10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2000

Commission file number 1-82

PHELPS DODGE CORPORATION

(a New York corporation)

13-1808503

(I.R.S. Employer Identification No.)

2600 N. Central Avenue, Phoenix, AZ 85004-3089

Registrant’s telephone number: (602) 234-8100

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       .

Number of Common Shares outstanding at May 9, 2000:  78,721,000 shares.

TABLE OF CONTENTS

Part I. Financial Information
Item 1. Financial Statements
	Statement of Consolidated Operations
	Consolidated Balance
	Consolidated Statement of Cash Flows
	Consolidated Statement of Common Shareholders' Equity
	Consolidated Statement of Common Shareholders' Equity
	Notes to Consolidated Financial Information
	Review by Independent Accountants
	Report of Independent Accountants on Review on Interim Financial Information
Item 2. Management's Discussion and Analysis
	Results of Operations
	Results of Phelps Dodge Mining Company
	Results of Phelps Dodge Industries
	Other Matters Relating to the Statement of Consolidated Operations
	Changes in Financial Condition
Part II. Other Information
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
Signatures
Index to Exhibits

i

PHELPS DODGE CORPORATION

Quarterly Report on Form 10-Q

For the Quarter Ended March 31, 2000

Table of Contents

Part I. Financial Information
	Item 1. Financial Statements
		Statement of Consolidated Operations
		Consolidated Balance Sheet
		Consolidated Statement of Cash Flows
		Consolidated Statement of Common Shareholders’ Equity
		Financial Data by Business Segment
		Notes to Consolidated Financial Information
		Review by Independent Accountants
		Report of Independent Accountants on Review of Interim Financial Information
	Item 2. Management’s Discussion and Analysis
		Results of Operations
		Results of Phelps Dodge Mining Company
		Results of Phelps Dodge Industries
		Other Matters Relating to the Statement of Consolidated Operations
		Changes in Financial Condition
Part II. Other Information
	Item 1. Legal Proceedings
	Item 6. Exhibits and Reports on Form 8-K
	Signatures
	Index to Exhibits

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PHELPS DODGE CORPORATION AND SUBSIDIARIES
Part I. Financial Information

Item 1. Financial Statements		First Quarter
		2000			1999
STATEMENT OF CONSOLIDATED OPERATIONS
(Unaudited; in millions except per share data)
Sales and other operating revenues		$	1,119.7			663.1
Operating costs and expenses
	Cost of products sold (see Note 3)		873.4			529.0
	Depreciation, depletion and amortization		119.4			73.2
	Selling and general administrative expense (see Note 3)		32.2			24.5
	Exploration and research expense		12.8			8.8
	Non-recurring charges and other (see Note 6)		2.1			—
			1,039.9			635.5
Operating income			79.8			27.6
	Interest expense		(55.4	)		(24.1	)
	Capitalized interest		0.4			0.1
	Miscellaneous income and expense, net		6.4			(7.4	)
Income (loss) before taxes, minority interests, equity in net earnings of affiliated companies and cumulative effect of accounting change			31.2			(3.8	)
	Provision for taxes on income		(11.2	)		(1.4	)
	Minority interests in consolidated subsidiaries		(1.4	)		(0.4	)
	Equity in net earnings of affiliated companies		0.8			6.1
Income before cumulative effect of accounting change			19.4			0.5
	Cumulative effect of accounting change (see Note 7)		—			(3.5	)
Net income (loss)		$	19.4			(3.0	)
Average number of shares outstanding — basic			78.4			57.8
Basic earnings per share before cumulative effect of accounting change		$	0.25			0.01
	Cumulative effect of accounting change (see Note 7)		—			(0.06	)
Basic earnings (loss) per share		$	0.25			(0.05	)
Average number of shares outstanding — diluted			78.8			57.9
Diluted earnings per share before cumulative effect of accounting change		$	0.25			0.01
	Cumulative effect of accounting change (see Note 7)		—			(0.06	)
Diluted earnings (loss) per share		$	0.25			(0.05	)

See Notes to Consolidated Financial Information.

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CONSOLIDATED BALANCE SHEET
(Unaudited; in millions)

			March 31,			December 31,
			2000			1999
Assets
	Cash and cash equivalents		$	311.6			234.2
	Accounts receivable, net			557.7			541.5
	Inventories			461.9			498.3
	Supplies			149.3			149.0
	Other current assets and prepaid expenses (see Note 9)			49.4			172.4
	Deferred income taxes			101.5			98.0
		Current assets		1,631.4			1,693.4
	Investments and long-term accounts receivable			133.1			136.1
	Property, plant and equipment, net			5,999.7			6,037.7
	Non-current deferred income taxes			16.9			16.9
	Other assets and deferred charges			345.9			344.9
			$	8,127.0			8,229.0
Liabilities
	Short-term debt		$	374.7			451.2
	Current portion of long-term debt			115.4			131.3
	Accounts payable and accrued expenses			801.8			786.5
	Accrued income taxes			26.0			49.3
		Current liabilities		1,317.9			1,418.3
	Long-term debt			2,173.9			2,172.5
	Deferred income taxes			396.3			385.7
	Other liabilities and deferred credits			879.7			879.4
				4,767.8			4,855.9
Minority interests in consolidated subsidiaries				99.1			96.3
Common shareholders’ equity
	Common shares, 78.7 outstanding (12/31/99 - 78.7)			492.0			491.6
	Capital in excess of par value			1,019.0			1,016.4
	Retained earnings			1,939.8			1,959.8
	Accumulated other comprehensive income (loss)			(178.1	)		(180.3	)
	Other			(12.6	)		(10.7	)
				3,260.1			3,276.8
			$	8,127.0			8,229.0

See Notes to Consolidated Financial Information.

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CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited; in millions)

				Three months ended March 31,
				2000			1999
Operating activities
	Net income (loss)			$	19.4			(3.0	)
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation, depletion and amortization			119.4			73.2
		Deferred income taxes			6.3			(1.3	)
		Equity earnings net of dividends received			(0.2	)		(6.1	)
		Changes in current assets and liabilities:
			(Increase) decrease in accounts receivable		(6.3	)		(32.4	)
			(Increase) decrease in inventories		24.9			16.0
			(Increase) decrease in supplies		(0.5	)		2.4
			(Increase) decrease in prepaid expenses		(17.0	)		—
			(Increase) decrease in deferred income taxes		(0.1	)		(0.4	)
			Increase (decrease) in interest payable		22.2			14.0
			Increase (decrease) in other accounts payable		15.9			(36.7	)
			Increase (decrease) in accrued income taxes		(22.6	)		(5.0	)
			Increase (decrease) in other accrued expenses		(32.3	)		(5.3	)
		Non-recurring charges and provisions (see Note 6)			2.1			—
		Other adjustments, net			(6.9	)		8.8
			Net cash provided by operating activities		124.3			24.2
Investing activities
	Capital outlays				(62.2	)		(30.5	)
	Capitalized interest				(0.4	)		(0.1	)
	Investment in subsidiaries				(7.5	)		(75.7	)
	Proceeds from asset dispositions and other (see Note 9)				149.4			0.3
			Net cash provided by (used in) investing activities		79.3			(106.0	)
Financing activities
	Increase in debt				5.2			109.1
	Payment of debt				(93.3	)		(23.3	)
	Common dividends				(39.4	)		(29.0	)
	Other, net				1.3			(0.1	)
			Net cash provided by (used in) financing activities		(126.2	)		56.7
Increase (decrease) in cash and cash equivalents					77.4			(25.1	)
Cash and cash equivalents at beginning of year					234.2			221.7
Cash and cash equivalents at end of period				$	311.6			196.6

See Notes to Consolidated Financial Information.

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CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS’ EQUITY
(Unaudited; in millions)

				Common Shares										Accumulated
								Capital in						Other						Common
				Number		At Par		Excess of			Retained			Comprehensive						Shareholders'
				of Shares		Value		Par Value			Earnings			Income (loss)			Other			Equity
Balance at December 31, 1999					78.7	$	491.6	$	1,016.4		$	1,959.8			($180.3	)		($10.7	)	$	3,276.8
	Stock options exercised				—		0.1		0.9			—									1.0
	Restricted shares issued, net				—		0.3		2.3			—						(1.9	)		0.7
	Other investment adjustments								(0.6	)		—									(0.6	)
	Dividends on common shares											(39.4	)								(39.4	)
	Comprehensive income:
		Net income										19.4									19.4
		Other comprehensive income, net of tax:
			Translation adjustment												1.7						1.7
			Unrealized gains on securities												0.5						0.5
			Other comprehensive income												2.2						2.2
		Comprehensive income																			21.6
Balance at March 31, 2000					78.7	$	492.0	$	1,019.0		$	1,939.8			($178.1	)		($12.6	)	$	3,260.1

See Notes to Consolidated Financial Information.

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FINANCIAL DATA BY BUSINESS SEGMENT

(Unaudited; in millions)

					PD Industries								Corporate
			Phelps										Unallocated &
			Dodge		Specialty		Wire &				Segment		Reconciling
			Mining		Chemicals		Cable		Total		Subtotal		Eliminations*			Totals
1st Quarter 2000
	Sales & other operating revenues:
		Unaffiliated customers	$	753.4		154.9		211.4		366.3		1,119.7		—			1,119.7
		Intersegment		60.7		—		—		—		60.7		(60.7	)		—
	Non-recurring charges			—		—		2.1		2.1		2.1		—			2.1
	Operating income (loss)			68.3		24.7		2.2		26.9		95.2		(15.4	)		79.8
	Assets at March 31			6,357.3		781.0		769.6		1,550.6		7,907.9		219.1			8,127.0
1st Quarter 1999
	Sales & other operating revenues:
		Unaffiliated customers	$	344.1		131.0		188.0		319.0		663.1		—			663.1
		Intersegment		51.8		—		—		—		51.8		(51.8	)		—
	Operating income (loss)			5.1		30.5		4.3		34.8		39.9		(12.3	)		27.6
	Assets at March 31			3,200.6		765.7		843.5		1,609.2		4,809.8		151.2			4,961.0

*  Represents corporate, unallocated and reconciling elimination activities and assets.

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NOTES TO CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)

1.	The unaudited consolidated financial information presented herein has been prepared in accordance with the instructions to Form 10-Q and does not include all of the information and note disclosures required by generally accepted accounting principles. Therefore, this information should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 1999. This information reflects all adjustments that are, in the opinion of management, necessary to a fair statement of the results for the interim periods reported.
2.	The results of operations for the three-month period ended March 31, 2000, are not necessarily indicative of the results to be expected for the full year.
3.	The 1999 first quarter reflects the reclassification of $4.9 million in operation support costs from selling and general administrative expenses to cost of products sold to conform to the current year presentation.
4.	Depending on market circumstances, we may periodically purchase or liquidate various copper price protection contracts for a portion of our expected future mine production to mitigate the risk of adverse price fluctuations. As of March 31, 2000, the company had a total of approximately 110 million pounds of year 2000 copper cathode production under various price protection agreements with various financial institutions. These annual contracts effectively ensure minimum (approximately 72 cents) and maximum (approximately 95 cents) prices per pound. Additionally, monthly minimum priced contracts covering approximately 200 million pounds of first quarter 2000 copper cathode expired without payment to Phelps Dodge. The minimum and maximum prices are based on the average London Metal Exchange price for the protection period.
5.	Cyprus Amax Acquisition
	Liabilities recorded in the acquisition of Cyprus Amax included costs of $22 million associated with merging Cyprus Amax’s operations into the company’s operations (e.g., lease and other cancellation costs and employee termination costs, primarily for duplicate administrative and management functions). Through March 31, 2000, we have paid $7 million for such costs, including approximately $6 million for employee termination and severance costs. Costs for these liabilities are expected to be substantially paid out by the end of 2000.
6.	1999 Restructuring Charges
	On June 30, 1999, we announced a plan to reduce costs and improve operating performance at all three of our business segments by (i) curtailing higher-cost copper production by temporarily closing our Hidalgo smelter in New Mexico and the smaller of two concentrators at our Morenci mining operations in Arizona, as well as curtailing production by 50 percent at our copper refinery in El Paso, Texas; (ii) selling a non-core South African fluorspar mining unit; (iii) restructuring certain wire and cable assets to respond to changing market conditions; and (iv) suspending operations at our carbon black plant in the Philippines. These actions resulted in a total non-recurring, pre-tax charge of $96.7 million (or $65.7 million, $1.07 per share, after taxes and minority interests) in 1999 and $2.1 million (or $1.3 million, 1 cent per share, after taxes) in the 2000 first quarter.
	Our mining segment had no charges in the 2000 first quarter from the June 30, 1999, restructuring plan. The current liability components of the restructuring plan for the mining segment related to employee severance, mothballing and take or pay contracts during the first quarter of 2000 were as follows:

(in millions)
					Mothballing/
					Take or
		Employee			Pay
		Severance			Contracts			Total
Dec. 31, 1999 balance			1.4			3.5			4.9
Payments made			(0.4	)		(0.3	)		(0.7	)
	March 31, 2000 balance		1.0			3.2			4.2

Our specialty chemicals segment had no charges in the 2000 first quarter from the June 30, 1999, restructuring plan. The current liability components of the restructuring plan

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for our specialty chemicals segment related to employee severance and disposal and dismantling costs during the first quarter of 2000 were as follows:

(in millions)
					Disposal
		Employee			and
		Severance			Dismantling			Total
	Dec. 31, 1999 balance		1.0			1.9			2.9
	Reclassification of the restructure		(0.6	)		—			(0.6	)
	Payments made		—			(0.3	)		(0.3	)
March 31, 2000 balance			0.4			1.6			2.0

Our wire and cable segment had non-recurring, pre-tax charges of $2.1 million in the 2000 first quarter from the restructuring plan. The components of the restructuring plan related to employee severance and disposal and dismantling costs during the 2000 first quarter were as follows:

(in millions)
					Equipment
					Disposal,
		Employee			Dismantling
		Severance &			&
		Relocation			Relocation			Total
Dec. 31, 1999 balance			3.2			1.0			4.2
Relocation expenses *			0.4			1.4			1.8
Additional severance			0.3			—			0.3
Payments made			(0.9	)		(1.4	)		(2.3	)
	March 31, 2000 balance		3.0			1.0			4.0

* Relocation costs are charged to expense as incurred.

	The first quarter 2000 non-recurring, after-tax charges of $2.1 million were principally for expenses to relocate equipment.
7.	Accounting Standards
	In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” This statement requires recognition of all derivatives as either assets or liabilities on the balance sheet and measurement of those instruments at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income (loss). Proper accounting for changes in fair value of derivatives held is dependent on whether the derivative transaction qualifies as an accounting hedge and on the classification of the hedge transaction. The statement was originally required to be adopted in the first quarter of 2000. Citing concerns about companies’ ability to modify their information systems and educate their managers in time to apply SFAS No. 133, the FASB has delayed its effective date for one year. We will adopt SFAS No. 133 in the first quarter of 2001. We are evaluating the effect this statement will have on our financial reporting and disclosures as well as on our derivative and hedging activities.
	In the 1999 first quarter, we adopted SOP 98-5, “Reporting on the Costs of Start-Up Activities.” The implementation resulted in a $3.5 million after-tax charge, or 6 cents per common share, representing the write-off of previously unamortized start-up costs at our Candelaria mining operation in Chile and our magnet wire operation in Mexico.
	In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101, “Revenue Recognition” that provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. SAB No. 101 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosures related to revenue recognition policies. We will adopt SAB No. 101 in the 2000 second quarter. We are evaluating the effect this bulletin may have, if any, on our consolidated financial statements.
	The Emerging Issues Task Force (EITF) issued Topic No. D-88, “Planned Major Maintenance Activities” on March 16, 2000. Topic D-88 requires companies to disclose in their Form 10-Qs for 2000, their accounting policy for repair and maintenance costs incurred in connection with planned major maintenance activities. Our policy for repair and maintenance costs incurred in connection with planned major maintenance activities is to charge to operations such costs equally over the twelve months of the year in which the major maintenance activities are incurred.
8.	Environmental Matters

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	As of December 31, 1999, we had a reserve balance of $336.1 million for estimated future costs associated with environmental matters. During the first three months of 2000, net spending against that reserve totaled $10.7 million. As of March 31, 2000, the reserve balance was $325.4 million.
	The company has contingencies regarding environmental, closure and other matters. For a further discussion of these contingencies please see Note 19 to the Consolidated Financial Statements of the company’s 1999 Form 10-K.
9.	Asset Sales
	On March 30, 2000, we sold Cyprus Australia Coal Company, a wholly owned subsidiary, to Glencore Coal Australia Pty. Ltd., a subsidiary of Switzerland-based Glencore International AG, for US$150 million in cash. We acquired Cyprus Australia Coal Company as part of our acquisition of Cyprus Amax Minerals Company on October 16, 1999. Cyprus Australia Coal Company owned 48 percent of Oakbridge Pty. Ltd. and 50 percent of the Springvale Mine in Australia.
10.	Debt
	An agreement on a new, unsecured revolving credit facility was entered into by the company and several lenders on May 10, 2000. The facility is to be used for general corporate purposes, primarily as a commercial paper backstop. This facility, which replaces the June 1997 agreement, permits borrowings of up to $1 billion until its maturity on May 10, 2005. It allows for one-year extensions beyond the maturity date under certain circumstances. Interest is payable at a fluctuating rate based on the agent bank’s base rate or a fixed rate based on the London Interbank Offered Rate (LIBOR), or at fixed rates offered independently by the several lenders, for maturities of from one month to twelve months. This agreement provides for an annual facility fee of 15 basis points (0.15 percent) on total commitments. The agreement requires the company to maintain minimum consolidated tangible net worth of $1.5 billion and limits indebtedness to 60 percent of total consolidated capitalization.

REVIEW BY INDEPENDENT ACCOUNTANTS

      The financial information as of March 31, 2000, and for the three-month periods ended March 31, 2000 and 1999, included in Part I pursuant to Rule 10-01 of Regulation S-X has been reviewed by PricewaterhouseCoopers LLP (PricewaterhouseCoopers), the company’s independent accountants, in accordance with standards established by the American Institute of Certified Public Accountants. PricewaterhouseCoopers’ report is included in this quarterly report.

      PricewaterhouseCoopers does not carry out any significant or additional audit tests beyond those that would have been necessary if its report had not been included in this quarterly report. Accordingly, such report is not a “report” or “part of a registration statement” within the meaning of Sections 7 and 11 of the Securities Act of 1933 and the liability provisions of Section 11 of such Act do not apply.

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PRICEWATERHOUSECOOPERS LLP
REPORT OF INDEPENDENT ACCOUNTANTS

April 24, 2000

To the Board of Directors and Shareholders of the
    Phelps Dodge Corporation

We have reviewed the accompanying consolidated balance sheet of Phelps Dodge Corporation and its subsidiaries as of March 31, 2000, and the related consolidated statements of operations, of cash flows and of common shareholders’ equity for the three-month periods ended March 31, 2000 and 1999. These financial statements are the responsibility of the Corporation’s management.

We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial statements for them to be in conformity with generally accepted accounting principles.

We previously audited in accordance with generally accepted auditing standards, the consolidated balance sheet as of December 31, 1999, and the related consolidated statements of operations, of cash flows and of common shareholders’ equity for the year then ended (not presented herein), and in our report dated January 26, 2000 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 1999, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

PricewaterhouseCoopers LLP
Phoenix, Arizona

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Item 2. Management’s Discussion and Analysis

      The U.S. securities laws provide a “safe harbor” for certain forward-looking statements. This quarterly report contains “forward-looking statements” that express expectations of future events or results. All statements based on future expectations rather than historical facts are forward-looking statements that involve a number of risks and uncertainties, and Phelps Dodge Corporation (the company, which may be referred to as Phelps Dodge, we, us or ours) cannot give assurance that such statements will prove to be correct. Please refer to the Management’s Discussion and Analysis sections of the company’s report on Form 10-K for the year ended December 31, 1999.

RESULTS OF OPERATIONS

      Earnings

      The company had consolidated earnings in the 2000 first quarter of $20.7 million, or 26 cents per common share, before non-recurring, after tax charges of $1.3 million, or 1 cent per share, from the company’s restructuring plan announced on June 30, 1999. By comparison, earnings for the first quarter of 1999 were $0.5 million, or 1 cent per share, before an after-tax charge of $3.5 million, or 6 cents per share, for the cumulative effect of an accounting change associated with unamortized start-up costs (please refer to Note 7 to the Consolidated Financial Information). After non-recurring charges, 2000 first quarter net income was $19.4 million, or 25 cents per share, compared with a 1999 first quarter net loss of $3.0 million, or 5 cents per share.

      Earnings before non-recurring items were more in the 2000 first quarter than in the corresponding 1999 period principally as a result of higher average copper prices partially offset by higher costs for petroleum products and the effect of continued economic difficulties in Southeast Asia and Latin America. The average spot price per pound of cathode copper on the New York Commodity Exchange (COMEX) was approximately 18 cents per pound, or 28 percent, higher in the first quarter of 2000 than the average price in the corresponding 1999 period. The higher costs for petroleum products increased our first quarter 2000 mining operating costs by approximately $7 million, or 1.1 cents per pound compared with the first quarter of 1999.

      The COMEX spot price per pound of copper cathode, upon which we base our selling price, averaged 82 cents in the 2000 first quarter, compared with 64 cents in the corresponding 1999 period. From April 1 to May 9, 2000, the COMEX price averaged 79 cents per pound, closing at 83 cents on May 9, 2000.

      Any material change in the price we receive for copper, or in our unit production costs, has a significant effect on our results. Our share of current annual production is approximately 2.4 billion pounds of copper. Accordingly, each 1 cent per pound change in our average annual realized copper price, or in our average annual unit production costs, causes a variation in annual operating income before taxes of approximately $24 million.

      Depending on market circumstances, we may periodically purchase or liquidate various copper price protection contracts for a portion of our expected future mine production to mitigate the risk of adverse price fluctuations. See Note 4 to the Consolidated Financial Information for a discussion of such contracts as of March 31, 2000.

      Sales

      Sales were $1,119.7 million in the 2000 first quarter, compared with $663.1 million in the corresponding 1999 period. This increase principally resulted from the higher average copper prices, combined with higher sales volumes of copper, molybdenum and carbon black.

      Business Segments

      Results for 2000 and 1999 can be meaningfully compared by separate reference to our reporting divisions, Phelps Dodge Mining Company and Phelps Dodge Industries. Phelps Dodge Mining Company is a business segment that includes our worldwide copper operations from mining through rod production, marketing and sales; molybdenum operations from mining through manufacturing, marketing and sales; other mining operations and investments; and worldwide mineral exploration and development programs. Phelps Dodge Industries includes our specialty chemicals segment and our wire and cable segment.

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RESULTS OF PHELPS DODGE MINING COMPANY

      Phelps Dodge Mining Company (PD Mining) is an international business comprising a group of companies involved in vertically integrated copper operations including mining, concentrating, electrowinning, smelting, refining, rod production, marketing and sales, and related activities. Copper is sold primarily to others as rod, cathode or concentrates, and as rod to our wire and cable segment. PD Mining, at times, smelts and refines copper and produces copper rod for others on a toll basis. PD Mining also is an integrated producer of molybdenum, with mining, roasting and processing facilities producing molybdenum concentrate as well as metallurgical and chemical products. PD Mining also produces gold, silver, molybdenum and copper chemicals as by-products, and sulfuric acid from our air quality control facilities. This business segment also includes our worldwide mineral exploration programs.

		First Quarter
		2000		1999
Copper production (thousand short tons):
	Total production		371.8		252.6
	Less minority participants’ shares *		67.4		43.3
	Net Phelps Dodge share		304.4		209.3
Copper sales (thousand short tons):
	Net Phelps Dodge share from own mines		315.4		212.9
	Purchased copper		99.0		61.0
	Total copper sales		414.4		273.9
New York Commodity Exchange
	Average spot price per pound - copper cathodes	$	0.82		0.64
Molybdenum production (million pounds)			12.7		0.2
Molybdenum sales (million pounds)			16.4		0.1
Metals Week
	Average dealer oxide price per pound - molybdenum	$	2.54		2.62
		(in millions)
Sales and other operating revenues - - unaffiliated customers		$	753.4		344.1
Operating income		$	68.3		5.1

* Minority participant interests include (i) a 15 percent undivided interest in the Morenci, Arizona, copper mining complex held by Sumitomo Metal Mining Arizona, Inc., (ii) a one-third partnership interest in Chino Mines Company in New Mexico held by Heisei Minerals Corporation, and (iii) a 20 percent interest in Candelaria in Chile held by SMMA Candelaria, Inc., a jointly owned indirect subsidiary of Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation, and (iv) a 49 percent interest in the El Abra copper mining operation in Chile held by Corporacion Nacional del Cobre de Chile (Codelco).

      PD Mining — Sales

      PD Mining sales and other operating revenues to unaffiliated customers increased by $409.3 million, or 120 percent, in the 2000 first quarter compared with the corresponding 1999 period. This variance primarily reflected the effect of increased copper sales volumes ($230 million) as a result of the October 16, 1999, acquisition of Cyprus Amax Minerals Company (Cyprus Amax), increased average selling price for copper (approximately $100 million) and an increase in molybdenum sales revenue as a result of the properties acquired as part of Cyprus Amax acquisition ($68 million).

      PD Mining — Operating Income

      PD Mining reported operating income of $68.3 million in the 2000 first quarter, compared with $5.1 million in the corresponding 1999 period. This increase primarily reflected the higher average copper price for sales of PD-mined copper (approximately $77 million) and higher sales volumes of PD mined copper (approximately $22 million), partially offset by higher copper production costs (approximately $34 million) and losses from molybdenum operations ($3 million). Higher 2000 copper production costs when compared with the first quarter of 1999 were primarily due to higher diesel fuel costs, higher depreciation expenses and the effect of lower ore grades at our Candelaria operation.

      PD Mining — Other Matters

      On May 8, 2000, we announced the curtailment of molybdenum production at our Henderson mine in Colorado. This curtailment will reduce molybdenum production by approximately 5 million pounds annually and result in a workforce reduction of approximately 130 workers. The severance related costs associated with the curtailment are expected to result in a non-recurring, pre-tax charge of $4.3 million ($2.7 million or 3 cents per share after taxes).

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RESULTS OF PHELPS DODGE INDUSTRIES

      Phelps Dodge Industries (PD Industries), our manufacturing division, produces engineered products principally for the global energy, telecommunications, transportation and specialty chemicals sectors. Its operations are characterized by products with significant market share, internationally competitive cost and quality, and specialized engineering capabilities. The manufacturing division includes our specialty chemicals segment and our wire and cable segment. Our specialty chemicals segment includes Columbian Chemicals Company and its subsidiaries (Columbian Chemicals or Columbian). Our wire and cable segment consists of three worldwide product line businesses including magnet wire, energy and telecommunications cables, and specialty conductors.

		First Quarter
		2000		1999
		(in millions)
Sales and other operating revenues - - unaffiliated customers:
	Specialty chemicals	$	154.9		131.0
	Wire and cable		211.4		188.0
		$	366.3		319.0
Operating income:
	Specialty chemicals	$	24.7		30.5
	Wire and cable*		2.2		4.3
		$	26.9		34.8

* Includes a pre-tax charge of $2.1 million in the 2000 first quarter for costs associated with the June 30, 1999, restructuring plan.

      PD Industries — Sales

      PD Industries reported sales to unaffiliated customers of $366.3 million in the 2000 first quarter, compared with $319.0 million in the corresponding 1999 period. The increase reflected higher sales both in the specialty chemicals and wire and cable segments. The higher specialty chemicals sales principally reflected higher volumes (5 percent higher) and higher average selling prices. The higher wire and cable sales were primarily a result of higher copper prices and higher sales volumes to the aerospace and geophysical markets.

      PD Industries — Operating Income

      PD Industries reported 2000 first quarter operating income of $29.0 million before non-recurring, pre-tax charges of $2.1 million for costs associated with the June 30, 1999, restructuring plan. Operating income in the 1999 first quarter was $34.8 million. The decrease from the 1999 first quarter was principally due to the effect of higher feedstock costs at our specialty chemicals segment as a result of increased petroleum prices.

OTHER MATTERS RELATING TO THE STATEMENT OF CONSOLIDATED OPERATIONS

      Depreciation, Depletion and Amortization

      Depreciation, depletion and amortization expense was $119.4 million in the 2000 first quarter, compared with $73.2 million in the corresponding 1999 period. The 2000 depreciation expense includes depreciation at the recently acquired Cyprus Amax properties.

      Selling and General Administrative Expense

      Selling and general administrative expense was $32.2 million in the 2000 first quarter, compared with $24.5 million in the corresponding 1999 period. The increase is primarily related to the addition of administrative functions to support the recently acquired Cyprus Amax properties and the inclusion of molybdenum selling expenses from the Cyprus Amax properties. (Also, see Note 3 to the Consolidated Financial Information for a brief discussion of reclassifications of 1999 expenses.)

      Exploration and Research and Development Expense

      Our 2000 first quarter exploration and research expense was $12.8 million, an increase of $4.0 million from that in the 1999 first quarter. The increase primarily reflected exploration spending in Brazil and Africa and higher research spending.

      Interest Expense

      Net interest expense was $55.0 million in the 2000 first quarter compared with $24.0 million in the 1999 first quarter. The increase primarily reflected the assumption of Cyprus Amax’s debt.

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      Miscellaneous Income and Expense, Net

      Miscellaneous income and expense, net, increased by $13.8 million in the 2000 first quarter compared with the corresponding 1999 period. This change principally reflected currency exchange losses (especially in Brazil) in the 1999 first quarter and higher interest income in the 2000 first quarter.

      Provision for Taxes on Income

      The effective tax rate changed from a 37 percent negative rate in the first quarter of 1999 to a 36 percent rate in the first quarter of 2000. The negative rate in 1999 resulted primarily from permanent foreign income expense items that do not vary proportionally with book income. Thus, as book income decreased, the effect of these permanent differences was magnified and our effective rate increased. The 36 percent effective rate in 2000 results from the return to positive earnings which dilute the rate impact of these permanent differences.

      Equity Earnings

      Equity in net earnings of affiliated companies decreased by $5.3 million primarily due to the 1999 first quarter gain on the sale of land by our equity basis Philippine wire and cable operation.

CHANGES IN FINANCIAL CONDITION

      Debt

      At March 31, 2000, our total debt was $2,664.0 million, compared with $2,755.0 million at year-end 1999. The $91.0 million decrease principally reflected the use of proceeds from the sale of the company’s wholly owned subsidiary, Cyprus Australia Coal Company for $150 million (please refer to Note 9 to the Consolidated Financial Information). Our ratio of debt to total capitalization was 44.2 percent at March 31, 2000, compared with 45.0 percent at December 31, 1999.

      An agreement on a new, unsecured revolving credit facility was entered into by the company and several lenders on May 10, 2000. For a discussion of this agreement, please see Note 10 to the Consolidated Financial Information.

      Capital Expenditures and Investments

      Capital expenditures and investments during the 2000 first quarter were $44.9 million for PD Mining, $11.6 million for PD Industries and $13.2 million for Corporate and other (primarily Cyprus acquisition costs). Capital expenditures and investments in the corresponding 1999 period were $17.9 million for PD Mining and $87.4 million for PD Industries, including $76.1 million for the acquisition of an 85 percent interest in the Korean carbon black manufacturing business of Korea Kumho Petrochemical Co. Ltd. The company expects capital expenditures and investments for the year 2000 to be approximately $350 million for PD Mining, including $132 million for the company’s share of the Morenci mine-for-leach project, and approximately $100 million for PD Industries.

      Dividends

      On March 10, 2000, we paid a regular quarterly dividend of 50 cents per share on our common shares for the 2000 first quarter; the total amount paid was $39.4 million. On May 3, 2000, the Board of Directors declared a regular dividend in the 2000 second quarter of 50 cents per common share. The dividend is to be paid on June 9, 2000, to shareholders of record at the close of business on May 18, 2000.

      Share Purchases

      This year through May 8, we have not purchased any of our shares under our May 7, 1997, share purchase authorization. Under that program, 1.7 million shares remain authorized for purchase. There were 78.7 million common shares outstanding at March 31, 2000.

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      Other Matters

      For a discussion of costs incurred associated with merging Cyprus Amax’s operations into our operations, please refer to Note 5 of the Consolidated Financial Information. For a discussion of the status of the current liability components of the 1999 restructuring charges, please refer to Note 6 of the Consolidated Financial Information. For a discussion of new accounting standards, please refer to Note 7 of the Consolidated Financial Information.

Part II. Other Information

Item 1. Legal Proceedings

      On February 28, 2000, Cobre Mining Company (“Cobre”) received an Administrative Order (Docket No. CWA-6-1014-00, the “Order”) from the U.S. Environmental Protection Agency (“EPA”). The Order alleges violations of the Clean Water Act, requires Cobre to deliver a response stating the steps it has taken to address each of the incidents leading to the alleged violations, and requires Cobre to show cause why no further action is necessary. Cobre has submitted its response to the EPA. The response contends that actions already taken adequately address the EPA’s concerns and that further action is not necessary.

Item 6. Exhibits and Reports on Form 8-K

(a) Any exhibits required to be filed by the company are listed in the Index to Exhibits.

(b) No reports on Form 8-K were filed by us during the quarter ended March 31, 2000.

Signatures

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

PHELPS DODGE CORPORATION
(Corporation or Registrant)

Date: May 12, 2000	By:      Stanton K. Rideout
	Stanton K. Rideout
	Vice President and Controller
	(Principal Accounting Officer)

Index to Exhibits

4.2	Credit Agreement, effective May 10, 2000, among the Corporation, the Lenders parties thereto, Salomon Smith Barney Inc., Bank of Tokyo-Mitsubishi Trust Company, and Citibank, N.A., as agent (SEC File No. 1-82).
10.13	Advisory Services Agreement, dated as of May 3, 2000, between the Corporation and Douglas C. Yearley (SEC File No. 1-82).
12	Computation of ratios of total debt to total capitalization.
15	Letter from PricewaterhouseCoopers LLP with respect to unaudited interim financial information.

  EX-4.2 2 EX-4.2 1 Exhibit 4.2 EXECUTION COPY U.S. $1,000,000,000 CREDIT AGREEMENT Dated as of May 10, 2000 Among PHELPS DODGE CORPORATION as Borrower and THE INITIAL LENDERS NAMED HEREIN as Initial Lenders and SALOMON SMITH BARNEY INC. as Sole Arranger and Book Manager and BANK OF TOKYO-MITSUBISHI TRUST COMPANY as Syndication Agent and CITIBANK, N.A. as Administrative Agent 2 iii TABLE OF CONTENTS

PAGE ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms .............................................. 1 SECTION 1.02. Computation of Time Periods ........................................ 13 SECTION 1.03. Accounting Terms ................................................... 13 ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES SECTION 2.01. The Revolving Credit Advances ...................................... 13 SECTION 2.02. Making the Revolving Credit Advances ............................... 13 SECTION 2.03. The Competitive Bid Advances ....................................... 14 SECTION 2.04. Fees ............................................................... 17 SECTION 2.05. Optional Termination or Reduction of the Commitments ............... 17 SECTION 2.06. Repayment of Revolving Credit Advances ............................. 17 SECTION 2.07. Interest on Revolving Credit Advances .............................. 17 SECTION 2.08. Interest Rate Determination ........................................ 18 SECTION 2.09. Optional Conversion of Revolving Credit Advances ................... 19 SECTION 2.10. Prepayments of Revolving Credit Advances ........................... 19 SECTION 2.11. Requirements of Law ................................................ 20 SECTION 2.12. Illegality ......................................................... 20 SECTION 2.13. Payments and Computations .......................................... 21 SECTION 2.14. Taxes .............................................................. 22 SECTION 2.15. Sharing of Payments, Etc ........................................... 23 SECTION 2.16. Evidence of Debt ................................................... 23 SECTION 2.17. Extension of Termination Date ...................................... 24 ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01 and 2.03 .... 26 SECTION 3.03. Conditions Precedent to Each Competitive Bid Borrowing ............. 27 SECTION 3.04. Determinations Under Section 3.01 .................................. 28 ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Borrower ..................... 28 ARTICLE V COVENANTS OF THE BORROWER SECTION 5.01. Affirmative Covenants .............................................. 31 SECTION 5.02. Negative Covenants ................................................. 34 ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default .................................................. 36 ARTICLE VII THE AGENT SECTION 7.01. Authorization and Action ............................................ 38

3 iv SECTION 7.02. Agent's Reliance, Etc .............................................. 38 SECTION 7.03. Citibank and Affiliates ............................................ 39 SECTION 7.04. Lender Credit Decision ............................................. 39 SECTION 7.05. Indemnification .................................................... 39 SECTION 7.06. Successor Agent .................................................... 39 SECTION 7.07. Other Agents ....................................................... 40 ARTICLE VIII MISCELLANEOUS SECTION 8.01. Amendments, Etc .................................................... 40 SECTION 8.02. Notices, Etc ....................................................... 40 SECTION 8.03. No Waiver; Remedies ................................................ 40 SECTION 8.04. Costs and Expenses ................................................. 40 SECTION 8.05. Right of Set-off ................................................... 41 SECTION 8.06. Binding Effect ..................................................... 42 SECTION 8.07. Assignments and Participations ..................................... 42 SECTION 8.08. Confidentiality .................................................... 44 SECTION 8.09. Governing Law ...................................................... 44 SECTION 8.10. Execution in Counterparts .......................................... 44 SECTION 8.11. Jurisdiction, Etc .................................................. 44 SECTION 8.12. Waiver of Jury Trial ............................................... 45 4 v Schedules - --------- Schedule II - Principal Domestic Subsidiaries and other Subsidiaries Schedule III - Environmental Representation Schedule IV - Disclosed Litigation 5 CREDIT AGREEMENT Dated as of May 10, 2000 PHELPS DODGE CORPORATION, a New York corporation (the "Borrower"), the banks, financial institutions and other institutional lenders (the "Initial Lenders") listed on the signature pages hereof, SALOMON SMITH BARNEY INC., as sole arranger and book manager, BANK OF TOKYO-MITSUBISHI TRUST COMPANY, as syndication agent, and CITIBANK, N.A. ("Citibank"), as administrative agent (the "Agent") for the Lenders (as hereinafter defined), 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): "Advance" means a Revolving Credit Advance or a Competitive Bid Advance. "Affiliate" means, as to any Person, any other Person (other than a Subsidiary) which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition,"control" of a Person means the power, directly or indirectly, either to (a) vote 20% or more of the securities having ordinary voting power for the election of directors of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. "Agent's Account" means the account of the Agent maintained by the Agent at Citibank at its office at 399 Park Avenue, New York, New York 10043, 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 and, in the case of a Competitive Bid Advance, the office of such Lender notified by such Lender to the Agent as its Applicable Lending Office with respect to such Competitive Bid Advance. "Applicable Margin" means as of any date, a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below: 6

Public Debt Rating Applicable Margin for Applicable Margin for S&P/Moody's Base Rate Advances Eurodollar Rate Advances ----------- ------------------ ------------------------ Level 1 A/A2 or above 0.000% 0.160% Level 2 A-/A3 0.000% 0.240% Level 3 BBB+/Baa1 0.000% 0.300% Level 4 BBB/Baa2 0.000% 0.450% Level 5 BBB-/Baa3 0.000% 0.775% Level 6 Lower than Level 5 0.000% 0.850%

"Applicable Percentage" means, as of any date a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below:

Public Debt Rating Applicable S&P/Moody's Percentage ----------- ---------- Level 1 A/A2 or above 0.090% Level 2 A-/A3 0.110% Level 3 BBB+/Baa1 0.150% Level 4 BBB/Baa2 0.175% Level 5 BBB-/Baa3 0.225% Level 6 Lower than Level 5 0.350%

"Applicable Utilization Fee" means, as of any date that the aggregate principal amount of the Advances exceeds 33% of the aggregate Commitments, a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below: 7 3

Public Debt Rating Applicable S&P/Moody's Utilization Fee ----------- --------------- Level 1 A/A2 or above 0.100% Level 2 A-/A3 0.100% Level 3 BBB+/Baa1 0.100% Level 4 BBB/Baa2 0.125% Level 5 BBB-/Baa3 0.125% Level 6 Lower than Level 5 0.300%

"Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Agent, in substantially the form of Exhibit C hereto. "Assuming Lender" has the meaning specified in Section 2.17(c). "Assumption Agreement" has the meaning specified in Section 2.17(c). "Attributable Debt" means, at any time, the present value, discounted at a rate per annum equal to the weighted average of the interest rates for any Advances outstanding under this Agreement, and if no Advances are outstanding under this Agreement, the Base Rate at such time, compounded quarterly, of the obligation of the lessee for rental payments (not including amounts payable by the lessee for maintenance, property taxes and insurance) during the remaining term of any lease (including any period for which such lease has been extended or may, at the option of the lessor, be extended). "Base Rate" means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of: (a) the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank's base rate; (b) the sum (adjusted to the nearest 1/32 of 1% or, if there is no nearest 1/32 of 1%, to the next higher 1/32 of 1%) of (i) 1/2 of 1% per annum, plus (ii) the rate obtained by dividing (A) the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks, such three-week moving average (adjusted to the basis of a year of 360 days) being determined weekly on each Monday (or, if such day is not a Business Day, on the next succeeding Business Day) for the three-week period ending on the previous Friday by Citibank on the basis of such rates reported by 8 4 certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by Citibank from three New York certificate of deposit dealers of recognized standing selected by Citibank, by (B) a percentage equal to 100% minus the average of the daily percentages specified during such three-week 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 with respect to liabilities consisting of or including (among other liabilities) three-month U.S. dollar non-personal time deposits in the United States, plus (iii) the average during such three-week period of the annual assessment rates estimated by Citibank for determining the then current annual assessment payable by Citibank to the Federal Deposit Insurance Corporation (or any successor) for insuring U.S. dollar deposits of Citibank in the United States; and (c) 1/2 of one percent per annum above the Federal Funds Rate. "Base Rate Advance" means a Revolving Credit Advance that bears interest as provided in Section 2.07(a)(i). "Board of Directors" means the Board of Directors of the Borrower, or the Executive Committee of the Board of Directors of the Borrower. "Borrowing" means a Revolving Credit Borrowing or a Competitive Bid Borrowing. "Business Day" means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances or LIBO Rate Advances, on which dealings are carried on in the London interbank market. "Capital Stock" means any and all shares, interests, participants or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. "Capitalized Lease" means any Lease of property, real, personal or mixed, in respect of which the present value (or some other computation) of the minimum rental commitment thereunder would, in accordance with GAAP in effect on the date such Lease is executed, be capitalized on a balance sheet of the lessee. "Capitalized Lease Obligation" means at any time, the aggregate amounts which, in accordance with GAAP, are shown as liabilities on the balance sheet of the lessee with respect to the minimum rental commitment under a Capitalized Lease of the lessee. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Commitment" means as to any Lender (a) the amount set forth opposite such Lender's name on the signature pages hereof, (b) if such Lender has become a Lender hereunder pursuant to an Assumption Agreement, the amount set forth in such Assumption Agreement or (c) if such Lender has entered into any Assignment and Acceptance, the amount set forth for such Lender in the Register maintained by the Agent pursuant to Section 8.07(d), as such amount may be reduced pursuant to Section 2.05. 9 5 "Commonly Controlled Entity" means an entity, whether or not incorporated, which is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group which includes the Borrower and which is treated as a single employer under Section 414 of the Code. "Competitive Bid Advance" means an advance by a Lender to the Borrower as part of a Competitive Bid Borrowing resulting from the competitive bidding procedure described in Section 2.03 and refers to a Fixed Rate Advance or a LIBO Rate Advance. "Competitive Bid Borrowing" means a borrowing consisting of simultaneous Competitive Bid Advances from each of the Lenders whose offer to make one or more Competitive Bid Advances as part of such borrowing has been accepted under the competitive bidding procedure described in Section 2.03. "Competitive Bid 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 Competitive Bid Advance made by such Lender. "Competitive Bid Reduction" has the meaning specified in Section 2.01. "Confidential Information" means information that the Borrower furnishes to the Agent or any Lender, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Agent or such Lender from a source other than the Borrower. "Consenting Lender" has the meaning specified in Section 2.17(b). "Consolidated" refers to the consolidation of accounts in accordance with GAAP. "Consolidated Tangible Net Worth" means at any date, the excess at such date of total assets over total liabilities of the Borrower and its consolidated subsidiaries determined in accordance with GAAP, on a consolidated basis, excluding, however, from the determination of total assets (i) all intangible assets such as goodwill, trade names, trademarks, patents, organization expenses, unamortized debt discount and expense and other like intangibles, (ii) to the extent not already deducted from total assets, reserves for depreciation, depletion, obsolescence and/or amortization of properties and all other reserves or appropriations of retained earnings which, in accordance with GAAP, should be established in connection with the business conducted by the relevant corporation, and (iii) any revaluation or other write-up in book value of assets subsequent to December 31, 1999 except 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. "Convert", "Conversion" and "Converted" each refers to a conversion of Revolving Credit Advances of one Type into Revolving Credit Advances of the other Type pursuant to Section 2.08 or 2.09. "Default" means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both. "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 Assumption Agreement or 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. 10 6 "Effective Date" has the meaning specified in Section 3.01. "Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a Lender; and (iii) any other bank or financial institution other than an Affiliate of the Borrower. "Environmental Action" means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, Environmental Permit or Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or any third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief. "Environmental Laws" means any and all applicable foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment. "Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental Law. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "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 Assumption Agreement or 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 any Interest Period for each Eurodollar Rate Advance comprising part of the same Revolving Credit Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a) the rate per annum (rounded upward to the nearest whole multiple of 1/32 of 1% per annum) appearing on Telerate 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 Interest Period for a term comparable to such Interest Period or, if for any reason such rate is not available, the average (rounded upward to the nearest whole multiple of 1/32 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 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to such Reference Bank's Eurodollar Rate Advance comprising part of such Revolving Credit Borrowing to be outstanding during such Interest Period and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period. If Telerate Page 3750 (or any successor page) is unavailable, the Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance comprising part of the same Revolving Credit Borrowing shall be determined by the Agent on the 11 7 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, subject, however, to the provisions of Section 2.08. "Eurodollar Rate Advance" means a Revolving Credit Advance that bears interest as provided in Section 2.07(a)(ii). "Eurodollar Rate Reserve Percentage" for any Interest Period for all Eurodollar Rate Advances or LIBO Rate Advances comprising part of the same Borrowing means the reserve percentage applicable two Business Days before the first day of such Interest Period 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 a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Advances or LIBO Rate Advances is determined) having a term equal to such Interest Period. "Events of Default" has the meaning specified in Section 6.01. "Extension Date" has the meaning specified in Section 2.17(b). "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 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 that 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. "Financing Lease" means any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. "Fixed Rate Advances" has the meaning specified in Section 2.03(a)(i). "GAAP" means generally accepted accounting principles in the United States of America in effect from time to time. "Governmental Authority" means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantee" of a Person, at a particular date, means the sum (without duplication) of the following: (a) guarantees or endorsements (other than for purposes of collection in the ordinary course of business) of, or obligations to purchase goods or services for the purpose of supplying funds for the purchase or payment of, indebtedness, liabilities or obligations of others, and other contingent liabilities in respect of, or to purchase or otherwise acquire or service, indebtedness, liabilities or obligations of others, provided that any such obligation to purchase goods or services shall be treated as Indebtedness only to the extent that payment thereunder will be required (after giving effect to any provision limiting such payments) if such property or services are not delivered to such Person, and (b) all indebtedness in effect guaranteed by an agreement, contingent or otherwise, to make any loan, advance, capital contribution or other investment in the debtor for the purpose of assuring a minimum equity, asset base, working capital or other balance sheet condition for any 12 8 date, or to provide funds for the payment of any liability, dividend or stock liquidation payment, or otherwise to supply funds to or in any manner invest in the debtor, but only to the extent of the liability of such Person thereunder. "Hazardous Materials" means (a) petroleum and petroleum products, by products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls, ureaformaldehyde and radon gas and (b) any other chemicals, materials, substances or wastes designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law. "Indebtedness" of a Person, at a particular date, means the sum (without duplication) of the following: (a) all items of indebtedness which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet of such Person as at such date, (b) indebtedness for the repayment of borrowed money secured by any Mortgage existing on a Principal Property owned subject to such Mortgage, whether or not the indebtedness secured thereby shall have been assumed, (c) Guarantees, (d) Capitalized Lease Obligations and (e) Production Payments, provided, however, that the term "Indebtedness" shall not include liabilities in respect of advance payments made under contracts for the sale of goods and/or services, or lease obligations other than Capitalized Lease Obligations, or guarantees of any such liabilities or lease obligations. "Indebtedness for Money Borrowed" of a Person, at a particular date, means the sum (without duplication) of the following (a) all Indebtedness, whether or not represented by bonds, debentures, notes, commercial paper or other securities, for the repayment of borrowed money, (b) all deferred obligations for the payment of the purchase price of property or assets purchased and secured by a purchase money mortgage, conditional sale agreement, security agreement or any title retention agreement, (c) Indebtedness of the character described in clauses (b) and (c) of the definition of "Indebtedness" if such Indebtedness relates to Indebtedness for Money Borrowed of others, (d) Capitalized Lease Obligations and (e) Production Payments. "Information Memorandum" means the information memorandum dated April 2000 used by the Agent in connection with the syndication of the Commitments. "Insolvency" means, with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA. "Insolvent" means pertaining to a condition of Insolvency. "Interest Period" means, for each Eurodollar Rate Advance comprising part of the same Revolving Credit Borrowing and each LIBO Rate Advance comprising part of the same Competitive Bid Borrowing, the period commencing on the date of such Eurodollar Rate Advance or LIBO Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, with respect to Eurodollar Rate Advances, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months or if available by all Lenders, nine or twelve months, as the Borrower may, upon notice received by the Agent not later than 2:00 P.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that (i) the Borrower may not select any Interest Period that ends after the Termination Date; 13 9 (ii) Interest Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Revolving Credit Borrowing or for LIBO Rate Advances comprising part of the same Competitive Bid Borrowing shall be of the same duration; (iii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, 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; and (iv) whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "Lease" or "lease" means any lease or other similar arrangement for the use of property and "lessee" thereunder shall include any lessee or user thereunder. "Lenders" means the Initial Lenders, each Assuming Lender that shall become a party hereto pursuant to Section 2.17 and each Person that shall become a party hereto pursuant to Section 8.07. "LIBO Rate" means, for any Interest Period for all LIBO Rate Advances comprising part of the same Competitive Bid Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a) the rate per annum (rounded upward to the nearest whole multiple of 1/32 of 1% per annum) appearing on Telerate 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 Interest Period for a term comparable to such Interest Period or, if for any reason such rate is not available, the average (rounded upward to the nearest whole multiple of 1/32 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars offered by the principal office of each of the Reference Banks in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to the amount that would be the Reference Banks' respective ratable shares of such Borrowing if such Borrowing were to be a Revolving Credit Borrowing to be outstanding during such Interest Period and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period. If the Telerate Page 3750 (or any successor page) is unavailable, the LIBO Rate for any Interest Period for each LIBO Rate Advance comprising part of the same Competitive Bid Borrowing shall be 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, subject, however, to the provisions of Section 2.08. "LIBO Rate Advances" means a Competitive Bid Advance bearing interest based on the LIBO Rate. "Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing). 14 10 "Loan Documents" means this Agreement and the Notes. "Material Adverse Change" means a material adverse change in the financial condition of the Borrower and its Consolidated Subsidiaries taken as a whole from that reflected in the Borrower's consolidated balance sheet as at December 31, 1999 referred to in Section 4.01(a). "Mortgage" means any mortgage, pledge, lien or other security interest. "Moody's" means Moody's Investors Service, Inc. "Multiemployer Plan" a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Non-Consenting Lender" has the meaning specified in Section 2.17(b). "Note" means a Revolving Credit Note or a Competitive Bid Note. "Notice of Competitive Bid Borrowing" has the meaning specified in Section 2.03(a). "Notice of Revolving Credit Borrowing" has the meaning specified in Section 2.02(a). "PBGC" means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA. "Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof. "Plan" means at a particular time, any employee benefit plan which is covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Principal Domestic Subsidiary" means each of the Subsidiaries designated as a "Principal Domestic Subsidiary" on Schedule II attached hereto. "Principal Property" means (a) any mineral property, located within the United States of America or its territories or possessions, of the Borrower or any Principal Domestic Subsidiary which is in production, under development or included in estimates of reserves published by the Borrower, (b) any concentrator, smelter, refinery, rod mill, metal fabricating plant or similar processing or manufacturing facility, located within the United States of America or its territories or possessions, of the Borrower or any Principal Domestic Subsidiary, or (c) any Capital Stock of, or any Indebtedness for Money Borrowed owing to the Borrower or any other Principal Domestic Subsidiary of, any Principal Domestic Subsidiary which owns any Principal Property; provided, that Principal Property shall in any event not include any property, facility or Principal Domestic Subsidiary determined by the Board of Directors not to be of material importance to the operations of the Borrower and the Principal Domestic Subsidiaries taken as a whole. "Production Payment" means any arrangement providing for the sale, transfer or other disposition of (a) minerals (including coal and hydrocarbons) until the transferee thereof shall realize therefrom a specified 15 11 amount of money (however determined) or a specified amount of such minerals (however determined) or (b) any interest in minerals (including coal and hydrocarbons) of the character commonly referred to as a "production payment." "Public Debt Rating" means, as of any date, the rating that has been most recently announced by either S&P or Moody's, as the case may be, for any class of non-credit enhanced long-term senior unsecured debt issued by the Borrower. For purposes of the foregoing, (a) if only one of S&P and Moody's shall have in effect a Public Debt Rating, the Applicable Margin, the Applicable Percentage and the Applicable Utilization Fee shall be determined by reference to the available rating; (b) if neither S&P nor Moody's shall have in effect a Public Debt Rating, the Applicable Margin and the Applicable Percentage will be set in accordance with Level 6 under the definition of "Applicable Margin", "Applicable Percentage" or "Applicable Utilization Fee", as the case may be; (c) if the ratings established by S&P and Moody's shall fall within different levels, the Applicable Margin, the Applicable Percentage and the Applicable Utilization Fee shall be based upon the higher rating except if the lower of such ratings is more than one level below the higher of such ratings, the Applicable Margin, the Applicable Percentage and the Applicable Utilization Fee shall be set at the level that is one level above the lower of such ratings; (d) if any rating established by S&P or Moody's shall be changed, such change shall be effective as of the date on which such change is first announced publicly by the rating agency making such change; and (e) if S&P or Moody's shall change the basis on which ratings are established, each reference to the Public Debt Rating announced by S&P or Moody's, as the case may be, shall refer to the then equivalent rating by S&P or Moody's, as the case may be. "Reference Banks" means Citibank, Bank of Tokyo-Mitsubishi Trust Company and Morgan Guaranty Trust Company of New York. "Register" has the meaning specified in Section 8.07(d). "Reorganization" means with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA. "Reportable Event" means any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under subsections .12, .13, .14, .16, .18, .19 or .20 of PBGC Reg. SS2615. "Required Lenders" means at any time Lenders owed at least a majority in interest of the then aggregate unpaid principal amount of the Revolving Credit Advances owing to Lenders, or, if no such principal amount is then outstanding, Lenders having at least a majority in interest of the Commitments or, if no Revolving Credit Advances are outstanding and the Commitments have been terminated, Lenders having at least a majority in interest of the Competitive Bid Advances, if any, then outstanding. "Requirement of Law" as to any Person, means any applicable law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Responsible Officer" means the chief executive officer, the president or any vice-president of the Borrower or, with respect to financial matters, the chief financial officer, any vice-president with responsibility primarily for accounting or financial matters, the treasurer or the controller of the Borrower. "Revolving Credit Advance" means an advance by a Lender to the Borrower as part of a Revolving Credit Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance (each of which shall be a "Type" of Revolving Credit Advance). 16 12 "Revolving Credit Borrowing" means a borrowing consisting of simultaneous Revolving Credit Advances of the same Type made by each of the Lenders pursuant to Section 2.01. "Revolving Credit Note" means a promissory note of the Borrower payable to the order of any Lender, delivered pursuant to a request made under Section 2.16 in substantially the form of Exhibit A-1 hereto, evidencing the aggregate indebtedness of the Borrower to such Lender resulting from the Revolving Credit Advances made by such Lender. "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies, Inc. "Sale and Lease-Back Transactions" means any arrangement with any Person providing for the leasing by the Borrower or a Principal Domestic Subsidiary of any Principal Property (except for temporary leases for a term of not more than three years), title to which property has been or is to be sold or transferred by the Borrower or such Principal Domestic Subsidiary to such Person, except for arrangements with any Governmental Authority of the United States of America or any of its territories or possessions entered into for the purpose of financing all or any part of the purchase price or the cost of constructing or improving the property subject to such arrangement. "Single Employer Plan" means any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan. "Subsidiary" of any Person means a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower. "Termination Date" means the earlier of (a) May 10, 2005, subject to the extension thereof pursuant to Section 2.17 and (b) the date of termination in whole of the Commitments pursuant to Section 2.05 or 6.01; provided, however, that the Termination Date of any Lender that is a Non-Consenting Lender to any requested extension pursuant to Section 2.17 shall be the Termination Date in effect immediately prior to the applicable Extension Date for all purposes of this Agreement. "Total Capitalization" means, at any date, the sum of Consolidated Tangible Net Worth at such date and Indebtedness for Money Borrowed of the Borrower and its Consolidated Subsidiaries determined in accordance with GAAP, on a consolidated basis, at such date. "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. SECTION 1.02. Computation of Time Periods. In this Agreement 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 mean "to but excluding". 17 13 SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(a). ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES SECTION 2.01. The Revolving Credit Advances. Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Revolving Credit Advances to the Borrower from time to time on any Business Day during the period from the Effective Date until the Termination Date in an aggregate amount not to exceed at any time outstanding such Lender's Commitment provided that the aggregate amount of the Commitments of the Lenders shall be deemed used from time to time to the extent of the aggregate amount of the Competitive Bid Advances then outstanding and such deemed use of the aggregate amount of the Commitments shall be allocated among the Lenders ratably according to their respective Commitments (such deemed use of the aggregate amount of the Commitments being a "Competitive Bid Reduction"). Each Revolving Credit Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and shall consist of Revolving Credit Advances of the same Type made on the same day by the Lenders ratably according to their respective Commitments. Within the limits of each Lender's Commitment, the Borrower may borrow under this Section 2.01, prepay pursuant to Section 2.10 and reborrow under this Section 2.01. SECTION 2.02. Making the Revolving Credit Advances. (a) Each Revolving Credit Borrowing shall be made on notice, given not later than (x) 2:00 P.M. (New York City time) on the third Business Day prior to the date of the proposed Revolving Credit Borrowing in the case of a Revolving Credit Borrowing consisting of Eurodollar Rate Advances or (y) 11:00 A.M. (New York City time) on the date of the proposed Revolving Credit Borrowing in the case of a Revolving Credit Borrowing consisting of Base Rate Advances, by the Borrower to the Agent, which shall give to each Lender prompt notice thereof by telecopier or telex. Each such notice of a Revolving Credit Borrowing (a "Notice of Revolving Credit Borrowing") shall be by telephone, confirmed immediately in writing, or telecopier or telex in substantially the form of Exhibit B-1 hereto, specifying therein the requested (i) date of such Revolving Credit Borrowing, (ii) Type of Advances comprising such Revolving Credit Borrowing, (iii) aggregate amount of such Revolving Credit Borrowing, and (iv) in the case of a Revolving Credit Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such Revolving Credit Advance. Each Lender shall, before 1:00 P.M. (New York City time) on the date of such Revolving Credit 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 Revolving Credit 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) Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for any Revolving Credit Borrowing if the aggregate amount of such Revolving Credit Borrowing is less than $5,000,000 or if the obligation of the Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.08 or 2.12 and (ii) the Eurodollar Rate Advances may not be outstanding as part of more than ten separate Revolving Credit Borrowings. (c) Each Notice of Revolving Credit Borrowing shall be irrevocable and binding on the Borrower. In the case of any Revolving Credit Borrowing that the related Notice of Revolving Credit Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any loss, cost or expense actually incurred by such Lender as a result of any failure to fulfill on or before the date specified in 18 14 such Notice of Revolving Credit Borrowing for such Revolving Credit 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 Revolving Credit Advance to be made by such Lender as part of such Revolving Credit Borrowing when such Revolving Credit Advance, as a result of such failure, is not made on such date. (d) Unless the Agent shall have received notice from a Lender prior to the date of any Revolving Credit Borrowing that such Lender will not make available to the Agent such Lender's ratable portion of such Revolving Credit Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Revolving Credit Borrowing in accordance with subsection (a) of this Section 2.02 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 day 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 Revolving Credit Advances comprising such Revolving Credit 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 Revolving Credit Advance as part of such Revolving Credit Borrowing for purposes of this Agreement. (e) The failure of any Lender to make the Revolving Credit Advance to be made by it as part of any Revolving Credit Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Revolving Credit Advance on the date of such Revolving Credit Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Revolving Credit Advance to be made by such other Lender on the date of any Revolving Credit Borrowing. SECTION 2.03. The Competitive Bid Advances. (a) Each Lender severally agrees that the Borrower may make Competitive Bid Borrowings under this Section 2.03 from time to time on any Business Day during the period from the date hereof until the date occurring 30 days prior to the Termination Date in the manner set forth below; provided that, following the making of each Competitive Bid Borrowing, the aggregate amount of the Advances then outstanding shall not exceed the aggregate amount of the Commitments of the Lenders (computed without regard to any Competitive Bid Reduction). (i) The Borrower may request a Competitive Bid Borrowing under this Section 2.03 by delivering to the Agent, by telecopier or telex, a notice of a Competitive Bid Borrowing (a "Notice of Competitive Bid Borrowing"), in substantially the form of Exhibit B-2 hereto, specifying therein the requested (v) date of such proposed Competitive Bid Borrowing, (w) aggregate amount of such proposed Competitive Bid Borrowing, (x) in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances, Interest Period, or in the case of a Competitive Bid Borrowing consisting of Fixed Rate Advances, maturity date for repayment of each Fixed Rate Advance to be made as part of such Competitive Bid Borrowing (which maturity date may not be earlier than the date occurring 7 days after the date of such Competitive Bid Borrowing or later than the Termination Date), (y) interest payment date or dates relating thereto, and (z) other terms (if any) to be applicable to such Competitive Bid Borrowing, not later than 2:00 P.M. (New York City time) (A) at least one Business Day prior to the date of the proposed Competitive Bid Borrowing, if the Borrower shall specify in the Notice of Competitive Bid Borrowing that the rates of interest to be offered by the Lenders shall be fixed rates per annum (the Advances comprising any such Competitive Bid Borrowing being referred to herein as "Fixed Rate Advances") and (B) at least four Business Days prior to the date of the proposed Competitive Bid Borrowing, if the Borrower shall instead specify in the Notice of Competitive Bid Borrowing that the Advances comprising such Competitive Bid Borrowing shall be LIBO Rate Advances. Each Notice of Competitive Bid Borrowing shall be irrevocable and binding on the Borrower. The Agent shall in turn promptly notify each 19 15 Lender of each request for a Competitive Bid Borrowing received by it from the Borrower by sending such Lender a copy of the related Notice of Competitive Bid Borrowing. (ii) Each Lender may, if, in its sole discretion, it elects to do so, irrevocably offer to make one or more Competitive Bid Advances to the Borrower as part of such proposed Competitive Bid Borrowing at a rate or rates of interest specified by such Lender in its sole discretion, by notifying the Agent (which shall give prompt notice thereof to the Borrower), (A) before 9:30 A.M. (New York City time) on the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of Fixed Rate Advances and (B) before 10:00 A.M. (New York City time) three Business Days before the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances of the minimum amount and maximum amount of each Competitive Bid Advance which such Lender would be willing to make as part of such proposed Competitive Bid Borrowing (which amounts of such proposed Competitive Bid may, subject to the proviso to the first sentence of this Section 2.03(a), exceed such Lender's Commitment, if any), the rate or rates of interest therefor and such Lender's Applicable Lending Office with respect to such Competitive Bid 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 before 10:00 A.M. (New York City time), and such Lender shall not be obligated to, and shall not, make any Competitive Bid Advance as part of such Competitive Bid Borrowing; provided that the failure by any Lender to give such notice shall be deemed a refusal by such Lender to make any Competitive Bid Advance as part of such proposed Competitive Bid Borrowing. (iii) The Borrower shall, in turn, (A) before 11:00 A.M. (New York City time) on the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of Fixed Rate Advances and (B) before 2:00 P.M. (New York City time) three Business Days before the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances, either: (x) cancel such Competitive Bid Borrowing by giving the Agent notice to that effect, or (y) accept one or more of the offers made by any Lender or Lenders pursuant to paragraph (ii) above, in its sole discretion, by giving notice to the Agent of the amount of each Competitive Bid Advance (which amount shall be equal to or greater than the minimum amount, and equal to or less than the maximum amount, notified to the Borrower by the Agent on behalf of such Lender for such Competitive Bid Advance pursuant to paragraph (ii) above) to be made by each Lender as part of such Competitive Bid Borrowing, and reject any remaining offers made by Lenders pursuant to paragraph (ii) above by giving the Agent notice to that effect. The Borrower shall accept the offers made by any Lender or Lenders to make Competitive Bid Advances in order of the lowest to the highest rates of interest offered by such Lenders. If two or more Lenders have offered the same interest rate, the amount to be borrowed at such interest rate will be allocated among such Lenders in proportion to the largest amount that each such Lender offered at such interest rate. (iv) If the Borrower notifies the Agent that such Competitive Bid Borrowing is cancelled pursuant to paragraph (iii)(x) above, the Agent shall give prompt notice thereof to the Lenders and such Competitive Bid 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 (A) each Lender that has made an offer as 20 16 described in paragraph (ii) above, of the date and aggregate amount of such Competitive Bid Borrowing and whether or not any offer or offers made by such Lender pursuant to paragraph (ii) above have been accepted by the Borrower, (B) each Lender that is to make a Competitive Bid Advance as part of such Competitive Bid Borrowing, of the amount of each Competitive Bid Advance to be made by such Lender as part of such Competitive Bid Borrowing, and (C) each Lender that is to make a Competitive Bid Advance as part of such Competitive Bid 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 Competitive Bid Advance as part of such Competitive Bid Borrowing shall, before 12:00 noon (New York City time) on the date of such Competitive Bid Borrowing specified in the notice received from the Agent pursuant to clause (A) of the preceding sentence or any later time when such Lender shall have received notice from the Agent pursuant to clause (C) of the preceding sentence, make available for the account of its Applicable Lending Office to the Agent at its address referred to in Section 8.02, in same day funds, such Lender's portion of such Competitive Bid 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 location specified by the Borrower in its Notice of Competitive Bid Borrowing. Promptly after each Competitive Bid Borrowing the Agent will notify each Lender of the amount of the Competitive Bid Borrowing, the consequent Competitive Bid Reduction and the dates upon which such Competitive Bid Reduction commenced and will terminate. (vi) If the Borrower notifies the Agent that it accepts one or more of the offers made by any Lender or Lenders pursuant to paragraph (iii)(y) above, such notice of acceptance shall be irrevocable and binding on the Borrower. The Borrower shall indemnify each Lender against any loss, cost or expense actually incurred by such Lender as a result of any failure to fulfill on or before the date specified in the related Notice of Competitive Bid Borrowing for such Competitive Bid 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 Competitive Bid Advance to be made by such Lender as part of such Competitive Bid Borrowing when such Competitive Bid Advance, as a result of such failure, is not made on such date. (b) Each Competitive Bid Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and, following the making of each Competitive Bid Borrowing, the Borrower shall be in compliance with the limitation set forth in the proviso to the first sentence of subsection (a) above. (c) Within the limits and on the conditions set forth in this Section 2.03, the Borrower may from time to time borrow under this Section 2.03, repay or prepay pursuant to subsection (d) below, and reborrow under this Section 2.03, provided that a Competitive Bid Borrowing shall not be made within three Business Days of the date of any other Competitive Bid Borrowing. (d) The Borrower shall repay to the Agent for the account of each Lender that has made a Competitive Bid Advance, on the maturity date of each Competitive Bid Advance (such maturity date being that specified by the Borrower for repayment of such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above and provided in the Competitive Bid Note evidencing such Competitive Bid Advance), the then unpaid principal amount of such Competitive Bid Advance. The Borrower shall have no right to prepay any principal amount of any Competitive Bid Advance unless, and then only on the terms, specified by the Borrower for such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above and set forth in the Competitive Bid Note evidencing such Competitive Bid Advance. (e) The Borrower shall pay interest on the unpaid principal amount of each Competitive Bid Advance from the date of such Competitive Bid Advance to the date the principal amount of such Competitive Bid Advance is repaid in full, at the rate of interest for such Competitive Bid Advance specified by the Lender making such 21 17 Competitive Bid Advance in its notice with respect thereto delivered pursuant to subsection (a)(ii) above, payable on the interest payment date or dates specified by the Borrower for such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above, as provided in the Competitive Bid Note evidencing such Competitive Bid Advance. Upon the occurrence and during the continuance of an Event of Default under Section 6.01(a), the Borrower shall pay interest on the amount of unpaid principal of and interest on each Competitive Bid Advance owing to a Lender that is not paid when due, payable in arrears on the date or dates interest is payable thereon, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Competitive Bid Advance under the terms of the Competitive Bid Note evidencing such Competitive Bid Advance unless otherwise agreed in such Competitive Bid Note. (f) The indebtedness of the Borrower resulting from each Competitive Bid Advance made to the Borrower as part of a Competitive Bid Borrowing shall be evidenced by a separate Competitive Bid Note of the Borrower payable to the order of the Lender making such Competitive Bid Advance. SECTION 2.04. Fees. (a) Facility Fee. The Borrower agrees to pay to the Agent for the account of each Lender a facility fee on the aggregate amount of such Lender's Commitment from the Effective Date in the case of each Initial Lender and from the effective date specified in the Assumption Agreement or in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender until the Termination Date at a rate per annum equal to the Applicable Percentage in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December, commencing June 30, 2000, and on the Termination Date. (b) 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 2.05. Optional Termination or Reduction of the Commitments. The Borrower shall have the right, upon at least one Business Day's notice to the Agent, to permanently terminate in whole or reduce ratably in part the unused portions of the respective Commitments of the Lenders, provided that each partial reduction shall be in the aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and provided further that the aggregate amount of the Commitments of the Lenders shall not be reduced to an amount that is less than the aggregate principal amount of the Competitive Bid Advances then outstanding. SECTION 2.06. Repayment of Revolving Credit Advances. The Borrower shall repay to the Agent for the ratable account of the Lenders on the Termination Date the aggregate principal amount of the Revolving Credit Advances then outstanding. SECTION 2.07. Interest on Revolving Credit Advances. (a) Scheduled Interest. The Borrower shall pay interest on the unpaid principal amount of each Revolving Credit Advance owing to each Lender from the date of such Revolving Credit Advance until such principal amount shall be paid in full, at the following rates per annum: (i) Base Rate Advances. During such periods as such Revolving Credit Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (x) the Base Rate in effect from time to time plus (y) the Applicable Margin in effect from time to time plus (z) the Applicable Utilization Fee, if any, in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Base Rate Advance shall be Converted or paid in full. (ii) Eurodollar Rate Advances. During such periods as such Revolving Credit Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Revolving Credit Advance to the sum of (x) the Eurodollar Rate for such Interest Period for such Revolving Credit Advance plus (y) the Applicable Margin in effect from time to time plus (z) the Applicable Utilization Fee, if any, in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest 22 18 Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full. (b) Default Interest. Upon the occurrence and during the continuance of an Event of Default under Section 6.01(a), the Borrower shall pay interest on (i) the unpaid principal amount of each Revolving Credit Advance owing to each Lender that is not paid when due, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Revolving Credit Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by law, the amount of any interest, fee or other amount payable hereunder that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on Base Rate Advances pursuant to clause (a)(i) above. SECTION 2.08. Interest Rate Determination. (a) Each Reference Bank agrees to furnish to the Agent timely information for the purpose of determining each Eurodollar Rate and each LIBO Rate. If any one or more 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 Banks. 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 2.07(a)(i) or (ii), and the rate, if any, furnished by each Reference Bank for the purpose of determining the interest rate under Section 2.07(a)(ii). (b) If, with respect to any Eurodollar Rate Advances, the Required Lenders notify the Agent that the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their respective Eurodollar Rate Advances for such Interest Period, the Agent shall forthwith so notify the Borrower and the Lenders, whereupon (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance, and (ii) the obligation of the Lenders to make, or to Convert Revolving Credit Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. (c) If the Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of "Interest Period" in Section 1.01, the Agent will forthwith so notify the Borrower and the Lenders and such Advances will automatically, on the last day of the then existing Interest Period therefor, be Converted into Base Rate Advances. (d) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $5,000,000, such Advances shall automatically Convert into Base Rate Advances. (e) Upon the occurrence and during the continuance of any Event of Default, (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended. (f) If Telerate Page 3750 is unavailable and fewer than two Reference Banks furnish timely information to the Agent for determining the Eurodollar Rate or LIBO Rate for any Eurodollar Rate Advances or LIBO Rate Advances, as the case may be, 23 19 (i) the Agent shall forthwith notify the Borrower and the Lenders that the interest rate cannot be determined for such Eurodollar Rate Advances or LIBO Rate Advances, as the case may be, (ii) with respect to Eurodollar Rate Advances, each such Advance will automatically, on the last day of the then existing Interest Period therefor, be prepaid by the Borrower or be automatically Converted into a Base Rate Advance (or if such Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and (iii) the obligation of the Lenders to make Eurodollar Rate Advances or LIBO Rate Advances or to Convert Revolving Credit Advances into Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. SECTION 2.09. Optional Conversion of Revolving Credit Advances. The Borrower may on any Business Day, upon notice given to the Agent not later than 2:00 P.M. (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.08 and 2.12, Convert all Revolving Credit Advances of one Type comprising the same Borrowing into Revolving Credit Advances of the other Type; provided, however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for such Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(b) and no Conversion of any Revolving Credit Advances shall result in more separate Revolving Credit Borrowings than permitted under Section 2.02(b). Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Revolving Credit Advances to be Converted, and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for each such Advance. Each notice of Conversion shall be irrevocable and binding on the Borrower. SECTION 2.10. Prepayments of Revolving Credit Advances. The Borrower may, upon notice at least two Business Days' prior to the date of such prepayment, in the case of Eurodollar Rate Advances, and not later than 2:00 P.M. (New York City time) on the date of such prepayment, in the case of Base 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 amount of the Revolving Credit Advances comprising part of the same Revolving Credit 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 (x) each partial prepayment shall be in an aggregate principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in the event of any such prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.04(c). SECTION 2.11. Requirements of Law. (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof: (i) shall subject any Lender to any tax of any kind whatsoever with respect to any Eurodollar Rate Advance made by it, or change the basis of taxation of payments to such Lender of principal, interest, fees or any other amount payable in respect thereof (except for Non-Excluded Taxes covered by Section 2.14 and changes in taxes imposed on or measured by the overall net income of such Lender or its lending office for such Advance); (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, 24 20 loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the Eurodollar Rate hereunder; or (iii) shall impose on such Lender any other condition (except for any condition covered by clauses (i) or (ii) above and not specifically excluded from the coverage of such clauses by the terms thereof); and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Rate Advances or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant to this subsection, it shall promptly notify the Borrower in writing, through the Agent, of the event by reason of which it has become so entitled; provided, that the Borrower shall not be required to compensate a Lender for costs in respect of any period beginning before the date which is 120 days prior to the date on which the Borrower receives notice that such costs have been imposed, or if such costs have been imposed retroactively, the period beginning on such earlier date on which such costs shall have become effective (excluding, however, any portion of such period which is after the date of adoption of or change in the relevant Requirement of Law and more than 120 days prior to the date on which the Borrower had received notice that such costs had been imposed). A certificate as to any additional amounts payable pursuant to this subsection submitted by such Lender, through the Agent, to the Borrower shall be conclusive in the absence of manifest error. (b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof does or shall have the effect of reducing the rate of return on such Lender's or such corporation's capital as a consequence of its obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such change or compliance (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Agent) of a written request therefor, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction. SECTION 2.12. Illegality. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain Eurodollar Rate Advances as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Rate Advances, continue Eurodollar Rate Advances as such and convert Base Rate Advances to Eurodollar Rate Advances shall forthwith be canceled and (b) such Lender's Revolving Credit Advances then outstanding as Eurodollar Rate Advances, if any, shall be converted automatically to Base Rate Advances on the respective last days of the then current Interest Periods with respect to such Revolving Credit Advances or within such earlier period as required by law. If any such conversion of a Eurodollar Rate Advance occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section 8.04(c). SECTION 2.13. Payments and Computations. (a) The Borrower shall make each payment hereunder not later than 2:00 P.M. (New York City time) on the day when due to the Agent 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 fees ratably (other than amounts payable pursuant to Section 2.03, 2.11, 2.14 or 8.04(c)) to the Lenders 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 any Assuming Lender becoming a Lender hereunder 25 21 as a result of an extension of the Termination Date pursuant to Section 2.17, and upon the Agent's receipt of such Lender's Assumption Agreement and recording of the information contained therein in the Register, from and after the applicable Extension Date, the Agent shall make all payments hereunder and under any Notes issued in connection therewith in respect of the interest assumed thereby to the Assuming Lender. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 8.07(c), from and after the effective date specified in such 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) The Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender is not made when due hereunder or under the Note held by such Lender, to charge from time to time against any or all of the Borrower's accounts with such Lender any amount so due. (c) All computations of interest based on the Base Rate 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 based on the Eurodollar Rate, the LIBO Rate or the Federal Funds Rate or in respect of Fixed Rate Advances and of fees 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 or fees are payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (d) 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 or fee, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances or LIBO Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (e) 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 2.14. Taxes. (a) All payments made by the Borrower under this Agreement and the Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority ("Taxes"), excluding (i) Taxes imposed on the Agent or any Lender as a result of a present or former connection between the Agent or such Lender and the jurisdiction of the Governmental Authority imposing such Tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or the Notes) and (ii) Taxes imposed by the United States on any Lender other than as a result of a Change in Law relating to such Lender (any such non-excluded Taxes, "Non-Excluded Taxes"). If any Taxes are required to be withheld from any amounts payable to the Agent or any Lender hereunder or under the Notes, (A) the Borrower or the Agent shall withhold and deduct any such Taxes from such amounts, (B) the Borrower or the Agent shall pay to or deposit with the appropriate taxing authority in a timely manner the full amount of Taxes so withheld or deducted, (C) the Borrower or the Agent 26 22 shall reasonably promptly send to the Agent or such Lender a certified copy of an original official receipt received by the Borrower (or other documentation reasonably acceptable to the Agent or such Lender) showing payment thereof, and (D) if such Taxes are Non-Excluded Taxes, the amounts so payable to the Agent or such Lender shall be increased to the extent necessary to yield to the Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Notes, provided, however, that the Borrower shall not be required to increase any such amounts payable to any Lender that is not organized under the laws of the United States of America or a state thereof if such Lender fails to comply with the requirements of paragraph (b) of this subsection. If the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required documentary evidence set forth in clause (C) above, the Borrower shall indemnify the Agent and the Lenders for any incremental Taxes, interest or penalties that may become payable by the Agent or any Lender as a result of any such failure. The agreements in this subsection shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. (b) Each Lender that is not incorporated under the laws of the United States of America or a state thereof shall: (i) on or prior to the date such Lender becomes a Lender hereunder deliver to the Borrower and the Agent two duly completed and accurate copies of United States Internal Revenue Service Form W-8BEN or W-8ECI, or successor applicable form, as the case may be; (ii) deliver to the Borrower and the Agent two further duly completed and accurate copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower; and (iii) obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Borrower or the Agent; unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender so advises the Borrower and the Agent. Such Lender shall make the certifications set forth in Form W-8BEN or W-8ECI, as the case may be, in order to establish that it is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes and that it is entitled to an exemption from United States backup withholding tax. As provided in subsection 8.07, each Person that shall become a Lender pursuant to Section 8.07 and that is not incorporated under the laws of the United States of America or any state thereof shall, upon the effectiveness of the related transfer, be required to provide all of the forms and statements required pursuant to this subsection. In addition, each Lender shall, upon the written request of the Borrower, provide the Borrower with such other forms, certificates or documentation as may be reasonably necessary to claim any exemption from, or reduced rate of, Taxes for which the Borrower is liable under this Section 2.14; provided that such action shall not cause the imposition on such Lender of any material additional costs or legal, regulatory or administrative burdens. If an event occurs after the date on which any form, certificate or documentation is submitted by a Lender that renders such item or the information set forth therein incorrect, such Lender shall promptly notify the Borrower and the Agent in writing of such incorrectness. (c) For purposes of this Section 2.14, "Change in Law" shall mean, with respect to any Lender, a change in the Code, the Treasury Regulations thereunder or any official interpretation thereof (or any officially proposed changes in the interpretation thereof) or an amendment or revocation of an applicable United States income tax treaty after the date such Lender acquired its Notes. 27 23 SECTION 2.15. 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 Revolving Credit Advances owing to it (other than pursuant to Section 2.11, 2.14 or 8.04(c)) in excess of its ratable share of payments on account of the Revolving Credit Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Revolving Credit 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 2.15 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) 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 2.16. Evidence of Debt. (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 Revolving Credit 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 Revolving Credit 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 a Revolving Credit Note is required or appropriate in order for such Lender to evidence (whether for purposes of pledge, enforcement or otherwise) the Revolving Credit Advances owing to, or to be made by, such Lender, the Borrower shall promptly execute and deliver to such Lender a Revolving Credit Note payable to the order of such Lender in a principal amount up to the Commitment of such Lender. (b) The Register maintained by the Agent pursuant to Section 8.07(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 Assumption Agreement and 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 2.17. Extension of Termination Date. (a) At least 45 days but not more than 60 days prior to any anniversary of the Effective Date, the Borrower, by written notice to the Agent, may request an extension of the Termination Date in effect at such time by one year from its then scheduled expiration. The Agent shall promptly notify each Lender of such request, and each Lender shall in turn, in its sole discretion, not earlier than 30 days prior to such anniversary date (and not later than 20 days prior to such anniversary date), notify the Borrower and the Agent in writing as to whether such Lender will consent to such extension. If any Lender shall fail to notify the Agent and the Borrower in writing of its consent to any such request for extension of the Termination Date at least 15 days prior to such anniversary date, such Lender shall be deemed to be a Non-Consenting Lender with respect to such request. The Agent shall notify the Borrower not later than 15 days prior to such anniversary date of the decision of the Lenders regarding the Borrower's request for an extension of the Termination Date. 28 24 (b) If all the Lenders consent in writing to any such request in accordance with subsection (a) of this Section 2.17, the Termination Date in effect at such time shall, effective as at the applicable anniversary date (the "Extension Date"), be extended for one year; provided that on each Extension Date the applicable conditions set forth in Article III shall be satisfied. If less than all of the Lenders consent in writing to any such request in accordance with subsection (a) of this Section 2.17, the Termination Date in effect at such time shall, effective as at the applicable Extension Date and subject to subsection (d) of this Section 2.17, be extended as to those Lenders that so consented (each a "Consenting Lender") but shall not be extended as to any other Lender (each a "Non-Consenting Lender"). To the extent that the Termination Date is not extended as to any Lender pursuant to this Section 2.17 and the Commitment of such Lender is not assumed in accordance with subsection (c) of this Section 2.17 on or prior to the applicable Extension Date, the Commitment of such Non-Consenting Lender shall automatically terminate in whole on such unextended Termination Date without any further notice or other action by the Borrower, such Lender or any other Person; provided that such Non-Consenting Lender's rights under Sections 2.11, 2.14 and 8.04, and its obligations under Section 7.05, shall survive the Termination Date for such Lender as to matters occurring prior to such date. It is understood and agreed that no Lender shall have any obligation whatsoever to agree to any request made by the Borrower for any requested extension of the Termination Date. (c) If less than all of the Lenders consent to any such request pursuant to subsection (a) of this Section 2.17, the Agent shall promptly so notify the Consenting Lenders, and each Consenting Lender may, in its sole discretion, give written notice to the Agent not later than 10 days prior to the Termination Date of the amount of the Non-Consenting Lenders' Commitments for which it is willing to accept an assignment. If the Consenting Lenders notify the Agent that they are willing to accept assignments of Commitments in an aggregate amount that exceeds the amount of the Commitments of the Non-Consenting Lenders, such Commitments shall be allocated among the Consenting Lenders willing to accept such assignments in such amounts as are agreed between the Borrower and the Agent. If after giving effect to the assignments of Commitments described above there remains any Commitments of Non-Consenting Lenders, the Borrower may arrange for one or more Consenting Lenders or other Eligible Assignees (each, an "Assuming Lender") to assume, effective as of the Extension Date, any Non-Consenting Lender's Commitment and all of the obligations of such Non-Consenting Lender under this Agreement thereafter arising, without recourse to or warranty by, or expense to, such Non-Consenting Lender; provided, however, that the amount of the Commitment of any such Assuming Lender as a result of such substitution shall in no event be less than $25,000,000 unless the amount of the Commitment of such Non-Consenting Lender is less than $25,000,000, in which case such Assuming Lender shall assume all of such lesser amount; and provided further that: (i) any such Consenting Lender or Assuming Lender shall have paid to such Non-Consenting Lender (A) the aggregate principal amount of, and any interest accrued and unpaid to the effective date of the assignment on, the outstanding Advances, if any, of such Non-Consenting Lender plus (B) any accrued but unpaid fees owing to such Non-Consenting Lender as of the effective date of such assignment; (ii) all additional costs reimbursements, expense reimbursements and indemnities payable to such Non-Consenting Lender, and all other accrued and unpaid amounts owing to such Non-Consenting Lender hereunder, as of the effective date of such assignment shall have been paid to such Non-Consenting Lender; and (iii) with respect to any such Assuming Lender, the applicable processing and recordation fee required under Section 8.07(a) for such assignment shall have been paid; provided further that such Non-Consenting Lender's rights under Sections 2.11, 2.14 and 8.04, and its obligations under Section 7.05, shall survive such substitution as to matters occurring prior to the date of substitution. At least three Business Days prior to any Extension Date, (A) each such Assuming Lender, if any, shall have delivered to the Borrower 29 25 and the Agent agreement (an "Assumption Agreement"), duly executed by such Assuming Lender, such Non-Consenting Lender, the Borrower and the Agent, (B) any such Consenting Lender shall have delivered confirmation in writing satisfactory to the Borrower and the Agent as to the increase in the amount of its Commitment and (C) each Non-Consenting Lender being replaced pursuant to this Section 2.17 shall have delivered to the Agent any Note or Notes held by such Non-Consenting Lender. Upon the payment or prepayment of all amounts referred to in clauses (i), (ii) and (iii) of the immediately preceding sentence, each such Consenting Lender or Assuming Lender, as of the Extension Date, will be substituted for such Non-Consenting Lender under this Agreement and shall be a Lender for all purposes of this Agreement, without any further acknowledgment by or the consent of the other Lenders, and the obligations of each such Non-Consenting Lender hereunder shall, by the provisions hereof, be released and discharged. (d) If (after giving effect to any assignments or assumptions pursuant to subsection (c) of this Section 2.17) all of the Lenders having Commitments equal to at least 50% of the Commitments in effect immediately prior to the Extension Date consent in writing to a requested extension (whether by execution or delivery of an Assumption Agreement or otherwise) as promptly as practicable, and in any event not later than one Business Day prior to such Extension Date, the Agent shall so notify the Borrower, and, subject to the satisfaction to the applicable conditions in Article III, the Termination Date then in effect shall be extended for the additional one-year period as described in subsection (a) of this Section 2.17, and all references in this Agreement, and in the Notes, if any, to the "Termination Date" shall, with respect to each Consenting Lender and each Assuming Lender for such Extension Date, refer to the Termination Date as so extended. Promptly following each Extension Date, the Agent shall notify the Lenders (including, without limitation, each Assuming Lender) of the extension of the scheduled Termination Date in effect immediately prior thereto and shall thereupon record in the Register the relevant information with respect to each such Consenting Lender and each such Assuming Lender. ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01 and 2.03. Sections 2.01 and 2.03 of this Agreement shall become effective on and as of the first date (the "Effective Date") on which the following conditions precedent have been satisfied: (a) There shall have occurred no Material Adverse Change since December 31, 1999. (b) Except as set forth on Schedule IV, there shall exist no action, suit, investigation, litigation or proceeding affecting the Borrower or any of its Subsidiaries pending or threatened before any court, governmental agency or arbitrator that could reasonably be expected to result in a Material Adverse Change. (c) Nothing shall have come to the attention of the Lenders during the course of their due diligence investigation to lead them to believe that the Information Memorandum was or has become misleading, incorrect or incomplete in any material respect; without limiting the generality of the foregoing, the Lenders shall have been given such access to the management, records, books of account, contracts and properties of the Borrower and its Subsidiaries as they shall have reasonably requested. (d) All governmental and material third party consents and approvals necessary in connection with the transactions contemplated hereby shall have been obtained (without the imposition of any conditions that are not reasonably acceptable to the Lenders) and shall remain in effect, and no law or regulation shall be applicable in the reasonable judgment of the Lenders that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated hereby. 30 26 (e) The Borrower shall have notified each Lender and the Agent in writing as to the proposed Effective Date. (f) The Borrower shall have paid all accrued fees and expenses of the Agent and the Lenders (including the reasonable fees and expenses of a single firm of counsel to the Agent) to the extent invoiced to the Borrower at least one Business Day prior to the Effective Date. (g) On the Effective Date, the following statements shall be true and the Agent shall have received for the account of each Lender a certificate signed by a duly authorized officer of the Borrower, dated the Effective Date, stating that: (i) The representations and warranties contained in Section 4.01 are correct on and as of the Effective Date, and (ii) No event has occurred and is continuing that constitutes a Default. (h) The Agent shall have received on or before the Effective Date the following, each dated such day, in form and substance satisfactory to the Agent and (except for the Revolving Credit Notes) in sufficient copies for each Lender: (i) The Revolving Credit Notes to the order of the Lenders to the extent requested by any Lender pursuant to Section 2.16. (ii) Certified copies of the resolutions of the Board of Directors of the Borrower approving this Agreement and the Notes, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement and the Notes. (iii) A certificate of the Secretary or an Assistant Secretary of the Borrower certifying the names and true signatures of the officers of the Borrower authorized to sign this Agreement and the Notes and the other documents to be delivered hereunder. (iv) Favorable opinions of (A) Assistant General Counsel and Assistant Secretary to the Borrower substantially in the form of Exhibit E-1 hereto and (B) Debevoise and Plimpton, counsel to the Borrower, substantially in the form of Exhibit E-2 hereto, and as to such other matters as any Lender through the Agent may reasonably request. (v) A favorable opinion of Shearman & Sterling, counsel for the Agent, in form and substance satisfactory to the Agent. (i) The Borrower shall have terminated the commitments of the lenders and repaid or prepaid all of the Indebtedness under, the Second Amended and Restated Credit Agreement dated as of June 25, 1997 among the Borrower, the lenders parties thereto and The Chase Manhattan Bank, as administrative agent. SECTION 3.02. Conditions Precedent to Each Revolving Credit Borrowing and Extension Date. The obligation of each Lender to make a Revolving Credit Advance on the occasion of each Revolving Credit Borrowing and each extension of Commitments pursuant to Section 2.17 shall be subject to the conditions precedent that the Effective Date shall have occurred and on the date of such Revolving Credit Borrowing or the applicable 31 27 Extension Date (a) the following statements shall be true (and each of the giving of the applicable Notice of Revolving Credit Borrowing, request for Commitment Extension and the acceptance by the Borrower of the proceeds of such Revolving Credit Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Borrowing or such Extension Date such statements are true): (i) the representations and warranties contained in Section 4.01 (except, in the case of Revolving Credit Borrowings, the representations set forth in subsection (b) or (f)(ii) thereof) are correct on and as of such date, before and after giving effect to such Revolving Credit Borrowing or such Extension Date and to the application of the proceeds therefrom, as though made on and as of such date, and (ii) no event has occurred and is continuing, or would result from such Revolving Credit Borrowing, such Extension Date or from the application of the proceeds therefrom, that constitutes a Default; and (b) the Agent shall have received such other approvals, opinions or documents as any Lender through the Agent may reasonably request. SECTION 3.03. Conditions Precedent to Each Competitive Bid Borrowing. The obligation of each Lender that is to make a Competitive Bid Advance on the occasion of a Competitive Bid Borrowing to make such Competitive Bid Advance as part of such Competitive Bid Borrowing is subject to the conditions precedent that (i) the Agent shall have received the written confirmatory Notice of Competitive Bid Borrowing with respect thereto, (ii) on or before the date of such Competitive Bid Borrowing, but prior to such Competitive Bid Borrowing, the Agent shall have received a Competitive Bid Note payable to the order of such Lender for each of the one or more Competitive Bid Advances to be made by such Lender as part of such Competitive Bid Borrowing, in a principal amount equal to the principal amount of the Competitive Bid Advance to be evidenced thereby and otherwise on such terms as were agreed to for such Competitive Bid Advance in accordance with Section 2.03, and (iii) on the date of such Competitive Bid Borrowing the following statements shall be true (and each of the giving of the applicable Notice of Competitive Bid Borrowing and the acceptance by the Borrower of the proceeds of such Competitive Bid Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Competitive Bid Borrowing such statements are true): (a) the representations and warranties contained in Section 4.01 (except, in the case of Revolving Credit Borrowings, the representations set forth in subsection (b) or (f)(ii) thereof) are correct on and as of the date of such Competitive Bid Borrowing, before and after giving effect to such Competitive Bid Borrowing 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 Competitive Bid Borrowing or from the application of the proceeds therefrom, that constitutes a Default. 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, specifying its objection thereto. The Agent shall promptly notify the Lenders of the occurrence of the Effective Date. 32 28 ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Borrower. The Borrower represents and warrants as follows: (a) Financial Condition. The consolidated balance sheet of the Borrower and its consolidated subsidiaries as at December 31, 1999 and the related consolidated statements of income and of cash flows for the fiscal year ended on such date, reported on by PricewaterhouseCoopers LLP, copies of which have heretofore been furnished to each Lender, are complete and correct and present fairly the consolidated financial condition of the Borrower and its consolidated subsidiaries as at such date, and the consolidated results of their operations and their consolidated cash flows for the fiscal years then ended. All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by such accountants or Responsible Officer, as the case may be, and as disclosed therein). (b) No Change. No event or circumstance since December 31, 1999 has occurred or is existing which has resulted in, or after giving effect to the reasonably projected outcome or effect thereof will result in, a Material Adverse Change. (c) Corporate Existence. The Borrower (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of New York, (ii) has the corporate power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged and (iii) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification except to the extent that the failure to be so qualified would not reasonably be expected to result in a Material Adverse Change. (d) Corporate Power; Authorization; Enforceable Obligations. The Borrower has the corporate power and authority, and the legal right, to make, deliver and perform the Loan Documents and to borrow hereunder and has taken all necessary corporate action to authorize the Borrowings on the terms and conditions of this Agreement and the Notes and to authorize the execution, delivery and performance of the Loan Documents. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the Borrowings hereunder or the transactions contemplated hereby or with the execution, delivery, performance, validity or enforceability of the Loan Documents except such as have been obtained or made and are in full force and effect. This Agreement has been, and each Note will be, duly executed and delivered on behalf of the Borrower. This Agreement constitutes, and each Note when executed and delivered will constitute, a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). (e) No Legal Bar. The execution, delivery and performance of the Loan Documents, the borrowings hereunder and the use of the proceeds thereof will not violate the certificate of incorporation, charter or by-laws of the Borrower or any Requirement of Law or Contractual Obligation of the Borrower or of any of its Principal Domestic Subsidiaries and will not result in, or require, the creation or imposition of any Lien on any of its or their respective properties or revenues pursuant to any provision of its certificate of incorporation, charter or by-laws or any such Requirement of Law or Contractual Obligation. (f) No Material Litigation. No litigation, investigation or proceeding (including any Environmental Action) of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, overtly 33 29 threatened by or against the Borrower or any of its Principal Domestic Subsidiaries or against any of its or their respective properties or revenues (i) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (ii) except as set forth on Schedule IV, which after giving effect to the reasonably projected outcome or effect thereof, will result in a Material Adverse Change. (g) No Default. Neither the Borrower nor any of its Principal Domestic Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect which has resulted in or, after giving effect to the reasonably projected outcome or effect thereof, will result in, a Material Adverse Change. No Default has occurred and is continuing. (h) Ownership of Property; Liens. Each of the Borrower and its Principal Domestic Subsidiaries has good record and marketable title in fee simple to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all its other property, and none of such property is subject to any Lien except as permitted by Section 5.02(b) except to the extent that the absence of such title or leasehold interest has not resulted in, and after giving effect to the reasonably projected outcome or effect thereof, will not result in, a Material Adverse Change. (i) Compliance with Law. The Borrower and each of its Principal Domestic Subsidiaries is in compliance with all Requirements of Law and Contractual Obligations except to the extent that the failure to comply therewith has not resulted in, and, after giving effect to the reasonably projected outcome or effect thereof, will not result in, a Material Adverse Change. (j) Taxes. Each of the Borrower and its Principal Domestic Subsidiaries has filed or caused to be filed all tax returns which, to the knowledge of the Borrower, are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Borrower or its Principal Domestic Subsidiaries, as the case may be) and, to the knowledge of the Borrower, no tax Lien (other than a Lien for taxes that are not yet due and payable) has been filed, with respect to any such tax, fee or other charge which, in any case, has resulted in, or after giving effect to the reasonably projected outcome or effect thereof will result in, a Material Adverse Change. (k) Federal Regulations. The Borrower is not engaged in the business of extending credit for the purpose of "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect and no proceeds of an Advance have been or will be used for any purpose which violates the provisions of the Regulations of such Board of Governors. At no time would the obligations of the Borrower hereunder or under the Notes be directly or "indirectly secured" by assets of the Borrower and its consolidated Subsidiaries that are "margin stock" (pursuant to, and as such captioned terms are defined in, Section 221.2(g) of Regulation U), provided that in any event not more than 25% of the value of the assets of the Borrower and its consolidated Subsidiaries subject to such arrangements shall be represented by such margin stock. If requested by any Lender or the Agent, the Borrower will furnish to the Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form U-1 referred to in said Regulation U. (l) ERISA. Neither a Reportable Event nor an "accumulated funding deficiency" (within the meaning of Section 412 of the Code or Section 302 of ERISA) nor any other event has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan which has resulted in or, after giving effect to the reasonably projected outcome or effect thereof, will result in, a Material Adverse Change. 34 30 (m) Investment Company Act; Other Regulations. The Borrower is not an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. The Borrower is not subject to regulation under any Federal or state statute or regulation which limits its ability to incur indebtedness of the type being incurred by it pursuant to this Agreement. (n) Subsidiaries. Set forth in Schedule II is a complete and accurate list showing all Subsidiaries (other than inactive Subsidiaries) existing as of the date of this Agreement, designating certain Subsidiaries as Principal Domestic Subsidiaries and showing the jurisdiction of incorporation of each Principal Domestic Subsidiary and the percentage of the outstanding shares of Capital Stock of such Subsidiaries owned (directly or indirectly) by the Borrower or any Subsidiary. All of the outstanding Capital Stock of each Principal Domestic Subsidiary has been validly issued, is fully paid and non-assessable and is owned by the Borrower or one or more of the Principal Domestic Subsidiaries free and clear of all Liens. Each Principal Domestic Subsidiary is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation. (o) Purpose of Advances. The proceeds of the Advances shall be used by the Borrower for its general corporate purposes, including, without limitation, working capital and acquisitions. (p) Environmental Matters. Except as disclosed in the Borrower's Annual Report on Form 10-K for fiscal year 1999, to the best knowledge of the Borrower, the Borrower and each Principal Domestic Subsidiary has complied with all applicable Environmental Laws, except for failures to comply which have not resulted in, and after giving effect to the reasonably projected outcome or effect thereof will not result in, a Material Adverse Change. Except as disclosed in the Borrower's Annual Report on Form 10-K for fiscal year 1999 or on Schedule III, to the best knowledge of the Borrower, there are no events, conditions or circumstances involving the Borrower, any of its Principal Domestic Subsidiaries or any Subsidiaries of such Principal Domestic Subsidiaries with respect to management of any Hazardous Materials, environmental pollution or contamination or employee health or safety which have resulted in, or after giving effect to the reasonably projected outcome or effect thereof will result in, a Material Adverse Change. (q) Information. All written information provided by the Borrower to the Agent or any Lender in connection with this Agreement or the Loan Documents and the transactions contemplated hereby and thereby, at the date hereof or (if provided after the date hereof) at the date it was provided (i) in the case of any factual matter (excluding any such information referred to in paragraph (ii)), is true and accurate in all material respects and (ii) in the case of financial and business projections, budgets, pro forma data and forecasts (all of the foregoing being, together, "Projections"), contained therein, were prepared in good faith and on reasonable grounds (it being understood by the parties hereto that such Projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower and that no assurance can be given (without limiting any other provision of this Agreement or the Loan Documents) that any such Projections will be realized). ARTICLE V COVENANTS OF THE BORROWER SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will: (a) Financial Statements. Furnish to each Lender: (i) as soon as available, but in any event within 100 days after the end of each fiscal year of the Borrower, a copy of the consolidated balance sheet of the Borrower and its consolidated subsidiaries as at the end of such year and the related consolidated statements of income and retained earnings and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, 35 31 reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by PricewaterhouseCoopers LLP or other independent certified public accountants of nationally recognized standing; and (ii) as soon as available, but in any event not later than 55 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, the unaudited consolidated balance sheet of the Borrower and its consolidated subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and retained earnings and of cash flows of the Borrower and its consolidated subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments); all such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein). (b) Certificates; Other Information. Furnish to each Lender: (i) concurrently with the delivery of the financial statements referred to in Section 5.01(a)(i), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default (including calculations demonstrating compliance with Section 5.02), except as specified in such certificate; (ii) concurrently with the delivery of the financial statements referred to in Sections 5.01(a)(i) and (ii), a certificate of a Responsible Officer stating that, to the best of such Officer's knowledge, the Borrower during such period has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and in the Notes to be observed, performed or satisfied by it (including calculations demonstrating compliance with Section 5.02), and that such Officer has obtained no knowledge of any Default except as specified in such certificate; (iii) within ten days after the same are sent, copies of all financial statements and reports which the Borrower sends to its stockholders, and within ten days after the same are filed, copies of all financial statements and periodic financial reports which the Borrower may make to, or file with, the Securities and Exchange Commission or any successor or analogous Governmental Authority; and (iv) promptly, such additional financial and other information as any Lender may from time to time reasonably request. (c) Payment of Taxes and Other Obligations. Pay, discharge or otherwise satisfy, in all material respects, and cause its Principal Domestic Subsidiaries to pay, discharge or otherwise satisfy, in all material respects (i) all material taxes, assessments and governmental changes or levies imposed on its property when due by it and (ii) at or before maturity or otherwise in accordance with reasonable business practices, all its material obligations of whatever nature; provided, that the Borrower or its Principal Domestic Subsidiaries, as the case may be, may contest its obligations in good faith by appropriate proceedings if it maintains reserves in conformity with GAAP with respect thereto. 36 32 (d) Conduct of Business and Maintenance of Existence. Continue to engage in businesses of the same general types as now conducted by it and preserve, renew and keep in full force and effect its corporate existence and take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business except that nothing in this Section 5.01(d) shall prevent (i) the Borrower from discontinuing any business if such discontinuance is, in the opinion of its Board of Directors, in the best interests of the Borrower and is not disadvantageous in any material respect to any Lender or the holder of any Note or (ii) the abandonment, modification or termination of rights, privileges and franchises of the Borrower, if such abandonment, modification or termination is, in the opinion of the Board of Directors, in the best interests of the Borrower and is not disadvantageous in any material respect to any Lender or the holder of any Note. (e) Compliance With Laws, etc. Use commercially reasonable efforts to comply, and to cause each Principal Domestic Subsidiary to comply, in all material respects with all Requirements of Law and Contractual Obligations except to the extent that failure to so comply would not, in the reasonable judgment of the Borrower, be expected to result in a Material Adverse Change, provided, however, that neither the Borrower nor any Principal Domestic Subsidiary shall be required to comply with any Requirements of Law or Contractual Obligations if the applicability or validity thereof shall currently be contested in good faith by appropriate proceedings. (f) Maintenance of Property; Insurance. Keep all Principal Properties in good working order and condition except that nothing in this Section 5.01(f) shall prevent the Borrower or any of its Principal Domestic Subsidiaries from discontinuing the operation and maintenance of any of its Principal Properties if such discontinuance is, in the opinion of the Board of Directors of the Borrower, in the best interest of the Borrower and is not disadvantageous in any material respect to any Lender or the holder of any Note; maintain, and cause each Principal Domestic Subsidiary to maintain, with financially sound and reputable insurance companies insurance on all its property of a character usually insured by companies similarly situated and operating like properties in at least such amounts and against at least such risks as are usually insured against in the same general area by companies engaged in the same or a similar business; and furnish to each Lender, upon written request, full information as to the insurance carried. The Borrower and any Principal Domestic Subsidiary may self-insure (which term shall include insurance by an affiliated insurance company) against any of the risks required to be insured against pursuant to this Section 5.01(f) so long as such self-insurance is not excessive in the light of self-insurance by companies similarly situated and operating like properties, provided, in the case of any insurance required by law, that such risk is permitted to be self-insured under applicable law and such self-insurance complies with applicable law. (g) Inspection of Property; Books and Records; Discussions. Keep, and cause each Principal Domestic Subsidiary to keep, proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and permit, and cause any Principal Domestic Subsidiary to permit, representatives of any Lender, at such Lender's own expense, to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time and as often as may reasonably be desired and, after reasonable notice to the Borrower, to discuss the business, operations, properties and financial and other condition of the Borrower and its Principal Domestic Subsidiaries with officers and employees of the Borrower and its Principal Domestic Subsidiaries and with its independent certified public accountants. (h) Notices. Promptly give notice to the Agent and each Lender of: (i) the occurrence of any Default; (ii) any (A) default or event of default under any Contractual Obligation of the Borrower or any of its Subsidiaries or (B) litigation, investigation or proceeding which may exist at any time between the Borrower or any of its Subsidiaries and any Governmental Authority, unless in either case, 37 33 the Borrower has determined that such event has not resulted in, or after giving effect to the reasonably projected outcome or effect thereof will not result in, a Material Adverse Change; and (iii) the following events, as soon as possible and in any event within 30 days after the Borrower knows or has reason to know thereof: (A) the occurrence or reasonably expected occurrence of any Reportable Event with respect to any Plan, a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (B) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan which with respect to the events in clause (A) or (B), individually or in the aggregate, could reasonably be expected to involve an amount of $15,000,000 or more. Each notice pursuant to this subsection shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower proposes to take with respect thereto. SECTION 5.02. Negative Covenants. So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will not: (a) Financial Condition Covenants. (i) Maintenance of Tangible Net Worth. Permit Consolidated Tangible Net Worth at any time to be less than $1,500,000,000. (ii) Indebtedness for Money Borrowed to Total Capitalization. Permit the ratio of Indebtedness for Money Borrowed of the Borrower and its consolidated Subsidiaries (determined on a consolidated basis in accordance with GAAP) to Total Capitalization at any time to be greater than 0.6:1. (b) Limitation on Mortgages, Sale and Leaseback, etc. (i) The Borrower will not, nor will it permit any Principal Domestic Subsidiary to, (i) issue, assume or guarantee any Indebtedness for Money Borrowed, if such Indebtedness for Money Borrowed is secured by a Lien upon, or (ii) directly or indirectly secure any outstanding Indebtedness for Money Borrowed by a mortgage upon, any Principal Property now owned or hereinafter acquired; provided, however, that the foregoing restriction shall not apply to the following: (A) Mortgages on any Principal Property acquired, constructed or improved by the Borrower or any Principal Domestic Subsidiary after the date of this Agreement which are created or assumed contemporaneously with, or within 90 days after, such acquisition, construction or improvement to secure or provide for the payment of any part of the purchase price of such property or the cost of such construction or improvement incurred after the date of this Agreement, or, in addition to Mortgages contemplated by clause (ii) below, Mortgages on any Principal Property existing at the time of acquisition thereof, provided, that in the case of any such acquisition, construction or improvement the Mortgage shall not apply to any property theretofore owned by the Borrower or any Principal Domestic Subsidiary, other than in the case of any such construction or improvement, any theretofore unimproved real property on which the property so constructed, or the improvement, is located; 38 34 (B) Mortgages on any Principal Property owned by a corporation which is merged with or into, or otherwise acquired by, the Borrower or a Principal Domestic Subsidiary; (C) Mortgages to secure Indebtedness for Money Borrowed of a Principal Domestic Subsidiary to the Borrower or to another Principal Domestic Subsidiary; (D) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Mortgage referred to in the foregoing clauses (i) to (iii), inclusive; provided, however, that the principal amount of Indebtedness for Money Borrowed secured thereby shall not exceed the principal amount of Indebtedness for Money Borrowed so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to all or part of the property which secured the mortgage so extended, renewed or replaced (plus improvements on such property); and (E) the issuance, assumption or guarantee of secured Indebtedness for Money Borrowed which would otherwise be subject to the foregoing restrictions of this subsection 5.02(b) in an aggregate amount which, together with all other such Indebtedness for Money Borrowed of the Borrower and its Principal Domestic Subsidiaries and the Attributable Debt in respect of Sale and Lease-Back Transactions (other than Sale and Lease-Back Transactions permitted because the Borrower would be entitled to incur Indebtedness for Money Borrowed secured by a mortgage on the property to be leased pursuant to the provisions of this Section 5.02(b) and other than Sale and Lease-Back Transactions the proceeds of which have been applied in accordance with the limitations on Sale and Lease-Back Transactions set forth in Section 5.02(b)(ii) below) does not at the time exceed 10% of Consolidated Tangible Net Worth. For the purposes of this Section 5.02(b), the following types of transactions, among others, shall not be deemed to create Indebtedness for Money Borrowed secured by a mortgage: (A) Production Payments; and (B) Mortgages in favor of the United States of America, any of its territories or possessions, or any State thereof, or any department, agency, instrumentality or political subdivision of any thereof, or any department, agency or instrumentality of any such political subdivision, to secure partial progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred for the purpose of financing all or any part of the purchase price or the cost of constructing or improving the property subject to such Mortgages. (ii) The Borrower will not, nor will it permit any Principal Domestic Subsidiary to, enter into any Sale and Lease-Back Transaction, unless the proceeds of such sale or transfer are at least equal to the fair value (as determined by the Board of Directors) of such property and either (A) the Borrower or such Principal Domestic Subsidiary would be entitled to incur Indebtedness for Borrowed Money secured by a mortgage on the property to be leased pursuant to this Section 5.02(b) or (B) the Borrower shall, and in any such case the Borrower covenants that it will, apply an amount equal to the fair value (as determined by the Board of Directors) of the property so leased to the retirement (other than any mandatory retirement), within 90 days of the effective date of any such Sale and Lease-Back Transaction, of Indebtedness for Money Borrowed of the Borrower or such Principal Domestic Subsidiary which by its terms matures at, or is extendible or renewable at the option of the obligor to, a date more than twelve months after the date of the creation of such Indebtedness for Money Borrowed and which ranks prior to or on a parity with the Advances; provided, however that the Borrower or any Principal Domestic Subsidiary may enter into any Sale and Lease-Back Transaction which would otherwise be subject to the 39 35 foregoing restrictions of this Section 5.02(b)(iii) if the amount of the Attributable Debt in respect of such Sale and Lease-Back Transactions for such transaction, together with all secured Indebtedness for Money Borrowed of the Borrower and its Principal Domestic Subsidiaries and all other Attributable Debt in respect of Sale and Lease-Back Transactions existing at such time (other than Sale and Lease-Back Transactions permitted because the Borrower would be entitled to incur Indebtedness for Money Borrowed secured by a Lien on the property to be leased and other than Sale and Lease-Back Transactions the proceeds of which have been applied in accordance with the clause (B) of this subsection), does not at the time exceed 10% of Consolidated Tangible Net Worth. (c) Mergers, Etc. Merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of the assets (whether now owned or thereafter acquired) of the Borrower and its Subsidiaries, taken as a whole, to, any Person, or permit any of its Subsidiaries to do so, except that (i) any Subsidiary of the Borrower may merge or consolidate with or into, or dispose of substantially all of its assets to, one or more other Subsidiaries of the Borrower, and any Subsidiary of the Borrower may merge into or dispose of substantially all or substantially all of its assets to the Borrower and one or more other Subsidiaries, (ii) the Borrower may merge with any other Person so long as the Borrower is the surviving corporation and (iii) any Subsidiary of the Borrower may merge or consolidate with or into, or dispose of all or substantially all of its assets to, any Person so long as such merger or disposition does not (whether in one transaction or in a series of transactions) constitute a disposition of all or substantially all of the assets of the Borrower and its Subsidiaries, taken as a whole, provided, that, in the case of any merger or consolidation in accordance with clause (i) above in which a Principal Domestic Subsidiary merges or consolidates with any Subsidiary (other than another Principal Domestic Subsidiary) of the Borrower, such Principal Domestic Subsidiary is the surviving corporation, and provided, further, in each case, that no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom. 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 any principal of any Advance when due in accordance with the terms thereof or hereof; or the Borrower shall fail to pay any interest on any Advance, or any other amount payable hereunder, within five Business Days after any such interest or other amount becomes due in accordance with the terms thereof or hereof; or (b) Any representation or warranty made or deemed made by the Borrower herein or which is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (c) The Borrower shall default in the observance or performance of any agreement contained in Section 5.02 (a) through (c) or (unless such default is capable of remedy and is remedied to the reasonable satisfaction of the Required Lenders with 30 days of such default) Section 5.02(d); or (d) The Borrower shall default in the observance or performance of any other agreement contained in this Agreement (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue 40 36 unremedied for a period of 30 days after notice thereof has been given to the Borrower in accordance with this Agreement; or (e) The Borrower or any of its Principal Domestic Subsidiaries shall (i) default in any payment of principal of or interest of any Indebtedness for Money Borrowed (other than the Advances), beyond the period of grace (not to exceed 30 days), if any, provided in the instrument or agreement under which such Indebtedness for Money Borrowed was created (except for any such payments on account of Indebtedness for Money Borrowed in an aggregate amount at any one time of up to $20,000,000); or (ii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness for Money Borrowed (except for any such Indebtedness in an aggregate principal amount at any one time of up to $20,000,000) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness for Money Borrowed (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, such Indebtedness for Money Borrowed to become due prior to its stated maturity; or (f) (i) The Borrower or any of its Principal Domestic Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or any of its Principal Domestic Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Borrower or any of its Principal Domestic Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Borrower or any of its Principal Domestic Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Borrower or any of its Principal Domestic Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any of its Principal Domestic Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (g) (i) Any Person shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, has resulted in, or after giving effect to the reasonably projected outcome or effect thereof will result in, a Material Adverse Change; or (h) One or more judgments or decrees shall be entered against the Borrower or any of its Principal Domestic Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance) of $30,000,000 or 41 37 more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 60 days from the entry thereof; or (i) This Agreement or any of the Notes shall, at any time while any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, cease to be in full force and effect or shall be declared to be null and void, or the validity or enforceability thereof shall be contested by the Borrower, or the Borrower shall deny that it has any or further liability or obligation under this Agreement or any of the Notes; or (j) (i) any Person or group (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) shall have acquired beneficial ownership, directly or indirectly, of Voting Stock of the Borrower (or other securities convertible into such Voting Stock) representing 35% or more of the combined voting power of all Voting Stock of the Borrower; or (ii) during any period of up to 12 consecutive months, commencing before or after the date of this Agreement, individuals who at the beginning of such 12 month period were directors of the Borrower shall cease for any reason (other than death or disability) to constitute a majority of the Board of Directors of the Borrower (except to the extent that individuals who at the beginning of such 12 month period were replaced by individuals (x) elected by the remaining Board of Directors of the Borrower, or (y) nominated for election by the remaining members of the Board of Directors of the Borrower and thereafter elected as directors by shareholders of the Borrower), or (iii) any Person or group (as so defined) shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in a Change of Control under clause (i) or (ii) above; then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the obligation of each Lender to make Advances to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Advances, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Advances, 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 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 shall automatically be terminated and (B) the Advances, 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. ARTICLE VII THE AGENT SECTION 7.01. Authorization and Action. Each Lender 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 Required 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. 42 38 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 Lender that made any Advance as the holder of the Indebtedness resulting therefrom until the Agent receives and accepts an Assumption Agreement entered into by an Assuming Lender as provided in Section 2.17 or an Assignment and Acceptance entered into by such Lender, as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07; (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 or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower 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 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, telegram or telex) 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 Note 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 therefor to the Lenders. 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. The Lenders agree to indemnify the Agent (to the extent not reimbursed by the Borrower), ratably according to the respective principal amounts of the Revolving Credit Advances then owed to each of them (or if no Revolving Credit Advances are at the time outstanding, ratably according to the respective amounts of their Commitments), from and against 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. 43 39 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 Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Required 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. 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 "Agent" (other than Citibank, as Agent) on the signature pages hereof has any liability hereunder other than in its capacity as a Lender. ARTICLE VIII MISCELLANEOUS SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the Revolving Credit 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 Required 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, unless in writing and signed by all the Lenders, do any of the following: (a) waive any of the conditions specified in Section 3.01, (b) increase the Commitments of the Lenders or subject the Lenders to any additional obligations, (c) reduce the principal of, or interest on, the Revolving Credit Advances or any fees or other amounts payable hereunder, (d) postpone any date fixed for any payment of principal of, or interest on, the Revolving Credit Advances or any fees or other amounts payable hereunder, (e) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Revolving Credit Advances, or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder or (f) amend this Section 8.01; 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. SECTION 8.02. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic or telex communication) and mailed, telecopied, telegraphed, telexed or delivered, if to the Borrower, at its address at 2600 North Central Avenue, Phoenix, Arizona 85004-3014 , Attention: Treasurer; if to any Initial Lender, 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 Assumption Agreement or 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. All such notices and communications shall, when mailed, telecopied, telegraphed or telexed, be effective when deposited in the mails, telecopied, delivered to the telegraph company or confirmed by telex answerback, respectively, except that notices and communications to the Agent pursuant to Article II, III or VII shall not be effective until received by the Agent. Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this 44 40 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. SECTION 8.03. 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 8.04. Costs and Expenses. (a) The Borrower agrees to pay on demand all 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, (A) all due diligence, syndication (including out-of-pocket printing, distribution and bank meetings), transportation, computer and duplication expenses and (B) the reasonable fees and expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities under this Agreement. The Borrower further agrees to pay on demand all costs and expenses of the Agent and the Lenders, if any (including, without limitation, reasonable counsel fees and expenses), 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 counsel for the Agent and each Lender in connection with the enforcement of rights under this Section 8.04(a). (b) The Borrower agrees to indemnify and hold harmless the Agent and each Lender and each of their Affiliates and their officers, directors, employees, agents and advisors (each, an "Indemnified Party") from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) the Notes, this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances or (ii) the actual or alleged presence of Hazardous Materials on any property of the Borrower or any of its Subsidiaries or any Environmental Action relating in any way to the Borrower or any of its Subsidiaries, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have 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 8.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or 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. (c) If any payment of principal of, or Conversion of, any Eurodollar Rate Advance or LIBO 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 or Conversion pursuant to Section 2.08(d) or (e), 2.10 or 2.12, acceleration of the maturity of the Notes pursuant to Section 6.01 or for any other reason, or by an Eligible Assignee to a Lender other than on the last day of the Interest Period for such Advance upon an assignment of rights and obligations under this Agreement pursuant to Section 8.07 as a result of a demand by the Borrower pursuant to Section 8.07(a), 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 that it shall actually incur as a result of such payment or Conversion, 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. 45 41 (d) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in Sections 2.11, 2.14 and 8.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Notes. SECTION 8.05. 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 and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or such Affiliate 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 Note held by such Lender, whether or not such Lender shall have made any demand under this Agreement or such Note 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 and its Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender and its Affiliates may have. SECTION 8.06. Binding Effect. This Agreement shall become effective (other than Sections 2.01 and 2.03, which shall only become effective upon satisfaction of the conditions precedent set forth in Section 3.01) when it shall have been executed by the Borrower and the Agent and when the Agent shall have been notified by each Initial Lender that such Initial Lender has executed it 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 8.07. Assignments and Participations. (a) Each Lender may with the consent of the Borrower and the Agent (which consent shall not be unreasonably withheld or delayed) and, if demanded by the Borrower (following a demand by such Lender pursuant to Section 2.11 or 2.14 and only so long as no Default has occurred and is continuing) upon at least 5 Business Days' notice to such Lender and the Agent, will assign to one or more Persons all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Revolving Credit Advances owing to it and the Revolving Credit Note or Notes held by it); provided, however, that (i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement (other than any right to make Competitive Bid Advances, Competitive Bid Advances owing to it and Competitive Bid Notes), (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender or an assignment of all of a Lender's rights and obligations under this Agreement, the amount of the 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 $25,000,000 or an integral multiple of $5,000,000 in excess thereof, (iii) each such assignment shall be to an Eligible Assignee, (iv) each such assignment made as a result of a demand by the Borrower pursuant to this Section 8.07(a) shall be arranged by the Borrower after consultation with the Agent and shall be either an assignment of all of the rights and obligations of the assigning Lender under this Agreement or an assignment of a portion of such rights and obligations made concurrently with another such assignment or other such assignments that together cover all of the rights and obligations of the assigning Lender under this Agreement, (v) no Lender shall be obligated to make any such assignment as a result of a demand by the Borrower pursuant to this Section 8.07(a) unless and until such Lender shall have received one or more payments from either the Borrower or one or more Eligible Assignees in an aggregate amount at least equal to the aggregate outstanding principal amount of the Advances owing to such Lender, together with accrued interest thereon to the date of payment of such principal amount and all other amounts payable to such Lender under this Agreement, and (vi) 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 Revolving Credit 46 42 Note subject to such assignment and a processing and recordation fee of $3,500 payable by the parties to each such assignment, provided, however, that in the case of each assignment made as a result of a demand by the Borrower, such recordation fee shall be payable by the Borrower except that no such recordation fee shall be payable in the case of an assignment made at the request of the Borrower to an Eligible Assignee that is an existing Lender, and (vii) any Lender may, without the approval of the Borrower and the Agent, assign all or a portion of its rights to any of its Affiliates or any other Lender or its Affiliates. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) 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 (y) 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 Section 2.11, 2.14 and 8.04 to the extent any claim thereunder relates to an event arising prior such assignment) and be released from its obligations 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 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 confirms that it is an Eligible Assignee; (vi) 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; and (vii) such assignee agrees that it will 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 a Lender. (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 Revolving Credit Note or Notes subject to such assignment, the Agent shall, 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 8.02 a copy of each Assumption Agreement and 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 manifest error, 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. 47 43 (e) Each Lender may sell participations to one or more banks or other entities (other than the Borrower or any of its Affiliates) 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, the Advances owing to it and any Note or Notes held by it); provided, however, that (i) such Lender's obligations under this Agreement (including, without limitation, its Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Note for all purposes of this Agreement, (iv) the Borrower, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of this Agreement or any Note, or any consent to any departure by the Borrower therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation. (f) Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 8.07, 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; provided that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any Confidential Information relating to the Borrower received by it from such Lender. (g) Notwithstanding any other provision set forth in this Agreement, any Lender may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it and any Note or Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System. SECTION 8.08. Confidentiality. Neither the Agent nor any Lender shall disclose any Confidential Information to any other Person without the consent of the Borrower, other than (a) to the Agent's or such Lender's Affiliates and their officers, directors, employees, agents and advisors and, as contemplated by Section 8.07(f), to actual or prospective assignees and participants, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process and (c) as requested or required by any state, federal or foreign authority or examiner regulating banks or banking and having jurisdiction over such Lender. SECTION 8.09. 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 8.10. 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 8.11. 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 the Notes, 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, 48 44 to the Borrower at its address specified pursuant to Section 8.02. 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 the Notes 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 the Notes in any New York State or federal court. 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 8.12. 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 the Notes 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. PHELPS DODGE CORPORATION By ------------------------------------------- Title: CITIBANK, N.A., as Agent By ------------------------------------------- Title: Initial Lenders

Commitment $160,000,000 CITIBANK, N.A. By ------------------------------------------- Title: $125,000,000 BANK OF TOKYO-MITSUBISHI TRUST COMPANY By ------------------------------------------- Title:

49 45 $85,000,000 BANK OF AMERICA, N.A. By ------------------------------------------- Title: $85,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By ------------------------------------------- Title: $85,000,000 THE INDUSTRIAL BANK OF JAPAN, LIMITED By ------------------------------------------- Title: $85,000,000 WACHOVIA BANK, N.A. By ------------------------------------------- Title: $85,000,000 WELLS FARGO BANK, NATIONAL ASSOCIATION By ------------------------------------------- Title: $60,000,000 THE BANK OF NOVA SCOTIA By ------------------------------------------- Title: 50 46 $60,000,000 CIBC INC. By ------------------------------------------- Title: $60,000,000 FIRST UNION NATIONAL BANK By ------------------------------------------- Title: $60,000,000 WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH By ------------------------------------------- Title: $50,000,000 THE NORTHERN TRUST COMPANY By ------------------------------------------- Title: $1,000,000,000 Total of the Commitments 51 SCHEDULE II BORROWER AND ITS SUBSIDIARIES PRINCIPAL DOMESTIC SUBSIDIARIES

PERCENTAGE OF VOTING STOCK HELD BY BORROWER AND ITS JURISDICTION OF NAME ASSOCIATED COMPANIES INCORPORATION Climax Molybdenum Company 100% Delaware Columbian Chemicals Company 100% Delaware Phelps Dodge Chino, Inc. 100% Delaware Phelps Dodge Industries, Inc. 100% Delaware Phelps Dodge Miami, Inc. 100% Delaware Phelps Dodge Morenci, Inc. 100% Delaware Phelps Dodge Refining Corporation 100% New York Phelps Dodge Sierrita, Inc. 100% Delaware

SUBSIDIARIES (OTHER THAN PRINCIPAL DOMESTIC SUBSIDIARIES)

PERCENTAGE OF VOTING STOCK HELD BY BORROWER AND ITS ASSOCIATED COMPANIES NAME AAV Corporation 100.00% Aislamientos Plasticos, C.A. (PLASTICA) 100.00% Ajo Improvement Company 100.00% Alambres y Cables de Panama, S.A. (ALCAP) 78.08% Alambres y Cables Venezolanos, C.A. (ALCAVE) 89.96% ALCAP Commercial, S.A. (ALCOMER) 100.00% Alcave Trading 100.00% Alcoa Fios e Cabos Electricos S.A. 60.00% Amax Arizona, Inc. 100.00% Amax Canada Development Limited 100.00% Amax de Chile, Inc. 100.00% Amax Energy Inc. 100.00% Amax Exploration (Ireland), Inc. 100.00% Amax Exploration, Inc. 100.00% Amax Investment (France), Inc. 100.00% Amax Metals Recovery, Inc. 100.00% Amax Nickel Overseas Ventures, Inc. 100.00% Amax Realty Development, Inc. 100.00%

52 Amax Research & Development, Inc. 100.00% Amax Specialty Coppers Corporation 100.00% Amax Specialty Metals (Canada) Limited 100.00% Amax Specialty Metals (Driver), Inc. 100.00% Amax Zinc (Newfoundland) Limited 100.00% American Metal Climax, Inc. 100.00% Ametalco (Toronto) Limited 100.00% Ametalco (Vancouver) Limited 100.00% Ametalco Limited 100.00% Ametalco, Inc. 100.00% Arizona Community Investment Corporation 100.00% Ashfork Mines Limited 100.00% Aurex International (Barbados) Ltd. 100.00% Bisbee Queen Mining Company 65.90% Blackwell Zinc Company, Inc. 100.00% Busa Mining Co., Inc. 100.00% Byner Cattle Company 100.00% Cables Electricos Ecuatorianos, C.A. (CABLEC) 67.10% Cahosa, S.A. (Panama) 78.08% CAM Receivables Corporation 100.00% Canapian Mining Co., Inc. 100.00% Capital Gestao de Negocios Ltda. 100.00% Cates Douglas Corporation 100.00% Chino Mines Company 66.67% CIS Venture Kazakstan, L.L.C. 60.00% CIS Venture Kyrgystan, L.L.C. 60.00% Climax Canada Ltd. 100.00% Climax Molybdenum B.V. 100.00% Climax Molybdenum GmbH 100.00% Climax Molybdenum Marketing Corporation 100.00% Climax Molybdenum S.R.L. 100.00% Climax Molybdenum U.K. Limited 100.00% Cobre Cerrillos S.A. (COCESA) 65.86% Cobre del Mayo, S.A. de C.V. 70.00% Cobre Mining Company 100.00% Cocesa Ingenieria y Construccion, S.A. (COCETEL) 100.00% Cocetel del Plata, S.A. (Argentina) 95.00% Cocetel El Salvador 100.00% Cocetel Ingenieria y Construccion, C.A. (Venezuela) 100.00% Columbian Carbon Deutschland G.M.B.H. 90.00% Columbian Carbon Europa S.R.L. 100.00% Columbian Carbon International (France) S.A. 100.00% Columbian Carbon Japan Ltd. 68.00% Columbian Carbon Philippines, Inc. 88.20% Columbian Carbon Spain, S.A. 100.00% Columbian Chemicals Brasil, S.A. 100.00% Columbian Chemicals Canada, Ltd. 100.00% 53 Columbian Chemicals Europa, GMBH 100.00% Columbian Chemicals Korea Co., Ltd. 85.00% Columbian Holding Company 98.00% Columbian International Chemicals Corporation (CICC) 100.00% Columbian International Trading Company 100.00% Columbian Technology Company 100.00% Columbian Tiszai Carbon Ltd. 60.00% Columbian (U.K.) Limited (CUKL) 100.00% Compania Contractual Minera Candelaria 80.00% Compania Contractual Minera Ojos del Salado 100.00% Compania Mexicana de Exploracion Cyprus S.A. de C.V. 100.00% CONDUCEN, S.A. 73.42% CONDUCOMER, S.A. (formerly INDELEC) 100.00% Conductores Electricos de Centro America, S.A. (CONELCA) 72.39% Conductores y Aluminio, C.A. (CONAL) 100.00% Copper Market, Inc. 100.00% Corobong Mining Co., Inc. 100.00% Cyprus Amax Australia Corporation 100.00% Cyprus Amax Chile Holdings, Inc. 100.00% Cyprus Amax China Corporation 100.00% Cyprus Amax del Peru Corporation 100.00% Cyprus Amax Finance Chile Corporation 100.00% Cyprus Amax Finance Corporation 100.00% Cyprus Amax Indonesia Corporation 100.00% Cyprus Amax Kansanshi Holdings Limited 100.00% Cyprus Amax Leasing Corporation 100.00% Cyprus Amax Minerals Company (CAMC) 100.00% Cyprus Amax Minerals Japan Corporation 100.00% Cyprus Amax Philippines Corporation 100.00% Cyprus Amax PNG Holdings, Inc. 100.00% Cyprus Amax Zambia Corporation 100.00% Cyprus Amax Zimbabwe Corporation 100.00% Cyprus Canada Inc. 100.00% Cyprus Climax Metals Company (CCMC) 100.00% Cyprus Copper Marketing Corporation 100.00% Cyprus Copperstone Gold Corporation 100.00% Cyprus El Abra Corporation 100.00% Cyprus El Abra Minera Limitada 100.00% Cyprus Exploration and Development Corporation 100.00% Cyprus Gold Company 100.00% Cyprus Gold Exploration Corporation 100.00% Cyprus Metals Company 100.00% Cyprus Metals Exploration Corporation 100.00% Cyprus Meullaboho Coal Mining Limited 100.00% Cyprus Mexico Corporation 100.00% Cyprus Minera de Chile, Inc. 100.00% Cyprus Minera de Panama, S.A. 100.00% 54 Cyprus Mines Corporation 100.00% Cyprus Pima Mining Company 75.01% Cyprus Pinos Altos Corporation 100.00% Cyprus Speciality Metals Company 100.00% Cyprus Tohono Corporation 100.00% Cyprus Tonopah Mining Corporation 100.00% Cyprus Zinc Corporation 100.00% Daguma Mining Co., Inc. 100.00% Dodge & James Insurance Company, Ltd. 100.00% Dulugan Mining Co., Inc. 100.00% Dumulag Mining Co., Inc. 100.00% Electroconductores de Honduras, S.A. de C.V. (ECOHSA) 60.00% Ferragudo Mining of Portugal, L.L.C. 70.00% Geomining L.L.C. 51.00% Grasshopper, L.L.C. 60.00% Habirshaw Cable and Wire Corporation 100.00% Industria de Conductores Electricos, C.A. (ICONEL) 100.00% Inversiones de Cobre Chile Co., S.A. 100.00% Iponan Mining Co., Inc. 100.00% Isulan Mining Co., Inc. 100.00% James Douglas Insurance Company, Ltd. 100.00% Kidapawan Mining Co., Inc. 100.00% Kumakata Mining Co., Inc. 100.00% Kyruso Mining Co., Inc. 100.00% Lambunao Mining Co., Inc. 100.00% Las Quintas Serenas Water Co. 59.00% Lumintao Mining Co., Inc. 100.00% Macote Mining Co., Inc. 100.00% Makilala Mining Co., Inc. 100.00% Malampay Mining Co., Inc. 100.00% Malibato Mining Co., Inc. 100.00% Mambalili Mining Co., Inc. 100.00% Mambusao Mining Co., Inc. 100.00% Metal Fabricators of Zambia Limited (ZAMEFA) 51.00% Metallic Ventures, Inc. 100.00% Minera Aurex (Chile) Limitada 99.00% Minera Cobre Chile Co., S.A. 100.00% Minera Cobre Chile Limitada 99.00% Minera Cuicuilco S.A. de C.V. 100.00% Minera Cyprus Amax Chile Limitada 100.00% Minera Cyprus Antacori Corporation 100.00% Minera Cyprus Chile Limitada 100.00% Minera La Mesa, S.A. de C.V. 100.00% Minera Las Clauditas, S.A. 85.00% Minera Las Trancas, S.A. de C.V. 100.00% Minera Papago, S.A. de C.V. 100.00% Minera Phelps Dodge del Peru S.A. 100.00% 55 Minera Phelps Dodge Mexico, S de RL de CV 100.00% Mineracao Serra do Sossego S.A. 50.00% Missouri Lead Smelting Company 100.00% Mt. Emmons Mining Company 100.00% Norala Mining Co., Inc. 100.00% North-West Minerals (Zambia) Ltd. 100.00% Oclaves Limited 100.00% Pacific Western Land Company 100.00% Palimbang Mining Co., Inc. 100.00% PD Candelaria, Inc. 100.00% PD Cobre del Mayo, Inc. 100.00% PD Cobre, Inc. 100.00% PD Colombia S.A. 100.00% PD Explorations, Inc. 100.00% PD Indonesia Corporation 100.00% PD Las Bambas Corporation 100.00% PD Ojos del Salado, Inc. 100.00% PD Peru, Inc. 100.00% PD Rus, LLC 100.00% PD Russia, Inc. 99.00% PDEP Inc. 100.00% Phelps Dodge Africa Cable Corporation (PDACC) 100.00% Phelps Dodge Ajo, Inc. 100.00% Phelps Dodge Australasia, Inc. 100.00% Phelps Dodge Bagdad, Inc. 100.00% Phelps Dodge Chicago Rod, Inc. 100.00% Phelps Dodge Corporation of Canada, Limited 100.00% Phelps Dodge Development Corporation 100.00% Phelps Dodge do Brasil Mineracao Ltda 99.99% Phelps Dodge Dublin, Inc. 100.00% Phelps Dodge Energy Services, LLC 100.00% Phelps Dodge Enfield Corporation 100.00% Phelps Dodge Espanola Co. 100.00% Phelps Dodge Exploracion Mexico, S.A. de C.V. 100.00% Phelps Dodge Exploration Corporation 100.00% Phelps Dodge Exploration East, Inc. 100.00% Phelps Dodge Exploration India Private Limited 100.00% Phelps Dodge Foundation -- Phelps Dodge Hidalgo, Inc. 100.00% Phelps Dodge High Performance Conductors Japan Co., Ltd. 100.00% Phelps Dodge High Performance Conductors of NJ, Inc. 100.00% Phelps Dodge High Performance Conductors of SC & GA, Inc. 100.00% Phelps Dodge Holdings Mexico, S.A. de C.V. 100.00% Phelps Dodge International Corporation 100.00% Phelps Dodge Madagascar S.A.R.L. 99.00% Phelps Dodge Magnet Wire (Austria) GmbH 100.00% Phelps Dodge Magnet Wire de Mexico, SA de CV 99.00% 56 Phelps Dodge Mercantile Company 100.00% Phelps Dodge Mining (Zambia) Limited 100.00% Phelps Dodge Mining Services, Inc. 100.00% Phelps Dodge Molybdenum Corporation 100.00% Phelps Dodge of Africa, Ltd. 100.00% Phelps Dodge Overseas Capital Corporation 100.00% Phelps Dodge Overseas Marketing Corporation 100.00% Phelps Dodge Safford, Inc. 100.00% Phelps Dodge Sales Company, Incorporated 100.00% Phelps Dodge Thailand Limited 75.47% Phelps Dodge Tyrone, Inc. 100.00% Phelps Dodge Wire & Cable Trading Company de Mexico, SA de CV 99.00% Phelps Dodge Wire and Cable Holding de Mexico SA de CV 99.00% Phelps Dodge Yantai China Holdings Inc. 66.67% Philippine Carbon Black Distribution Company, Inc. 100.00% Pietersburg Iron Company (Proprietary) Limited 50.00% Pollac Mining Co., Inc. 100.00% Proper Equipment Co. 80.00% Pt Cyprus Amax Indonesia 100.00% PT Kutaraja Tembaga Raya 55.00% Representaciones de Industrias Venezolanas, C.A. (REDIVENCA) 100.00% Rio Blanco Exploration, LLC 50.00% Sabang Mining Co., Inc. 100.00% Savanna Development Co., Ltd. 100.00% Servicios Cyprus, S.A. de C.V. 100.00% Servicios Phelps Dodge Mexico, S.A. de C.V. 100.00% Sevalco (Trustee) Ltd. 100.00% Sevalco Limited 100.00% Silver Springs Ranch, Inc. 100.00% Sociedad Contractual Minera El Abra 51.00% Sociedad Minera Cerro Verde S.A. 82.49% Sofia Mineral Ltd. (Somin) (partnership) 50.00% Soner, Inc. 100.00% T.I.E. (Trading Import Export) 100.00% Tambali Mining Co., Inc. 100.00% The Morenci Water & Electric Company 100.00% Tien Shen Minerals 50.00% Tucson, Cornelia and Gila Bend Railroad Co. 100.00% United States Metals Refining Company 100.00% Warren Company 100.00% Western Nuclear Australia Limited 100.00% Western Nuclear, Inc. 100.00% 57 SCHEDULE III - ENVIRONMENTAL REPRESENTATION None 58 SCHEDULE IV - LITIGATION 1. In re the General Adjudication of All Rights to Use Water in the Little Colorado River System and Source, No. 6417 (Superior Court of Arizona, Apache County) (water rights litigation). 2. In re the General Adjudication of All Rights to Use Water in the Gila River System and Source, Nos. W-1 (Salt River), W-2 (Verde River), W-3 (Gila River) and W-4 (San Pedro River) (Superior Court of Arizona, Maricopa County) (water rights litigation). 3. United States v. Gila Valley Irrigation District, et al., and Globe Equity No. 59 (D. Ariz.) (water rights litigation). 4. Prior to January 1, 1983, various Indian tribes filed several suits in the U.S. District Court for the District of Arizona claiming prior and paramount rights to use waters which are presently being used by many water users, including Phelps Dodge Corporation, and claiming damages for prior use in derogation of their allegedly paramount rights. These federal proceedings have been stayed pending state court adjudication. 5. United States, et al. v. City of Tucson, et al., No. CIV 75-39 (D. Ariz.) (water rights litigation). 6. In 1999, the Pinal Creek Group, comprising Cyprus Miami Mining Corporation (a wholly owned subsidiary of the Company) and other companies, continued remediation and assessment of groundwater quality in the shallow alluvial aquifers along Pinal Creek near Miami, Arizona. The removal, remediation and assessment work is being conducted in accordance with the requirements of the Arizona Department of Environmental Quality's Water Quality Assurance Revolving Fund program. In addition, the remedial and removal action is consistent with the National Contingency Plan prepared by the EPA as required by CERCLA. In November 1997, Cyprus Miami, as a member of the Pinal Creek Group, joined with the State of Arizona in seeking approval of the District Court for entry of a Consent Decree resolving all matters related to an enforcement action contemplated by the State of Arizona with respect to the groundwater matter. On August 13, 1998, the court approved the Decree that committed Cyprus Miami and the other Pinal Creek Group members to complete the remediation work outlined in the remedial action plan that was submitted to the State in May 1997. Approximately $143 million remained in the Company's Pinal Creek remediation reserve at December 31, 1999. Cyprus Miami has commenced contribution litigation against other parties involved in this matter and has asserted claims against certain of its past insurance carriers. While significant recoveries are expected, the Company cannot reasonably estimate the amount and, therefore, has not taken potential recoveries into consideration in the recorded reserve. EX-10.13 3 EX-10.13 1 Exhibit 10.13 ADVISORY SERVICES AGREEMENT This Advisory Services Agreement ("Agreement") is made and entered into by and between Phelps Dodge Corporation, a New York corporation ("Company") and Douglas C. Yearley ("Advisor"). WHEREAS, Advisor is currently employed by the Company and has informed Company of his intent to retire from the Company, and as Chairman of its Board of Directors, as of May 3, 2000; and WHEREAS, Company desires, to the extent practicable, to retain and secure for its benefit the experience, abilities, knowledge, and services of Advisor after his retirement; and WHEREAS, Advisor has extensive personal and specialized knowledge and skill in the management of multinational mining and related corporations, and the Company wishes to engage Advisor to perform services within his area of expertise. NOW, THEREFORE, in consideration of the premises, the mutual promises set forth below, and such other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties, Company and Advisor agree as follows: 1. Advisory Services. The Advisor, as an independent contractor, shall render the advisory services described in this Section 1 for the period beginning on May 4, 2000 and ending on May 3, 2003, (the "Advisory Period"). During the Advisory Period, the Advisor will provide such advisory services concerning the business affairs and management of the Company as may be requested by the Company's Board of Directors or the Chief Executive Officer, but shall not be required to devote more than 30 hours each month to such requested services. Advisor shall perform any services requested under this Agreement without Company's direct supervision, and Advisor shall have complete discretion about when, where, and how the services are to be performed. If at anytime during the Advisory Period, the Advisor engages in full-time employment, outside of those services provided to Company, the Advisor shall be deemed to be in breach of this Section 1 (unless such full-time employment consists of the Advisor providing services to one or more (i) charitable or nonprofit organizations or (ii) family-owned corporations, trusts, or partnerships), in which case the term of the Advisory Period shall terminate and the 2 Company shall have no further obligations under this Agreement other than with respect to earned and unpaid fees and benefits. Company and Advisor acknowledge and agree, subject to Section 7 of this Agreement, that during the Advisory Period the Advisor may provide other than full-time services to third parties (including serving as a member of the Board of Directors of any such party). 2. Compensation. During the Advisory Period, the Advisor shall be entitled to receive a fee in the amount of $20,833.33 per month for each month during such period. Such fee shall be payable for each such month whether or not Advisor is called upon for advising during any particular month or months. In addition, Advisor shall be entitled to the benefits described in Section 3 hereof. In the event the Advisor dies or becomes Disabled (as defined in the next sentence) during the Advisory Term, no advisory fees shall be payable for any month after the month the Advisor dies or becomes Disabled. Advisor shall be deemed to be Disabled for purposes of this Agreement Letter if the Corporation determines in good faith that he is no longer able to perform his advisory duties under this Agreement Letter because of a mental or physical illness which is determined to be total and permanent by a physician selected by the Corporation and acceptable to the Advisor or his legal representative (such agreement as to acceptability not to be withheld unreasonably). 3. Fringe Benefits. The Advisor shall be entitled during the Advisory Period and at Company's expense to an annual executive physical examination similar to such examinations available to other executives of the Company. During the Advisory Period, the Company shall continue to pay on behalf of the Advisor monthly dues and other charges in connection with existing or current corporate memberships in clubs (as of the date this Agreement is signed), so as to facilitate the Advisor's ability to perform the services contemplated by this Agreement and appropriately represent the Company in the business community. During the advisory period, Advisor shall be eligible to receive personal financial counseling, tax preparation, and estate planning benefits on terms comparable to those enjoyed by him prior to retirement, provided however, that the maximum financial counseling fees that the Corporation will be obligated to pay in any calendar year will be $15,000. The terms of this Agreement shall not be extended except by a separate written agreement of the parties. 4. Expenses. The Company, upon receipt of adequate supporting documentation, shall reimburse the Advisor 3 for reasonable expenses incurred by him in providing the requested services to the Company, subject to the Company's usual expense reimbursement policies, which may be amended from time to time. The Company shall provide for limited availability of any Company airplanes for the use of Advisor in performing those advisory services requested of him. Such availability will acknowledge the priority and pre-emptive scheduling of such aircraft for ongoing business purposes, and will be at the direction of the Chief Executive Officer. 5. Independent Contractor Relationship. In providing the requested services under this Agreement, Advisor acknowledges and agrees that he will be serving as an independent contractor. The Company and the Advisor agree that he shall have no obligation to work any particular schedule and the Company has no right to control or direct the details, manner, or means in which the Advisor provides his advisory services. Other than provided in this Agreement, the Company is not obligated to provide to Advisor any other employee benefit or compensation, whether retirement, welfare or otherwise, during the Advisory Period, and is not liable for any employment tax or withholding tax obligations in relation to the fees and benefits paid hereunder. Advisor shall be solely responsible for all income and other tax obligations in connection with the services performed and payments received under this Agreement. As an independent contractor, Advisor shall not be eligible to participate in any employee benefit plans (as such term is defined in the Employee Retirement Income Security Act of 1974, as amended), sponsored by Company or any of its affiliates. The Company will provide Advisor with office space when working from the corporate headquarters, direct office support, and supplies as required to perform the services contemplated by this Agreement. 6. Termination for Cause. The Company may terminate this Agreement and all of the Company's obligations hereunder (other than fees and benefits accrued through the date of termination) by action of the Company's Board of Directors, or a committee thereof, because of the Consultant's conviction (treating a nolo contendere plea as a conviction) of a felony (whether or not any right to appeal has been or may be exercised) or willful refusal without proper cause to perform his obligations under this Agreement or because of Advisor's breach of any of the covenants provided for in Sections 7, 8 or 9 below. 7. Noncompetition Agreement. During the Advisory Period and for a period of two years after the termination 4 thereof, the Advisor covenants that he shall not, without the written consent of the Company, directly or indirectly be employed or retained by, or render any services for, or be financially interested in, any firm or corporation engaged in any business which is competitive with any business in which the Company or any of its affiliates may have been engaged during the period of his employment or the Advisory Period. The foregoing restriction shall not apply to the purchase by the Advisor of not to exceed 5% of the outstanding shares of the capital stock of any corporation whose securities are listed on any national securities exchange. 8. Loyalty Commitments. During and after the Advisory Period or any time thereafter: (i) the Advisor covenants that he shall not disclose any confidential information about the affairs of the Company or any of its affiliates; and (ii) the Advisor covenants that he shall not, without the prior written consent of the Company, induce or attempt to induce any employee or agency representative of the Company or any affiliate to leave the employment or representation of the Company or such affiliate. 9. Ownership of Work Product. The Advisor acknowledges that during the term of his employment and the Advisory Period, he may conceive of, discover, invent or create inventions, improvements, new contributions, literary property, material, ideas and discoveries, whether patentable or copyrightable or not (all of the foregoing being collectively referred to herein as "Work Product"), and that various business opportunities shall be presented to him by reason of his relationship to the Company. The Advisor acknowledges and agrees that all of the foregoing shall be owned by and belong exclusively to the Company and that he shall have no personal interest therein, provided that they are either related in any manner to the business (commercial, research and development, or experimental) of the Company, or are, in the case of Work Product, conceived or made on the Company's time or with the use of the Company's facilities or materials, or, in the case of business opportunities, are presented to him for the possible interest or participation of the Company. 10. Specific Remedy. In addition to such other rights and remedies as the Company may have at equity or in law with respect to any breach of this Agreement, if the Advisor commits a material breach of any of the provisions of Sections 7, 8, or 9, the Company shall have the right and remedy to have such provisions specifically enforced by any court of competent 5 jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide Company an adequate remedy. 11. Notices. Where there is provision therein for the delivery of written notice to either of the parties, such notice shall be deemed to have been delivered for the purposes of this Agreement when delivered in person or placed in a sealed, postpaid envelope addressed to such party and mailed by certified mail, return receipt requested to: Douglas C. Yearley Attn: Corporate Secretary c/o Irene Mueller Phelps Dodge Corporation Phelps Dodge Corporation 2600 N. Central Avenue 2600 N. Central Avenue Phoenix, AZ 85004-3014 Phoenix, AZ 85004-3014 12. Arbitration. Any controversy arising from or related to the Agreement, other than those addressed in Section 10, shall be determined by arbitration in the City of Phoenix, Arizona, in accordance with the rules of the American Arbitration Association, and judgment upon any such determination or award may be entered in any court of competent jurisdiction. In the event of any arbitration between the Advisor and the Company related to the Agreement, if the Advisor shall be the successful party the Company will indemnify and reimburse the Advisor from and against any reasonable legal fees, costs, and expenses incurred in such arbitration. 13. Separability of Provisions. The terms of this Agreement shall be considered to be separate from each other, and in the event any shall be found to be invalid, it shall not affect the validity of the remaining terms. 14. Binding Effect and Assignment. This Agreement shall be binding upon and inure to the benefit of (i) the Company, and its successors and assigns; and (ii) the Advisor, his personal representatives, heirs and legatees. The performance of the services contemplated by this Agreement is personal to Advisor, and his obligation to perform these services is not assignable. 15. Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes and revokes any and all prior oral or written understandings between the parties relating to the services to be provided hereunder. The Agreement may not be changed orally, but only by a written document signed by the party against whom enforcement of any 6 waiver, change, modification, extension or discharge is sought. 16. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the substantive laws of the State of Arizona applicable to agreements made and to be performed entirely in Arizona. 17. Change of Control. In the event of a "Change of Control" (as that term is defined by the Company's Change of Control Agreements in effect as of the effective date of this Agreement) Advisor shall have the right to terminate this Agreement, effective as of the first day of the calendar month following a Change of Control. In the event of such voluntary termination by Advisor, the rights, duties, and obligations of the parties under this Agreement shall terminate as of such date; provided that the Company shall pay Advisor for all services rendered and costs incurred through the date of termination. 18. Amendment. This Agreement can not be amended or modified in any respect unless such amendment or modification is evidenced by a written instrument executed by both parties hereto. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 25th day of April, 2000, to be effective as of May 4, 2000. PHELPS DODGE CORPORATION By: /s/ J. Steven Whisler Chief Executive Officer Douglas C. Yearley EX-12 4 EX-12 1 PHELPS DODGE CORPORATION AND SUBSIDIARIES Exhibit 12 COMPUTATION OF TOTAL DEBT TO TOTAL CAPITALIZATION (Unaudited; dollars in millions)

March 31, December 31, 2000 1999 ---------- ---------- Short-term debt ................................. $ 374.7 451.2 Current portion of long-term debt ............... 115.4 131.3 Long-term debt .................................. 2,173.9 2,172.5 ---------- ------- Total debt ................................. 2,664.0 2,755.0 Minority interests in subsidiaries .............. 99.1 96.3 Common shareholders' equity ..................... 3,260.1 3,276.8 ---------- ------- Total capitalization ....................... $ 6,023.2 6,128.1 ========== ======= Ratio of total debt to total capitalization ..... 44.2% 45.0% ========== =======

EX-15 5 EX-15 1 Exhibit 15 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Commissioners: We are aware that our report dated April 24, 2000 on our review of interim financial information of Phelps Dodge Corporation (the "Corporation") as of and for the period ended March 31, 2000 and included in the Corporation's quarterly report on Form 10-Q for the quarter then ended is incorporated by reference in its Registration Statement and Post-Effective Amendment No. 1 and Form S-3 (Nos. 33-44380 and 333-36415), Registration Statements on Form S-8 (Nos. 33-26442, 33-6141, 33-26443, 33-29144, 33-19012, 2-67317, 33-34363, 33-34362, 33-62648, 333-42231, and 333-52175) and Post-Effective Amendment No. 4 on Form S-8 to the Registration Statement on Form S-4 (No. 333-86061). Very truly yours, PricewaterhouseCoopers LLP Phoenix, Arizona May 11, 2000 EX-27 6 EX-27

<ARTICLE> 5

<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT MARCH 31, 2000 AND THE RELATED CONSOLIDATED STATEMENTS OF OPERATIONS AND OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2000 OF PHELPS DODGE CORPORATION AND ITS SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

<MULTIPLIER> 1,000 <CURRENCY> U S DOLLARS <PERIOD-TYPE> 3-MOS <FISCAL-YEAR-END> DEC-31-2000 <PERIOD-START> JAN-01-2000 <PERIOD-END> MAR-31-2000 <EXCHANGE-RATE> 1 <CASH> 311,600 <SECURITIES> 0 <RECEIVABLES> 557,700 <ALLOWANCES> 0 <INVENTORY> 461,900 <CURRENT-ASSETS> 1,631,400 <PP&E> 8,773,700 <DEPRECIATION> 2,774,000 <TOTAL-ASSETS> 8,127,000 <CURRENT-LIABILITIES> 1,317,900 <BONDS> 2,173,900 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 492,000 <OTHER-SE> 2,768,100 <TOTAL-LIABILITY-AND-EQUITY> 8,127,000 <SALES> 1,119,700 <TOTAL-REVENUES> 1,119,700 <CGS> 873,400 <TOTAL-COSTS> 873,400 <OTHER-EXPENSES> 134,300 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 55,400 <INCOME-PRETAX> 31,200 <INCOME-TAX> (11,200) <INCOME-CONTINUING> 19,400 <DISCONTINUED> 0 <EXTRAORDINARY> 0 <CHANGES> 0 <NET-INCOME> 19,400 <EPS-BASIC> .25 <EPS-DILUTED> .25

-----END PRIVACY-ENHANCED MESSAGE-----

EX-4.2

   1
                                                                     Exhibit 4.2
                                                                  EXECUTION COPY




                               U.S. $1,000,000,000


                                CREDIT AGREEMENT

                            Dated as of May 10, 2000

                                      Among

                            PHELPS DODGE CORPORATION

                                   as Borrower

                                       and

                        THE INITIAL LENDERS NAMED HEREIN

                               as Initial Lenders

                                       and

                            SALOMON SMITH BARNEY INC.

                        as Sole Arranger and Book Manager

                                       and

                     BANK OF TOKYO-MITSUBISHI TRUST COMPANY

                              as Syndication Agent

                                       and

                                 CITIBANK, N.A.

                             as Administrative Agent
   2
                                      iii

                                TABLE OF CONTENTS



                                                                                                 PAGE
                                                                                              
                                    ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS
         SECTION 1.01.  Certain Defined Terms ..............................................         1
         SECTION 1.02.  Computation of Time Periods ........................................        13
         SECTION 1.03.  Accounting Terms ...................................................        13

                                   ARTICLE II
                       AMOUNTS AND TERMS OF THE ADVANCES
         SECTION 2.01.  The Revolving Credit Advances ......................................        13
         SECTION 2.02.  Making the Revolving Credit Advances ...............................        13
         SECTION 2.03.  The Competitive Bid Advances .......................................        14
         SECTION 2.04.  Fees ...............................................................        17
         SECTION 2.05.  Optional Termination or Reduction of the Commitments ...............        17
         SECTION 2.06.  Repayment of Revolving Credit Advances .............................        17
         SECTION 2.07.  Interest on Revolving Credit Advances ..............................        17
         SECTION 2.08.  Interest Rate Determination ........................................        18
         SECTION 2.09.  Optional Conversion of Revolving Credit Advances ...................        19
         SECTION 2.10.  Prepayments of Revolving Credit Advances ...........................        19
         SECTION 2.11.  Requirements of Law ................................................        20
         SECTION 2.12.  Illegality .........................................................        20
         SECTION 2.13.  Payments and Computations ..........................................        21
         SECTION 2.14.  Taxes ..............................................................        22
         SECTION 2.15.  Sharing of Payments, Etc ...........................................        23
         SECTION 2.16.  Evidence of Debt ...................................................        23
         SECTION 2.17.  Extension of Termination Date ......................................        24

                                   ARTICLE III
                     CONDITIONS TO EFFECTIVENESS AND LENDING
         SECTION 3.01.  Conditions Precedent to Effectiveness of Sections 2.01 and 2.03 ....        26
         SECTION 3.03.  Conditions Precedent to Each Competitive Bid Borrowing .............        27
         SECTION 3.04.  Determinations Under Section 3.01 ..................................        28

                                    ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES
         SECTION 4.01.  Representations and Warranties of the Borrower .....................        28

                                    ARTICLE V
                           COVENANTS OF THE BORROWER
         SECTION 5.01.  Affirmative Covenants ..............................................        31
         SECTION 5.02.  Negative Covenants .................................................        34

                                    ARTICLE VI
                               EVENTS OF DEFAULT
         SECTION 6.01.  Events of Default ..................................................        36

                                   ARTICLE VII
                                    THE AGENT
         SECTION 7.01. Authorization and Action ............................................        38

   3
                                       iv

                                                                                              
         SECTION 7.02.  Agent's Reliance, Etc ..............................................        38
         SECTION 7.03.  Citibank and Affiliates ............................................        39
         SECTION 7.04.  Lender Credit Decision .............................................        39
         SECTION 7.05.  Indemnification ....................................................        39
         SECTION 7.06.  Successor Agent ....................................................        39
         SECTION 7.07.  Other Agents .......................................................        40

                                  ARTICLE VIII
                                 MISCELLANEOUS
         SECTION 8.01.  Amendments, Etc ....................................................        40
         SECTION 8.02.  Notices, Etc .......................................................        40
         SECTION 8.03.  No Waiver; Remedies ................................................        40
         SECTION 8.04.  Costs and Expenses .................................................        40
         SECTION 8.05.  Right of Set-off ...................................................        41
         SECTION 8.06.  Binding Effect .....................................................        42
         SECTION 8.07.  Assignments and Participations .....................................        42
         SECTION 8.08.  Confidentiality ....................................................        44
         SECTION 8.09.  Governing Law ......................................................        44
         SECTION 8.10.  Execution in Counterparts ..........................................        44
         SECTION 8.11.  Jurisdiction, Etc ..................................................        44
         SECTION 8.12.  Waiver of Jury Trial ...............................................        45


   4
                                       v

Schedules
- ---------

Schedule II - Principal Domestic Subsidiaries and other Subsidiaries

Schedule III - Environmental Representation

Schedule IV - Disclosed Litigation
   5
                                CREDIT AGREEMENT

                            Dated as of May 10, 2000


                  PHELPS DODGE CORPORATION, a New York corporation (the
"Borrower"), the banks, financial institutions and other institutional lenders
(the "Initial Lenders") listed on the signature pages hereof, SALOMON SMITH
BARNEY INC., as sole arranger and book manager, BANK OF TOKYO-MITSUBISHI TRUST
COMPANY, as syndication agent, and CITIBANK, N.A. ("Citibank"), as
administrative agent (the "Agent") for the Lenders (as hereinafter defined),
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):

                  "Advance" means a Revolving Credit Advance or a Competitive
         Bid Advance.

                  "Affiliate" means, as to any Person, any other Person (other
         than a Subsidiary) which, directly or indirectly, is in control of, is
         controlled by, or is under common control with, such Person. For
         purposes of this definition,"control" of a Person means the power,
         directly or indirectly, either to (a) vote 20% or more of the
         securities having ordinary voting power for the election of directors
         of such Person or (b) direct or cause the direction of the management
         and policies of such Person, whether by contract or otherwise.

                  "Agent's Account" means the account of the Agent maintained by
         the Agent at Citibank at its office at 399 Park Avenue, New York, New
         York 10043, 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 and, in the case of a Competitive Bid
         Advance, the office of such Lender notified by such Lender to the Agent
         as its Applicable Lending Office with respect to such Competitive Bid
         Advance.

                  "Applicable Margin" means as of any date, a percentage per
         annum determined by reference to the Public Debt Rating in effect on
         such date as set forth below:
   6


                  Public Debt Rating             Applicable Margin for          Applicable Margin for
                     S&P/Moody's                   Base Rate Advances          Eurodollar Rate Advances
                     -----------                   ------------------          ------------------------
                                                                         
                  Level 1
                   A/A2 or above                        0.000%                         0.160%

                  Level 2
                   A-/A3                                0.000%                         0.240%

                  Level 3
                   BBB+/Baa1                            0.000%                         0.300%

                  Level 4
                   BBB/Baa2                             0.000%                         0.450%

                  Level 5
                  BBB-/Baa3                             0.000%                         0.775%

                  Level 6
                  Lower than Level 5                    0.000%                         0.850%


                  "Applicable Percentage" means, as of any date a percentage per
         annum determined by reference to the Public Debt Rating in effect on
         such date as set forth below:




                         Public Debt Rating                          Applicable
                             S&P/Moody's                             Percentage
                             -----------                             ----------
                                                                  
                           Level 1
                            A/A2 or above                              0.090%

                           Level 2
                            A-/A3                                      0.110%

                           Level 3
                            BBB+/Baa1                                  0.150%

                           Level 4
                            BBB/Baa2                                   0.175%

                           Level 5
                           BBB-/Baa3                                   0.225%

                           Level 6
                           Lower than Level 5                          0.350%



                  "Applicable Utilization Fee" means, as of any date that the
         aggregate principal amount of the Advances exceeds 33% of the aggregate
         Commitments, a percentage per annum determined by reference to the
         Public Debt Rating in effect on such date as set forth below:
   7
                                       3



                         Public Debt Rating                          Applicable
                             S&P/Moody's                          Utilization Fee
                             -----------                          ---------------
                                                               
                           Level 1
                            A/A2 or above                              0.100%

                           Level 2
                            A-/A3                                      0.100%

                           Level 3
                            BBB+/Baa1                                  0.100%

                           Level 4
                            BBB/Baa2                                   0.125%

                           Level 5
                           BBB-/Baa3                                   0.125%

                           Level 6
                           Lower than Level 5                          0.300%



                  "Assignment and Acceptance" means an assignment and acceptance
         entered into by a Lender and an Eligible Assignee, and accepted by the
         Agent, in substantially the form of Exhibit C hereto.

                  "Assuming Lender" has the meaning specified in Section
         2.17(c).

                  "Assumption Agreement" has the meaning specified in Section
         2.17(c).

                  "Attributable Debt" means, at any time, the present value,
         discounted at a rate per annum equal to the weighted average of the
         interest rates for any Advances outstanding under this Agreement, and
         if no Advances are outstanding under this Agreement, the Base Rate at
         such time, compounded quarterly, of the obligation of the lessee for
         rental payments (not including amounts payable by the lessee for
         maintenance, property taxes and insurance) during the remaining term of
         any lease (including any period for which such lease has been extended
         or may, at the option of the lessor, be extended).

                  "Base Rate" means a fluctuating interest rate per annum in
         effect from time to time, which rate per annum shall at all times be
         equal to the highest of:

                           (a) the rate of interest announced publicly by
                  Citibank in New York, New York, from time to time, as
                  Citibank's base rate;

                          (b) the sum (adjusted to the nearest 1/32 of 1% or,
                  if there is no nearest 1/32 of 1%, to the next higher 1/32 of
                  1%) of (i) 1/2 of 1% per annum, plus (ii) the rate obtained by
                  dividing (A) the latest three-week moving average of secondary
                  market morning offering rates in the United States for
                  three-month certificates of deposit of major United States
                  money market banks, such three-week moving average (adjusted
                  to the basis of a year of 360 days) being determined weekly on
                  each Monday (or, if such day is not a Business Day, on the
                  next succeeding Business Day) for the three-week period ending
                  on the previous Friday by Citibank on the basis of such rates
                  reported by
   8
                                       4

                  certificate of deposit dealers to and published by the Federal
                  Reserve Bank of New York or, if such publication shall be
                  suspended or terminated, on the basis of quotations for such
                  rates received by Citibank from three New York certificate of
                  deposit dealers of recognized standing selected by Citibank,
                  by (B) a percentage equal to 100% minus the average of the
                  daily percentages specified during such three-week 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 with respect
                  to liabilities consisting of or including (among other
                  liabilities) three-month U.S. dollar non-personal time
                  deposits in the United States, plus (iii) the average during
                  such three-week period of the annual assessment rates
                  estimated by Citibank for determining the then current annual
                  assessment payable by Citibank to the Federal Deposit
                  Insurance Corporation (or any successor) for insuring U.S.
                  dollar deposits of Citibank in the United States; and

                           (c) 1/2 of one percent per annum above the Federal
                  Funds Rate.

                  "Base Rate Advance" means a Revolving Credit Advance that
         bears interest as provided in Section 2.07(a)(i).

                  "Board of Directors" means the Board of Directors of the
         Borrower, or the Executive Committee of the Board of Directors of the
         Borrower.

                  "Borrowing" means a Revolving Credit Borrowing or a
         Competitive Bid Borrowing.

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

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

                  "Capitalized Lease" means any Lease of property, real,
         personal or mixed, in respect of which the present value (or some other
         computation) of the minimum rental commitment thereunder would, in
         accordance with GAAP in effect on the date such Lease is executed, be
         capitalized on a balance sheet of the lessee.

                  "Capitalized Lease Obligation" means at any time, the
         aggregate amounts which, in accordance with GAAP, are shown as
         liabilities on the balance sheet of the lessee with respect to the
         minimum rental commitment under a Capitalized Lease of the lessee.

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

                  "Commitment" means as to any Lender (a) the amount set forth
         opposite such Lender's name on the signature pages hereof, (b) if such
         Lender has become a Lender hereunder pursuant to an Assumption
         Agreement, the amount set forth in such Assumption Agreement or (c) if
         such Lender has entered into any Assignment and Acceptance, the amount
         set forth for such Lender in the Register maintained by the Agent
         pursuant to Section 8.07(d), as such amount may be reduced pursuant to
         Section 2.05.
   9
                                       5

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

                  "Competitive Bid Advance" means an advance by a Lender to the
         Borrower as part of a Competitive Bid Borrowing resulting from the
         competitive bidding procedure described in Section 2.03 and refers to a
         Fixed Rate Advance or a LIBO Rate Advance.

                  "Competitive Bid Borrowing" means a borrowing consisting of
         simultaneous Competitive Bid Advances from each of the Lenders whose
         offer to make one or more Competitive Bid Advances as part of such
         borrowing has been accepted under the competitive bidding procedure
         described in Section 2.03.

                  "Competitive Bid 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 Competitive Bid Advance made by such Lender.

                  "Competitive Bid Reduction" has the meaning specified in
         Section 2.01.

                  "Confidential Information" means information that the Borrower
         furnishes to the Agent or any Lender, but does not include any such
         information that is or becomes generally available to the public or
         that is or becomes available to the Agent or such Lender from a source
         other than the Borrower.

                  "Consenting Lender" has the meaning specified in Section
         2.17(b).

                  "Consolidated" refers to the consolidation of accounts in
         accordance with GAAP.

                  "Consolidated Tangible Net Worth" means at any date, the
         excess at such date of total assets over total liabilities of the
         Borrower and its consolidated subsidiaries determined in accordance
         with GAAP, on a consolidated basis, excluding, however, from the
         determination of total assets (i) all intangible assets such as
         goodwill, trade names, trademarks, patents, organization expenses,
         unamortized debt discount and expense and other like intangibles, (ii)
         to the extent not already deducted from total assets, reserves for
         depreciation, depletion, obsolescence and/or amortization of properties
         and all other reserves or appropriations of retained earnings which, in
         accordance with GAAP, should be established in connection with the
         business conducted by the relevant corporation, and (iii) any
         revaluation or other write-up in book value of assets subsequent to
         December 31, 1999 except 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.

                  "Convert", "Conversion" and "Converted" each refers to a
         conversion of Revolving Credit Advances of one Type into Revolving
         Credit Advances of the other Type pursuant to Section 2.08 or 2.09.

                  "Default" means any Event of Default or any event that would
         constitute an Event of Default but for the requirement that notice be
         given or time elapse or both.


                  "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 Assumption Agreement
         or 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.
   10
                                       6

                  "Effective Date" has the meaning specified in Section 3.01.

                  "Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a
         Lender; and (iii) any other bank or financial institution other than an
         Affiliate of the Borrower.

                  "Environmental Action" means any action, suit, demand, demand
         letter, claim, notice of non-compliance or violation, notice of
         liability or potential liability, investigation, proceeding, consent
         order or consent agreement relating in any way to any Environmental
         Law, Environmental Permit or Hazardous Materials or arising from
         alleged injury or threat of injury to health, safety or the
         environment, including, without limitation, (a) by any governmental or
         regulatory authority for enforcement, cleanup, removal, response,
         remedial or other actions or damages and (b) by any governmental or
         regulatory authority or any third party for damages, contribution,
         indemnification, cost recovery, compensation or injunctive relief.

                  "Environmental Laws" means any and all applicable foreign,
         Federal, state, local or municipal laws, rules, orders, regulations,
         statutes, ordinances, codes, decrees, requirements of any Governmental
         Authority or other Requirements of Law (including common law)
         regulating, relating to or imposing liability or standards of conduct
         concerning protection of human health or the environment.

                  "Environmental Permit" means any permit, approval,
         identification number, license or other authorization required under
         any Environmental Law.

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

                  "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 Assumption Agreement
         or 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 any Interest Period for each
         Eurodollar Rate Advance comprising part of the same Revolving Credit
         Borrowing, an interest rate per annum equal to the rate per annum
         obtained by dividing (a) the rate per annum (rounded upward to the
         nearest whole multiple of 1/32 of 1% per annum) appearing on Telerate
         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 Interest Period for a
         term comparable to such Interest Period or, if for any reason such rate
         is not available, the average (rounded upward to the nearest whole
         multiple of 1/32 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 11:00
         A.M. (London time) two Business Days before the first day of such
         Interest Period in an amount substantially equal to such Reference
         Bank's Eurodollar Rate Advance comprising part of such Revolving Credit
         Borrowing to be outstanding during such Interest Period and for a
         period equal to such Interest Period by (b) a percentage equal to 100%
         minus the Eurodollar Rate Reserve Percentage for such Interest Period.
         If Telerate Page 3750 (or any successor page) is unavailable, the
         Eurodollar Rate for any Interest Period for each Eurodollar Rate
         Advance comprising part of the same Revolving Credit Borrowing shall be
         determined by the Agent on the
   11
                                       7

         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, subject, however, to the provisions of Section 2.08.

                  "Eurodollar Rate Advance" means a Revolving Credit Advance
         that bears interest as provided in Section 2.07(a)(ii).

                  "Eurodollar Rate Reserve Percentage" for any Interest Period
         for all Eurodollar Rate Advances or LIBO Rate Advances comprising part
         of the same Borrowing means the reserve percentage applicable two
         Business Days before the first day of such Interest Period 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 a member bank
         of the Federal Reserve System in New York City with respect to
         liabilities or assets consisting of or including Eurocurrency
         Liabilities (or with respect to any other category of liabilities that
         includes deposits by reference to which the interest rate on Eurodollar
         Rate Advances or LIBO Rate Advances is determined) having a term equal
         to such Interest Period.

                  "Events of Default" has the meaning specified in Section 6.01.

                  "Extension Date" has the meaning specified in Section 2.17(b).

                  "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 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 that 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.

                  "Financing Lease" means any lease of property, real or
         personal, the obligations of the lessee in respect of which are
         required in accordance with GAAP to be capitalized on a balance sheet
         of the lessee.

                  "Fixed Rate Advances" has the meaning specified in Section
         2.03(a)(i).

                  "GAAP" means generally accepted accounting principles in the
         United States of America in effect from time to time.

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

                "Guarantee" of a Person, at a particular date, means the sum
         (without duplication) of the following: (a) guarantees or endorsements
         (other than for purposes of collection in the ordinary course of
         business) of, or obligations to purchase goods or services for the
         purpose of supplying funds for the purchase or payment of,
         indebtedness, liabilities or obligations of others, and other
         contingent liabilities in respect of, or to purchase or otherwise
         acquire or service, indebtedness, liabilities or obligations of others,
         provided that any such obligation to purchase goods or services shall
         be treated as Indebtedness only to the extent that payment thereunder
         will be required (after giving effect to any provision limiting such
         payments) if such property or services are not delivered to such
         Person, and (b) all indebtedness in effect guaranteed by an agreement,
         contingent or otherwise, to make any loan, advance, capital
         contribution or other investment in the debtor for the purpose of
         assuring a minimum equity, asset base, working capital or other balance
         sheet condition for any
   12
                                       8

         date, or to provide funds for the payment of any liability, dividend or
         stock liquidation payment, or otherwise to supply funds to or in any
         manner invest in the debtor, but only to the extent of the liability of
         such Person thereunder.

                  "Hazardous Materials" means (a) petroleum and petroleum
         products, by products or breakdown products, radioactive materials,
         asbestos-containing materials, polychlorinated biphenyls,
         ureaformaldehyde and radon gas and (b) any other chemicals, materials,
         substances or wastes designated, classified or regulated as hazardous
         or toxic or as a pollutant or contaminant under any Environmental Law.

                  "Indebtedness" of a Person, at a particular date, means the
         sum (without duplication) of the following: (a) all items of
         indebtedness which in accordance with GAAP would be included in
         determining total liabilities as shown on the liability side of a
         balance sheet of such Person as at such date, (b) indebtedness for the
         repayment of borrowed money secured by any Mortgage existing on a
         Principal Property owned subject to such Mortgage, whether or not the
         indebtedness secured thereby shall have been assumed, (c) Guarantees,
         (d) Capitalized Lease Obligations and (e) Production Payments,
         provided, however, that the term "Indebtedness" shall not include
         liabilities in respect of advance payments made under contracts for the
         sale of goods and/or services, or lease obligations other than
         Capitalized Lease Obligations, or guarantees of any such liabilities or
         lease obligations.

                  "Indebtedness for Money Borrowed" of a Person, at a particular
         date, means the sum (without duplication) of the following (a) all
         Indebtedness, whether or not represented by bonds, debentures, notes,
         commercial paper or other securities, for the repayment of borrowed
         money, (b) all deferred obligations for the payment of the purchase
         price of property or assets purchased and secured by a purchase money
         mortgage, conditional sale agreement, security agreement or any title
         retention agreement, (c) Indebtedness of the character described in
         clauses (b) and (c) of the definition of "Indebtedness" if such
         Indebtedness relates to Indebtedness for Money Borrowed of others, (d)
         Capitalized Lease Obligations and (e) Production Payments.

                  "Information Memorandum" means the information memorandum
         dated April 2000 used by the Agent in connection with the syndication
         of the Commitments.

                  "Insolvency" means, with respect to any Multiemployer Plan,
         the condition that such Plan is insolvent within the meaning of Section
         4245 of ERISA.

                  "Insolvent" means pertaining to a condition of Insolvency.

                  "Interest Period" means, for each Eurodollar Rate Advance
         comprising part of the same Revolving Credit Borrowing and each LIBO
         Rate Advance comprising part of the same Competitive Bid Borrowing, the
         period commencing on the date of such Eurodollar Rate Advance or LIBO
         Rate Advance or the date of the Conversion of any Base Rate Advance
         into such Eurodollar Rate Advance and ending on the last day of the
         period selected by the Borrower pursuant to the provisions below and,
         thereafter, with respect to Eurodollar Rate Advances, each subsequent
         period commencing on the last day of the immediately preceding Interest
         Period and ending on the last day of the period selected by the
         Borrower pursuant to the provisions below. The duration of each such
         Interest Period shall be one, two, three or six months or if available
         by all Lenders, nine or twelve months, as the Borrower may, upon notice
         received by the Agent not later than 2:00 P.M. (New York City time) on
         the third Business Day prior to the first day of such Interest Period,
         select; provided, however, that

                           (i) the Borrower may not select any Interest Period
                  that ends after the Termination Date;
   13
                                       9

                           (ii) Interest Periods commencing on the same date for
                  Eurodollar Rate Advances comprising part of the same Revolving
                  Credit Borrowing or for LIBO Rate Advances comprising part of
                  the same Competitive Bid Borrowing shall be of the same
                  duration;

                           (iii) whenever the last day of any Interest Period
                  would otherwise occur on a day other than a Business Day, the
                  last day of such Interest Period shall be extended to occur on
                  the next succeeding Business Day, provided, however, 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; and

                           (iv) whenever the first day of any Interest Period
                  occurs on a day of an initial calendar month for which there
                  is no numerically corresponding day in the calendar month that
                  succeeds such initial calendar month by the number of months
                  equal to the number of months in such Interest Period, such
                  Interest Period shall end on the last Business Day of such
                  succeeding calendar month.

                  "Internal Revenue Code" means the Internal Revenue Code of
         1986, as amended from time to time, and the regulations promulgated and
         rulings issued thereunder.

                  "Lease" or "lease" means any lease or other similar
         arrangement for the use of property and "lessee" thereunder shall
         include any lessee or user thereunder.

                  "Lenders" means the Initial Lenders, each Assuming Lender that
         shall become a party hereto pursuant to Section 2.17 and each Person
         that shall become a party hereto pursuant to Section 8.07.

                  "LIBO Rate" means, for any Interest Period for all LIBO Rate
         Advances comprising part of the same Competitive Bid Borrowing, an
         interest rate per annum equal to the rate per annum obtained by
         dividing (a) the rate per annum (rounded upward to the nearest whole
         multiple of 1/32 of 1% per annum) appearing on Telerate 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 Interest Period for a term
         comparable to such Interest Period or, if for any reason such rate is
         not available, the average (rounded upward to the nearest whole
         multiple of 1/32 of 1% per annum, if such average is not such a
         multiple) of the rate per annum at which deposits in U.S. dollars
         offered by the principal office of each of the Reference Banks in
         London, England to prime banks in the London interbank market at 11:00
         A.M. (London time) two Business Days before the first day of such
         Interest Period in an amount substantially equal to the amount that
         would be the Reference Banks' respective ratable shares of such
         Borrowing if such Borrowing were to be a Revolving Credit Borrowing to
         be outstanding during such Interest Period and for a period equal to
         such Interest Period by (b) a percentage equal to 100% minus the
         Eurodollar Rate Reserve Percentage for such Interest Period. If the
         Telerate Page 3750 (or any successor page) is unavailable, the LIBO
         Rate for any Interest Period for each LIBO Rate Advance comprising part
         of the same Competitive Bid Borrowing shall be 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, subject, however, to the provisions of Section 2.08.

                  "LIBO Rate Advances" means a Competitive Bid Advance bearing
         interest based on the LIBO Rate.

                  "Lien" means any mortgage, pledge, hypothecation, assignment,
         deposit arrangement, encumbrance, lien (statutory or other), charge or
         other security interest or any preference, priority or other security
         agreement or preferential arrangement of any kind or nature whatsoever
         (including, without limitation, any conditional sale or other title
         retention agreement and any Financing Lease having substantially the
         same economic effect as any of the foregoing).
   14
                                       10

                  "Loan Documents" means this Agreement and the Notes.

                  "Material Adverse Change" means a material adverse change in
         the financial condition of the Borrower and its Consolidated
         Subsidiaries taken as a whole from that reflected in the Borrower's
         consolidated balance sheet as at December 31, 1999 referred to in
         Section 4.01(a).

                  "Mortgage" means any mortgage, pledge, lien or other security
         interest.

                  "Moody's" means Moody's Investors Service, Inc.

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

                  "Non-Consenting Lender" has the meaning specified in Section
         2.17(b).

                  "Note" means a Revolving Credit Note or a Competitive Bid
         Note.

                  "Notice of Competitive Bid Borrowing" has the meaning
         specified in Section 2.03(a).

                  "Notice of Revolving Credit Borrowing" has the meaning
         specified in Section 2.02(a).

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

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

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

                  "Principal Domestic Subsidiary" means each of the Subsidiaries
         designated as a "Principal Domestic Subsidiary" on Schedule II attached
         hereto.

                  "Principal Property" means (a) any mineral property, located
         within the United States of America or its territories or possessions,
         of the Borrower or any Principal Domestic Subsidiary which is in
         production, under development or included in estimates of reserves
         published by the Borrower, (b) any concentrator, smelter, refinery, rod
         mill, metal fabricating plant or similar processing or manufacturing
         facility, located within the United States of America or its
         territories or possessions, of the Borrower or any Principal Domestic
         Subsidiary, or (c) any Capital Stock of, or any Indebtedness for Money
         Borrowed owing to the Borrower or any other Principal Domestic
         Subsidiary of, any Principal Domestic Subsidiary which owns any
         Principal Property; provided, that Principal Property shall in any
         event not include any property, facility or Principal Domestic
         Subsidiary determined by the Board of Directors not to be of material
         importance to the operations of the Borrower and the Principal Domestic
         Subsidiaries taken as a whole.

                  "Production Payment" means any arrangement providing for the
         sale, transfer or other disposition of (a) minerals (including coal and
         hydrocarbons) until the transferee thereof shall realize therefrom a
         specified
   15
                                       11

         amount of money (however determined) or a specified amount of such
         minerals (however determined) or (b) any interest in minerals
         (including coal and hydrocarbons) of the character commonly referred to
         as a "production payment."

                  "Public Debt Rating" means, as of any date, the rating that
         has been most recently announced by either S&P or Moody's, as the case
         may be, for any class of non-credit enhanced long-term senior unsecured
         debt issued by the Borrower. For purposes of the foregoing, (a) if only
         one of S&P and Moody's shall have in effect a Public Debt Rating, the
         Applicable Margin, the Applicable Percentage and the Applicable
         Utilization Fee shall be determined by reference to the available
         rating; (b) if neither S&P nor Moody's shall have in effect a Public
         Debt Rating, the Applicable Margin and the Applicable Percentage will
         be set in accordance with Level 6 under the definition of "Applicable
         Margin", "Applicable Percentage" or "Applicable Utilization Fee", as
         the case may be; (c) if the ratings established by S&P and Moody's
         shall fall within different levels, the Applicable Margin, the
         Applicable Percentage and the Applicable Utilization Fee shall be based
         upon the higher rating except if the lower of such ratings is more than
         one level below the higher of such ratings, the Applicable Margin, the
         Applicable Percentage and the Applicable Utilization Fee shall be set
         at the level that is one level above the lower of such ratings; (d) if
         any rating established by S&P or Moody's shall be changed, such change
         shall be effective as of the date on which such change is first
         announced publicly by the rating agency making such change; and (e) if
         S&P or Moody's shall change the basis on which ratings are established,
         each reference to the Public Debt Rating announced by S&P or Moody's,
         as the case may be, shall refer to the then equivalent rating by S&P or
         Moody's, as the case may be.

                  "Reference Banks" means Citibank, Bank of Tokyo-Mitsubishi
         Trust Company and Morgan Guaranty Trust Company of New York.

                  "Register" has the meaning specified in Section 8.07(d).

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

                  "Reportable Event" means any of the events set forth in
         Section 4043(c) of ERISA, other than those events as to which the
         thirty day notice period is waived under subsections .12, .13, .14,
         .16, .18, .19 or .20 of PBGC Reg. SS2615.

                  "Required Lenders" means at any time Lenders owed at least a
         majority in interest of the then aggregate unpaid principal amount of
         the Revolving Credit Advances owing to Lenders, or, if no such
         principal amount is then outstanding, Lenders having at least a
         majority in interest of the Commitments or, if no Revolving Credit
         Advances are outstanding and the Commitments have been terminated,
         Lenders having at least a majority in interest of the Competitive Bid
         Advances, if any, then outstanding.

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

                  "Responsible Officer" means the chief executive officer, the
         president or any vice-president of the Borrower or, with respect to
         financial matters, the chief financial officer, any vice-president with
         responsibility primarily for accounting or financial matters, the
         treasurer or the controller of the Borrower.

                  "Revolving Credit Advance" means an advance by a Lender to the
         Borrower as part of a Revolving Credit Borrowing and refers to a Base
         Rate Advance or a Eurodollar Rate Advance (each of which shall be a
         "Type" of Revolving Credit Advance).

   16
                                       12

                  "Revolving Credit Borrowing" means a borrowing consisting of
         simultaneous Revolving Credit Advances of the same Type made by each of
         the Lenders pursuant to Section 2.01.

                  "Revolving Credit Note" means a promissory note of the
         Borrower payable to the order of any Lender, delivered pursuant to a
         request made under Section 2.16 in substantially the form of Exhibit
         A-1 hereto, evidencing the aggregate indebtedness of the Borrower to
         such Lender resulting from the Revolving Credit Advances made by such
         Lender.

                  "S&P" means Standard & Poor's, a division of The McGraw-Hill
         Companies, Inc.

                  "Sale and Lease-Back Transactions" means any arrangement with
         any Person providing for the leasing by the Borrower or a Principal
         Domestic Subsidiary of any Principal Property (except for temporary
         leases for a term of not more than three years), title to which
         property has been or is to be sold or transferred by the Borrower or
         such Principal Domestic Subsidiary to such Person, except for
         arrangements with any Governmental Authority of the United States of
         America or any of its territories or possessions entered into for the
         purpose of financing all or any part of the purchase price or the cost
         of constructing or improving the property subject to such arrangement.

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

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

                  "Termination Date" means the earlier of (a) May 10, 2005,
         subject to the extension thereof pursuant to Section 2.17 and (b) the
         date of termination in whole of the Commitments pursuant to Section
         2.05 or 6.01; provided, however, that the Termination Date of any
         Lender that is a Non-Consenting Lender to any requested extension
         pursuant to Section 2.17 shall be the Termination Date in effect
         immediately prior to the applicable Extension Date for all purposes of
         this Agreement.

                  "Total Capitalization" means, at any date, the sum of
         Consolidated Tangible Net Worth at such date and Indebtedness for Money
         Borrowed of the Borrower and its Consolidated Subsidiaries determined
         in accordance with GAAP, on a consolidated basis, at such date.

                  "Voting Stock" means capital stock issued by a corporation, or
         equivalent interests in any other Person, the holders of which are
         ordinarily, in the absence of contingencies, entitled to vote for the
         election of directors (or persons performing similar functions) of such
         Person, even if the right so to vote has been suspended by the
         happening of such a contingency.

                  SECTION 1.02. Computation of Time Periods. In this Agreement
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 mean "to but excluding".
   17
                                       13

                  SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(a).


                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

                  SECTION 2.01. The Revolving Credit Advances. Each Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
Revolving Credit Advances to the Borrower from time to time on any Business Day
during the period from the Effective Date until the Termination Date in an
aggregate amount not to exceed at any time outstanding such Lender's Commitment
provided that the aggregate amount of the Commitments of the Lenders shall be
deemed used from time to time to the extent of the aggregate amount of the
Competitive Bid Advances then outstanding and such deemed use of the aggregate
amount of the Commitments shall be allocated among the Lenders ratably according
to their respective Commitments (such deemed use of the aggregate amount of the
Commitments being a "Competitive Bid Reduction"). Each Revolving Credit
Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple
of $1,000,000 in excess thereof and shall consist of Revolving Credit Advances
of the same Type made on the same day by the Lenders ratably according to their
respective Commitments. Within the limits of each Lender's Commitment, the
Borrower may borrow under this Section 2.01, prepay pursuant to Section 2.10 and
reborrow under this Section 2.01.

                  SECTION 2.02. Making the Revolving Credit Advances. (a) Each
Revolving Credit Borrowing shall be made on notice, given not later than (x)
2:00 P.M. (New York City time) on the third Business Day prior to the date of
the proposed Revolving Credit Borrowing in the case of a Revolving Credit
Borrowing consisting of Eurodollar Rate Advances or (y) 11:00 A.M. (New York
City time) on the date of the proposed Revolving Credit Borrowing in the case of
a Revolving Credit Borrowing consisting of Base Rate Advances, by the Borrower
to the Agent, which shall give to each Lender prompt notice thereof by
telecopier or telex. Each such notice of a Revolving Credit Borrowing (a "Notice
of Revolving Credit Borrowing") shall be by telephone, confirmed immediately in
writing, or telecopier or telex in substantially the form of Exhibit B-1 hereto,
specifying therein the requested (i) date of such Revolving Credit Borrowing,
(ii) Type of Advances comprising such Revolving Credit Borrowing, (iii)
aggregate amount of such Revolving Credit Borrowing, and (iv) in the case of a
Revolving Credit Borrowing consisting of Eurodollar Rate Advances, initial
Interest Period for each such Revolving Credit Advance. Each Lender shall,
before 1:00 P.M. (New York City time) on the date of such Revolving Credit
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 Revolving Credit 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) Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for
any Revolving Credit Borrowing if the aggregate amount of such Revolving Credit
Borrowing is less than $5,000,000 or if the obligation of the Lenders to make
Eurodollar Rate Advances shall then be suspended pursuant to Section 2.08 or
2.12 and (ii) the Eurodollar Rate Advances may not be outstanding as part of
more than ten separate Revolving Credit Borrowings.

                  (c) Each Notice of Revolving Credit Borrowing shall be
irrevocable and binding on the Borrower. In the case of any Revolving Credit
Borrowing that the related Notice of Revolving Credit Borrowing specifies is to
be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each
Lender against any loss, cost or expense actually incurred by such Lender as a
result of any failure to fulfill on or before the date specified in
   18
                                       14

such Notice of Revolving Credit Borrowing for such Revolving Credit 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 Revolving Credit Advance to be made by such
Lender as part of such Revolving Credit Borrowing when such Revolving Credit
Advance, as a result of such failure, is not made on such date.

                  (d) Unless the Agent shall have received notice from a Lender
prior to the date of any Revolving Credit Borrowing that such Lender will not
make available to the Agent such Lender's ratable portion of such Revolving
Credit Borrowing, the Agent may assume that such Lender has made such portion
available to the Agent on the date of such Revolving Credit Borrowing in
accordance with subsection (a) of this Section 2.02 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 day 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 Revolving Credit Advances comprising such Revolving Credit 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 Revolving Credit Advance as part of such Revolving
Credit Borrowing for purposes of this Agreement.

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

                  SECTION 2.03. The Competitive Bid Advances. (a) Each Lender
severally agrees that the Borrower may make Competitive Bid Borrowings under
this Section 2.03 from time to time on any Business Day during the period from
the date hereof until the date occurring 30 days prior to the Termination Date
in the manner set forth below; provided that, following the making of each
Competitive Bid Borrowing, the aggregate amount of the Advances then outstanding
shall not exceed the aggregate amount of the Commitments of the Lenders
(computed without regard to any Competitive Bid Reduction).

                  (i) The Borrower may request a Competitive Bid Borrowing under
         this Section 2.03 by delivering to the Agent, by telecopier or telex, a
         notice of a Competitive Bid Borrowing (a "Notice of Competitive Bid
         Borrowing"), in substantially the form of Exhibit B-2 hereto,
         specifying therein the requested (v) date of such proposed Competitive
         Bid Borrowing, (w) aggregate amount of such proposed Competitive Bid
         Borrowing, (x) in the case of a Competitive Bid Borrowing consisting of
         LIBO Rate Advances, Interest Period, or in the case of a Competitive
         Bid Borrowing consisting of Fixed Rate Advances, maturity date for
         repayment of each Fixed Rate Advance to be made as part of such
         Competitive Bid Borrowing (which maturity date may not be earlier than
         the date occurring 7 days after the date of such Competitive Bid
         Borrowing or later than the Termination Date), (y) interest payment
         date or dates relating thereto, and (z) other terms (if any) to be
         applicable to such Competitive Bid Borrowing, not later than 2:00 P.M.
         (New York City time) (A) at least one Business Day prior to the date of
         the proposed Competitive Bid Borrowing, if the Borrower shall specify
         in the Notice of Competitive Bid Borrowing that the rates of interest
         to be offered by the Lenders shall be fixed rates per annum (the
         Advances comprising any such Competitive Bid Borrowing being referred
         to herein as "Fixed Rate Advances") and (B) at least four Business Days
         prior to the date of the proposed Competitive Bid Borrowing, if the
         Borrower shall instead specify in the Notice of Competitive Bid
         Borrowing that the Advances comprising such Competitive Bid Borrowing
         shall be LIBO Rate Advances. Each Notice of Competitive Bid Borrowing
         shall be irrevocable and binding on the Borrower. The Agent shall in
         turn promptly notify each
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                                       15

         Lender of each request for a Competitive Bid Borrowing received by it
         from the Borrower by sending such Lender a copy of the related Notice
         of Competitive Bid Borrowing.

                  (ii) Each Lender may, if, in its sole discretion, it elects to
         do so, irrevocably offer to make one or more Competitive Bid Advances
         to the Borrower as part of such proposed Competitive Bid Borrowing at a
         rate or rates of interest specified by such Lender in its sole
         discretion, by notifying the Agent (which shall give prompt notice
         thereof to the Borrower), (A) before 9:30 A.M. (New York City time) on
         the date of such proposed Competitive Bid Borrowing, in the case of a
         Competitive Bid Borrowing consisting of Fixed Rate Advances and (B)
         before 10:00 A.M. (New York City time) three Business Days before the
         date of such proposed Competitive Bid Borrowing, in the case of a
         Competitive Bid Borrowing consisting of LIBO Rate Advances of the
         minimum amount and maximum amount of each Competitive Bid Advance which
         such Lender would be willing to make as part of such proposed
         Competitive Bid Borrowing (which amounts of such proposed Competitive
         Bid may, subject to the proviso to the first sentence of this Section
         2.03(a), exceed such Lender's Commitment, if any), the rate or rates of
         interest therefor and such Lender's Applicable Lending Office with
         respect to such Competitive Bid 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 before 10:00 A.M. (New York City time), and such
         Lender shall not be obligated to, and shall not, make any Competitive
         Bid Advance as part of such Competitive Bid Borrowing; provided that
         the failure by any Lender to give such notice shall be deemed a refusal
         by such Lender to make any Competitive Bid Advance as part of such
         proposed Competitive Bid Borrowing.

                  (iii) The Borrower shall, in turn, (A) before 11:00 A.M. (New
         York City time) on the date of such proposed Competitive Bid Borrowing,
         in the case of a Competitive Bid Borrowing consisting of Fixed Rate
         Advances and (B) before 2:00 P.M. (New York City time) three Business
         Days before the date of such proposed Competitive Bid Borrowing, in the
         case of a Competitive Bid Borrowing consisting of LIBO Rate Advances,
         either:

                           (x) cancel such Competitive Bid Borrowing by giving
                  the Agent notice to that effect, or

                           (y) accept one or more of the offers made by any
                  Lender or Lenders pursuant to paragraph (ii) above, in its
                  sole discretion, by giving notice to the Agent of the amount
                  of each Competitive Bid Advance (which amount shall be equal
                  to or greater than the minimum amount, and equal to or less
                  than the maximum amount, notified to the Borrower by the Agent
                  on behalf of such Lender for such Competitive Bid Advance
                  pursuant to paragraph (ii) above) to be made by each Lender as
                  part of such Competitive Bid Borrowing, and reject any
                  remaining offers made by Lenders pursuant to paragraph (ii)
                  above by giving the Agent notice to that effect. The Borrower
                  shall accept the offers made by any Lender or Lenders to make
                  Competitive Bid Advances in order of the lowest to the highest
                  rates of interest offered by such Lenders. If two or more
                  Lenders have offered the same interest rate, the amount to be
                  borrowed at such interest rate will be allocated among such
                  Lenders in proportion to the largest amount that each such
                  Lender offered at such interest rate.

                  (iv) If the Borrower notifies the Agent that such Competitive
         Bid Borrowing is cancelled pursuant to paragraph (iii)(x) above, the
         Agent shall give prompt notice thereof to the Lenders and such
         Competitive Bid 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 (A) each Lender that has made an offer as

   20
                                       16

         described in paragraph (ii) above, of the date and aggregate amount of
         such Competitive Bid Borrowing and whether or not any offer or offers
         made by such Lender pursuant to paragraph (ii) above have been accepted
         by the Borrower, (B) each Lender that is to make a Competitive Bid
         Advance as part of such Competitive Bid Borrowing, of the amount of
         each Competitive Bid Advance to be made by such Lender as part of such
         Competitive Bid Borrowing, and (C) each Lender that is to make a
         Competitive Bid Advance as part of such Competitive Bid 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 Competitive Bid Advance as part of such Competitive
         Bid Borrowing shall, before 12:00 noon (New York City time) on the date
         of such Competitive Bid Borrowing specified in the notice received from
         the Agent pursuant to clause (A) of the preceding sentence or any later
         time when such Lender shall have received notice from the Agent
         pursuant to clause (C) of the preceding sentence, make available for
         the account of its Applicable Lending Office to the Agent at its
         address referred to in Section 8.02, in same day funds, such Lender's
         portion of such Competitive Bid 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 location specified by the Borrower in its Notice of
         Competitive Bid Borrowing. Promptly after each Competitive Bid
         Borrowing the Agent will notify each Lender of the amount of the
         Competitive Bid Borrowing, the consequent Competitive Bid Reduction and
         the dates upon which such Competitive Bid Reduction commenced and will
         terminate.

                  (vi) If the Borrower notifies the Agent that it accepts one or
         more of the offers made by any Lender or Lenders pursuant to paragraph
         (iii)(y) above, such notice of acceptance shall be irrevocable and
         binding on the Borrower. The Borrower shall indemnify each Lender
         against any loss, cost or expense actually incurred by such Lender as a
         result of any failure to fulfill on or before the date specified in the
         related Notice of Competitive Bid Borrowing for such Competitive Bid
         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 Competitive Bid Advance to be made by such Lender as part of such
         Competitive Bid Borrowing when such Competitive Bid Advance, as a
         result of such failure, is not made on such date.

                  (b) Each Competitive Bid Borrowing shall be in an aggregate
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof
and, following the making of each Competitive Bid Borrowing, the Borrower shall
be in compliance with the limitation set forth in the proviso to the first
sentence of subsection (a) above.

                  (c) Within the limits and on the conditions set forth in this
Section 2.03, the Borrower may from time to time borrow under this Section 2.03,
repay or prepay pursuant to subsection (d) below, and reborrow under this
Section 2.03, provided that a Competitive Bid Borrowing shall not be made within
three Business Days of the date of any other Competitive Bid Borrowing.

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

                  (e) The Borrower shall pay interest on the unpaid principal
amount of each Competitive Bid Advance from the date of such Competitive Bid
Advance to the date the principal amount of such Competitive Bid Advance is
repaid in full, at the rate of interest for such Competitive Bid Advance
specified by the Lender making such
   21
                                       17

Competitive Bid Advance in its notice with respect thereto delivered pursuant to
subsection (a)(ii) above, payable on the interest payment date or dates
specified by the Borrower for such Competitive Bid Advance in the related Notice
of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above, as
provided in the Competitive Bid Note evidencing such Competitive Bid Advance.
Upon the occurrence and during the continuance of an Event of Default under
Section 6.01(a), the Borrower shall pay interest on the amount of unpaid
principal of and interest on each Competitive Bid Advance owing to a Lender that
is not paid when due, payable in arrears on the date or dates interest is
payable thereon, at a rate per annum equal at all times to 2% per annum above
the rate per annum required to be paid on such Competitive Bid Advance under the
terms of the Competitive Bid Note evidencing such Competitive Bid Advance unless
otherwise agreed in such Competitive Bid Note.

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

         SECTION 2.04. Fees. (a) Facility Fee. The Borrower agrees to pay to the
Agent for the account of each Lender a facility fee on the aggregate amount of
such Lender's Commitment from the Effective Date in the case of each Initial
Lender and from the effective date specified in the Assumption Agreement or in
the Assignment and Acceptance pursuant to which it became a Lender in the case
of each other Lender until the Termination Date at a rate per annum equal to the
Applicable Percentage in effect from time to time, payable in arrears quarterly
on the last day of each March, June, September and December, commencing June 30,
2000, and on the Termination Date.

                  (b) 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 2.05. Optional Termination or Reduction of the
Commitments. The Borrower shall have the right, upon at least one Business Day's
notice to the Agent, to permanently terminate in whole or reduce ratably in part
the unused portions of the respective Commitments of the Lenders, provided that
each partial reduction shall be in the aggregate amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof and provided further that the
aggregate amount of the Commitments of the Lenders shall not be reduced to an
amount that is less than the aggregate principal amount of the Competitive Bid
Advances then outstanding.


                  SECTION 2.06. Repayment of Revolving Credit Advances. The
Borrower shall repay to the Agent for the ratable account of the Lenders on the
Termination Date the aggregate principal amount of the Revolving Credit Advances
then outstanding.

                  SECTION 2.07. Interest on Revolving Credit Advances. (a)
Scheduled Interest. The Borrower shall pay interest on the unpaid principal
amount of each Revolving Credit Advance owing to each Lender from the date of
such Revolving Credit Advance until such principal amount shall be paid in full,
at the following rates per annum:

                  (i) Base Rate Advances. During such periods as such Revolving
         Credit Advance is a Base Rate Advance, a rate per annum equal at all
         times to the sum of (x) the Base Rate in effect from time to time plus
         (y) the Applicable Margin in effect from time to time plus (z) the
         Applicable Utilization Fee, if any, in effect from time to time,
         payable in arrears quarterly on the last day of each March, June,
         September and December during such periods and on the date such Base
         Rate Advance shall be Converted or paid in full.

                  (ii) Eurodollar Rate Advances. During such periods as such
         Revolving Credit Advance is a Eurodollar Rate Advance, a rate per annum
         equal at all times during each Interest Period for such Revolving
         Credit Advance to the sum of (x) the Eurodollar Rate for such Interest
         Period for such Revolving Credit Advance plus (y) the Applicable Margin
         in effect from time to time plus (z) the Applicable Utilization Fee, if
         any, in effect from time to time, payable in arrears on the last day of
         such Interest Period and, if such Interest
   22
                                       18

         Period has a duration of more than three months, on each day that
         occurs during such Interest Period every three months from the first
         day of such Interest Period and on the date such Eurodollar Rate
         Advance shall be Converted or paid in full.

                  (b) Default Interest. Upon the occurrence and during the
continuance of an Event of Default under Section 6.01(a), the Borrower shall pay
interest on (i) the unpaid principal amount of each Revolving Credit Advance
owing to each Lender that is not paid when due, payable in arrears on the dates
referred to in clause (a)(i) or (a)(ii) above, at a rate per annum equal at all
times to 2% per annum above the rate per annum required to be paid on such
Revolving Credit Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to
the fullest extent permitted by law, the amount of any interest, fee or other
amount payable hereunder that is not paid when due, from the date such amount
shall be due until such amount shall be paid in full, payable in arrears on the
date such amount shall be paid in full and on demand, at a rate per annum equal
at all times to 2% per annum above the rate per annum required to be paid on
Base Rate Advances pursuant to clause (a)(i) above.

                  SECTION 2.08. Interest Rate Determination. (a) Each Reference
Bank agrees to furnish to the Agent timely information for the purpose of
determining each Eurodollar Rate and each LIBO Rate. If any one or more 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 Banks. 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 2.07(a)(i) or (ii), and the rate, if any, furnished by each Reference
Bank for the purpose of determining the interest rate under Section 2.07(a)(ii).

                  (b) If, with respect to any Eurodollar Rate Advances, the
Required Lenders notify the Agent that the Eurodollar Rate for any Interest
Period for such Advances will not adequately reflect the cost to such Required
Lenders of making, funding or maintaining their respective Eurodollar Rate
Advances for such Interest Period, the Agent shall forthwith so notify the
Borrower and the Lenders, whereupon (i) each Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance, and (ii) the obligation of the Lenders to
make, or to Convert Revolving Credit Advances into, Eurodollar Rate Advances
shall be suspended until the Agent shall notify the Borrower and the Lenders
that the circumstances causing such suspension no longer exist.

                  (c) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Agent will forthwith so notify the Borrower and the Lenders and such Advances
will automatically, on the last day of the then existing Interest Period
therefor, be Converted into Base Rate Advances.

                  (d) On the date on which the aggregate unpaid principal amount
of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $5,000,000, such Advances shall
automatically Convert into Base Rate Advances.

                  (e) Upon the occurrence and during the continuance of any
Event of Default, (i) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance and (ii) the obligation of the Lenders to make, or to Convert Advances
into, Eurodollar Rate Advances shall be suspended.

                  (f) If Telerate Page 3750 is unavailable and fewer than two
Reference Banks furnish timely information to the Agent for determining the
Eurodollar Rate or LIBO Rate for any Eurodollar Rate Advances or LIBO Rate
Advances, as the case may be,
   23
                                       19

                  (i) the Agent shall forthwith notify the Borrower and the
         Lenders that the interest rate cannot be determined for such Eurodollar
         Rate Advances or LIBO Rate Advances, as the case may be,

                  (ii) with respect to Eurodollar Rate Advances, each such
         Advance will automatically, on the last day of the then existing
         Interest Period therefor, be prepaid by the Borrower or be
         automatically Converted into a Base Rate Advance (or if such Advance is
         then a Base Rate Advance, will continue as a Base Rate Advance), and

                  (iii) the obligation of the Lenders to make Eurodollar Rate
         Advances or LIBO Rate Advances or to Convert Revolving Credit Advances
         into Eurodollar Rate Advances shall be suspended until the Agent shall
         notify the Borrower and the Lenders that the circumstances causing such
         suspension no longer exist.

                   SECTION 2.09. Optional Conversion of Revolving Credit
Advances. The Borrower may on any Business Day, upon notice given to the Agent
not later than 2:00 P.M. (New York City time) on the third Business Day prior to
the date of the proposed Conversion and subject to the provisions of Sections
2.08 and 2.12, Convert all Revolving Credit Advances of one Type comprising the
same Borrowing into Revolving Credit Advances of the other Type; provided,
however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances
shall be made only on the last day of an Interest Period for such Eurodollar
Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate
Advances shall be in an amount not less than the minimum amount specified in
Section 2.02(b) and no Conversion of any Revolving Credit Advances shall result
in more separate Revolving Credit Borrowings than permitted under Section
2.02(b). Each such notice of a Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Revolving
Credit Advances to be Converted, and (iii) if such Conversion is into Eurodollar
Rate Advances, the duration of the initial Interest Period for each such
Advance. Each notice of Conversion shall be irrevocable and binding on the
Borrower.

                  SECTION 2.10. Prepayments of Revolving Credit Advances. The
Borrower may, upon notice at least two Business Days' prior to the date of such
prepayment, in the case of Eurodollar Rate Advances, and not later than 2:00
P.M. (New York City time) on the date of such prepayment, in the case of Base
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 amount of the Revolving Credit Advances comprising
part of the same Revolving Credit 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 (x) each partial prepayment shall be in
an aggregate principal amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof and (y) in the event of any such prepayment of a
Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the
Lenders in respect thereof pursuant to Section 8.04(c).

                  SECTION 2.11. Requirements of Law. (a) If the adoption of or
any change in any Requirement of Law or in the interpretation or application
thereof or compliance by any Lender with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:

                  (i) shall subject any Lender to any tax of any kind whatsoever
         with respect to any Eurodollar Rate Advance made by it, or change the
         basis of taxation of payments to such Lender of principal, interest,
         fees or any other amount payable in respect thereof (except for
         Non-Excluded Taxes covered by Section 2.14 and changes in taxes imposed
         on or measured by the overall net income of such Lender or its lending
         office for such Advance);

                  (ii) shall impose, modify or hold applicable any reserve,
         special deposit, compulsory loan or similar requirement against assets
         held by, deposits or other liabilities in or for the account of,
         advances,
   24
                                       20

         loans or other extensions of credit by, or any other acquisition of
         funds by, any office of such Lender which is not otherwise included in
         the determination of the Eurodollar Rate hereunder; or

                  (iii) shall impose on such Lender any other condition (except
         for any condition covered by clauses (i) or (ii) above and not
         specifically excluded from the coverage of such clauses by the terms
         thereof);

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Rate Advances or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, the Borrower
shall promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender for such increased cost or reduced amount
receivable. If any Lender becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the Borrower in writing,
through the Agent, of the event by reason of which it has become so entitled;
provided, that the Borrower shall not be required to compensate a Lender for
costs in respect of any period beginning before the date which is 120 days prior
to the date on which the Borrower receives notice that such costs have been
imposed, or if such costs have been imposed retroactively, the period beginning
on such earlier date on which such costs shall have become effective (excluding,
however, any portion of such period which is after the date of adoption of or
change in the relevant Requirement of Law and more than 120 days prior to the
date on which the Borrower had received notice that such costs had been
imposed). A certificate as to any additional amounts payable pursuant to this
subsection submitted by such Lender, through the Agent, to the Borrower shall be
conclusive in the absence of manifest error.

                      (b) If any Lender shall have determined that the adoption
of or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof does or shall have the effect of
reducing the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such change or compliance
(taking into consideration such Lender's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, after submission by such Lender to the Borrower (with a
copy to the Agent) of a written request therefor, the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.

                      SECTION 2.12. Illegality. Notwithstanding any other
provision herein, if the adoption of or any change in any Requirement of Law or
in the interpretation or application thereof shall make it unlawful for any
Lender to make or maintain Eurodollar Rate Advances as contemplated by this
Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Rate
Advances, continue Eurodollar Rate Advances as such and convert Base Rate
Advances to Eurodollar Rate Advances shall forthwith be canceled and (b) such
Lender's Revolving Credit Advances then outstanding as Eurodollar Rate Advances,
if any, shall be converted automatically to Base Rate Advances on the respective
last days of the then current Interest Periods with respect to such Revolving
Credit Advances or within such earlier period as required by law. If any such
conversion of a Eurodollar Rate Advance occurs on a day which is not the last
day of the then current Interest Period with respect thereto, the Borrower shall
pay to such Lender such amounts, if any, as may be required pursuant to Section
8.04(c).

                      SECTION 2.13. Payments and Computations. (a) The Borrower
shall make each payment hereunder not later than 2:00 P.M. (New York City time)
on the day when due to the Agent 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 fees ratably (other than amounts payable
pursuant to Section 2.03, 2.11, 2.14 or 8.04(c)) to the Lenders 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 any Assuming Lender becoming a Lender
hereunder

   25
                                       21

as a result of an extension of the Termination Date pursuant to Section 2.17,
and upon the Agent's receipt of such Lender's Assumption Agreement and recording
of the information contained therein in the Register, from and after the
applicable Extension Date, the Agent shall make all payments hereunder and under
any Notes issued in connection therewith in respect of the interest assumed
thereby to the Assuming Lender. Upon its acceptance of an Assignment and
Acceptance and recording of the information contained therein in the Register
pursuant to Section 8.07(c), from and after the effective date specified in such
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)      The Borrower hereby authorizes each Lender, if and to
the extent payment owed to such Lender is not made when due hereunder or under
the Note held by such Lender, to charge from time to time against any or all of
the Borrower's accounts with such Lender any amount so due.

                  (c)      All computations of interest based on the Base Rate
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 based on the Eurodollar Rate, the
LIBO Rate or the Federal Funds Rate or in respect of Fixed Rate Advances and of
fees 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 or fees are payable. Each
determination by the Agent of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.

                  (d)      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 or fee, as the
case may be; provided, however, that, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances or LIBO Rate Advances to be
made in the next following calendar month, such payment shall be made on the
next preceding Business Day.

                  (e)      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  2.14. Taxes. (a) All payments made by the Borrower
under this Agreement and the Notes shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority ("Taxes"), excluding (i) Taxes imposed on the
Agent or any Lender as a result of a present or former connection between the
Agent or such Lender and the jurisdiction of the Governmental Authority imposing
such Tax or any political subdivision or taxing authority thereof or therein
(other than any such connection arising solely from the Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or the Notes) and (ii) Taxes imposed by the
United States on any Lender other than as a result of a Change in Law relating
to such Lender (any such non-excluded Taxes, "Non-Excluded Taxes"). If any Taxes
are required to be withheld from any amounts payable to the Agent or any Lender
hereunder or under the Notes, (A) the Borrower or the Agent shall withhold and
deduct any such Taxes from such amounts, (B) the Borrower or the Agent shall pay
to or deposit with the appropriate taxing authority in a timely manner the full
amount of Taxes so withheld or deducted, (C) the Borrower or the Agent
   26
                                       22

shall reasonably promptly send to the Agent or such Lender a certified copy of
an original official receipt received by the Borrower (or other documentation
reasonably acceptable to the Agent or such Lender) showing payment thereof, and
(D) if such Taxes are Non-Excluded Taxes, the amounts so payable to the Agent or
such Lender shall be increased to the extent necessary to yield to the Agent or
such Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the Notes, provided, however, that the Borrower shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state thereof if
such Lender fails to comply with the requirements of paragraph (b) of this
subsection. If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Agent the required
documentary evidence set forth in clause (C) above, the Borrower shall indemnify
the Agent and the Lenders for any incremental Taxes, interest or penalties that
may become payable by the Agent or any Lender as a result of any such failure.
The agreements in this subsection shall survive the termination of this
Agreement and the payment of the Notes and all other amounts payable hereunder.

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

                  (i)      on or prior to the date such Lender becomes a Lender
         hereunder deliver to the Borrower and the Agent two duly completed and
         accurate copies of United States Internal Revenue Service Form W-8BEN
         or W-8ECI, or successor applicable form, as the case may be;

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

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

unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the Agent.
Such Lender shall make the certifications set forth in Form W-8BEN or W-8ECI, as
the case may be, in order to establish that it is entitled to receive payments
under this Agreement without deduction or withholding of any United States
federal income taxes and that it is entitled to an exemption from United States
backup withholding tax. As provided in subsection 8.07, each Person that shall
become a Lender pursuant to Section 8.07 and that is not incorporated under the
laws of the United States of America or any state thereof shall, upon the
effectiveness of the related transfer, be required to provide all of the forms
and statements required pursuant to this subsection. In addition, each Lender
shall, upon the written request of the Borrower, provide the Borrower with such
other forms, certificates or documentation as may be reasonably necessary to
claim any exemption from, or reduced rate of, Taxes for which the Borrower is
liable under this Section 2.14; provided that such action shall not cause the
imposition on such Lender of any material additional costs or legal, regulatory
or administrative burdens. If an event occurs after the date on which any form,
certificate or documentation is submitted by a Lender that renders such item or
the information set forth therein incorrect, such Lender shall promptly notify
the Borrower and the Agent in writing of such incorrectness.

                  (c)      For purposes of this Section 2.14, "Change in Law"
shall mean, with respect to any Lender, a change in the Code, the Treasury
Regulations thereunder or any official interpretation thereof (or any officially
proposed changes in the interpretation thereof) or an amendment or revocation of
an applicable United States income tax treaty after the date such Lender
acquired its Notes.
   27
                                       23

                  SECTION  2.15. 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 Revolving Credit Advances
owing to it (other than pursuant to Section 2.11, 2.14 or 8.04(c)) in excess of
its ratable share of payments on account of the Revolving Credit Advances
obtained by all the Lenders, such Lender shall forthwith purchase from the other
Lenders such participations in the Revolving Credit 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 2.15 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) 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  2.16. Evidence of Debt. (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 Revolving
Credit 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 Revolving Credit 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 a Revolving Credit Note is required or appropriate in order
for such Lender to evidence (whether for purposes of pledge, enforcement or
otherwise) the Revolving Credit Advances owing to, or to be made by, such
Lender, the Borrower shall promptly execute and deliver to such Lender a
Revolving Credit Note payable to the order of such Lender in a principal amount
up to the Commitment of such Lender.

                  (b)      The Register maintained by the Agent pursuant to
Section 8.07(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 Assumption Agreement and 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  2.17. Extension of Termination Date. (a) At least 45
days but not more than 60 days prior to any anniversary of the Effective Date,
the Borrower, by written notice to the Agent, may request an extension of the
Termination Date in effect at such time by one year from its then scheduled
expiration. The Agent shall promptly notify each Lender of such request, and
each Lender shall in turn, in its sole discretion, not earlier than 30 days
prior to such anniversary date (and not later than 20 days prior to such
anniversary date), notify the Borrower and the Agent in writing as to whether
such Lender will consent to such extension. If any Lender shall fail to notify
the Agent and the Borrower in writing of its consent to any such request for
extension of the Termination Date at least 15 days prior to such anniversary
date, such Lender shall be deemed to be a Non-Consenting Lender with respect to
such request. The Agent shall notify the Borrower not later than 15 days prior
to such anniversary date of the decision of the Lenders regarding the Borrower's
request for an extension of the Termination Date.
   28
                                       24

                  (b)      If all the Lenders consent in writing to any such
request in accordance with subsection (a) of this Section 2.17, the Termination
Date in effect at such time shall, effective as at the applicable anniversary
date (the "Extension Date"), be extended for one year; provided that on each
Extension Date the applicable conditions set forth in Article III shall be
satisfied. If less than all of the Lenders consent in writing to any such
request in accordance with subsection (a) of this Section 2.17, the Termination
Date in effect at such time shall, effective as at the applicable Extension Date
and subject to subsection (d) of this Section 2.17, be extended as to those
Lenders that so consented (each a "Consenting Lender") but shall not be extended
as to any other Lender (each a "Non-Consenting Lender"). To the extent that the
Termination Date is not extended as to any Lender pursuant to this Section 2.17
and the Commitment of such Lender is not assumed in accordance with subsection
(c) of this Section 2.17 on or prior to the applicable Extension Date, the
Commitment of such Non-Consenting Lender shall automatically terminate in whole
on such unextended Termination Date without any further notice or other action
by the Borrower, such Lender or any other Person; provided that such
Non-Consenting Lender's rights under Sections 2.11, 2.14 and 8.04, and its
obligations under Section 7.05, shall survive the Termination Date for such
Lender as to matters occurring prior to such date. It is understood and agreed
that no Lender shall have any obligation whatsoever to agree to any request made
by the Borrower for any requested extension of the Termination Date.

                  (c)      If less than all of the Lenders consent to any such
request pursuant to subsection (a) of this Section 2.17, the Agent shall
promptly so notify the Consenting Lenders, and each Consenting Lender may, in
its sole discretion, give written notice to the Agent not later than 10 days
prior to the Termination Date of the amount of the Non-Consenting Lenders'
Commitments for which it is willing to accept an assignment. If the Consenting
Lenders notify the Agent that they are willing to accept assignments of
Commitments in an aggregate amount that exceeds the amount of the Commitments of
the Non-Consenting Lenders, such Commitments shall be allocated among the
Consenting Lenders willing to accept such assignments in such amounts as are
agreed between the Borrower and the Agent. If after giving effect to the
assignments of Commitments described above there remains any Commitments of
Non-Consenting Lenders, the Borrower may arrange for one or more Consenting
Lenders or other Eligible Assignees (each, an "Assuming Lender") to assume,
effective as of the Extension Date, any Non-Consenting Lender's Commitment and
all of the obligations of such Non-Consenting Lender under this Agreement
thereafter arising, without recourse to or warranty by, or expense to, such
Non-Consenting Lender; provided, however, that the amount of the Commitment of
any such Assuming Lender as a result of such substitution shall in no event be
less than $25,000,000 unless the amount of the Commitment of such Non-Consenting
Lender is less than $25,000,000, in which case such Assuming Lender shall assume
all of such lesser amount; and provided further that:

                  (i)      any such Consenting Lender or Assuming Lender shall
         have paid to such Non-Consenting Lender (A) the aggregate principal
         amount of, and any interest accrued and unpaid to the effective date of
         the assignment on, the outstanding Advances, if any, of such
         Non-Consenting Lender plus (B) any accrued but unpaid fees owing to
         such Non-Consenting Lender as of the effective date of such assignment;

                  (ii)     all additional costs reimbursements, expense
         reimbursements and indemnities payable to such Non-Consenting Lender,
         and all other accrued and unpaid amounts owing to such Non-Consenting
         Lender hereunder, as of the effective date of such assignment shall
         have been paid to such Non-Consenting Lender; and

                  (iii)    with respect to any such Assuming Lender, the
         applicable processing and recordation fee required under Section
         8.07(a) for such assignment shall have been paid;

provided further that such Non-Consenting Lender's rights under Sections 2.11,
2.14 and 8.04, and its obligations under Section 7.05, shall survive such
substitution as to matters occurring prior to the date of substitution. At least
three Business Days prior to any Extension Date, (A) each such Assuming Lender,
if any, shall have delivered to the Borrower
   29
                                       25

and the Agent agreement (an "Assumption Agreement"), duly executed by such
Assuming Lender, such Non-Consenting Lender, the Borrower and the Agent, (B) any
such Consenting Lender shall have delivered confirmation in writing satisfactory
to the Borrower and the Agent as to the increase in the amount of its Commitment
and (C) each Non-Consenting Lender being replaced pursuant to this Section 2.17
shall have delivered to the Agent any Note or Notes held by such Non-Consenting
Lender. Upon the payment or prepayment of all amounts referred to in clauses
(i), (ii) and (iii) of the immediately preceding sentence, each such Consenting
Lender or Assuming Lender, as of the Extension Date, will be substituted for
such Non-Consenting Lender under this Agreement and shall be a Lender for all
purposes of this Agreement, without any further acknowledgment by or the consent
of the other Lenders, and the obligations of each such Non-Consenting Lender
hereunder shall, by the provisions hereof, be released and discharged.

                  (d)      If (after giving effect to any assignments or
assumptions pursuant to subsection (c) of this Section 2.17) all of the Lenders
having Commitments equal to at least 50% of the Commitments in effect
immediately prior to the Extension Date consent in writing to a requested
extension (whether by execution or delivery of an Assumption Agreement or
otherwise) as promptly as practicable, and in any event not later than one
Business Day prior to such Extension Date, the Agent shall so notify the
Borrower, and, subject to the satisfaction to the applicable conditions in
Article III, the Termination Date then in effect shall be extended for the
additional one-year period as described in subsection (a) of this Section 2.17,
and all references in this Agreement, and in the Notes, if any, to the
"Termination Date" shall, with respect to each Consenting Lender and each
Assuming Lender for such Extension Date, refer to the Termination Date as so
extended. Promptly following each Extension Date, the Agent shall notify the
Lenders (including, without limitation, each Assuming Lender) of the extension
of the scheduled Termination Date in effect immediately prior thereto and shall
thereupon record in the Register the relevant information with respect to each
such Consenting Lender and each such Assuming Lender.


                                   ARTICLE III

                     CONDITIONS TO EFFECTIVENESS AND LENDING

                  SECTION  3.01. Conditions Precedent to Effectiveness of
Sections 2.01 and 2.03. Sections 2.01 and 2.03 of this Agreement shall become
effective on and as of the first date (the "Effective Date") on which the
following conditions precedent have been satisfied:

                  (a)      There shall have occurred no Material Adverse Change
         since December 31, 1999.

                  (b)      Except as set forth on Schedule IV, there shall exist
         no action, suit, investigation, litigation or proceeding affecting the
         Borrower or any of its Subsidiaries pending or threatened before any
         court, governmental agency or arbitrator that could reasonably be
         expected to result in a Material Adverse Change.

                  (c)      Nothing shall have come to the attention of the
         Lenders during the course of their due diligence investigation to lead
         them to believe that the Information Memorandum was or has become
         misleading, incorrect or incomplete in any material respect; without
         limiting the generality of the foregoing, the Lenders shall have been
         given such access to the management, records, books of account,
         contracts and properties of the Borrower and its Subsidiaries as they
         shall have reasonably requested.

                  (d)      All governmental and material third party consents
         and approvals necessary in connection with the transactions
         contemplated hereby shall have been obtained (without the imposition of
         any conditions that are not reasonably acceptable to the Lenders) and
         shall remain in effect, and no law or regulation shall be applicable in
         the reasonable judgment of the Lenders that restrains, prevents or
         imposes materially adverse conditions upon the transactions
         contemplated hereby.
   30
                                       26

                  (e)      The Borrower shall have notified each Lender and the
         Agent in writing as to the proposed Effective Date.

                  (f)      The Borrower shall have paid all accrued fees and
         expenses of the Agent and the Lenders (including the reasonable fees
         and expenses of a single firm of counsel to the Agent) to the extent
         invoiced to the Borrower at least one Business Day prior to the
         Effective Date.

                  (g)      On the Effective Date, the following statements shall
         be true and the Agent shall have received for the account of each
         Lender a certificate signed by a duly authorized officer of the
         Borrower, dated the Effective Date, stating that:

                           (i)      The representations and warranties contained
                  in Section 4.01 are correct on and as of the Effective Date,
                  and

                           (ii)     No event has occurred and is continuing that
                  constitutes a Default.

                  (h)      The Agent shall have received on or before the
         Effective Date the following, each dated such day, in form and
         substance satisfactory to the Agent and (except for the Revolving
         Credit Notes) in sufficient copies for each Lender:

                           (i)      The Revolving Credit Notes to the order of
                  the Lenders to the extent requested by any Lender pursuant to
                  Section 2.16.

                           (ii)     Certified copies of the resolutions of the
                  Board of Directors of the Borrower approving this Agreement
                  and the Notes, and of all documents evidencing other necessary
                  corporate action and governmental approvals, if any, with
                  respect to this Agreement and the Notes.

                           (iii)    A certificate of the Secretary or an
                  Assistant Secretary of the Borrower certifying the names and
                  true signatures of the officers of the Borrower authorized to
                  sign this Agreement and the Notes and the other documents to
                  be delivered hereunder.

                           (iv)     Favorable opinions of (A) Assistant General
                  Counsel and Assistant Secretary to the Borrower substantially
                  in the form of Exhibit E-1 hereto and (B) Debevoise and
                  Plimpton, counsel to the Borrower, substantially in the form
                  of Exhibit E-2 hereto, and as to such other matters as any
                  Lender through the Agent may reasonably request.

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

                  (i)      The Borrower shall have terminated the commitments of
         the lenders and repaid or prepaid all of the Indebtedness under, the
         Second Amended and Restated Credit Agreement dated as of June 25, 1997
         among the Borrower, the lenders parties thereto and The Chase Manhattan
         Bank, as administrative agent.

                  SECTION  3.02. Conditions Precedent to Each Revolving Credit
Borrowing and Extension Date. The obligation of each Lender to make a Revolving
Credit Advance on the occasion of each Revolving Credit Borrowing and each
extension of Commitments pursuant to Section 2.17 shall be subject to the
conditions precedent that the Effective Date shall have occurred and on the date
of such Revolving Credit Borrowing or the applicable
   31
                                       27

Extension Date (a) the following statements shall be true (and each of the
giving of the applicable Notice of Revolving Credit Borrowing, request for
Commitment Extension and the acceptance by the Borrower of the proceeds of such
Revolving Credit Borrowing shall constitute a representation and warranty by the
Borrower that on the date of such Borrowing or such Extension Date such
statements are true):

                  (i)      the representations and warranties contained in
         Section 4.01 (except, in the case of Revolving Credit Borrowings, the
         representations set forth in subsection (b) or (f)(ii) thereof) are
         correct on and as of such date, before and after giving effect to such
         Revolving Credit Borrowing or such Extension Date and to the
         application of the proceeds therefrom, as though made on and as of such
         date, and

                  (ii)     no event has occurred and is continuing, or would
         result from such Revolving Credit Borrowing, such Extension Date or
         from the application of the proceeds therefrom, that constitutes a
         Default;

and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.

                  SECTION  3.03. Conditions Precedent to Each Competitive Bid
Borrowing. The obligation of each Lender that is to make a Competitive Bid
Advance on the occasion of a Competitive Bid Borrowing to make such Competitive
Bid Advance as part of such Competitive Bid Borrowing is subject to the
conditions precedent that (i) the Agent shall have received the written
confirmatory Notice of Competitive Bid Borrowing with respect thereto, (ii) on
or before the date of such Competitive Bid Borrowing, but prior to such
Competitive Bid Borrowing, the Agent shall have received a Competitive Bid Note
payable to the order of such Lender for each of the one or more Competitive Bid
Advances to be made by such Lender as part of such Competitive Bid Borrowing, in
a principal amount equal to the principal amount of the Competitive Bid Advance
to be evidenced thereby and otherwise on such terms as were agreed to for such
Competitive Bid Advance in accordance with Section 2.03, and (iii) on the date
of such Competitive Bid Borrowing the following statements shall be true (and
each of the giving of the applicable Notice of Competitive Bid Borrowing and the
acceptance by the Borrower of the proceeds of such Competitive Bid Borrowing
shall constitute a representation and warranty by the Borrower that on the date
of such Competitive Bid Borrowing such statements are true):

                  (a)      the representations and warranties contained in
         Section 4.01 (except, in the case of Revolving Credit Borrowings, the
         representations set forth in subsection (b) or (f)(ii) thereof) are
         correct on and as of the date of such Competitive Bid Borrowing, before
         and after giving effect to such Competitive Bid Borrowing 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 Competitive Bid Borrowing or from the application of
         the proceeds therefrom, that constitutes a Default.

                  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, specifying
its objection thereto. The Agent shall promptly notify the Lenders of the
occurrence of the Effective Date.
   32
                                       28

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

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

                  (a)      Financial Condition. The consolidated balance sheet
of the Borrower and its consolidated subsidiaries as at December 31, 1999 and
the related consolidated statements of income and of cash flows for the fiscal
year ended on such date, reported on by PricewaterhouseCoopers LLP, copies of
which have heretofore been furnished to each Lender, are complete and correct
and present fairly the consolidated financial condition of the Borrower and its
consolidated subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the fiscal years then ended.
All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein).

                  (b)      No Change. No event or circumstance since December
31, 1999 has occurred or is existing which has resulted in, or after giving
effect to the reasonably projected outcome or effect thereof will result in, a
Material Adverse Change.

                  (c)      Corporate Existence. The Borrower (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York, (ii) has the corporate power and authority, and the
legal right, to own and operate its property, to lease the property it operates
as lessee and to conduct the business in which it is currently engaged and (iii)
is duly qualified as a foreign corporation and in good standing under the laws
of each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification except to the extent that
the failure to be so qualified would not reasonably be expected to result in a
Material Adverse Change.

                  (d)      Corporate Power; Authorization; Enforceable
Obligations. The Borrower has the corporate power and authority, and the legal
right, to make, deliver and perform the Loan Documents and to borrow hereunder
and has taken all necessary corporate action to authorize the Borrowings on the
terms and conditions of this Agreement and the Notes and to authorize the
execution, delivery and performance of the Loan Documents. No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with the
Borrowings hereunder or the transactions contemplated hereby or with the
execution, delivery, performance, validity or enforceability of the Loan
Documents except such as have been obtained or made and are in full force and
effect. This Agreement has been, and each Note will be, duly executed and
delivered on behalf of the Borrower. This Agreement constitutes, and each Note
when executed and delivered will constitute, a legal, valid and binding
obligation of the Borrower enforceable against the Borrower in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

                  (e)      No Legal Bar. The execution, delivery and performance
of the Loan Documents, the borrowings hereunder and the use of the proceeds
thereof will not violate the certificate of incorporation, charter or by-laws of
the Borrower or any Requirement of Law or Contractual Obligation of the Borrower
or of any of its Principal Domestic Subsidiaries and will not result in, or
require, the creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any provision of its certificate
of incorporation, charter or by-laws or any such Requirement of Law or
Contractual Obligation.

                  (f)      No Material Litigation. No litigation, investigation
or proceeding (including any Environmental Action) of or before any arbitrator
or Governmental Authority is pending or, to the knowledge of the Borrower,
overtly
   33
                                       29

threatened by or against the Borrower or any of its Principal Domestic
Subsidiaries or against any of its or their respective properties or revenues
(i) with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (ii) except as set forth on Schedule IV,
which after giving effect to the reasonably projected outcome or effect thereof,
will result in a Material Adverse Change.

                  (g)      No Default. Neither the Borrower nor any of its
Principal Domestic Subsidiaries is in default under or with respect to any of
its Contractual Obligations in any respect which has resulted in or, after
giving effect to the reasonably projected outcome or effect thereof, will result
in, a Material Adverse Change. No Default has occurred and is continuing.

                  (h)      Ownership of Property; Liens. Each of the Borrower
and its Principal Domestic Subsidiaries has good record and marketable title in
fee simple to, or a valid leasehold interest in, all its real property, and good
title to, or a valid leasehold interest in, all its other property, and none of
such property is subject to any Lien except as permitted by Section 5.02(b)
except to the extent that the absence of such title or leasehold interest has
not resulted in, and after giving effect to the reasonably projected outcome or
effect thereof, will not result in, a Material Adverse Change.

                  (i)      Compliance with Law. The Borrower and each of its
Principal Domestic Subsidiaries is in compliance with all Requirements of Law
and Contractual Obligations except to the extent that the failure to comply
therewith has not resulted in, and, after giving effect to the reasonably
projected outcome or effect thereof, will not result in, a Material Adverse
Change.

                  (j)      Taxes. Each of the Borrower and its Principal
Domestic Subsidiaries has filed or caused to be filed all tax returns which, to
the knowledge of the Borrower, are required to be filed and has paid all taxes
shown to be due and payable on said returns or on any assessments made against
it or any of its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority (other than any the
amount or validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Borrower or its Principal Domestic
Subsidiaries, as the case may be) and, to the knowledge of the Borrower, no tax
Lien (other than a Lien for taxes that are not yet due and payable) has been
filed, with respect to any such tax, fee or other charge which, in any case, has
resulted in, or after giving effect to the reasonably projected outcome or
effect thereof will result in, a Material Adverse Change.

                  (k)      Federal Regulations. The Borrower is not engaged in
the business of extending credit for the purpose of "purchasing" or "carrying"
any "margin stock" within the respective meanings of each of the quoted terms
under Regulation U of the Board of Governors of the Federal Reserve System as
now and from time to time hereafter in effect and no proceeds of an Advance have
been or will be used for any purpose which violates the provisions of the
Regulations of such Board of Governors. At no time would the obligations of the
Borrower hereunder or under the Notes be directly or "indirectly secured" by
assets of the Borrower and its consolidated Subsidiaries that are "margin stock"
(pursuant to, and as such captioned terms are defined in, Section 221.2(g) of
Regulation U), provided that in any event not more than 25% of the value of the
assets of the Borrower and its consolidated Subsidiaries subject to such
arrangements shall be represented by such margin stock. If requested by any
Lender or the Agent, the Borrower will furnish to the Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
U-1 referred to in said Regulation U.

                  (l)      ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) nor any other event has occurred during the five-year period prior
to the date on which this representation is made or deemed made with respect to
any Plan which has resulted in or, after giving effect to the reasonably
projected outcome or effect thereof, will result in, a Material Adverse Change.
   34
                                       30

                  (m)      Investment Company Act; Other Regulations. The
Borrower is not an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. The Borrower is not subject to regulation under any Federal or state
statute or regulation which limits its ability to incur indebtedness of the type
being incurred by it pursuant to this Agreement.

                  (n)      Subsidiaries. Set forth in Schedule II is a complete
and accurate list showing all Subsidiaries (other than inactive Subsidiaries)
existing as of the date of this Agreement, designating certain Subsidiaries as
Principal Domestic Subsidiaries and showing the jurisdiction of incorporation of
each Principal Domestic Subsidiary and the percentage of the outstanding shares
of Capital Stock of such Subsidiaries owned (directly or indirectly) by the
Borrower or any Subsidiary. All of the outstanding Capital Stock of each
Principal Domestic Subsidiary has been validly issued, is fully paid and
non-assessable and is owned by the Borrower or one or more of the Principal
Domestic Subsidiaries free and clear of all Liens. Each Principal Domestic
Subsidiary is duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation.

                  (o)      Purpose of Advances. The proceeds of the Advances
shall be used by the Borrower for its general corporate purposes, including,
without limitation, working capital and acquisitions.

                  (p)      Environmental Matters. Except as disclosed in the
Borrower's Annual Report on Form 10-K for fiscal year 1999, to the best
knowledge of the Borrower, the Borrower and each Principal Domestic Subsidiary
has complied with all applicable Environmental Laws, except for failures to
comply which have not resulted in, and after giving effect to the reasonably
projected outcome or effect thereof will not result in, a Material Adverse
Change. Except as disclosed in the Borrower's Annual Report on Form 10-K for
fiscal year 1999 or on Schedule III, to the best knowledge of the Borrower,
there are no events, conditions or circumstances involving the Borrower, any of
its Principal Domestic Subsidiaries or any Subsidiaries of such Principal
Domestic Subsidiaries with respect to management of any Hazardous Materials,
environmental pollution or contamination or employee health or safety which have
resulted in, or after giving effect to the reasonably projected outcome or
effect thereof will result in, a Material Adverse Change.

                  (q)      Information. All written information provided by the
Borrower to the Agent or any Lender in connection with this Agreement or the
Loan Documents and the transactions contemplated hereby and thereby, at the date
hereof or (if provided after the date hereof) at the date it was provided (i) in
the case of any factual matter (excluding any such information referred to in
paragraph (ii)), is true and accurate in all material respects and (ii) in the
case of financial and business projections, budgets, pro forma data and
forecasts (all of the foregoing being, together, "Projections"), contained
therein, were prepared in good faith and on reasonable grounds (it being
understood by the parties hereto that such Projections are subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Borrower and that no assurance can be given (without limiting any
other provision of this Agreement or the Loan Documents) that any such
Projections will be realized).

                                    ARTICLE V

                            COVENANTS OF THE BORROWER

                  SECTION  5.01. Affirmative Covenants. So long as any Advance
shall remain unpaid or any Lender shall have any Commitment hereunder, the
Borrower will:

                  (a)      Financial Statements. Furnish to each Lender:

                           (i)      as soon as available, but in any event
         within 100 days after the end of each fiscal year of the Borrower, a
         copy of the consolidated balance sheet of the Borrower and its
         consolidated subsidiaries as at the end of such year and the related
         consolidated statements of income and retained earnings and of cash
         flows for such year, setting forth in each case in comparative form the
         figures for the previous year,
   35
                                       31

         reported on without a "going concern" or like qualification or
         exception, or qualification arising out of the scope of the audit, by
         PricewaterhouseCoopers LLP or other independent certified public
         accountants of nationally recognized standing; and

                           (ii)     as soon as available, but in any event not
         later than 55 days after the end of each of the first three quarterly
         periods of each fiscal year of the Borrower, the unaudited consolidated
         balance sheet of the Borrower and its consolidated subsidiaries as at
         the end of such quarter and the related unaudited consolidated
         statements of income and retained earnings and of cash flows of the
         Borrower and its consolidated subsidiaries for such quarter and the
         portion of the fiscal year through the end of such quarter, setting
         forth in each case in comparative form the figures for the previous
         year, certified by a Responsible Officer as being fairly stated in all
         material respects (subject to normal year-end audit adjustments);

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

                  (b)      Certificates; Other Information. Furnish to each
Lender:

                           (i)      concurrently with the delivery of the
         financial statements referred to in Section 5.01(a)(i), a certificate
         of the independent certified public accountants reporting on such
         financial statements stating that in making the examination necessary
         therefor no knowledge was obtained of any Default (including
         calculations demonstrating compliance with Section 5.02), except as
         specified in such certificate;

                           (ii)     concurrently with the delivery of the
         financial statements referred to in Sections 5.01(a)(i) and (ii), a
         certificate of a Responsible Officer stating that, to the best of such
         Officer's knowledge, the Borrower during such period has observed or
         performed all of its covenants and other agreements, and satisfied
         every condition, contained in this Agreement and in the Notes to be
         observed, performed or satisfied by it (including calculations
         demonstrating compliance with Section 5.02), and that such Officer has
         obtained no knowledge of any Default except as specified in such
         certificate;

                           (iii)    within ten days after the same are sent,
         copies of all financial statements and reports which the Borrower sends
         to its stockholders, and within ten days after the same are filed,
         copies of all financial statements and periodic financial reports which
         the Borrower may make to, or file with, the Securities and Exchange
         Commission or any successor or analogous Governmental Authority; and

                           (iv)     promptly, such additional financial and
         other information as any Lender may from time to time reasonably
         request.

                  (c)      Payment of Taxes and Other Obligations. Pay,
discharge or otherwise satisfy, in all material respects, and cause its
Principal Domestic Subsidiaries to pay, discharge or otherwise satisfy, in all
material respects (i) all material taxes, assessments and governmental changes
or levies imposed on its property when due by it and (ii) at or before maturity
or otherwise in accordance with reasonable business practices, all its material
obligations of whatever nature; provided, that the Borrower or its Principal
Domestic Subsidiaries, as the case may be, may contest its obligations in good
faith by appropriate proceedings if it maintains reserves in conformity with
GAAP with respect thereto.
   36
                                       32

                  (d)      Conduct of Business and Maintenance of Existence.
Continue to engage in businesses of the same general types as now conducted by
it and preserve, renew and keep in full force and effect its corporate existence
and take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business except that nothing
in this Section 5.01(d) shall prevent (i) the Borrower from discontinuing any
business if such discontinuance is, in the opinion of its Board of Directors, in
the best interests of the Borrower and is not disadvantageous in any material
respect to any Lender or the holder of any Note or (ii) the abandonment,
modification or termination of rights, privileges and franchises of the
Borrower, if such abandonment, modification or termination is, in the opinion of
the Board of Directors, in the best interests of the Borrower and is not
disadvantageous in any material respect to any Lender or the holder of any Note.

                  (e)      Compliance With Laws, etc. Use commercially
reasonable efforts to comply, and to cause each Principal Domestic Subsidiary to
comply, in all material respects with all Requirements of Law and Contractual
Obligations except to the extent that failure to so comply would not, in the
reasonable judgment of the Borrower, be expected to result in a Material Adverse
Change, provided, however, that neither the Borrower nor any Principal Domestic
Subsidiary shall be required to comply with any Requirements of Law or
Contractual Obligations if the applicability or validity thereof shall currently
be contested in good faith by appropriate proceedings.

                  (f)      Maintenance of Property; Insurance. Keep all
Principal Properties in good working order and condition except that nothing in
this Section 5.01(f) shall prevent the Borrower or any of its Principal Domestic
Subsidiaries from discontinuing the operation and maintenance of any of its
Principal Properties if such discontinuance is, in the opinion of the Board of
Directors of the Borrower, in the best interest of the Borrower and is not
disadvantageous in any material respect to any Lender or the holder of any Note;
maintain, and cause each Principal Domestic Subsidiary to maintain, with
financially sound and reputable insurance companies insurance on all its
property of a character usually insured by companies similarly situated and
operating like properties in at least such amounts and against at least such
risks as are usually insured against in the same general area by companies
engaged in the same or a similar business; and furnish to each Lender, upon
written request, full information as to the insurance carried. The Borrower and
any Principal Domestic Subsidiary may self-insure (which term shall include
insurance by an affiliated insurance company) against any of the risks required
to be insured against pursuant to this Section 5.01(f) so long as such
self-insurance is not excessive in the light of self-insurance by companies
similarly situated and operating like properties, provided, in the case of any
insurance required by law, that such risk is permitted to be self-insured under
applicable law and such self-insurance complies with applicable law.

                  (g)      Inspection of Property; Books and Records;
Discussions. Keep, and cause each Principal Domestic Subsidiary to keep, proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit, and
cause any Principal Domestic Subsidiary to permit, representatives of any
Lender, at such Lender's own expense, to visit and inspect any of its properties
and examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired and, after reasonable
notice to the Borrower, to discuss the business, operations, properties and
financial and other condition of the Borrower and its Principal Domestic
Subsidiaries with officers and employees of the Borrower and its Principal
Domestic Subsidiaries and with its independent certified public accountants.

                  (h)      Notices. Promptly give notice to the Agent and each
Lender of:

                           (i)      the occurrence of any Default;

                           (ii)     any (A) default or event of default under
                  any Contractual Obligation of the Borrower or any of its
                  Subsidiaries or (B) litigation, investigation or proceeding
                  which may exist at any time between the Borrower or any of its
                  Subsidiaries and any Governmental Authority, unless in either
                  case,
   37
                                       33

                  the Borrower has determined that such event has not resulted
                  in, or after giving effect to the reasonably projected outcome
                  or effect thereof will not result in, a Material Adverse
                  Change; and

                           (iii)    the following events, as soon as possible
                  and in any event within 30 days after the Borrower knows or
                  has reason to know thereof: (A) the occurrence or reasonably
                  expected occurrence of any Reportable Event with respect to
                  any Plan, a failure to make any required contribution to a
                  Plan, the creation of any Lien in favor of the PBGC or a Plan
                  or any withdrawal from, or the termination, Reorganization or
                  Insolvency of, any Multiemployer Plan or (B) the institution
                  of proceedings or the taking of any other action by the PBGC
                  or the Borrower or any Commonly Controlled Entity or any
                  Multiemployer Plan with respect to the withdrawal from, or the
                  terminating, Reorganization or Insolvency of, any Plan which
                  with respect to the events in clause (A) or (B), individually
                  or in the aggregate, could reasonably be expected to involve
                  an amount of $15,000,000 or more.

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

                  SECTION  5.02. Negative Covenants. So long as any Advance
shall remain unpaid or any Lender shall have any Commitment hereunder, the
Borrower will not:

                  (a)      Financial Condition Covenants.

                           (i)      Maintenance of Tangible Net Worth. Permit
                  Consolidated Tangible Net Worth at any time to be less than
                  $1,500,000,000.

                           (ii)     Indebtedness for Money Borrowed to Total
                  Capitalization. Permit the ratio of Indebtedness for Money
                  Borrowed of the Borrower and its consolidated Subsidiaries
                  (determined on a consolidated basis in accordance with GAAP)
                  to Total Capitalization at any time to be greater than 0.6:1.

                  (b)      Limitation on Mortgages, Sale and Leaseback, etc.

                           (i)      The Borrower will not, nor will it permit
                  any Principal Domestic Subsidiary to, (i) issue, assume or
                  guarantee any Indebtedness for Money Borrowed, if such
                  Indebtedness for Money Borrowed is secured by a Lien upon, or
                  (ii) directly or indirectly secure any outstanding
                  Indebtedness for Money Borrowed by a mortgage upon, any
                  Principal Property now owned or hereinafter acquired;
                  provided, however, that the foregoing restriction shall not
                  apply to the following:

                                    (A)      Mortgages on any Principal Property
                           acquired, constructed or improved by the Borrower or
                           any Principal Domestic Subsidiary after the date of
                           this Agreement which are created or assumed
                           contemporaneously with, or within 90 days after, such
                           acquisition, construction or improvement to secure or
                           provide for the payment of any part of the purchase
                           price of such property or the cost of such
                           construction or improvement incurred after the date
                           of this Agreement, or, in addition to Mortgages
                           contemplated by clause (ii) below, Mortgages on any
                           Principal Property existing at the time of
                           acquisition thereof, provided, that in the case of
                           any such acquisition, construction or improvement the
                           Mortgage shall not apply to any property theretofore
                           owned by the Borrower or any Principal Domestic
                           Subsidiary, other than in the case of any such
                           construction or improvement, any theretofore
                           unimproved real property on which the property so
                           constructed, or the improvement, is located;
   38
                                       34

                                    (B)      Mortgages on any Principal Property
                           owned by a corporation which is merged with or into,
                           or otherwise acquired by, the Borrower or a Principal
                           Domestic Subsidiary;

                                    (C)      Mortgages to secure Indebtedness
                           for Money Borrowed of a Principal Domestic Subsidiary
                           to the Borrower or to another Principal Domestic
                           Subsidiary;

                                    (D)      any extension, renewal or
                           replacement (or successive extensions, renewals or
                           replacements), in whole or in part, of any Mortgage
                           referred to in the foregoing clauses (i) to (iii),
                           inclusive; provided, however, that the principal
                           amount of Indebtedness for Money Borrowed secured
                           thereby shall not exceed the principal amount of
                           Indebtedness for Money Borrowed so secured at the
                           time of such extension, renewal or replacement, and
                           that such extension, renewal or replacement shall be
                           limited to all or part of the property which secured
                           the mortgage so extended, renewed or replaced (plus
                           improvements on such property); and

                                    (E)      the issuance, assumption or
                           guarantee of secured Indebtedness for Money Borrowed
                           which would otherwise be subject to the foregoing
                           restrictions of this subsection 5.02(b) in an
                           aggregate amount which, together with all other such
                           Indebtedness for Money Borrowed of the Borrower and
                           its Principal Domestic Subsidiaries and the
                           Attributable Debt in respect of Sale and Lease-Back
                           Transactions (other than Sale and Lease-Back
                           Transactions permitted because the Borrower would be
                           entitled to incur Indebtedness for Money Borrowed
                           secured by a mortgage on the property to be leased
                           pursuant to the provisions of this Section 5.02(b)
                           and other than Sale and Lease-Back Transactions the
                           proceeds of which have been applied in accordance
                           with the limitations on Sale and Lease-Back
                           Transactions set forth in Section 5.02(b)(ii) below)
                           does not at the time exceed 10% of Consolidated
                           Tangible Net Worth.

                  For the purposes of this Section 5.02(b), the following types
                  of transactions, among others, shall not be deemed to create
                  Indebtedness for Money Borrowed secured by a mortgage:

                                    (A)      Production Payments; and

                                    (B)      Mortgages in favor of the United
                           States of America, any of its territories or
                           possessions, or any State thereof, or any department,
                           agency, instrumentality or political subdivision of
                           any thereof, or any department, agency or
                           instrumentality of any such political subdivision, to
                           secure partial progress, advance or other payments
                           pursuant to any contract or statute or to secure any
                           indebtedness incurred for the purpose of financing
                           all or any part of the purchase price or the cost of
                           constructing or improving the property subject to
                           such Mortgages.

                           (ii)     The Borrower will not, nor will it permit
                  any Principal Domestic Subsidiary to, enter into any Sale and
                  Lease-Back Transaction, unless the proceeds of such sale or
                  transfer are at least equal to the fair value (as determined
                  by the Board of Directors) of such property and either (A) the
                  Borrower or such Principal Domestic Subsidiary would be
                  entitled to incur Indebtedness for Borrowed Money secured by a
                  mortgage on the property to be leased pursuant to this Section
                  5.02(b) or (B) the Borrower shall, and in any such case the
                  Borrower covenants that it will, apply an amount equal to the
                  fair value (as determined by the Board of Directors) of the
                  property so leased to the retirement (other than any mandatory
                  retirement), within 90 days of the effective date of any such
                  Sale and Lease-Back Transaction, of Indebtedness for Money
                  Borrowed of the Borrower or such Principal Domestic Subsidiary
                  which by its terms matures at, or is extendible or renewable
                  at the option of the obligor to, a date more than twelve
                  months after the date of the creation of such Indebtedness for
                  Money Borrowed and which ranks prior to or on a parity with
                  the Advances; provided, however that the Borrower or any
                  Principal Domestic Subsidiary may enter into any Sale and
                  Lease-Back Transaction which would otherwise be subject to the
   39
                                       35

                  foregoing restrictions of this Section 5.02(b)(iii) if the
                  amount of the Attributable Debt in respect of such Sale and
                  Lease-Back Transactions for such transaction, together with
                  all secured Indebtedness for Money Borrowed of the Borrower
                  and its Principal Domestic Subsidiaries and all other
                  Attributable Debt in respect of Sale and Lease-Back
                  Transactions existing at such time (other than Sale and
                  Lease-Back Transactions permitted because the Borrower would
                  be entitled to incur Indebtedness for Money Borrowed secured
                  by a Lien on the property to be leased and other than Sale and
                  Lease-Back Transactions the proceeds of which have been
                  applied in accordance with the clause (B) of this subsection),
                  does not at the time exceed 10% of Consolidated Tangible Net
                  Worth.

                  (c)      Mergers, Etc. Merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of the assets (whether now
owned or thereafter acquired) of the Borrower and its Subsidiaries, taken as a
whole, to, any Person, or permit any of its Subsidiaries to do so, except that
(i) any Subsidiary of the Borrower may merge or consolidate with or into, or
dispose of substantially all of its assets to, one or more other Subsidiaries of
the Borrower, and any Subsidiary of the Borrower may merge into or dispose of
substantially all or substantially all of its assets to the Borrower and one or
more other Subsidiaries, (ii) the Borrower may merge with any other Person so
long as the Borrower is the surviving corporation and (iii) any Subsidiary of
the Borrower may merge or consolidate with or into, or dispose of all or
substantially all of its assets to, any Person so long as such merger or
disposition does not (whether in one transaction or in a series of transactions)
constitute a disposition of all or substantially all of the assets of the
Borrower and its Subsidiaries, taken as a whole, provided, that, in the case of
any merger or consolidation in accordance with clause (i) above in which a
Principal Domestic Subsidiary merges or consolidates with any Subsidiary (other
than another Principal Domestic Subsidiary) of the Borrower, such Principal
Domestic Subsidiary is the surviving corporation, and provided, further, in each
case, that no Default shall have occurred and be continuing at the time of such
proposed transaction or would result therefrom.


                                   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 any principal of any Advance
when due in accordance with the terms thereof or hereof; or the Borrower shall
fail to pay any interest on any Advance, or any other amount payable hereunder,
within five Business Days after any such interest or other amount becomes due in
accordance with the terms thereof or hereof; or

         (b)      Any representation or warranty made or deemed made by the
Borrower herein or which is contained in any certificate, document or financial
or other statement furnished by it at any time under or in connection with this
Agreement shall prove to have been incorrect in any material respect on or as of
the date made or deemed made; or

         (c)      The Borrower shall default in the observance or performance of
any agreement contained in Section 5.02 (a) through (c) or (unless such default
is capable of remedy and is remedied to the reasonable satisfaction of the
Required Lenders with 30 days of such default) Section 5.02(d); or

         (d)      The Borrower shall default in the observance or performance of
any other agreement contained in this Agreement (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall continue
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                                       36

unremedied for a period of 30 days after notice thereof has been given to the
Borrower in accordance with this Agreement; or

         (e)      The Borrower or any of its Principal Domestic Subsidiaries
shall (i) default in any payment of principal of or interest of any Indebtedness
for Money Borrowed (other than the Advances), beyond the period of grace (not to
exceed 30 days), if any, provided in the instrument or agreement under which
such Indebtedness for Money Borrowed was created (except for any such payments
on account of Indebtedness for Money Borrowed in an aggregate amount at any one
time of up to $20,000,000); or (ii) default in the observance or performance of
any other agreement or condition relating to any such Indebtedness for Money
Borrowed (except for any such Indebtedness in an aggregate principal amount at
any one time of up to $20,000,000) or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness for Money
Borrowed (or a trustee or agent on behalf of such holder or holders) to cause,
with the giving of notice if required, such Indebtedness for Money Borrowed to
become due prior to its stated maturity; or

         (f)      (i) The Borrower or any of its Principal Domestic Subsidiaries
shall commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or the Borrower or any of its Principal Domestic Subsidiaries shall make
a general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Principal Domestic Subsidiaries any
case, proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such adjudication
or appointment or (B) remains undismissed, undischarged or unbonded for a period
of 60 days; or (iii) there shall be commenced against the Borrower or any of its
Principal Domestic Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or (iv)
the Borrower or any of its Principal Domestic Subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the
Borrower or any of its Principal Domestic Subsidiaries shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its debts as
they become due; or

         (g)      (i) Any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan or any Lien
in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, has resulted in, or
after giving effect to the reasonably projected outcome or effect thereof will
result in, a Material Adverse Change; or

         (h)      One or more judgments or decrees shall be entered against the
Borrower or any of its Principal Domestic Subsidiaries involving in the
aggregate a liability (not paid or fully covered by insurance) of $30,000,000 or
   41
                                       37

more, and all such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 60 days from the entry thereof; or

         (i)      This Agreement or any of the Notes shall, at any time while
any Advance shall remain unpaid or any Lender shall have any Commitment
hereunder, cease to be in full force and effect or shall be declared to be null
and void, or the validity or enforceability thereof shall be contested by the
Borrower, or the Borrower shall deny that it has any or further liability or
obligation under this Agreement or any of the Notes; or

         (j)      (i) any Person or group (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934) shall have acquired beneficial ownership, directly or indirectly, of
Voting Stock of the Borrower (or other securities convertible into such Voting
Stock) representing 35% or more of the combined voting power of all Voting Stock
of the Borrower; or (ii) during any period of up to 12 consecutive months,
commencing before or after the date of this Agreement, individuals who at the
beginning of such 12 month period were directors of the Borrower shall cease for
any reason (other than death or disability) to constitute a majority of the
Board of Directors of the Borrower (except to the extent that individuals who at
the beginning of such 12 month period were replaced by individuals (x) elected
by the remaining Board of Directors of the Borrower, or (y) nominated for
election by the remaining members of the Board of Directors of the Borrower and
thereafter elected as directors by shareholders of the Borrower), or (iii) any
Person or group (as so defined) shall have acquired by contract or otherwise, or
shall have entered into a contract or arrangement that, upon consummation, will
result in a Change of Control under clause (i) or (ii) above;

then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
Advances, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Advances, 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 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 shall automatically be terminated and (B) the Advances, 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.


                                   ARTICLE VII

                                    THE AGENT

                  SECTION  7.01. Authorization and Action. Each Lender 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 Required 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.
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                                       38

                  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 Lender that made any Advance as the holder of the Indebtedness
resulting therefrom until the Agent receives and accepts an Assumption Agreement
entered into by an Assuming Lender as provided in Section 2.17 or an Assignment
and Acceptance entered into by such Lender, as assignor, and an Eligible
Assignee, as assignee, as provided in Section 8.07; (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 or observance of any of the terms, covenants or conditions of
this Agreement on the part of the Borrower 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 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, telegram or telex) 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 Note 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 therefor to the Lenders.

                  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. The Lenders agree to indemnify
the Agent (to the extent not reimbursed by the Borrower), ratably according to
the respective principal amounts of the Revolving Credit Advances then owed to
each of them (or if no Revolving Credit Advances are at the time outstanding,
ratably according to the respective amounts of their Commitments), from and
against 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.
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                                       39

                  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 Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Required 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. 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
"Agent" (other than Citibank, as Agent) on the signature pages hereof has any
liability hereunder other than in its capacity as a Lender.

                                  ARTICLE VIII

                                  MISCELLANEOUS

                  SECTION  8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Revolving Credit 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 Required 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, unless in writing and signed by all the Lenders, do any of the
following: (a) waive any of the conditions specified in Section 3.01, (b)
increase the Commitments of the Lenders or subject the Lenders to any additional
obligations, (c) reduce the principal of, or interest on, the Revolving Credit
Advances or any fees or other amounts payable hereunder, (d) postpone any date
fixed for any payment of principal of, or interest on, the Revolving Credit
Advances or any fees or other amounts payable hereunder, (e) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Revolving Credit Advances, or the number of Lenders, that shall be required for
the Lenders or any of them to take any action hereunder or (f) amend this
Section 8.01; 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.

                  SECTION  8.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including telecopier,
telegraphic or telex communication) and mailed, telecopied, telegraphed, telexed
or delivered, if to the Borrower, at its address at 2600 North Central Avenue,
Phoenix, Arizona 85004-3014 , Attention: Treasurer; if to any Initial Lender, 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 Assumption
Agreement or 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. All such notices and communications shall, when mailed,
telecopied, telegraphed or telexed, be effective when deposited in the mails,
telecopied, delivered to the telegraph company or confirmed by telex answerback,
respectively, except that notices and communications to the Agent pursuant to
Article II, III or VII shall not be effective until received by the Agent.
Delivery by telecopier of an executed counterpart of any amendment or waiver of
any provision of this
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                                       40

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.

                  SECTION  8.03. 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  8.04. Costs and Expenses. (a) The Borrower agrees to
pay on demand all 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, (A) all due diligence, syndication (including
out-of-pocket printing, distribution and bank meetings), transportation,
computer and duplication expenses and (B) the reasonable fees and expenses of
counsel for the Agent with respect thereto and with respect to advising the
Agent as to its rights and responsibilities under this Agreement. The Borrower
further agrees to pay on demand all costs and expenses of the Agent and the
Lenders, if any (including, without limitation, reasonable counsel fees and
expenses), 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 counsel for the Agent and each Lender in connection with
the enforcement of rights under this Section 8.04(a).

                  (b)      The Borrower agrees to indemnify and hold harmless
the Agent and each Lender and each of their Affiliates and their officers,
directors, employees, agents and advisors (each, an "Indemnified Party") from
and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel)
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation or proceeding or
preparation of a defense in connection therewith) (i) the Notes, this Agreement,
any of the transactions contemplated herein or the actual or proposed use of the
proceeds of the Advances or (ii) the actual or alleged presence of Hazardous
Materials on any property of the Borrower or any of its Subsidiaries or any
Environmental Action relating in any way to the Borrower or any of its
Subsidiaries, except to the extent such claim, damage, loss, liability or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have 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 8.04(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by the Borrower, its directors, shareholders or creditors
or an Indemnified Party or any other Person or 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.

                  (c)      If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance or LIBO 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 or Conversion pursuant to Section 2.08(d)
or (e), 2.10 or 2.12, acceleration of the maturity of the Notes pursuant to
Section 6.01 or for any other reason, or by an Eligible Assignee to a Lender
other than on the last day of the Interest Period for such Advance upon an
assignment of rights and obligations under this Agreement pursuant to Section
8.07 as a result of a demand by the Borrower pursuant to Section 8.07(a), 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 that it
shall actually incur as a result of such payment or Conversion, 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.
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                                       41

                  (d)      Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in Sections 2.11, 2.14 and 8.04 shall survive the payment in
full of principal, interest and all other amounts payable hereunder and under
the Notes.

                  SECTION  8.05. 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 and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender or such Affiliate 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 Note held by such Lender, whether or not such
Lender shall have made any demand under this Agreement or such Note 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 and its Affiliates under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Lender and its Affiliates may have.

                  SECTION  8.06. Binding Effect. This Agreement shall become
effective (other than Sections 2.01 and 2.03, which shall only become effective
upon satisfaction of the conditions precedent set forth in Section 3.01) when it
shall have been executed by the Borrower and the Agent and when the Agent shall
have been notified by each Initial Lender that such Initial Lender has executed
it 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  8.07. Assignments and Participations. (a) Each Lender
may with the consent of the Borrower and the Agent (which consent shall not be
unreasonably withheld or delayed) and, if demanded by the Borrower (following a
demand by such Lender pursuant to Section 2.11 or 2.14 and only so long as no
Default has occurred and is continuing) upon at least 5 Business Days' notice to
such Lender and the Agent, will assign to one or more Persons all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Revolving Credit Advances
owing to it and the Revolving Credit Note or Notes held by it); provided,
however, that (i) each such assignment shall be of a constant, and not a
varying, percentage of all rights and obligations under this Agreement (other
than any right to make Competitive Bid Advances, Competitive Bid Advances owing
to it and Competitive Bid Notes), (ii) except in the case of an assignment to a
Person that, immediately prior to such assignment, was a Lender or an assignment
of all of a Lender's rights and obligations under this Agreement, the amount of
the 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 $25,000,000 or an
integral multiple of $5,000,000 in excess thereof, (iii) each such assignment
shall be to an Eligible Assignee, (iv) each such assignment made as a result of
a demand by the Borrower pursuant to this Section 8.07(a) shall be arranged by
the Borrower after consultation with the Agent and shall be either an assignment
of all of the rights and obligations of the assigning Lender under this
Agreement or an assignment of a portion of such rights and obligations made
concurrently with another such assignment or other such assignments that
together cover all of the rights and obligations of the assigning Lender under
this Agreement, (v) no Lender shall be obligated to make any such assignment as
a result of a demand by the Borrower pursuant to this Section 8.07(a) unless and
until such Lender shall have received one or more payments from either the
Borrower or one or more Eligible Assignees in an aggregate amount at least equal
to the aggregate outstanding principal amount of the Advances owing to such
Lender, together with accrued interest thereon to the date of payment of such
principal amount and all other amounts payable to such Lender under this
Agreement, and (vi) 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 Revolving Credit
   46
                                       42

Note subject to such assignment and a processing and recordation fee of $3,500
payable by the parties to each such assignment, provided, however, that in the
case of each assignment made as a result of a demand by the Borrower, such
recordation fee shall be payable by the Borrower except that no such recordation
fee shall be payable in the case of an assignment made at the request of the
Borrower to an Eligible Assignee that is an existing Lender, and (vii) any
Lender may, without the approval of the Borrower and the Agent, assign all or a
portion of its rights to any of its Affiliates or any other Lender or its
Affiliates. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, (x) 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 (y) 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 Section 2.11, 2.14 and 8.04
to the extent any claim thereunder relates to an event arising prior such
assignment) and be released from its obligations 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 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 confirms that it is an Eligible Assignee; (vi)
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; and (vii) such assignee agrees
that it will 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 a Lender.

                  (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 Revolving Credit Note or Notes subject to
such assignment, the Agent shall, 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 8.02 a copy of each Assumption Agreement and 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 manifest error, 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.
   47
                                       43

                  (e)      Each Lender may sell participations to one or more
banks or other entities (other than the Borrower or any of its Affiliates) 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, the Advances
owing to it and any Note or Notes held by it); provided, however, that (i) such
Lender's obligations under this Agreement (including, without limitation, its
Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Lender shall remain the holder of any such Note
for all purposes of this Agreement, (iv) the Borrower, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
(v) no participant under any such participation shall have any right to approve
any amendment or waiver of any provision of this Agreement or any Note, or any
consent to any departure by the Borrower therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest on,
the Notes or any fees or other amounts payable hereunder, in each case to the
extent subject to such participation, or postpone any date fixed for any payment
of principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation.

                  (f)      Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.07, 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; provided that, prior to any such disclosure,
the assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any Confidential Information relating to the
Borrower received by it from such Lender.

                  (g)      Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and any Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.

                  SECTION  8.08. Confidentiality. Neither the Agent nor any
Lender shall disclose any Confidential Information to any other Person without
the consent of the Borrower, other than (a) to the Agent's or such Lender's
Affiliates and their officers, directors, employees, agents and advisors and, as
contemplated by Section 8.07(f), to actual or prospective assignees and
participants, and then only on a confidential basis, (b) as required by any law,
rule or regulation or judicial process and (c) as requested or required by any
state, federal or foreign authority or examiner regulating banks or banking and
having jurisdiction over such Lender.

                  SECTION  8.09. 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  8.10. 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  8.11. 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 the Notes, 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,
   48
                                       44

to the Borrower at its address specified pursuant to Section 8.02. 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 the Notes 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
the Notes in any New York State or federal court. 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  8.12. 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 the Notes 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.

                                   PHELPS DODGE CORPORATION


                                   By
                                     -------------------------------------------
                                     Title:


                                   CITIBANK, N.A.,
                                     as Agent


                                   By
                                     -------------------------------------------
                                     Title:


                                 Initial Lenders



Commitment

                                
$160,000,000                       CITIBANK, N.A.


                                   By
                                     -------------------------------------------
                                     Title:


$125,000,000                       BANK OF TOKYO-MITSUBISHI
                                   TRUST COMPANY


                                   By
                                     -------------------------------------------
                                     Title:


   49
                                       45

                                
$85,000,000                        BANK OF AMERICA, N.A.


                                   By
                                     -------------------------------------------
                                     Title:


$85,000,000                        MORGAN GUARANTY TRUST COMPANY OF NEW YORK


                                   By
                                     -------------------------------------------
                                     Title:


$85,000,000                        THE INDUSTRIAL BANK OF JAPAN, LIMITED


                                   By
                                     -------------------------------------------
                                     Title:


$85,000,000                        WACHOVIA BANK, N.A.


                                   By
                                     -------------------------------------------
                                     Title:


$85,000,000                        WELLS FARGO BANK, NATIONAL
                                   ASSOCIATION


                                   By
                                     -------------------------------------------
                                     Title:


$60,000,000                        THE BANK OF NOVA SCOTIA


                                   By
                                     -------------------------------------------
                                     Title:



   50
                                       46

                                
$60,000,000                        CIBC INC.


                                   By
                                     -------------------------------------------
                                     Title:


$60,000,000                        FIRST UNION NATIONAL BANK


                                   By
                                     -------------------------------------------
                                     Title:


$60,000,000                        WESTDEUTSCHE LANDESBANK
                                   GIROZENTRALE, NEW YORK BRANCH


                                   By
                                     -------------------------------------------
                                     Title:


$50,000,000                        THE NORTHERN TRUST COMPANY


                                   By
                                     -------------------------------------------
                                     Title:



$1,000,000,000        Total of the Commitments


   51
                                   SCHEDULE II

                          BORROWER AND ITS SUBSIDIARIES


                         PRINCIPAL DOMESTIC SUBSIDIARIES



                                                   PERCENTAGE OF VOTING STOCK
                                                    HELD BY BORROWER AND ITS           JURISDICTION OF
                     NAME                             ASSOCIATED COMPANIES              INCORPORATION

                                                                                 
Climax Molybdenum Company                                     100%                        Delaware
Columbian Chemicals Company                                   100%                        Delaware
Phelps Dodge Chino, Inc.                                      100%                        Delaware
Phelps Dodge Industries, Inc.                                 100%                        Delaware
Phelps Dodge Miami, Inc.                                      100%                        Delaware
Phelps Dodge Morenci, Inc.                                    100%                        Delaware
Phelps Dodge Refining Corporation                             100%                        New York
Phelps Dodge Sierrita, Inc.                                   100%                        Delaware



                                  SUBSIDIARIES
                  (OTHER THAN PRINCIPAL DOMESTIC SUBSIDIARIES)



                                                                                       PERCENTAGE OF VOTING STOCK
                                                                                        HELD BY BORROWER AND ITS
                                                                                          ASSOCIATED COMPANIES
                                        NAME
                                                                                    
AAV Corporation                                                                                  100.00%
Aislamientos Plasticos, C.A. (PLASTICA)                                                          100.00%
Ajo Improvement Company                                                                          100.00%
Alambres y Cables de Panama, S.A. (ALCAP)                                                         78.08%
Alambres y Cables Venezolanos, C.A. (ALCAVE)                                                      89.96%
ALCAP Commercial, S.A. (ALCOMER)                                                                 100.00%
Alcave Trading                                                                                   100.00%
Alcoa Fios e Cabos Electricos S.A.                                                                60.00%
Amax Arizona, Inc.                                                                               100.00%
Amax Canada Development Limited                                                                  100.00%
Amax de Chile, Inc.                                                                              100.00%
Amax Energy Inc.                                                                                 100.00%
Amax Exploration (Ireland), Inc.                                                                 100.00%
Amax Exploration, Inc.                                                                           100.00%
Amax Investment (France), Inc.                                                                   100.00%
Amax Metals Recovery, Inc.                                                                       100.00%
Amax Nickel Overseas Ventures, Inc.                                                              100.00%
Amax Realty Development, Inc.                                                                    100.00%

   52
                                                                                    
Amax Research & Development, Inc.                                                                100.00%
Amax Specialty Coppers Corporation                                                               100.00%
Amax Specialty Metals (Canada) Limited                                                           100.00%
Amax Specialty Metals (Driver), Inc.                                                             100.00%
Amax Zinc (Newfoundland) Limited                                                                 100.00%
American Metal Climax, Inc.                                                                      100.00%
Ametalco (Toronto) Limited                                                                       100.00%
Ametalco (Vancouver) Limited                                                                     100.00%
Ametalco Limited                                                                                 100.00%
Ametalco, Inc.                                                                                   100.00%
Arizona Community Investment Corporation                                                         100.00%
Ashfork Mines Limited                                                                            100.00%
Aurex International (Barbados) Ltd.                                                              100.00%
Bisbee Queen Mining Company                                                                       65.90%
Blackwell Zinc Company, Inc.                                                                     100.00%
Busa Mining Co., Inc.                                                                            100.00%
Byner Cattle Company                                                                             100.00%
Cables Electricos Ecuatorianos, C.A. (CABLEC)                                                     67.10%
Cahosa, S.A.   (Panama)                                                                           78.08%
CAM Receivables Corporation                                                                      100.00%
Canapian Mining Co., Inc.                                                                        100.00%
Capital Gestao de Negocios Ltda.                                                                 100.00%
Cates Douglas Corporation                                                                        100.00%
Chino Mines Company                                                                               66.67%
CIS Venture Kazakstan, L.L.C.                                                                     60.00%
CIS Venture Kyrgystan, L.L.C.                                                                     60.00%
Climax Canada Ltd.                                                                               100.00%
Climax Molybdenum B.V.                                                                           100.00%
Climax Molybdenum GmbH                                                                           100.00%
Climax Molybdenum Marketing Corporation                                                          100.00%
Climax Molybdenum S.R.L.                                                                         100.00%
Climax Molybdenum U.K. Limited                                                                   100.00%
Cobre Cerrillos S.A.  (COCESA)                                                                    65.86%
Cobre del Mayo, S.A. de C.V.                                                                      70.00%
Cobre Mining Company                                                                             100.00%
Cocesa Ingenieria y Construccion, S.A. (COCETEL)                                                 100.00%
Cocetel del Plata, S.A.  (Argentina)                                                              95.00%
Cocetel El Salvador                                                                              100.00%
Cocetel Ingenieria y Construccion, C.A.  (Venezuela)                                             100.00%
Columbian Carbon Deutschland G.M.B.H.                                                             90.00%
Columbian Carbon Europa S.R.L.                                                                   100.00%
Columbian Carbon International (France) S.A.                                                     100.00%
Columbian Carbon Japan Ltd.                                                                       68.00%
Columbian Carbon Philippines, Inc.                                                                88.20%
Columbian Carbon Spain, S.A.                                                                     100.00%
Columbian Chemicals Brasil, S.A.                                                                 100.00%
Columbian Chemicals Canada, Ltd.                                                                 100.00%


   53
                                                                                    
Columbian Chemicals Europa, GMBH                                                                 100.00%
Columbian Chemicals Korea Co., Ltd.                                                               85.00%
Columbian Holding Company                                                                         98.00%
Columbian International Chemicals Corporation (CICC)                                             100.00%
Columbian International Trading Company                                                          100.00%
Columbian Technology Company                                                                     100.00%
Columbian Tiszai Carbon Ltd.                                                                      60.00%
Columbian (U.K.) Limited (CUKL)                                                                  100.00%
Compania Contractual Minera Candelaria                                                            80.00%
Compania Contractual Minera Ojos del Salado                                                      100.00%
Compania Mexicana de Exploracion Cyprus S.A. de C.V.                                             100.00%
CONDUCEN, S.A.                                                                                    73.42%
CONDUCOMER, S.A. (formerly INDELEC)                                                              100.00%
Conductores Electricos de Centro America, S.A.  (CONELCA)                                         72.39%
Conductores y Aluminio, C.A. (CONAL)                                                             100.00%
Copper Market, Inc.                                                                              100.00%
Corobong Mining Co., Inc.                                                                        100.00%
Cyprus Amax Australia Corporation                                                                100.00%
Cyprus Amax Chile Holdings, Inc.                                                                 100.00%
Cyprus Amax China Corporation                                                                    100.00%
Cyprus Amax del Peru Corporation                                                                 100.00%
Cyprus Amax Finance Chile Corporation                                                            100.00%
Cyprus Amax Finance Corporation                                                                  100.00%
Cyprus Amax Indonesia Corporation                                                                100.00%
Cyprus Amax Kansanshi Holdings Limited                                                           100.00%
Cyprus Amax Leasing Corporation                                                                  100.00%
Cyprus Amax Minerals Company  (CAMC)                                                             100.00%
Cyprus Amax Minerals Japan Corporation                                                           100.00%
Cyprus Amax Philippines Corporation                                                              100.00%
Cyprus Amax PNG Holdings, Inc.                                                                   100.00%
Cyprus Amax Zambia Corporation                                                                   100.00%
Cyprus Amax Zimbabwe Corporation                                                                 100.00%
Cyprus Canada Inc.                                                                               100.00%
Cyprus Climax Metals Company  (CCMC)                                                             100.00%
Cyprus Copper Marketing Corporation                                                              100.00%
Cyprus Copperstone Gold Corporation                                                              100.00%
Cyprus El Abra Corporation                                                                       100.00%
Cyprus El Abra Minera Limitada                                                                   100.00%
Cyprus Exploration and Development Corporation                                                   100.00%
Cyprus Gold Company                                                                              100.00%
Cyprus Gold Exploration Corporation                                                              100.00%
Cyprus Metals Company                                                                            100.00%
Cyprus Metals Exploration Corporation                                                            100.00%
Cyprus Meullaboho Coal Mining Limited                                                            100.00%
Cyprus Mexico Corporation                                                                        100.00%
Cyprus Minera de Chile, Inc.                                                                     100.00%
Cyprus Minera de Panama, S.A.                                                                    100.00%


   54
                                                                                    
Cyprus Mines Corporation                                                                         100.00%
Cyprus Pima Mining Company                                                                        75.01%
Cyprus Pinos Altos Corporation                                                                   100.00%
Cyprus Speciality Metals Company                                                                 100.00%
Cyprus Tohono Corporation                                                                        100.00%
Cyprus Tonopah Mining Corporation                                                                100.00%
Cyprus Zinc Corporation                                                                          100.00%
Daguma Mining Co., Inc.                                                                          100.00%
Dodge & James Insurance Company, Ltd.                                                            100.00%
Dulugan Mining Co., Inc.                                                                         100.00%
Dumulag Mining Co., Inc.                                                                         100.00%
Electroconductores de Honduras, S.A. de C.V. (ECOHSA)                                             60.00%
Ferragudo Mining of Portugal, L.L.C.                                                              70.00%
Geomining L.L.C.                                                                                  51.00%
Grasshopper, L.L.C.                                                                               60.00%
Habirshaw Cable and Wire Corporation                                                             100.00%
Industria de Conductores Electricos, C.A. (ICONEL)                                               100.00%
Inversiones de Cobre Chile Co., S.A.                                                             100.00%
Iponan Mining Co., Inc.                                                                          100.00%
Isulan Mining Co., Inc.                                                                          100.00%
James Douglas Insurance Company, Ltd.                                                            100.00%
Kidapawan Mining Co., Inc.                                                                       100.00%
Kumakata Mining Co., Inc.                                                                        100.00%
Kyruso Mining Co., Inc.                                                                          100.00%
Lambunao Mining Co., Inc.                                                                        100.00%
Las Quintas Serenas Water Co.                                                                     59.00%
Lumintao Mining Co., Inc.                                                                        100.00%
Macote Mining Co., Inc.                                                                          100.00%
Makilala Mining Co., Inc.                                                                        100.00%
Malampay Mining Co., Inc.                                                                        100.00%
Malibato Mining Co., Inc.                                                                        100.00%
Mambalili Mining Co., Inc.                                                                       100.00%
Mambusao Mining Co., Inc.                                                                        100.00%
Metal Fabricators of Zambia Limited (ZAMEFA)                                                      51.00%
Metallic Ventures, Inc.                                                                          100.00%
Minera Aurex (Chile) Limitada                                                                     99.00%
Minera Cobre Chile Co., S.A.                                                                     100.00%
Minera Cobre Chile Limitada                                                                       99.00%
Minera Cuicuilco S.A. de C.V.                                                                    100.00%
Minera Cyprus Amax Chile Limitada                                                                100.00%
Minera Cyprus Antacori Corporation                                                               100.00%
Minera Cyprus Chile Limitada                                                                     100.00%
Minera La Mesa, S.A. de C.V.                                                                     100.00%
Minera Las Clauditas, S.A.                                                                        85.00%
Minera Las Trancas, S.A. de C.V.                                                                 100.00%
Minera Papago, S.A. de C.V.                                                                      100.00%
Minera Phelps Dodge del Peru S.A.                                                                100.00%


   55
                                                                                    
Minera Phelps Dodge Mexico, S de RL de CV                                                        100.00%
Mineracao Serra do Sossego S.A.                                                                   50.00%
Missouri Lead Smelting Company                                                                   100.00%
Mt. Emmons Mining Company                                                                        100.00%
Norala Mining Co., Inc.                                                                          100.00%
North-West Minerals (Zambia) Ltd.                                                                100.00%
Oclaves Limited                                                                                  100.00%
Pacific Western Land Company                                                                     100.00%
Palimbang Mining Co., Inc.                                                                       100.00%
PD Candelaria, Inc.                                                                              100.00%
PD Cobre del Mayo, Inc.                                                                          100.00%
PD Cobre, Inc.                                                                                   100.00%
PD Colombia S.A.                                                                                 100.00%
PD Explorations, Inc.                                                                            100.00%
PD Indonesia Corporation                                                                         100.00%
PD Las Bambas Corporation                                                                        100.00%
PD Ojos del Salado, Inc.                                                                         100.00%
PD Peru, Inc.                                                                                    100.00%
PD Rus, LLC                                                                                      100.00%
PD Russia, Inc.                                                                                   99.00%
PDEP Inc.                                                                                        100.00%
Phelps Dodge Africa Cable Corporation (PDACC)                                                    100.00%
Phelps Dodge Ajo, Inc.                                                                           100.00%
Phelps Dodge Australasia, Inc.                                                                   100.00%
Phelps Dodge Bagdad, Inc.                                                                        100.00%
Phelps Dodge Chicago Rod, Inc.                                                                   100.00%
Phelps Dodge Corporation of Canada, Limited                                                      100.00%
Phelps Dodge Development Corporation                                                             100.00%
Phelps Dodge do Brasil Mineracao Ltda                                                             99.99%
Phelps Dodge Dublin, Inc.                                                                        100.00%
Phelps Dodge Energy Services, LLC                                                                100.00%
Phelps Dodge Enfield Corporation                                                                 100.00%
Phelps Dodge Espanola Co.                                                                        100.00%
Phelps Dodge Exploracion Mexico, S.A. de C.V.                                                    100.00%
Phelps Dodge Exploration Corporation                                                             100.00%
Phelps Dodge Exploration East, Inc.                                                              100.00%
Phelps Dodge Exploration India Private Limited                                                   100.00%
Phelps Dodge Foundation                                                                              --
Phelps Dodge Hidalgo, Inc.                                                                       100.00%
Phelps Dodge High Performance Conductors Japan Co., Ltd.                                         100.00%
Phelps Dodge High Performance Conductors of NJ, Inc.                                             100.00%
Phelps Dodge High Performance Conductors of SC & GA, Inc.                                        100.00%
Phelps Dodge Holdings Mexico, S.A. de C.V.                                                       100.00%
Phelps Dodge International Corporation                                                           100.00%
Phelps Dodge Madagascar S.A.R.L.                                                                  99.00%
Phelps Dodge Magnet Wire (Austria) GmbH                                                          100.00%
Phelps Dodge Magnet Wire de Mexico, SA de CV                                                      99.00%


   56
                                                                                    
Phelps Dodge Mercantile Company                                                                  100.00%
Phelps Dodge Mining (Zambia) Limited                                                             100.00%
Phelps Dodge Mining Services, Inc.                                                               100.00%
Phelps Dodge Molybdenum Corporation                                                              100.00%
Phelps Dodge of Africa, Ltd.                                                                     100.00%
Phelps Dodge Overseas Capital Corporation                                                        100.00%
Phelps Dodge Overseas Marketing Corporation                                                      100.00%
Phelps Dodge Safford, Inc.                                                                       100.00%
Phelps Dodge Sales Company, Incorporated                                                         100.00%
Phelps Dodge Thailand Limited                                                                     75.47%
Phelps Dodge Tyrone, Inc.                                                                        100.00%
Phelps Dodge Wire & Cable Trading Company de Mexico, SA de CV                                     99.00%
Phelps Dodge Wire and Cable Holding de Mexico SA de CV                                            99.00%
Phelps Dodge Yantai China Holdings Inc.                                                           66.67%
Philippine Carbon Black Distribution Company, Inc.                                               100.00%
Pietersburg Iron Company (Proprietary) Limited                                                    50.00%
Pollac Mining Co., Inc.                                                                          100.00%
Proper Equipment Co.                                                                              80.00%
Pt Cyprus Amax Indonesia                                                                         100.00%
PT Kutaraja Tembaga Raya                                                                          55.00%
Representaciones de Industrias Venezolanas, C.A. (REDIVENCA)                                     100.00%
Rio Blanco Exploration, LLC                                                                       50.00%
Sabang Mining Co., Inc.                                                                          100.00%
Savanna Development Co., Ltd.                                                                    100.00%
Servicios Cyprus, S.A. de C.V.                                                                   100.00%
Servicios Phelps Dodge Mexico, S.A. de C.V.                                                      100.00%
Sevalco (Trustee) Ltd.                                                                           100.00%
Sevalco Limited                                                                                  100.00%
Silver Springs Ranch, Inc.                                                                       100.00%
Sociedad Contractual Minera El Abra                                                               51.00%
Sociedad Minera Cerro Verde S.A.                                                                  82.49%
Sofia Mineral Ltd.  (Somin) (partnership)                                                         50.00%
Soner, Inc.                                                                                      100.00%
T.I.E. (Trading Import Export)                                                                   100.00%
Tambali Mining Co., Inc.                                                                         100.00%
The Morenci Water & Electric Company                                                             100.00%
Tien Shen Minerals                                                                                50.00%
Tucson, Cornelia and Gila Bend Railroad Co.                                                      100.00%
United States Metals Refining Company                                                            100.00%
Warren Company                                                                                   100.00%
Western Nuclear Australia Limited                                                                100.00%
Western Nuclear, Inc.                                                                            100.00%


   57
                   SCHEDULE III - ENVIRONMENTAL REPRESENTATION


                                      None
   58
                            SCHEDULE IV - LITIGATION


                  1. In re the General Adjudication of All Rights to Use Water
         in the Little Colorado River System and Source, No. 6417 (Superior
         Court of Arizona, Apache County) (water rights litigation).

                  2. In re the General Adjudication of All Rights to Use Water
         in the Gila River System and Source, Nos. W-1 (Salt River), W-2 (Verde
         River), W-3 (Gila River) and W-4 (San Pedro River) (Superior Court of
         Arizona, Maricopa County) (water rights litigation).

                  3. United States v. Gila Valley Irrigation District, et al.,
         and Globe Equity No. 59 (D. Ariz.) (water rights litigation).

                  4. Prior to January 1, 1983, various Indian tribes filed
         several suits in the U.S. District Court for the District of Arizona
         claiming prior and paramount rights to use waters which are presently
         being used by many water users, including Phelps Dodge Corporation, and
         claiming damages for prior use in derogation of their allegedly
         paramount rights. These federal proceedings have been stayed pending
         state court adjudication.

                  5. United States, et al. v. City of Tucson, et al., No. CIV
         75-39 (D. Ariz.) (water rights litigation).

                  6. In 1999, the Pinal Creek Group, comprising Cyprus Miami
         Mining Corporation (a wholly owned subsidiary of the Company) and other
         companies, continued remediation and assessment of groundwater quality
         in the shallow alluvial aquifers along Pinal Creek near Miami, Arizona.
         The removal, remediation and assessment work is being conducted in
         accordance with the requirements of the Arizona Department of
         Environmental Quality's Water Quality Assurance Revolving Fund program.
         In addition, the remedial and removal action is consistent with the
         National Contingency Plan prepared by the EPA as required by CERCLA.

         In November 1997, Cyprus Miami, as a member of the Pinal Creek Group,
joined with the State of Arizona in seeking approval of the District Court for
entry of a Consent Decree resolving all matters related to an enforcement action
contemplated by the State of Arizona with respect to the groundwater matter. On
August 13, 1998, the court approved the Decree that committed Cyprus Miami and
the other Pinal Creek Group members to complete the remediation work outlined in
the remedial action plan that was submitted to the State in May 1997.
Approximately $143 million remained in the Company's Pinal Creek remediation
reserve at December 31, 1999. Cyprus Miami has commenced contribution litigation
against other parties involved in this matter and has asserted claims against
certain of its past insurance carriers. While significant recoveries are
expected, the Company cannot reasonably estimate the amount and, therefore, has
not taken potential recoveries into consideration in the recorded reserve.

EX-10.13

   1

                                                                   Exhibit 10.13


                           ADVISORY SERVICES AGREEMENT

This Advisory Services Agreement ("Agreement") is made and entered into by and
between Phelps Dodge Corporation, a New York corporation ("Company") and Douglas
C. Yearley ("Advisor").

WHEREAS, Advisor is currently employed by the Company and has informed Company
of his intent to retire from the Company, and as Chairman of its Board of
Directors, as of May 3, 2000; and

WHEREAS, Company desires, to the extent practicable, to retain and secure for
its benefit the experience, abilities, knowledge, and services of Advisor after
his retirement; and

WHEREAS, Advisor has extensive personal and specialized knowledge and skill in
the management of multinational mining and related corporations, and the Company
wishes to engage Advisor to perform services within his area of expertise.

NOW, THEREFORE, in consideration of the premises, the mutual promises set forth
below, and such other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties, Company and Advisor
agree as follows:

         1.       Advisory Services. The Advisor, as an independent contractor,
                  shall render the advisory services described in this Section 1
                  for the period beginning on May 4, 2000 and ending on May 3,
                  2003, (the "Advisory Period"). During the Advisory Period, the
                  Advisor will provide such advisory services concerning the
                  business affairs and management of the Company as may be
                  requested by the Company's Board of Directors or the Chief
                  Executive Officer, but shall not be required to devote more
                  than 30 hours each month to such requested services. Advisor
                  shall perform any services requested under this Agreement
                  without Company's direct supervision, and Advisor shall have
                  complete discretion about when, where, and how the services
                  are to be performed. If at anytime during the Advisory Period,
                  the Advisor engages in full-time employment, outside of those
                  services provided to Company, the Advisor shall be deemed to
                  be in breach of this Section 1 (unless such full-time
                  employment consists of the Advisor providing services to one
                  or more (i) charitable or nonprofit organizations or (ii)
                  family-owned corporations, trusts, or partnerships), in which
                  case the term of the Advisory Period shall terminate and the

   2
                  Company shall have no further obligations under this Agreement
                  other than with respect to earned and unpaid fees and
                  benefits. Company and Advisor acknowledge and agree, subject
                  to Section 7 of this Agreement, that during the Advisory
                  Period the Advisor may provide other than full-time services
                  to third parties (including serving as a member of the Board
                  of Directors of any such party).

         2.       Compensation. During the Advisory Period, the Advisor shall be
                  entitled to receive a fee in the amount of $20,833.33 per
                  month for each month during such period. Such fee shall be
                  payable for each such month whether or not Advisor is called
                  upon for advising during any particular month or months. In
                  addition, Advisor shall be entitled to the benefits described
                  in Section 3 hereof. In the event the Advisor dies or becomes
                  Disabled (as defined in the next sentence) during the Advisory
                  Term, no advisory fees shall be payable for any month after
                  the month the Advisor dies or becomes Disabled. Advisor shall
                  be deemed to be Disabled for purposes of this Agreement Letter
                  if the Corporation determines in good faith that he is no
                  longer able to perform his advisory duties under this
                  Agreement Letter because of a mental or physical illness which
                  is determined to be total and permanent by a physician
                  selected by the Corporation and acceptable to the Advisor or
                  his legal representative (such agreement as to acceptability
                  not to be withheld unreasonably).

         3.       Fringe Benefits. The Advisor shall be entitled during the
                  Advisory Period and at Company's expense to an annual
                  executive physical examination similar to such examinations
                  available to other executives of the Company. During the
                  Advisory Period, the Company shall continue to pay on behalf
                  of the Advisor monthly dues and other charges in connection
                  with existing or current corporate memberships in clubs (as of
                  the date this Agreement is signed), so as to facilitate the
                  Advisor's ability to perform the services contemplated by this
                  Agreement and appropriately represent the Company in the
                  business community. During the advisory period, Advisor shall
                  be eligible to receive personal financial counseling, tax
                  preparation, and estate planning benefits on terms comparable
                  to those enjoyed by him prior to retirement, provided however,
                  that the maximum financial counseling fees that the
                  Corporation will be obligated to pay in any calendar year will
                  be $15,000. The terms of this Agreement shall not be extended
                  except by a separate written agreement of the parties.

         4.       Expenses. The Company, upon receipt of adequate supporting
                  documentation, shall reimburse the Advisor

   3
                  for reasonable expenses incurred by him in providing the
                  requested services to the Company, subject to the Company's
                  usual expense reimbursement policies, which may be amended
                  from time to time. The Company shall provide for limited
                  availability of any Company airplanes for the use of Advisor
                  in performing those advisory services requested of him. Such
                  availability will acknowledge the priority and pre-emptive
                  scheduling of such aircraft for ongoing business purposes, and
                  will be at the direction of the Chief Executive Officer.

         5.       Independent Contractor Relationship. In providing the
                  requested services under this Agreement, Advisor acknowledges
                  and agrees that he will be serving as an independent
                  contractor. The Company and the Advisor agree that he shall
                  have no obligation to work any particular schedule and the
                  Company has no right to control or direct the details, manner,
                  or means in which the Advisor provides his advisory services.
                  Other than provided in this Agreement, the Company is not
                  obligated to provide to Advisor any other employee benefit or
                  compensation, whether retirement, welfare or otherwise, during
                  the Advisory Period, and is not liable for any employment tax
                  or withholding tax obligations in relation to the fees and
                  benefits paid hereunder. Advisor shall be solely responsible
                  for all income and other tax obligations in connection with
                  the services performed and payments received under this
                  Agreement. As an independent contractor, Advisor shall not be
                  eligible to participate in any employee benefit plans (as such
                  term is defined in the Employee Retirement Income Security Act
                  of 1974, as amended), sponsored by Company or any of its
                  affiliates. The Company will provide Advisor with office space
                  when working from the corporate headquarters, direct office
                  support, and supplies as required to perform the services
                  contemplated by this Agreement.

         6.       Termination for Cause. The Company may terminate this
                  Agreement and all of the Company's obligations hereunder
                  (other than fees and benefits accrued through the date of
                  termination) by action of the Company's Board of Directors, or
                  a committee thereof, because of the Consultant's conviction
                  (treating a nolo contendere plea as a conviction) of a felony
                  (whether or not any right to appeal has been or may be
                  exercised) or willful refusal without proper cause to perform
                  his obligations under this Agreement or because of Advisor's
                  breach of any of the covenants provided for in Sections 7, 8
                  or 9 below.

         7.       Noncompetition Agreement. During the Advisory Period and for a
                  period of two years after the termination
   4

                  thereof, the Advisor covenants that he shall not, without the
                  written consent of the Company, directly or indirectly be
                  employed or retained by, or render any services for, or be
                  financially interested in, any firm or corporation engaged in
                  any business which is competitive with any business in which
                  the Company or any of its affiliates may have been engaged
                  during the period of his employment or the Advisory Period.
                  The foregoing restriction shall not apply to the purchase by
                  the Advisor of not to exceed 5% of the outstanding shares of
                  the capital stock of any corporation whose securities are
                  listed on any national securities exchange.

         8.       Loyalty Commitments. During and after the Advisory Period or
                  any time thereafter: (i) the Advisor covenants that he shall
                  not disclose any confidential information about the affairs of
                  the Company or any of its affiliates; and (ii) the Advisor
                  covenants that he shall not, without the prior written consent
                  of the Company, induce or attempt to induce any employee or
                  agency representative of the Company or any affiliate to leave
                  the employment or representation of the Company or such
                  affiliate.

         9.       Ownership of Work Product. The Advisor acknowledges that
                  during the term of his employment and the Advisory Period, he
                  may conceive of, discover, invent or create inventions,
                  improvements, new contributions, literary property, material,
                  ideas and discoveries, whether patentable or copyrightable or
                  not (all of the foregoing being collectively referred to
                  herein as "Work Product"), and that various business
                  opportunities shall be presented to him by reason of his
                  relationship to the Company. The Advisor acknowledges and
                  agrees that all of the foregoing shall be owned by and belong
                  exclusively to the Company and that he shall have no personal
                  interest therein, provided that they are either related in any
                  manner to the business (commercial, research and development,
                  or experimental) of the Company, or are, in the case of Work
                  Product, conceived or made on the Company's time or with the
                  use of the Company's facilities or materials, or, in the case
                  of business opportunities, are presented to him for the
                  possible interest or participation of the Company.

         10.      Specific Remedy. In addition to such other rights and remedies
                  as the Company may have at equity or in law with respect to
                  any breach of this Agreement, if the Advisor commits a
                  material breach of any of the provisions of Sections 7, 8, or
                  9, the Company shall have the right and remedy to have such
                  provisions specifically enforced by any court of competent

   5
                  jurisdiction, it being acknowledged and agreed that any such
                  breach or threatened breach will cause irreparable injury to
                  the Company and that money damages will not provide Company an
                  adequate remedy.

         11.      Notices. Where there is provision therein for the delivery of
                  written notice to either of the parties, such notice shall be
                  deemed to have been delivered for the purposes of this
                  Agreement when delivered in person or placed in a sealed,
                  postpaid envelope addressed to such party and mailed by
                  certified mail, return receipt requested to:

                  Douglas C. Yearley                 Attn: Corporate Secretary
                  c/o Irene Mueller                  Phelps Dodge Corporation
                  Phelps Dodge Corporation           2600 N. Central Avenue
                  2600 N. Central Avenue             Phoenix, AZ  85004-3014
                  Phoenix, AZ 85004-3014

         12.      Arbitration. Any controversy arising from or related to the
                  Agreement, other than those addressed in Section 10, shall be
                  determined by arbitration in the City of Phoenix, Arizona, in
                  accordance with the rules of the American Arbitration
                  Association, and judgment upon any such determination or award
                  may be entered in any court of competent jurisdiction. In the
                  event of any arbitration between the Advisor and the Company
                  related to the Agreement, if the Advisor shall be the
                  successful party the Company will indemnify and reimburse the
                  Advisor from and against any reasonable legal fees, costs, and
                  expenses incurred in such arbitration.

         13.      Separability of Provisions. The terms of this Agreement shall
                  be considered to be separate from each other, and in the event
                  any shall be found to be invalid, it shall not affect the
                  validity of the remaining terms.

         14.      Binding Effect and Assignment. This Agreement shall be binding
                  upon and inure to the benefit of (i) the Company, and its
                  successors and assigns; and (ii) the Advisor, his personal
                  representatives, heirs and legatees. The performance of the
                  services contemplated by this Agreement is personal to
                  Advisor, and his obligation to perform these services is not
                  assignable.

         15.      Entire Agreement. This Agreement constitutes the entire
                  agreement between the parties and supersedes and revokes any
                  and all prior oral or written understandings between the
                  parties relating to the services to be provided hereunder. The
                  Agreement may not be changed orally, but only by a written
                  document signed by the party against whom enforcement of any

   6
                  waiver, change, modification, extension or discharge is
                  sought.

         16.      Governing Law. This Agreement shall be governed by and
                  construed and enforced in accordance with the substantive laws
                  of the State of Arizona applicable to agreements made and to
                  be performed entirely in Arizona.

         17.      Change of Control. In the event of a "Change of Control" (as
                  that term is defined by the Company's Change of Control
                  Agreements in effect as of the effective date of this
                  Agreement) Advisor shall have the right to terminate this
                  Agreement, effective as of the first day of the calendar month
                  following a Change of Control. In the event of such voluntary
                  termination by Advisor, the rights, duties, and obligations of
                  the parties under this Agreement shall terminate as of such
                  date; provided that the Company shall pay Advisor for all
                  services rendered and costs incurred through the date of
                  termination.

         18.      Amendment. This Agreement can not be amended or modified in
                  any respect unless such amendment or modification is evidenced
                  by a written instrument executed by both parties hereto.


IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 25th
day of April, 2000, to be effective as of May 4, 2000.



                                            PHELPS DODGE CORPORATION

                                            By: /s/ J. Steven Whisler

                                            Chief Executive Officer






                                            Douglas C. Yearley

EX-12

   1
                    PHELPS DODGE CORPORATION AND SUBSIDIARIES

                                   Exhibit 12

COMPUTATION OF TOTAL DEBT TO TOTAL CAPITALIZATION
(Unaudited; dollars in millions)



                                                         March 31,       December 31,
                                                           2000           1999
                                                        ----------       ----------
                                                                   
Short-term debt .................................       $    374.7          451.2
Current portion of long-term debt ...............            115.4          131.3
Long-term debt ..................................          2,173.9        2,172.5
                                                        ----------        -------

     Total debt .................................          2,664.0        2,755.0
Minority interests in subsidiaries ..............             99.1           96.3
Common shareholders' equity .....................          3,260.1        3,276.8
                                                        ----------        -------

     Total capitalization .......................       $  6,023.2        6,128.1
                                                        ==========        =======

Ratio of total debt to total capitalization .....             44.2%          45.0%
                                                        ==========        =======

EX-15

   1
                                   Exhibit 15



Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.  20549


Commissioners:

We are aware that our report dated April 24, 2000 on our review of interim
financial information of Phelps Dodge Corporation (the "Corporation") as of and
for the period ended March 31, 2000 and included in the Corporation's quarterly
report on Form 10-Q for the quarter then ended is incorporated by reference in
its Registration Statement and Post-Effective Amendment No. 1 and Form S-3 (Nos.
33-44380 and 333-36415), Registration Statements on Form S-8 (Nos. 33-26442,
33-6141, 33-26443, 33-29144, 33-19012, 2-67317, 33-34363, 33-34362, 33-62648,
333-42231, and 333-52175) and Post-Effective Amendment No. 4 on Form S-8 to the
Registration Statement on Form S-4 (No. 333-86061).


Very truly yours,




PricewaterhouseCoopers LLP
Phoenix, Arizona
May 11, 2000

EX-27

 

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT MARCH 31, 2000 AND THE RELATED CONSOLIDATED
STATEMENTS OF OPERATIONS AND OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31,
2000 OF PHELPS DODGE CORPORATION AND ITS SUBSIDIARIES AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

<MULTIPLIER> 1,000
<CURRENCY> U S DOLLARS

                             
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          DEC-31-2000
<PERIOD-START>                             JAN-01-2000
<PERIOD-END>                               MAR-31-2000
<EXCHANGE-RATE>                                      1
<CASH>                                         311,600
<SECURITIES>                                         0
<RECEIVABLES>                                  557,700
<ALLOWANCES>                                         0
<INVENTORY>                                    461,900
<CURRENT-ASSETS>                             1,631,400
<PP&E>                                       8,773,700
<DEPRECIATION>                               2,774,000
<TOTAL-ASSETS>                               8,127,000
<CURRENT-LIABILITIES>                        1,317,900
<BONDS>                                      2,173,900
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                       492,000
<OTHER-SE>                                   2,768,100
<TOTAL-LIABILITY-AND-EQUITY>                 8,127,000
<SALES>                                      1,119,700
<TOTAL-REVENUES>                             1,119,700
<CGS>                                          873,400
<TOTAL-COSTS>                                  873,400
<OTHER-EXPENSES>                               134,300
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              55,400
<INCOME-PRETAX>                                 31,200
<INCOME-TAX>                                  (11,200)
<INCOME-CONTINUING>                             19,400
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                    19,400
<EPS-BASIC>                                        .25
<EPS-DILUTED>                                      .25