall otherwise consent in writing:

(a) Compliance with Laws, Etc. Comply, and cause each Subsidiary to comply, with all applicable laws, rules, regulations and orders (such compliance to include, without limitation, paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or upon its property except to the extent contested in good faith) the failure to comply with which would have a material adverse effect on the business, financial condition or results of operations of the Borrower and its Subsidiaries taken as a whole.

(b) Consolidated Leverage Ratio. Maintain a Consolidated Leverage Ratio as of the last day of each Reference Period of not more than 3.50 : 1.0.

(c) Consolidated Interest Coverage Ratio. Maintain a Consolidated Interest Coverage Ratio for each Reference Period of not less than 4.00 : 1.0.

(d) Preservation of Corporate Existence, Etc. Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its corporate existence, and the rights (charter and statutory) and franchises material to the business of the Borrower and its Subsidiaries, taken as a whole; provided, however, that (i) the Borrower and its Subsidiaries may consummate any merger or consolidation permitted under Section 5.02(c), (ii) neither the Borrower nor any of its Subsidiaries shall be required to preserve any such right or franchise if the Borrower or such Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Borrower or such Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any material respect to the Borrower, such Subsidiary or the Lenders and (iii) no Subsidiary shall be required to preserve its corporate existence if the Borrower has determined to liquidate or dissolve such Subsidiary and such liquidation or dissolution will not violate any other provision of this Agreement.

(e) Keeping of Books. Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each such Subsidiary in a manner which will permit the preparation of consolidated financial statements in accordance with GAAP.

(f) Maintenance of Properties, Etc. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are material to the conduct of the business of the Borrower and its Subsidiaries, taken as a whole, in good working order and condition, ordinary wear and tear excepted.

(g) Insurance. Maintain, and cause each Subsidiary to maintain, insurance with reputable insurance companies or associations in such amount and covering such risks as the Borrower, in its good faith business judgment, believes necessary.

(h) ERISA. Ensure that each ERISA Affiliate will meet its minimum funding requirements and all of its other obligations under ERISA with respect to all of its Plans and satisfy all of its obligations to Multiemployer Plans, including any Withdrawal Liability, if the failure to do so would have a material adverse effect on the business, financial condition or results of operations of the Borrower and its Subsidiaries, taken as a whole.

(i) Reporting Requirements. Furnish to each Lender:

(i) as soon as available and in any event within 60 days after the end of each of the first three quarters of each year, balance sheets of the Borrower and the Subsidiaries, on a consolidated basis, as of the end of such quarter and statements of income and retained earnings and cash flow of the Borrower and the Subsidiaries, on a consolidated basis, for the period commencing at the end of the previous year and ending with the end of such quarter, certified by the chief financial officer of the Borrower, subject to audit and year end adjustments;

(ii) as soon as available and in any event within 120 days after the end of each year, a copy of the balance sheets of the Borrower and the Subsidiaries, on a consolidated basis, as of the end of such year and the statements of income and retained earnings and cash flow of the Borrower and the Subsidiaries, on a consolidated basis, for such year, certified by KPMG LLP or another independent nationally recognized firm of public accountants;

(iii) as soon as possible and in any event within ten days after an officer of the Borrower becomes aware of the occurrence of each Event of Default (and each event which, with the giving of notice or lapse of time, or both, would constitute an Event of Default), an Officer’s Certificate setting forth details of such Event of Default or event and the action which the Borrower has taken and proposes to take with respect thereto;

(iv) contemporaneously with each delivery of the statements referred to in clauses (i) and (ii) above, (A) either an Officer’s Certificate stating that no

Event of Default (other than by reason of non-compliance with the covenants referred to in Sections 5.01(b) and (c)) and no event which, with the giving of notice or lapse of time, or both, would constitute an Event of Default (other than by reason of non-compliance with the covenants referred to in Sections 5.01(b) and (c)) occurred during such quarter or, if applicable, an Officer’s Certificate pursuant to clause (iii) above, (B) an Officer’s Certificate stating that, as of the last day of the preceding quarter, and to the best of his or her knowledge, at all times during the preceding quarter, the Borrower was in compliance with the covenants referred to in Sections 5.01(b) and (c) and providing reasonable details of the calculations evidencing the Borrower’s compliance with such covenants and (C) reasonable details of each material change in GAAP from those applied in preparing the statements referred to in Section 4.01(e) insofar as such changes are applicable to the statements referred to in clauses (i) and (ii) above;

(v) promptly after the sending or filing thereof, copies of all reports which the Borrower sends to any of its shareholders, and copies of all reports and registration statements which the Borrower or any Subsidiary files with the Securities and Exchange Commission or any national securities exchange (other than those pertaining to employee benefit plans); and

(vi) such other information respecting the condition or operations, financial or otherwise, of the Borrower or any Subsidiary as any Lender through the Agent may from time to time reasonably request.

Reports and financial statements required to be delivered by the Borrower pursuant to paragraphs (i), (ii) and (v) of this Section 5.01(i) shall be deemed to have been delivered on the date on which it posts such reports containing such financial statements are posted on the SEC’s website at www.sec.gov; provided that it shall deliver paper copies of the reports and financial statements referred to in paragraphs (i), (ii) and (v) of this Section 5.01(i) to the Agent or any Lender who requests it to deliver such paper copies until written notice to cease delivering paper copies is given by the Agent or such Lender.

SECTION 5.02. Negative Covenants. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender shall have any Commitment hereunder, the Borrower will not, without the written consent of the Majority Lenders:

(a) Liens. Create, assume or suffer to exist or permit any Subsidiary of the Borrower to create, assume or suffer to exist any Lien upon any of its property or assets, whether now owned or hereafter acquired, except

(i) Permitted Encumbrances,

(ii) other Liens incidental to the conduct of its business or the ownership of its property and assets which were not incurred to secure Indebtedness, and which do not in the aggregate materially detract from the value of its property or assets or materially impair the use thereof in the operation of its business,

(iii) Liens on property or assets of a Domestic Subsidiary to secure obligations of such Subsidiary to the Borrower or another Domestic Subsidiary, and Liens on property or assets of a Foreign Subsidiary to secure obligations of such Subsidiary to the Borrower or any other Subsidiary,

(iv) any Lien on property of any Foreign Subsidiary to secure Indebtedness of such Subsidiary, provided that, immediately after giving effect thereto and to the concurrent repayment of any other Indebtedness, the aggregate principal amount of outstanding Indebtedness secured by Liens permitted by this clause (iv) or by clause (vi) or (ix) of this Section does not exceed 10% of Consolidated Net Tangible Assets,

(v) Liens incurred in connection with any Tax-Exempt Financing which do not in the aggregate materially detract from the value of the property or assets affected thereby or materially impair the use of such property or assets in the operation of its business,

(vi) Liens on property or assets granted in connection with applications for or reimbursement obligations with respect to letters of credit issued at the request of the Borrower or a Subsidiary by a banking institution to secure the performance of obligations of the Borrower or a Subsidiary relating to such letters of credit, to the extent such banking institution requested the granting to it of such Lien as a condition for its issuance of the letter of credit; provided that, immediately after giving effect thereto and to the concurrent repayment of any other Indebtedness, the aggregate principal amount of outstanding Indebtedness secured by Liens permitted by this clause (vi) or by clause (iv) or (ix) of this Section does not exceed 10% of Consolidated Net Tangible Assets,

(vii) any Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary; provided that (A) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (B) such Lien shall not apply to any other property or assets of the Borrower or any Subsidiary and (C) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be, and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof,

(viii) Liens on fixed or capital assets acquired, constructed or improved by the Borrower or any Subsidiary; provided that (A) with respect to Liens securing Indebtedness of any Domestic Subsidiary, such Liens secure Indebtedness permitted by clause (ii) of Section 5.02(b), (B) such Liens and the Indebtedness secured thereby are incurred prior to or within 90 days after acquisition or the completion of such construction or improvement, (C) the Indebtedness secured thereby does not exceed 100% of the cost of acquiring, constructing or improving such fixed or capital assets and (D) such Liens shall not apply to any other property or assets of the Borrower or any Subsidiary,

(ix) Liens on assets securing other obligations of the Borrower and its Subsidiaries not expressly permitted by clauses (i) through (viii) above; provided that, immediately after giving effect thereto and to the concurrent repayment of any other secured obligations, the aggregate principal amount of outstanding obligations secured by Liens permitted by this clause (ix) or by clause (iv) or (vi) of this Section does not exceed 10% of Consolidated Net Tangible Assets, and

(x) Liens on Margin Stock, if and to the extent the value of all Margin Stock of the Borrower and its Subsidiaries exceeds 25% of the value of the total assets subject to this Section 5.02(a) (it being understood that Margin Stock not in excess of 25% of the value of such assets will be subject to the restrictions of this Section 5.02(a)).

(b) Domestic Subsidiary Indebtedness. Permit any Domestic Subsidiary to create, incur, assume or permit to exist any Indebtedness, except:

(i) Indebtedness of any Domestic Subsidiary to the Borrower or any other Domestic Subsidiary;

(ii) Indebtedness incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; provided that such Indebtedness is incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement;

(iii) Indebtedness of any Person that becomes a Domestic Subsidiary after the date hereof; provided that such Indebtedness exists at the time such Person becomes a Domestic Subsidiary and is not created in contemplation of or in connection with such Person becoming a Domestic Subsidiary; and

(iv) other Indebtedness in an aggregate principal amount not exceeding $20,000,000 at any time outstanding.

(c) Mergers, Etc. (i) Merge or consolidate with or into any other Person (other than a Subsidiary) or (ii) convey, transfer, lease or otherwise dispose of, or permit a Subsidiary to convey, transfer, lease, or otherwise dispose of, (whether in one transaction or in a series of related transactions) all or substantially all of the property or assets of the Borrower and its Subsidiaries taken as a whole (whether now owned or hereafter acquired), directly or indirectly, to any Person, including through a merger or consolidation of a Subsidiary with an unaffiliated party, unless (A) in each case of (i) or (ii), after giving effect to such proposed transaction, no Event of Default or event which with the giving of notice or lapse of time, or both, would constitute an Event of Default

would exist and (B) in the case of clause (i),the surviving corporation is the Borrower, provided that to the extent that the value of all Margin Stock owned by the Borrower and its Subsidiaries taken as a whole exceeds 25% of the value of the total assets of the Borrower and its Subsidiaries subject to this Section 5.02(c), nothing in this Section 5.02(c) shall prohibit the sale of such Margin Stock (it being understood that Margin Stock not in excess of 25% of the value of such assets will be subject to the restrictions of this Section 5.02(c)) .

(d) Change in Nature of Business. Engage, or permit any of its Subsidiaries to engage, to any material extent, in any business other than the businesses of the type conducted by the Borrower and its Subsidiaries on the date of this Agreement and businesses reasonably related thereto.

(e) ERISA. Create, assume or suffer to exist or permit any ERISA Affiliate to create, assume or suffer to exist (i) any Insufficiency of any Plan (or, in the case of a Plan with respect to which an ERISA Event described in clauses (iii) through (vi) of the definition of ERISA Event shall have occurred and then exist, the liability related thereto), in respect of which Plan an ERISA Event has occurred, or (ii) any Withdrawal Liability under any Multiemployer Plan, if the sum of (A) any such Insufficiency or Withdrawal Liability, as applicable, (B) the Insufficiency of any and all other Plans with respect to which an ERISA Event shall have occurred and then exist (or, in the case of a Plan with respect to which an ERISA Event described in clauses (iii) through (vi) of the definition of ERISA Event shall have occurred and then exist, the liability related thereto), (C) amounts then required to be paid to any and all other Multiemployer Plans by the Borrower or its ERISA Affiliates as Withdrawal Liability and (D) the aggregate principal amount of all Indebtedness of the Borrower and all the Subsidiaries secured by Liens permitted by clauses (iv), (vi), (vii), (viii) and (ix) of Section 5.02(a), shall exceed 10% of Consolidated Net Tangible Assets.

ARTICLE VI

EVENTS OF DEFAULT

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

(a) The Borrower shall fail to pay (i) any principal of any Advance when the same becomes due and payable or (ii) any interest on any Advance or any fees or other amounts payable under this Agreement within five days of the same becoming due and payable; or

(b) Any representation or warranty made by the Borrower herein or by the Borrower (or any of its officers) in connection with this Agreement shall prove to have been incorrect in any material respect when made; or

(c) The Borrower shall fail to perform or observe (i) any term, covenant or agreement contained in Section 5.01(b), (c) or (i)(iii) or Section 5.02, or (ii) any term,

covenant or agreement contained in any Loan Document (other than as referred to in subsection (a) or clause (i) above) on its part to be performed or observed if, in the case of this clause (ii), such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Agent or any Lender; or

(d) The Borrower or any Subsidiary shall fail to pay any installment of principal of or any premium or interest on any Indebtedness, which is outstanding in a principal amount of at least $25,000,000 in the aggregate (but excluding Indebtedness outstanding hereunder) of the Borrower or such Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness, or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Indebtedness and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness, or any Indebtedness of the Borrower or any Subsidiary which is outstanding in an aggregate principal amount of at least $25,000,000 shall, for any reason, be accelerated (it being understood that a mandatory prepayment on the sale of any asset shall be deemed not to be an acceleration of the Indebtedness secured by such asset) ; or

(e) Either the Borrower or any Significant Subsidiary or any two or more Subsidiaries which (when taken together) would have aggregate total assets constituting those of a Significant Subsidiary shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower or any such Subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property, and, in the case of any such proceeding instituted against the Borrower or such Subsidiary (but not instituted by it), either such proceeding shall not be dismissed or stayed for 60 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against it or the appointment of a trustee, custodian or other similar official for it or any substantial part of its property) shall occur; or the Borrower or any such Subsidiary shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or

(f) Any judgment or order for the payment of money in excess of $25,000,000 shall be rendered against the Borrower or any Subsidiary and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order and, within 60 days of the commencement of such proceedings, such judgment shall not have been satisfied or (subject to clause (ii) below) shall have been stayed or (ii) there shall be any period of 60 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(g) The Borrower or any of its ERISA Affiliates shall incur, or shall be reasonably likely to incur liability in excess of $25,000,000 in the aggregate as a result of one or more of the following: (i) the occurrence of any ERISA Event; (ii) the partial or complete withdrawal of the Borrower or any of its ERISA Affiliates from a Multiemployer Plan; or (iii) the reorganization or termination of a Multiemployer Plan;

then, and in any such event, the Agent (i) shall at the request, or may with the consent of the Majority Lenders, by notice to the Borrower declare the obligation of each Lender to make Advances (other than A Advances by an Issuing Bank or a Lender pursuant to Section 2.02(b)) and of the Issuing Banks to issue Letters of Credit to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent of the Majority Lenders, by notice to the Borrower, declare the Notes, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an Event of Default resulting from the actual or deemed entry of an order for relief with respect to the Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances (other than A Advances by an Issuing Bank or a Lender pursuant to Section 2.02(b)) and of the Issuing Banks to issue Letters of Credit shall automatically be terminated and (B) the Notes, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.

SECTION 6.02. Actions in Respect of the Letters of Credit upon Event of Default. If any Event of Default shall have occurred and be continuing, the Agent may with the consent, or shall at the request, of the Majority Lenders, irrespective of whether it is taking any of the actions described in Section 6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such demand the Borrower will, (a) pay to the Agent on behalf of the Lenders in same day funds at the Agent’s office designated in such demand, for deposit in the L/C Cash Collateral Account, an amount equal to the aggregate Available Amount of all Letters of Credit then outstanding or (b) make such other arrangements in respect of the outstanding Letters of Credit as shall be acceptable to the Majority Lenders. If at any time the Agent determines that any funds held in the L/C Cash Collateral Account are subject to any right or claim of any Person other than the Agent and the Lenders or that the total amount of such funds is less than the aggregate Available Amount of all Letters of Credit, the Borrower will, forthwith upon demand by the Agent, pay to the Agent, as additional funds to be deposited and held in the L/C Cash Collateral Account, an amount equal to the excess of (a) such aggregate Available Amount over (b) the total amount of funds, if any, then held in the L/C Cash Collateral Account that the Agent determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit, to the extent funds are on deposit in the L/C Cash Collateral Account, such funds shall be applied to reimburse the Issuing Bank or the Lenders, as applicable, to the extent permitted by applicable law. The Agent, in its sole discretion and at the risk and expense of the Borrower, may invest the funds in the L/C Cash Collateral Account, and interest or profits therefrom (if

any) shall accumulate in the L/C Cash Collateral Account. At any time that the amount of funds in the L/C Cash Collateral Account exceeds the Available Amount of all Letters of Credit outstanding, the Agent shall promptly return such excess amount to the Borrower. All amounts in the L/C Cash Collateral Account shall be returned to the Borrower upon the earlier of (x) the date that all Letters of Credit shall have expired or been fully drawn upon and all reimbursement obligations shall have been satisfied and (y) the date on which no Event of Default shall be continuing or on which every Event of Default shall have been waived.

ARTICLE VII

THE AGENT

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

SECTION 7.02. Agent’s Reliance, Etc. Neither the Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (i) may treat the payee of any Note as the holder thereof until the Agent receives and accepts an Assignment and Acceptance entered into by the Lender that is the payee of such Note as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.02; (ii) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance, observance or satisfaction of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or the existence at any time of any event which constitutes, or with the passage of time would constitute, an Event of Default or to inspect the property (including the books and records) of the Borrower; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created in under or in connection with, this Agreement or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier) believed by it to be genuine and signed or sent by the proper party or parties.

SECTION 7.03. Citibank and Affiliates. With respect to its Commitment, the Advances made by it and the Notes issued to it, Citibank shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include Citibank in its individual capacity. Citibank and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, the Borrower, any of its Subsidiaries and any Person who may do business with or own securities of the Borrower or any such Subsidiary, all as if Citibank were not the Agent and without any duty to account therefore to the Lenders. The Agent shall have no duty to disclose information obtained or received by it or any of its Affiliates relating to the Borrower or its Subsidiaries to the extent such information was obtained or received in any capacity other than as Agent.

SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement.

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

(b) Each Lender severally agrees to indemnify each Issuing Bank (to the extent not promptly reimbursed by the Borrower) from and against such Lender’s ratable share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against such Issuing Bank in any way relating to or

arising out of this Agreement or any action taken or omitted by such Issuing Bank hereunder or in connection herewith; provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Issuing Bank’s gross negligence or willful misconduct as found in a final, non-appealable judgment by a court of competent jurisdiction. Without limitation of the foregoing, each Lender agrees to reimburse each Issuing Bank promptly upon demand for its ratable share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Borrower under Section 8.04, to the extent that the Issuing Bank is not promptly reimbursed for such costs and expenses by the Borrower.

(c) For purposes of this Section 7.05, the Lenders’ respective ratable shares of any amount shall be determined, at any time, according to the sum of (i) the aggregate principal amount of the A Advances outstanding at such time and owing to the respective Lenders, (ii) their respective Pro Rata Shares of the aggregate Available Amount of all Letters of Credit outstanding at such time and (iii) their respective Unused Commitments at such time; provided that the aggregate principal amount of A Advances made as a result of a drawing under a Letter of Credit owing to the Issuing Bank shall be considered to be owed to the Lenders ratably in accordance with their respective A Commitments. The failure of any Lender Party to reimburse the Agent or the Issuing Bank, as the case may be, promptly upon demand for its ratable share of any amount required to be paid by the Lender Parties to such Agent or the Issuing Bank, as the case may be, as provided herein shall not relieve any other Lender Party of its obligation hereunder to reimburse such Agent or Issuing Bank, as the case may be, for its ratable share of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse the Agent or the Issuing Bank, as the case may be, for such other Lender’s ratable share of such amount. Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section 7.05 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Notes.

SECTION 7.06. Successor Agent. The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and may be removed at any time with or without cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successor Agent, subject, so long as no Event of Default has occurred and is continuing, to the Borrower’s approval. If no successor Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent’s giving of notice of resignation or the Majority Lenders’ removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement other than the obligations provided in Section 9.12. After any retiring Agent’s resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.

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

ARTICLE VIII

ASSIGNMENTS AND PARTICIPATIONS

SECTION 8.01. Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower, the Agent and by each Bank and thereafter shall be binding upon and inure to the benefit of the Borrower, the Agent and each Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders.

SECTION 8.02. Assignments. (a) Each Lender may, upon at least 10 Business Days’ notice to the Borrower, the Issuing Banks and the Agent, assign to one or more banks or other entities (other than an assignment which would result in increased costs to the Borrower pursuant to Sections 2.07, 2.10 or 2.14 hereof) all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Advances owing to it and the Note or Notes held by it); provided, however, that (i) if such bank or other entity is not already a Lender or an Affiliate of a Lender and prior to the expiring of the 10 Business Days’ notice referred to above, the Borrower (unless an Event of Default has occurred and is continuing at such time) or the Agent notifies the assignor Lender that such assignee is, in its sole discretion, not acceptable to it, such assignor Lender shall not make such assignment, (ii) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register an Assignment and Acceptance, together with any Note or Notes subject to such assignment and a processing and recordation fee of $3,500 payable by the parties to each such assignment, (iii) each such assignment shall be only to an Eligible Assignee, (iv) each such assignment shall be of a constant, and not a varying, percentage of all of the assigning Lender’s rights and obligations under this Agreement and (v) the amount of the A Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $5,000,000, in the case of an assignment to a Lender and $10,000,000, in the case of an Assignment to an Eligible Assignee not already a Lender and, in each case, shall be an integral multiple of $5,000,000. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (B) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (other than its rights under Sections 2.07, 2.10, 2.14, 9.04 and 9.06 to the extent any claim thereunder relates to an event arising prior to such assignment) and be released from its obligations (other than those provided in Section 9.12) under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto).

(b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01(e) and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender; (vi) such assignee confirms that it is an Eligible Assignee; and (vii) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto.

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

(d) The Agent shall maintain at its address referred to in Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Advances owing to, each Lender from time to time (the “Register”). The entries in the Register shall be conclusive and binding for all purposes, absent demonstrable error, provided, that the failure of the Agent to make an entry, or any finding that an entry is incorrect, in the Register shall not limit or otherwise affect the obligations of the Borrower under this Agreement and the Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.

(e) Each Lender may assign to one or more banks or other entities any B Note or B Notes held by it.

(f) Any Lender may pledge all or a portion of its Advances to any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Revenue Bank. No such assignment shall release the assigning Lender from its obligations under the Agreement.

(g) Each Issuing Bank may, upon at least 10 Business Days’ notice to the Borrower, assign to any other Lender all of its rights and obligations under the undrawn portion of its Letter of Credit Commitment at any time; provided, however, that (i) if prior to the expiring of the 10 Business Days’ notice referred to above, the Borrower notifies the assignor Issuing Bank that such assignee is, in its sole discretion, not acceptable to it, such assignor Issuing Bank shall not make such assignment, (ii) the amount of the Letter of Credit Commitment of the assigning Issuing Bank being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof, and (iii) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with a processing and recordation fee of $3,500.

SECTION 8.03. Participations. Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, and the Advances owing to it and the Note or Notes held by it); provided, however, that (a) such Lender’s obligations under this Agreement (including, without limitation, its Commitment to the Borrower hereunder) shall remain unchanged, (b) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (c) such Lender shall remain the holder of any such Note for all purposes of this Agreement, (d) the Borrower 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, (e) such participation is not prohibited by applicable law and (f) no participant shall have any claim against the Borrower or the Agent for any amounts due to it under its participation agreement and no Lender shall have any additional claim under Sections 2.07, 2.10 or 2.14 as a result of any participation. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce 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 Person acquiring such participation, agree to any amendment, modification or waiver described in clause (a), (b) or (c) of the proviso to Section 9.01 that directly affects such Person.

SECTION 8.04. Information. Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Article VIII, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the Notes, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall: (a) increase the Commitment of any Lender or subject any Lender to any additional obligations without the written consent of such Lender, (b) reduce the principal of, or interest on, any A Note, A Advance, or any fee or other amount payable hereunder without the written consent of each Lender affected thereby, (c) postpone any date fixed for any payment of principal of, or interest on, the A Notes, A Advances, or any fees or other amounts payable hereunder without the written consent of each Lender affected thereby, (d) change the percentage of the Commitments or of the aggregate unpaid principal amount of the A Notes, A Advances, or the number of Lenders, which shall be required for the Lenders or any of them to take any action hereunder without the written consent of all the Lenders or (e) amend this Section 9.01 without the written consent of all the Lenders and provided further that no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Agent under this Agreement or any Note; and provided further that no amendment, waiver or consent shall, unless in writing and signed by the affected Issuing Bank in addition to the Lenders required above to take such action, affect the rights or obligations of such Issuing Bank under this Agreement.

SECTION 9.02. Notices, Etc. (a) All notices and other communications provided for hereunder shall be either (x) in writing (including telecopy communication) and mailed, telecopied or delivered or (y) as and to the extent set forth in Section 9.02(b) and in the proviso to this Section 9.02(a), if to the Borrower, at its address at 501 Merritt 7, P.O. Box 4500, Norwalk, Connecticut, 06851-4500, telecopy no. (203) 750-3292, Attention: Treasury Department; if to any Bank, at its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender, at its Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender; and if to the Agent, at its address at Two Penns Way, New Castle, Delaware 19720, Attention: Bank Loan Syndications Department; or, as to the Borrower or the Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Agent, provided that materials required to be delivered pursuant to Section 5.01(i)(i), (ii), (iv) and (v) may be delivered to the Agent as specified in Section 9.02(b) or as otherwise specified to the Borrower by the Agent. All such notices and communications shall, when mailed or telecopied, be effective only when received by the relevant party. Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement or the Notes or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of a manually executed counterpart thereof.

(b) So long as Citibank or any of its Affiliates is the Agent, materials required to be delivered pursuant to Section 5.01(i)(i), (ii), (iv) and (v) may be delivered to the Agent in

an electronic medium in a format acceptable to the Agent and the Lenders by e-mail at oploanswebadmin@citigroup.com. The Borrower agrees that the Agent may make such materials, as well as any other written information, documents, instruments and other material relating to the Borrower, any of its Subsidiaries or any other materials or matters relating to this Agreement, the Notes or any of the transactions contemplated hereby (collectively, the “Communications”) available to the Lenders by posting such notices on Intralinks or a substantially similar electronic system (the “Platform”). The Borrower acknowledges that (i) the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution, (ii) the Platform is provided “as is” and “as available” and (iii) neither the Agent nor any of its Affiliates warrants the accuracy, adequacy or completeness of the Communications or the Platform and each expressly disclaims liability for errors or omissions in the Communications or the Platform. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by the Agent or any of its Affiliates in connection with the Platform.

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

SECTION 9.03. No Waiver; Remedies. No failure on the part of any Lender or the Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 9.04. Costs, Expenses and Taxes. (a) The Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses of the Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement, the Notes and the other documents to be delivered hereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of outside counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities under this Agreement, and all out-of-pocket costs and expenses of the Agent and the Lenders, if any (including, without limitation, reasonable fees and expenses of outside counsel for each Lender), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, the Notes and the other documents to be delivered hereunder including, without limitation, reasonable fees and expenses of outside counsel for the Agent and each Lender in connection with the enforcement of rights under this Section 9.04(a).

(b) If any payment of principal of any Eurodollar Rate Advance is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Advance, as a result of a payment pursuant to Section 2.09(b), acceleration of the maturity of the Notes pursuant to Section 6.01 or for any other reason, the Borrower shall, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses which it may reasonably incur as a result of such payment, including, without limitation, any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. Each Lender demanding payment of such amount shall provide, at the time of making such demand, the Borrower and the Agent with reasonable details, including the basis for the calculation thereof, of such increase, provided that, in the absence of manifest error, the amount so notified shall be conclusive and binding upon the Borrower.

SECTION 9.05. Right of Set-off. Upon (i) the occurrence and during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Agent to declare the Notes due and payable pursuant to the provisions of Section 6.01, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement and the other Loan Documents, whether or not such Lender shall have made any demand under this Agreement or the Note held by such Lender and although such obligations may be unmatured. Each Lender agrees promptly to notify the Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender may have.

SECTION 9.06. Indemnification by Borrower. The Borrower agrees to indemnify and hold harmless the Agent and each Lender (and each of their respective officers, agents, employees and directors) (each, an “Indemnified Party”) from and against any and all claims, damages, liabilities, obligations, losses, penalties, actions, judgments, suits, costs, expenses and disbursements (including, without limitation, reasonable fees and disbursements of outside counsel) of any kind or nature whatsoever (“Claims”) which may be imposed on, incurred by or asserted against such Lender or any of its officers, agents, employees or directors (but excluding Claims of any Person resulting from such Person’s gross negligence or willful misconduct) in connection with or arising out of any investigation, litigation or proceeding (including, without limitation, any threatened investigation, litigation or proceeding or preparation of a defense in connection therewith) related to the Notes, this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances, except to the extent such claim, damage, loss, liability or expense resulted from such Indemnified Party’s gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.06 applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, equityholders or creditors or an Indemnified Party or any other Person, whether or not any Indemnified Party is otherwise a party thereto and whether or not the

transactions contemplated hereby are consummated. The Borrower also agrees not to assert any claim for special, indirect, consequential or punitive damages against the Agent, any Lender, any of their Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, arising out of or otherwise relating to the Notes, this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances.

SECTION 9.07. Governing Law. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 9.08. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 9.09. Special Prepayment Right. (a) In the event that a Change of Control Date shall occur, the Borrower will, within 10 days after such Change of Control Date, give the Agent written notice thereof and describe in reasonable detail the facts and circumstances giving rise thereto, and the Borrower will prepay, if any Lender shall so request, all of the Advances from such Lender plus interest accrued to the date of prepayment and any other fees and amounts as may then be payable by Borrower under this Agreement. Said request (the “Prepayment Notice”) shall be made by a Lender in writing not later than 45 days after the Change of Control Date and shall specify (i) the date (the “Special Prepayment Date”) upon which the Borrower shall prepay the Advances, which date shall be not less than 15 days nor more than 45 days from the date of the Prepayment Notice and (ii) the amount of the Advances to be prepaid. In the event of such request, the Commitment of such Lender to make Advances shall forthwith terminate.

(b) On the Special Prepayment Date, the Borrower shall prepay all of the Advances of such Lender plus interest accrued thereon to the Special Prepayment Date and such other fees and amounts as may then be payable by Borrower under this Agreement. Payment shall be made as provided in this Agreement.

(i) the term “Change of Control Date” shall mean (A) the first day on which any person, or group of related persons, has beneficial ownership of more than 33¹/3% of the outstanding voting stock of the Borrower or (B) the date immediately following the first date on which the members of the Board of Directors of the Borrower (the “Board”) at the commencement of any period of 730 consecutive days (together with any other Directors whose appointment or election by the Board or whose nomination for election by the stockholders of the Borrower was approved by a vote of at least a majority of the Directors then in office who either were Directors at the beginning of such period or whose appointment or election or nomination for election was previously so approved) shall cease to constitute a majority of the Board at the end of such period; provided,

however, that a Change of Control Date shall not be deemed to have occurred under clause (A) hereof if (x) the Borrower shall have merged or disposed of a portion of its assets in compliance with the requirements of subsection 5.02(c) hereof within 10 days after the acquisition of such beneficial ownership shall have occurred and (y) no person or group of related persons shall have beneficial ownership of more than 33¹/3 % of the outstanding voting stock of the Borrower after such merger or disposition.

(ii) the term “voting stock” shall mean stock of any class or classes (however designated) having ordinary voting power for the election of a majority of the directors of the Borrower other than stock having such power only by reason of a contingency.

SECTION 9.10. Jurisdiction, Etc. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. The Borrower hereby further irrevocably consents to the service of process in any action or proceeding in such courts by the mailing thereof by any parties hereto by registered or certified mail, postage prepaid, to the Borrower at its address specified pursuant to Section 9.02. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any of the other Loan Documents in the courts of any jurisdiction.

(b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents in any New York State or federal court sitting in New York City. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

SECTION 9.11. No Liability of the Issuing Banks. The Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither any Issuing Bank nor any of its officers or directors shall be liable or responsible for: (a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by an Issuing Bank against presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, except that the Borrower shall have a claim against an

Issuing Bank, and such Issuing Bank shall be liable to the Borrower, to the extent of any direct, but not consequential, damages suffered by the Borrower that were caused by (i) such Issuing Bank’s willful misconduct or gross negligence in determining whether documents presented under any Letter of Credit comply with the terms of the Letter of Credit or (ii) such Issuing Bank’s willful failure to make lawful payment under a Letter of Credit after the presentation to it of a draft and certificates strictly complying with the terms and conditions of the Letter of Credit. In furtherance and not in limitation of the foregoing, each Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary.

SECTION 9.12. Confidentiality. Each of the Agent and the Lenders expressly agrees, for the benefit of the Borrower and its Subsidiaries, to maintain the confidentiality of the Confidential Information, except that Confidential 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 Confidential Information and instructed to keep such Confidential Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an express agreement for the benefit of the Borrower and its Subsidiaries containing provisions substantially the same as those of this Section, to any Eligible Assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement, (g) with the consent of the Borrower or (h) to the extent such Confidential Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Agent or any Lender on a nonconfidential basis from a source other than the Borrower or any of its Subsidiaries. For the purposes of this Section, “Confidential Information” means all information, including material nonpublic information with the meaning of Regulation FD promulgated by the SEC (“Regulation FD”), received from the Borrower or its Subsidiaries relating to such entities or their respective businesses, other than any such information that is available to the Agent or any Lender on a nonconfidential basis prior to disclosure by such entities; provided, that such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Confidential Information as provided in this Section shall be considered to have compiled 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 customarily accords to its own confidential information; provided, however, that with respect to disclosures pursuant to clauses (b) and (c) of this Section, unless prohibited by law or applicable court order, each Lender and the Agent shall attempt to notify the Borrower of any request by any governmental agency or representative thereof or other Person for disclosure of Confidential Information after receipt of such request, and if reasonable, practicable and permissible, before disclosure of such Confidential Information. It is understood and agreed that the Borrower, its Subsidiaries and their respective Affiliates may rely upon this Section for any purpose, including without limitation to comply with Regulation FD.

SECTION 9.13. 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 each borrower, guarantor or grantor (the “Loan Parties”), which information includes the name and address of each Loan Party and other information that will allow such Lender to identify such Loan Party in accordance with the Act.

SECTION 9.14. Waiver of Jury Trial. Each of the Borrower, the Agent and the Lenders hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or any of the other Loan Documents or the actions of the Agent or any Lender in the negotiation, administration, performance or enforcement thereof.

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


	Borrower

		OLIN CORPORATION

		By:	/s/ Janet Pierpont
		Name:	Janet Pierpont
		Title:	Vice President and Treasurer

	Agent

		CITIBANK, N.A., as Agent

		By:	/s/ Carolyn A. Sheridan
		Name:	Carolyn A. Sheridan
		Title:	Managing Director & Vice President

	Lenders
A Commitment

$35,000,000		CITIBANK, N.A.

		By:	/s/ Carolyn A. Sheridan
		Name:	Carolyn A. Sheridan
		Title:	Managing Director & Vice President

$30,000,000		BANK OF AMERICA, N.A.

		By:	/s/ Colleen Briscoe
		Name:	Colleen Briscoe
		Title:	Vice President


$25,000,000	THE NORTHERN TRUST COMPANY

	By:	/s/ Chris McKean
	Name:	Chris McKean
	Title:	Vice President

$25,000,000	WACHOVIA BANK, NATIONAL ASSOCIATION

	By:	/s/ Barbara Van Meerten
	Name:	Barbara Van Meerten
	Title:	Director

$20,000,000	SOVEREIGN BANK

	By:	/s/ Constantine Dean G. Andrews
	Name:	Constantine Dean G. Andrews
	Title:	Vice President

$15,000,000	NATIONAL CITY BANK

	By:	/s/ Thomas J. McDonnell
	Name:	Thomas J. McDonnell
	Title:	Senior Vice President

$10,000,000	CITIZENS BANK OF CONNECTICUT

	By:	/s/ Paul M. Canelli
	Name:	Paul M. Canelli
	Title:	Vice President
$ 160,000,000 Total of A Commitments


	Issuing Bank
Letter of Credit Commitment
$80,000,000	WACHOVIA BANK, NATIONAL ASSOCIATION

	By:	/s/ Barbara Van Meerten
	Name:	Barbara Van Meerten
	Title:	Director

Schedule I to the

Credit Agreement

Applicable Lending Offices


Bank	Domestic Lending Office	Eurodollar Lending Office
Bank of America, N.A.	Bank of America 101 Norh Tryon Street Charlotte, NC 28255 Attention: Jason Hooks	Bank of America 101 North Tryon Street Charlotte, NC 28255 Attention: Jason Hooks

Citibank, N.A.	Citibank, N.A. Two Penns Way New Castle, DE 19720 Attention: Bank Loan Syndicates Department	Citibank, N.A. Two Penns Way New Castle, DE 19720 Attention: Bank Loan Syndicates Department

Citizens Bank of Connecticut	Citizens Bank of Connecticut One Citizens Drive Riverside, CT 02914 Attention: Alice Butera T: 401 734-5493 F: 401 734-5385	Citizens Bank of Connecticut One Citizens Drive Riverside, CT 02914 Attention: Alice Butera T: 401 734-5493 F: 401 734-5385

National City Bank	National City Bank 2300 Mill Creek Blvd. Highland Hills, OH 44122 Attention: David Gregory T: 216 488-7087 F: 216 488-7110	National City Bank 2300 Mill Creek Blvd. Highland Hills, OH 44122 Attention: David Gregory T: 216 488-7087 F: 216 488-7110

The Northern Trust Company	The Northern Trust Company	The Northern Trust Company

Sovereign Bank	1010 Farmington Avenue West Hartford, CT 06102 Attention: Christina Apuzzo T: 860 570-3214 F: 860 570-3255	1010 Farmington Avenue West Hartford, CT 06102 Attention: Christina Apuzzo T: 860 570-3214 F: 860 570-3255

Wachovia Bank, N.A.	Wachovia Bank, N.A. 191 Peachtree St. NE 28^th Floor Atlanta, GA 30303 Attn: Robert Wilson	Wachovia Bank, N.A. 191 Peachtree St. NE 28^th Floor Atlanta, GA 30303 Attn: Robert Wilson

EX-12 3 dex12.htm COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Computation of Ratio of Earnings to Fixed Charges

Exhibit 12

OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES

Computation of Ratio of Earnings to Fixed Charges

(In millions)

(Unaudited)


	Six Months Ended June 30,
	2004			2003
Earnings:
Income (loss) before taxes and cumulative effect of accounting charge	$	22.8		$	(4.3	)
Add (deduct):
Equity in income of non-consolidated affiliates		(1.5	)		(4.6	)
Amortization of capitalized interest		0.1			0.2
Fixed charges as described below		15.1			15.9

Total	$	36.5		$	7.2

Fixed Charges:
Interest expensed	$	10.0		$	10.3
Estimated interest factor in rent expense (1)		5.1			5.6

Total	$	15.1		$	15.9

Ratio of earnings to fixed charges (2)		2.4			—

(1)	Amounts represent those portions of rent expense that are reasonable approximations of interest costs.

(2)	Income (loss) before taxes and cumulative effect of accounting change was insufficient to cover fixed charges by approximately $8.7 million for the six months ended June 30, 2003.

EX-31.1 4 dex311.htm SECTION 302 CEO CERTIFICATION Section 302 CEO Certification

Exhibit 31.1

CERTIFICATIONS

I, Joseph D. Rupp, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Olin Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2004

/s/ Joseph D. Rupp

Joseph D. Rupp

President and Chief Executive Officer

EX-31.2 5 dex312.htm SECTION 302 CFO CERTIFICATION Section 302 CFO Certification

Exhibit 31.2

CERTIFICATIONS

I, Anthony W. Ruggiero, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Olin Corporation (the “registrant”);

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2004

/s/ Anthony W. Ruggiero

Anthony W. Ruggiero

Executive Vice President and

Chief Financial Officer

EX-32 6 dex32.htm SECTION 906 CEO AND CFO CERTIFICATION Section 906 CEO and CFO Certification

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Olin Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2004 as filed with the Securities and Exchange Commission (the “Report”), I, Joseph D. Rupp, President and Chief Executive Officer and I, Anthony W. Ruggiero, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to our knowledge: (1) the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its Staff upon request.

/s/ Joseph D. Rupp

Joseph D. Rupp

President and Chief Executive Officer

Dated: August 6, 2004

/s/ Anthony W. Ruggiero

Anthony W. Ruggiero

Executive Vice President and Chief Financial Officer

Dated: August 6, 2004

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