UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 10-K
 
[ √ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF   THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004
OR
[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________  to __________
 
Commission file number 1-11037
 

Praxair, Inc.

Praxair, Inc.
Tel. (203) 837-2000
39 Old Ridgebury Road
State of incorporation: Delaware
Danbury, Connecticut 06810-5113
IRS identification number: 06-124 9050


Securities registered pursuant to Section 12(b) of the Act:
 

Title of each class:
Registered on :

Common Stock ($0.01 par value)
New York Stock Exchange
Common Stock Purchase Rights
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:   None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Security 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  [ √ ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ √ ]

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [ √ ]  No [ ]

The aggregate market value of the voting and non-voting common stock held by non-affiliates, computed by reference to the price at which the stock was last sold on June 30, 2004, was approximately $13.0 billion.

At January 31, 2005, 322,379,633 shares of common stock of Praxair, Inc. were outstanding.

Documents incorporated by reference:
Portions of the 2004 Annual Report to Shareholders of the Registrant are incorporated in Parts I, II and IV of this report. Also, portions of the Proxy Statement of Praxair, Inc., dated March 2 , 2005, are incorporated in Part III of this report.

The Index to Exhibits is located on page 14 of this report.







Forward-looking statements

The forward-looking statements contained in this document concerning demand for products and services, the expected macroeconomic environment, sales , margins and earnings growth rates, projected capital and acquisition spending, the impact of required changes in accounting, the impact of accounting and other estimates, and other financial goals involve risks and uncertainties, and are subject to change based on various factors. These risk factors include the impact of changes in worldwide and national economies, the performance of stock markets, the cost and availability of electric power, natural gas and other materials, and the ability to achieve price increases to offset such cost increases, inflation in wages and other compensation, development of operational efficiencies, changes in foreign currencies, changes in interest rates, the continued timely development and acceptance of new products and processes, the impact of competitive products and pricing, and the impact of tax, accounting and other legislation, litigation, government regulation in the jurisdictions in which the Company operates and the effectiveness and speed of integrating new acquisitions into the business.






 
 


INDEX



Part I
 
PAGE
 
2
 
6
 
7
 
7
 
 
 
Part II
 
 
 
 
 
8
 
8
 
9
 
9
 
9
 
9
 
9
 
10
 
 
 
Part III
 
 
 
11
 
11
 
11
 
11
 
11
 
 
 
 
 
 
Part IV
 
 
 
12
 
 
 
 
13
 
14



1




PART I
Praxair, Inc. and Subsidiaries
 
Item 1. Business

General
Praxair, Inc. (Praxair or Company) was founded in 1907 and became an independent publicly traded company in 1992. Praxair was the first company in the United States to produce oxygen from air using a cryogenic process and continues to be a major technological innovator in the industrial gases industry.

Praxair is the largest industrial gases company in North and South America and is rapidly growing in Asia, and has strong, well-established businesses in Europe. Praxair's primary products for its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, rare gases), process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene). The Company also designs, engineers, and builds equipment that produces industrial gases for internal use and external sale. The Company's Surface Technology segment, operated through Praxair Surface Technologies, Inc., supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders. Sales for Praxair were $6,594 million, $5,613 million, and $5,128 million, for 2004, 2003 and 2002, respectively. Refer to Note 4 of the section captioned "Notes to Consolidated Financial Statements" in Praxair's 2004 Annual Report to Shareholders for information related to Praxair's reportable segments.

Praxair serves approximately 25 industries as diverse as healthcare and petroleum refining; computer-chip manufactur ing and beverage carbonation; fiber-optics and steel making; and aerospace, chemicals and water treatment. In 2004, 93% of sales were generated in four regional segments (North America, Europe, South America, and Asia) primarily from the sale of industrial gases with the balance generated from the Surface Technologies segment. Praxair provides a competitive advantage to its customer base by continuously developing new products and applications, which allow them to improve their productivity, energy efficiency and environmental performance.


Industrial Gases Products and Manufacturing Processes
Atmospheric gases are the highest volume products produced by Praxair. Using air as its raw material, Praxair produces oxygen, nitrogen and argon through several air separation processes, of which, cryogenic air separation, is the most prevalent process. As a pioneer in the industrial gases industry, Praxair is a leader in developing a wide range of proprietary and patented applications and supply systems technology, including small cryogenic nitrogen plants. Praxair also led the development and commercialization of non-cryogenic air separation technologies for the production of industrial gases. These technologies open important new markets and optimize production capacity for the Company by lowering the cost of supply of industrial gases. These technologies include proprietary vacuum pressure swing adsorption ("VPSA") and membrane separation to produce gaseous oxygen and nitrogen, respectively. Praxair also manufactures precious metal and ceramic sputtering targets used primarily in the production of semiconductors.
 
 
2
 
 
 
 
PART I (Continued)
Praxair, Inc. and Subsidiaries
 
Process gases, including carbon dioxide, hydrogen, carbon monoxide, helium and acetylene, are produced by different methods than air separation technologies. Most carbon dioxide is purchased from by-product sources, including chemical plants, refineries, industrial processes, and is recovered from carbon dioxide wells. Carbon dioxide is processed in Praxair's plants to produce commercial carbon dioxide. Hydrogen and carbon monoxide are produced by either steam methane reforming of natural gas or by purifying by-product sources obtained from the chemical and petrochemical industries. Most of the helium sold by Praxair is sourced from certain helium-rich natural gas streams in the United States, with additional supplies being acquired from outside the United States. Acetylene is typically produced from calcium carbide and water or purchased as a chemical by-product.

Industrial Gases Distribution
There are three basic distribution methods for industrial gases: (i) on-site or tonnage; (ii) merchant liquid; and (iii) packaged or cylinder gases. These distribution methods are often integrated, with products from all three supply modes coming from the same plant. The method of supply is generally determined by the lowest cost means of meeting the customer's needs, depending upon factors such as volume requirements, purity, pattern of usage, and the form in which the product is used (as a gas or as a cryogenic liquid).

On-site. Customers that require the largest volumes of product (typically oxygen, nitrogen and hydrogen) and that have a relatively constant demand pattern are supplied by cryogenic and process gas on-site plants. Praxair constructs plants on or adjacent to these customers' sites and supplies the product directly to customers. Because these are usually dedicated plants, the product supply contracts generally are total requirement contracts with terms typically ranging from 10-20 years and containing minimum purchase requirements and price escalation provisions. Many of the cryogenic on-site plants also produce liquid products for the merchant market. New advanced air separation processes allow on-site delivery to customers with smaller volume requirements. Customers using these systems usually enter into requirement contracts with terms typically ranging from 5-15 years.

Merchant. The merchant business is generally associated with distributable liquid oxygen, nitrogen, argon, carbon dioxide, hydrogen and helium. The deliveries generally are made from Praxair's plants by tanker trucks to storage containers owned or leased and maintained by Praxair or the customer at the customer's site. Due to distribution cost, merchant oxygen and nitrogen generally have a relatively small distribution radius from the plants at which they are produced. Merchant argon, hydrogen and helium can be shipped much longer distances. The agreements used in the merchant business are usually three-to five-year requirement contracts, except for carbon dioxide, which typically has one-year requirement contracts in the United States.

Packaged Gases. Customers requiring small volumes are supplied products in metal containers called cylinders, under medium to high pressure. Packaged gases include atmospheric gases, carbon dioxide, hydrogen, helium and acetylene. Praxair also produces and distributes in cylinders a wide range of specialty gases and mixtures. Cylinders may be delivered to the customer's site or picked up by the customer at a packaging facility or retail store. Packaged gases are generally sold by purchase orders.

A substantial amount of the cylinder gases sold in the United States is distributed by independent distributors that buy merchant gases in liquid form and repackage the products in their facilities. These businesses also distribute welding equipment purchased from independent manufacturers. Over time, Praxair has acquired several independent industrial gases and welding products distributors at various locations in the United States and continues to sell merchant gases to other independent distributors. Between its own distribution business, joint ventures and sales to independent distributors, Praxair is represented in 48 states, the District of Columbia and Puerto Rico.
 
Surface Technologies
Praxair's Surface Technologies segment supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders to the aircraft, printing, textile, plastics, primary metals, petrochemical, and other industries. It also provides aircraft engine and airframe component overhaul services, and manufactures a complete line of electric arc, plasma, and high velocity oxygen fuel spray equipment as well as arc and flame wire equipment used for the application of wear resistant coatings. The coatings extend wear life and are applied at Praxair's facilities using a variety of thermal spray coatings processes. The coated parts are finished to the customer's precise specifications before shipment.
 
 
3
 
 
 
 
PART I (Continued)
Praxair, Inc. and Subsidiaries
 
Inventories - Praxair carries inventories of merchant and cylinder gases, hardgoods and coatings materials to supply products to its customers on a reasonable delivery schedule. On-site plants and pipeline complexes have limited inventory. Inventories, inventory obsolescence and backlogs are not material to Praxair's business.

Customers - Praxair is not dependent upon a single customer or a few customers.

International - Praxair is a global enterprise with approximately 50% of its 2004 sales outside of the United States. It conducts industrial gases business through subsidiary and affiliated companies in Argentina, Belgium, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, France, Germany, India, Israel, Italy, Japan, South Korea, Malayasia, Mexico, the Netherlands, the People's Republic of China, Paraguay, Peru, Portugal, Spain, Taiwan, Thailand, Turkey, Uruguay and Venezuela. S.I.A.D. (Societa Italiana Acetilene & Derivati S.p.A.), an Italian company accounted for as an equity company, also has established positions in Austria, Bulgaria, Croatia, the Czech Republic, Hungary, Romania and Slovenia. Praxair's Surface Technologies segment has operations in Brazil, France, Germany, Italy, Japan, Singapore, South Korea, Taiwan, Spain, Switzerland and the United Kingdom.

Praxair's international business is subject to risks customarily encountered in foreign operations, including fluctuations in foreign currency exchange rates and controls, import and export controls, and other economic, political and regulatory policies of local governments. Also, see Note 1 of the section captioned "Notes to Consolidated Financial Statements", and the section captioned "Management's Discussion and Analysis - Market Risk and Sensitivity Analysis" in Praxair's 2004 Annual Report to Shareholders.

Seasonality - Praxair's business is generally not subject to seasonal fluctuations to any significant extent.

Research and Development - Praxair's research and development is directed toward developing new and improved methods for the production and distribution of industrial gases and the development of new markets and applications for these gases. This results in the frequent introduction of new industrial gas applications, and the development of new advanced air separation process technologies. Research and development for industrial gases is principally conducted at Tonawanda, New York; Burr Ridge, Illinois; and Rio de Janeiro, Brazil.

Praxair conducts research and development for its surface technologies to improve the quality and durability of coatings and the use of specialty powders for new applications and industries. Surface technologies research is conducted at Indianapolis, Indiana.

Patents and Trademarks - Praxair owns or licenses a large number of United States and foreign patents that relate to a wide variety of products and processes. Praxair's patents expire at various times over the next 20 years. While these patents and licenses are considered important, Praxair does not consider its business as a whole to be materially dependent upon any one particular patent or patent license. Praxair also owns a large number of trademarks.
 
Raw Materials and Energy Costs - Energy is the single largest cost item in the production and distribution of industrial gases. Most of Praxair's energy requirements are in the form of electricity, natural gas and diesel fuel for distribution. Praxair minimizes the financial impact of variability in these costs through the management of customer contracts, which typically have escalation and pass-through clauses.

The supply of energy has not been a significant issue in the geographic areas where we conduct business. However, the outcome of regional energy situations or new energy situations is unpredictable and may pose unforeseen future risks.

For carbon dioxide, carbon monoxide, helium, hydrogen, specialty gases and surface technologies, raw materials are largely purchased from outside sources. Praxair has contracts or commitments for, or readily available sources of, most of these raw materials; however, their long-term availability and prices are subject to market conditions.

Competition - Praxair operates within a highly competitive environment. Some of its competitors are larger in size and capital base than Praxair. Competition is based on price, product quality, delivery, reliability, technology and service to customers.
 

 
4
 
 
 
 
PART I (Continued)
Praxair, Inc. and Subsidiaries
 
Major competitors in the industrial gases industry both in the United States and worldwide include Air Products and Chemicals, Inc., Airgas Inc., The BOC Group p.l.c., L'Air Liquide S.A., and Linde AG. At a worldwide level, there are no congruent competitors for the surface technologies business. However, principal domestic competitors are Chromalloy Gas Turbine Corporation, a subsidiary of Sequa Corporation, Sermatech International, Inc., a subsidiary of Teleflex, Inc., and Chemtronics, Inc., a subsidiary of GKN p.l.c. International competitors in surface technologies vary from country to country.

Employees and Labor Relations - As of December 31, 2004, Praxair had 27,020 employees worldwide. Of this number, 11,185 are employed in the United States. Praxair has collective bargaining agreements with unions at numerous locations throughout the world, which expire at various dates. Praxair considers relations with its employees to be good.

Environment - Information required by this item is incorporated herein by reference to the section captioned "Management's Discussion and Analysis - Costs Relating to the Protection of the Environment" in Praxair's 2004 Annual Report to Shareholders.

Website Access to Reports - Praxair's company website is http://www.praxair.com. The Company makes its periodic and current reports available, free of charge, on its website as soon as practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (SEC). The SEC is located at 450 Fifth Street NW, Washington, D.C. 20549 and its website address is http://www.sec.gov. In addition, investors may also access from the Company website other investor information such as press releases, business trends, presentations, etc.

 
5
 
 
 
 
PART I (Continued)
Praxair, Inc. and Subsidiaries

Item 2. Properties

Praxair's worldwide headquarters is located in leased office space in Danbury, Connecticut. Other principal administrative offices are owned in Tonawanda, New York, and Rio de Janeiro, Brazil and leased in Shanghai, China and Madrid, Spain.

Praxair designs, engineers, manufactures and operates facilities that produce and distribute industrial gases. These industrial gas production facilities and certain components are designed and/or manufactured at its facilities in Tonawanda, New York; Burr Ridge, Illinois and Rio de Janeiro, Brazil. Praxair's Italian equity affiliate, Societa Italiana Acetilene & Derivati S.p.A. (S.I.A.D.) also has such capacity.

The following table summarizes production locations for Praxair by segment. No significant portion of these assets was leased at December 31, 2004. Generally, these facilities are fully utilized and are sufficient to meet our manufacturing needs. The majority of the Surface Technologies locations are in the United States.

   
Number of Locations at December 31, 2004
   
ASU (a)
 
Hydrogen
 
CO2 (b)
 
Other (c)
                 
North America
 
173
 
29
 
49
 
386
Europe
 
49
 
2
 
5
 
66
South America
 
36
 
1
 
17
 
105
Asia
 
19
 
2
 
11
 
35
Surface Technologies
 
-
 
-
 
-
 
47
Total
 
277
 
34
 
82
 
639
         

(a)  
Cryogenic air separation plants.
(b)  
Carbon dioxide plants.
(c)  
Other includes non-cryogenic plants, packaged gas plants, helium plants, specialty gas plants, and Surface Technologies plants.

No single production location is material except for the following pipeline complexes:

Supply System
 
Number of
Production Locations
 
Number of
Connected Plants (a)
 
Plant Type
Northern Indiana
 
5
 
14
 
ASU/Hydrogen/CO2
Houston  
 
3
 
8
 
ASU
Gulf Coast
 
4
 
12
 
Hydrogen/Carbon Monoxide
Detroit
 
1
 
7
 
ASU/Hydrogen
Louisiana
 
3
 
4
 
Hydrogen/Carbon Monoxide
Southern Brazil (b)  
 
9
 
9
 
ASU
Northern Spain
 
5
 
6
 
ASU/Hydrogen/CO2
Germany - Rhine Region
 
2
 
3
 
ASU/Carbon Monoxide
Germany - Saar Region
 
1
 
3
 
ASU

(a)  
A production location contains one or more independently productive plants.
(b)  
Locations are partially owned and partially leased.
 
 
6
 
 
 
 
PART I (Continued)
Praxair, Inc. and Subsidiaries
 
Item 3. Legal Proceedings

Information required by this item is incorporated herein by reference to the section captioned "Notes to Consolidated Financial Statements - Note 20 Commitments and Contingencies" in Praxair's 2004 Annual Report to Shareholders.

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

Praxair did not submit any matters to a shareholder vote during the fourth quarter of 2004.
 

7
 
 
 
 
PART II
Praxair, Inc. and Subsidiaries
 
 
Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

Market, trading, shareholder and dividend information for Praxair's common stock is incorporated herein by reference to the section captioned "Investor Information" in Praxair's 2004 Annual Report to Shareholders.

On October 28, 2003, Praxair's Board of Directors declared a two-for-one split of the Company's common stock. The stock split was effected in the form of a stock dividend of one additional share for each share owned by stockholders of record on December 5, 2003, and each share held in treasury as of the record date.

Praxair's annual dividend on its common stock for 2004 was $0.60 per share. On January 25, 2005, Praxair's Board of Directors declared a dividend of $0.18 per share for the first quarter of 2005, or $0.72 per share annualized, which may be changed as Praxair's earnings and business prospects warrant. The declaration of dividends is a business decision made by the Board of Directors based on Praxair's earnings and financial condition and other factors the Board of Directors considers relevant.

Purchases of Equity Securities - Certain information regarding purchases made by or on behalf of the Company or any affiliated purchaser (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended) of its common stock during the three months ended December 31, 2004 is provided below:  

Period
 
Total Number of Shares Purchased
(Thousands)
 
Average Price Paid
Per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
(Thousands)
 
Maximum Number of Shares that May Yet be Purchased Under the Program (2)
October
 
1,813
 
$ 41.91
 
1,813
 
N/A
November
 
500
 
$ 44.20
 
500
 
N/A
December
 
594
 
$ 44.20
 
594
 
N/A
Fourth Quarter 2004
 
2,907
 
$ 42.77
 
2,907
 
N/A

(1)
On January 20, 1997, the Company's Board of Directors approved a share repurchase program, which authorized the Company to repurchase shares of its common stock from time to time, either directly or through agents, in the open market at prices and on terms satisfactory to the Company in order to offset some or all of such shares issued pursuant to the Company's employee benefit plans and its Dividend Reinvestment and Stock Purchase Plan. The Company announced this program on January 21, 1997. The program has no expiration date.

(2)
The Board-approved program does not contain any quantitative limit on the total number of shares, or dollar value, that may be purchased.


Item 6. Selected Financial Data

Information required by this item is incorporated herein by reference to the sections captioned "Five-Year Financial Summary" and "Appendix" in Praxair's 2004 Annual Report to Shareholders. These items should be read in conjunction with the Consolidated Financial Statements and related Notes to Consolidated Financial Statements.
 

8
 
 
 
 
PART II (Continued)
Praxair, Inc. and Subsidiaries
 
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Information required by this item is incorporated herein by reference to the section captioned "Management's Discussion and Analysis" in Praxair's 2004 Annual Report to Shareholders.


Item 7a. Quantitative and Qualitative Disclosures About Market Risk

Information required by this item is incorporated herein by reference to the section captioned "Management's Discussion and Analysis" in Praxair's 2004 Annual Report to Shareholders.


Item 8. Financial Statements and Supplementary Data

Information required by this item is incorporated herein by reference to the sections captioned "Consolidated Statements of Income," "Consolidated Balance Sheets," "Consolidated Statements of Cash Flows," "Consolidated Statements of Shareholders' Equity" and "Notes to Consolidated Financial Statements" in Praxair's 2004 Annual Report to Shareholders.


Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9a. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Based on an evaluation of the effectiveness of Praxair's disclosure controls and procedures, which was made under the supervision and with the participation of management, including Praxair's principal executive officer and principal financial officer, the principal executive officer and principal financial officer have each concluded that, as of the end of the annual period covered by this report, such disclosure controls and procedures are effective in ensuring that information required to be disclosed by Praxair in reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission's rules and forms.

Management's Report on Internal Control Over Financial Reporting  

Praxair's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of management, including the Company's principal executive officer and principal financial officer, Praxair conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (often referred to as COSO ). Based on this evaluation, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2004.

Praxair's evaluation did not include the internal control over financial reporting relating to two acquisitions in 2004: the purchase of certain industrial gas assets and related businesses in Germany (German Acquisition) and the purchase of Home Care Supply, Inc. (HCS), a U.S. home-healthcare business. Total sales and assets for the German Acquisition represent 0.3% and 7.4% and for HCS represent 1.4% and 2.6%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2004 (see Note 3 to the consolidated financial statements incorporated by reference in Item 8).

Management's assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2004 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report incorporated by reference in Item 15.
 

9
 
 
 
 
PART II (Continued)
Praxair, Inc. and Subsidiaries
 
Changes in Internal Control over Financial Reporting

Effective in the fourth quarter 2004, Praxair implemented the Accounts Receivable and Sales modules of its JD Edwards software implementation for a significant portion of its North American industrial gases business. As a result, certain changes were made to the Company's internal control over financial reporting as it relates to that business which management believes strengthen such controls. The new control structure was evaluated for effectiveness in Management's Report on Internal Control Over Financial Reporting as of December 31, 2004. During the annual period covered by this report, no other significant change was made to Praxair's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, Praxair's internal control over financial reporting.

Item 9b. Other Information

The following disclosure would otherwise have been filed on Form 8-K under the heading "Item 1.01. Entry into a Material Definitive Agreement":

l  
On December 16, 2004, the Company signed the Sixth Amendment to Lease Agreement by and between itself, Union Carbide Corporation and Danbury Buildings Co., L.P. The provisions of the agreement include, but are not limited to, an extension of the lease term for Praxair's worldwide corporate headquarters office space in Danbury, Connecticut for a ten-year period subsequent to the initial expiration provided in the fifth amendment. A copy of the lease agreement is attached hereto as Exhibit 10.14e and incorporated herein by reference.
 
 
10

 
 
 
PART III
Praxair, Inc. and Subsidiaries
 
Item 10. Directors and Executive Officers of the Registrant

Certain information required by this item is incorporated herein by reference to the sections captioned "The Board of Directors", and "Executive Officers" in Praxair's Proxy Statement for the Annual Meeting of Shareholders to be held on April 26, 2005.

Identification of the Audit Committee
Praxair has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 as amended (the "Exchange Act"). The members of that Audit Committee are H. Mitchell Watson, Jr., Chairman, Raymond W. LeBoeuf, Wayne T. Smith, and Robert L. Wood.

Audit Committee Financial Expert
The Praxair Board of Directors has determined that each of H. Mitchell Watson, Jr., Raymond W. LeBoeuf, Wayne T. Smith and Robert L. Wood is an "audit committee financial expert" as defined by Item 401(h) of Regulation S-K of the Exchange Act and is independent within the meaning of Item 7(d)(3)(iv) of Schedule 14A of the Exchange Act.

Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of SEC Forms 3, 4 and 5 furnished to Praxair and written representations to the effect that no Form 5 is required, Praxair believes that during the period January 1, 2004 to December 31, 2004, all reports required by Section 16(a) of the Securities and Exchange Act of 1934 have been filed by its officers and directors.

Code of Ethics
Praxair has adopted a "code of ethics" that applies to the Company's directors and all employees, including its Chief Executive Officer, Chief Financial Officer, and Controller. This code of ethics, comprising Praxair's "Compliance with Laws and Business Integrity and Ethics Policy" and its "Standards of Business Integrity", is posted on the Company's public website, www.praxair.com.

Item 11. Executive Compensation

Information required by this item is incorporated herein by reference to the sections captioned "Shareholder Return" and "Executive Compensation" in Praxair's Proxy Statement for the Annual Meeting of Shareholders to be held on April 26, 2005.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Information required by this item is incorporated by reference to the sections captioned "Share Ownership" and "Equity Compensation Plans Information" in Praxair's Proxy Statement for the Annual Meeting of Shareholders to be held on April 26, 2005.


Item 13. Certain Relationships and Related Transactions

Information required by this item is incorporated herein by reference to the section captioned "Certain Relationships and Transactions" in Praxair's Proxy Statement for the Annual Meeting of Shareholders to be held on April 26, 2005.


Item 14.   Principal Accountants Fees and Services

Information required by this item is incorporated herein by reference to the section captioned "The Independent Auditor" in Praxair's Proxy Statement for the Annual Meeting of Shareholders to be held on April 26, 2005.
 

11




PART IV
Praxair, Inc. and Subsidiaries
 
Item 15. Exhibits and Financial Statement Schedules

(a)   Documents filed as part of this report

(1)   Financial Statements
  Page No. in Praxair's 2004
  Annual Report (AR)*

Consolidated Statements of Income for the Years Ended
     December 31, 2004, 2003 and 2002 .................................................................................. AR-25

Consolidated Balance Sheets at December 31, 2004 and 2003................................................ AR-26

Consolidated Statements of Cash Flows for the Years Ended
     December 31, 2004, 2003 and 2002 ..............­.................................................................... AR-27

Consolidated Statements of Shareholders' Equity for the
     Years Ended December 31, 2004, 2003 and 2002 ..........................................................  AR-28

Notes to Consolidated Financial Statements ...........................................................................   AR-43 to AR-63

Report of Independent Registered Public Accounting Firm..................................................   AR-65 to AR-66

* Incorporated by reference to the indicated pages of the 2004 Annual Report to Shareholders. With the exception of this information and the information incorporated in Items 3, 5, 6, 7, 7A, 8 and 9B, the 2004 Annual Report to Shareholders is not to be deemed filed as part of this Annual Report on Form 10-K.

(2)   Financial Statement Schedules

All financial statement schedules have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

(3)
Exhibits

Exhibits filed as a part of this annual report on Form 10-K are listed in the Index to Exhibits located on page 14 of this Report.
 
 
12




Praxair, Inc. and Subsidiaries
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 

     
PRAXAIR, INC.
     
(Registrant)
       
       
       
Date:  
March 2 , 2005
 
/s/ Patrick M. Clark
     
Patrick M. Clark
     
Vice President and Controller
     
( On behalf of the Registrant and as Chief Accounting Officer)

 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on February 22, 2005.


 
/s/ James S. Sawyer
 
/s/ Dennis H. Reilley
 
/s/ Claire W. Gargalli
James S. Sawyer
 
Dennis H. Reilley
 
Claire W. Gargalli
Senior Vice President and
 
Chairman, President and Chief
 
Director
Chief Financial Officer
 
Executive Officer and Director
   
         
         
         
/s/ Ira D. Hall
 
/s/ Ronald L. Kuehn, Jr.
 
/s/ Raymond W. LeBoeuf
Ira D. Hall
 
Ronald L. Kuehn, Jr.
 
Raymond W. LeBoeuf
Director  
 
Director  
 
Director
         
         
         
/s/ G. Jackson Ratcliffe, Jr.
 
/s/ Wayne T. Smith
 
/s/ H. Mitchell Watson, Jr.
G. Jackson Ratcliffe, Jr.
 
Wayne T. Smith
 
H. Mitchell Watson, Jr.
Director  
 
Director  
 
Director
         
         
         
/s/ Robert L. Wood
       
Robert L. Wood
       
Director
       


 
13


 
Praxair, Inc. and Subsidiaries

Exhibit No.        Description

2.01
Agreement and Plan of Merger dated as of December 22, 1995 among Praxair, Inc., PX Acquisition Corp. and CBI Industries, Inc. (Filed as Exhibit 2 to the Company's Current Report on Form 8-K dated December 22, 1995, Filing No. 1-11037, and incorporated herein by reference).

3.01
Restated Certificate of Incorporation (Filed as Exhibit 3.01 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

3.02
Amended By-Laws of Praxair, Inc. (Filed as Exhibit 3.02 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

3.03
Certificate of Designations for the 7.48% Cumulative Preferred Stock, Series A. (Filed on February 7, 1997 as Exhibit 3.3 to Amendment #1 to the Company's Registration Statement on Form S-3, Registration No. 333-18141).
 
3.04
Certificate of Designations for the 6.75% Cumulative Preferred Stock, Series B. (Filed on February 7, 1997 as Exhibit 3.4 to Amendment #1 to the Company's Registration Statement on Form S-3, Registration No. 333-18141).  
 
3.05
Certificate of Amendment to Restated Certificate of Incorporation (Filed as Exhibit 3.05 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, Filing No. 1-11037, and incorporated herein by reference).

4.01
Common Stock Certificate (Filed as Exhibit 4.01 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

4.02
Stockholder Protection Rights Agreement, dated as of May 3, 2004, between the registrant and Registrar and Transfer Company as Rights Agent. (Filed on April 29, 2004 as Exhibit (1) to the Company's Registration Statement on Form 8-A, Filing No. 1-11037, and incorporated herein by reference).

4.03
Indenture, dated as of July 15, 1992, between Praxair, Inc. and State Street Bank and Trust Company, successor trustee to Fleet Bank of Connecticut and the ultimate successor trustee to Bank of America Illinois (formerly Continental Bank, National Association) (Filed as Exhibit 4 to the Company's Form 10-Q for the quarter ended June 30, 1992, Filing No. 1-11307, and incorporated herein by reference).

4.04
Copies of the agreements relating to long-term debt which are not required to be filed as exhibits to this Annual Report on Form 10-K will be furnished to the Securities and Exchange Commission upon request.

4.05
Series A Preferred Stock Certificate. (Filed on February 7, 1997 as Exhibit 4.3 to Amendment #1 to the Company's Registration Statement on Form S-3, Registration No. 333-18141).

4.06
Series B Preferred Stock Certificate. (Filed on February 7, 1997 as Exhibit 4.4 to Amendment #1 to the Company's Registration Statement on Form S-3, Registration No. 333-18141).

*10.01
Amended and Restated 2002 Praxair, Inc. Long Term Incentive Plan (Filed as Exhibit 10.01 to the Company's 2003 Annual Report on Form 10-K, Filing No. 1-11037, and incorporated herein by reference).
 

14

 

 
INDEX TO EXHIBITS  (Continued)
 
Praxair, Inc. and Subsidiaries

Exhibit No.            Description
 
*10.01a
Standard Form of Option Award under the 2002 Praxair, Inc. Long Term Incentive Plan (Filed as Exhibit 10.01a to the Company's Current Report on Form 8-K dated February 28, 2005, Filing No. 1-11037, and incorporated herein by reference).
 
*10.01b
Transferable Form of Option Award under the 2002 Praxair, Inc. Long Term Incentive Plan (Filed as Exhibit 10.01b to the Company's Current Report on Form 8-K dated February 28, 2005, Filing No. 1-11037, and incorporated herein by reference).
 
*10.02
Form of Executive Severance Compensation Agreement (Filed as Exhibit 10.02 to the Company's 2003 Annual Report on Form 10-K, Filing No. 1-11037, and incorporated herein by reference).

*10.03
2002 Praxair, Inc. Variable Compensation Plan (Filed as Exhibit 10.03 to the Company's 2001 Annual Report on Form 10-K, Filing No. 1-11037, and incorporated herein by reference).

*10.04
Amended and Restated 1995 Stock Option Plan for Non-Employee Directors (Filed as Exhibit 10.04 to the Company's 2003 Annual Report on Form 10-K, Filing No. 1-11037, and incorporated herein by reference).

*10.05
Special Severance Protection Program (Filed as Exhibit 10.05 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

*10.06
Amended and Restated Praxair, Inc. Directors' Fees Deferral Plan (Filed as Exhibit 10.06 to the Company's Current Report on Form 8-K dated January 25, 2005, Filing No. 1-11037, and incorporated herein by reference).

*10.07
Amended and Restated 1993 Praxair Compensation Deferral Program (Filed as Exhibit 10.07 to the Company's 1996 Annual Report on Form 10-K, Filing No. 1-11037, and incorporated herein by reference).
 
*10.07a
First Amendment, dated as of April 1, 2001, to the Amended and Restated 1993 Praxair Compensation Deferral Program (Filed as Exhibit 10.07a to the Company's 2001 Annual Report on Form 10-K, Filing No. 1-11037, and incorporated herein by reference).  
 
*10.07b
Second Amendment, dated as of October 28, 2003, to the Amended and Restated 1993 Praxair Compensation Deferral Program (Filed as Exhibit 10.07b to the Company's 2003 Annual Report on Form 10-K, Filing No. 1-11037, and incorporated herein by reference).

10.08
Transfer Agreement dated January 1, 1989, between Union Carbide Corporation and the registrant. (Filed as Exhibit 10.06 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

10.08a
Amendment No. 1 dated as of December 31, 1989, to the Transfer Agreement (Filed as Exhibit 10.07 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

10.08b
Amendment No. 2 dated as of July 2, 1990, to the Transfer Agreement (Filed as Exhibit 10.08 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

10.08c
Amendment No. 3 dated as of January 2, 1991, to the Transfer Agreement (Filed as Exhibit 10.09 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).
 

 
15
 

 

INDEX TO EXHIBITS  (Continued)
 
Praxair, Inc. and Subsidiaries

Exhibit No.            Description

10.09
Transfer Agreement dated January 1, 1989, between Union Carbide Corporation and Union Carbide Coatings Service Corporation (Filed as Exhibit 10.14 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

10.09a
Amendment No. 1 dated as of December 31, 1989, to the Transfer Agreement (Filed as Exhibit 10.15 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

10.09b
Amendment No. 2 dated as of July 2, 1990, to the Transfer Agreement (Filed as Exhibit 10.16 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

10.10
Additional Provisions Agreement dated as of June 4, 1992 (Filed as Exhibit 10.21 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

10.11
Amended and Restated Realignment Indemnification Agreement dated as of June 4, 1992 (Filed as Exhibit 10.23 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

10.12
Environmental Management, Services and Liabilities Allocation Agreement dated as of January 1, 1990 (Filed as Exhibit 10.13 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

10.12a
Amendment No. 1 to the Environmental Management, Services and Liabilities Allocation Agreement dated as of June 4, 1992 (Filed as Exhibit 10.22 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

10.13
Danbury Lease-Related Services Agreement dated as of June 4, 1992 (Filed as Exhibit 10.24 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

10.13a
First Amendment to Danbury Lease-Related Services Agreement (Filed as Exhibit 10.13a to the Company's 1994 Annual Report on Form 10-K, Filing No. 1-11037, and incorporated herein by reference).

10.14
Danbury Lease Agreements, as amended (Filed as Exhibit 10.26 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

10.14a
Second Amendment to Linde Data Center Lease (Danbury) (Filed as Exhibit 10.14a to the Company's 1993 Annual Report on Form 10-K, Filing No. 1-11037, and incorporated herein by reference).

10.14b
Fourth Amendment to Carbide Center Lease (Filed as Exhibit 10.14b to the Company's 1993 Annual Report on Form 10-K, Filing No. 1-11037, and incorporated herein by reference).

10.14c
Third Amendment to Linde Data Center Lease (Filed as Exhibit 10.14c to the Company's 1994 Annual Report on Form 10-K, Filing No. 1-11037, and incorporated herein by reference).

10.14d
Fifth Amendment to Carbide Center Lease (Filed as Exhibit 10.14d to the Company's 1994 Annual Report on Form 10-K, Filing No. 1-11037, and incorporated herein by reference).

Sixth Amendment to Carbide Center Lease.

 
16
 

 
 
INDEX TO EXHIBITS  (Continued)
 
Praxair, Inc. and Subsidiaries

Exhibit No.            Description
 
10.15
Employee Benefits Agreement dated as of June 4, 1992 (Filed as Exhibit 10.25 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).

10.15a
First Amendatory Agreement to the Employee Benefits Agreement (Filed as Exhibit 10.15a to the Company's 1994 Annual Report on Form 10-K, Filing No. 1-11037, and incorporated herein by reference).

10.16
Tax Disaffiliation Agreement dated as of June 4, 1992 (Filed as Exhibit 10.20 to the Company's Registration Statement on Form 10, Filing No. 1-11037, and incorporated herein by reference).
 
Credit Agreement dated as of December 23, 2004 among Praxair, Inc., The Eligible Subsidiaries Referred to Therein, The Lenders Listed Therein, JP Morgan Chase Bank, N. A., as Administrative Agent, Bank of America, N. A., as Syndication Agent, and Citibank, N. A. and Credit Suisse First Boston as Co-Documentation Agents.
 
Facility Agreement dated as of November 29, 2004 among Praxair Euroholding, S. L., an indirect wholly owned subsidiary of the Company, as Borrower, Praxair, Inc., as Guarantor, The Lenders Party Thereto, Citigroup Global Markets, Inc., as Syndication Agent and ABN AMRO Bank N. V., as Administrative Agent and Documentation Agent.
 
10.18a
Amendment No. 1 to Facility Agreement (Filed as Exhibit 10.18a to the Company’s Current Report on Form 8-K dated March 1, 2005, Filing No. 1-11037, and incorporated herein by reference).

*10.19
Praxair, Inc. Plan for Determining Performance-Based Awards Under Section 162(M) (Filed as Exhibit 10.19 to the Company's 2001 Annual Report on Form 10-K, Filing No. 1-11037, and incorporated herein by reference).

Computation of Ratio of Earnings to Fixed Charges.

Financial Section (Page 25 to 69) of Praxair's 2004 Annual Report to Shareholders (such information, except for those portions which are expressly referred to in this Form 10-K, is furnished for the information of the Commission and is not deemed "filed" as part of this Form 10-K).

Subsidiaries of Praxair, Inc.

23.01                        
Consent of Independent Registered Public Accounting Firm.
 
31.01                        
Rule 13a-14(a) Certification
 
31.02                        
Rule 13a-14(a) Certification
 
§ 1350 Certification (such certifications are furnished for the information of the Commission and shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act).

§ 1350 Certification (such certifications are furnished for the information of the Commission and shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act).

Copies of exhibits incorporated by reference can be obtained from the SEC and are located in SEC File No. 1-11037.
                *Indicates a management contract or compensatory plan or arrangement.
 

 
17


 
SIXTH AMENDMENT TO CARBIDE CENTER LEASE   
 
Praxair, Inc. and Subsidiaries
EXHIBIT 10.14e

SIXTH AMENDMENT TO LEASE AGREEMENT
THIS AMENDMENT TO LEASE AGREEMENT (hereinafter referred to as this"Amendment"), entered into as of the 16 th day of December 2004 by and among DANBURY BUILDINGS CO., L.P., a Delaware limited partnership (hereinafter referred to as the"Overlandlord"), UNION CARBIDE CORPORATION, a New York corporation (hereinafter referred to as the"Landlord"), and PRAXAIR, INC., a Delaware corporation (hereinafter referred to as"Tenant").
 
WITNESSETH:

A. Overlandlord is the owner of the land and buildings commonly known as the Danbury Corporate Center, Danbury Connecticut (hereinafter referred to as the"Complex").

B. By Lease dated as of December 29, 1986 Overlandlord's predecessor in interest leased the Complex to Landlord, which lease was amended by Overlandlord and Landlord pursuant to a Lease Amendment and Release dated as of June 28, 1989, and by a Second Amendment of Lease dated as of May 3, 1995 (said Lease as so amended is hereinafter referred to as the"Prime Lease").

C. Landlord and Tenant, then known as Union Carbide Industrial Gases, Inc., entered into that certain Lease Agreement dated January 1, 1989 which lease was amended by Tenant and Landlord pursuant to a First Amendment of Lease dated as of June 1, 1989, a Second Amendment of Lease dated as of October 24, 1990, a Third Amendment to Union Carbide Center Lease dated as of June 4, 1992, a Fourth Amendment to Carbide Center Lease dated as of July 1, 1992 and a Fifth Amendment to Carbide Center Lease dated as of June 30, 1994 (said lease as so amended is hereinafter referred to as the"Old Lease") for premises as more fully described in the Old Lease (hereinafter referred to as the"Original Premises") within the Complex.

D. Landlord, Overlandlord and Tenant desire to amend the Old Lease as set forth in this Amendment.

ARTICLE 1
AMENDMENT AND CONTINUATION

1.1 Amendment . The term of the Old Lease shall be extended for one (1) day through December 31, 2006. Effective at 11:59 pm (est) on December 31, 2006, the Old Lease shall be amended and restated in its entirety and the terms and conditions herein set forth shall be substituted for all the terms and conditions in the Old Lease.

1.2 Succession . Upon expiration of the Prime Lease on December 31, 2006 the parties hereto agree that Overlandlord shall succeed to the rights and obligations of Landlord hereunder and Landlord shall have no further rights, liability or obligations hereunder, except as same arose hereunder on or prior to 11:59 pm (est) December 31, 2006. On January 1, 2007, Overlandlord shall accept Tenant's attornment and Tenant agrees to so attorn and recognize Overlandlord as Tenant's landlord under this Lease without further requirement for execution and delivery of any instrument to further evidence the attornment set forth herein. Tenant will, upon the request of Overlandlord, execute and deliver such reasonably acceptable instruments to evidence such attornment. Overlandlord and Tenant hereby release, remit, waive, and discharge Landlord of, from, and against all claims and liabilities arising under, or in any way connected with, the terms and conditions of this Lease arising after 11:59 pm (est) December 31, 2006.

1.3 Continuation .   When Overlandlord shall succeed to the rights of Landlord hereunder, this Lease shall continue in full force and effect as, or as if it were, a direct lease between Overlandlord and Tenant upon all of the then executory terms, conditions and covenants as are set forth in this Lease, and shall be applicable after such attornment, provided however, that Overlandlord shall not be: (i) subject to any credits, offsets, defenses or claims which Tenant might have against Landlord for the period prior to January 1, 2007; (ii) bound by any prepayment of rent which Tenant might have paid to Landlord; (iii) be liable for any act or omission of Landlord; (iv) liable for any payment to Tenant of any sums, or the granting to Tenant of any credit, in the nature of a contribution towards the cost of preparing, furnishing or moving into the Premises or any portion thereof payable prior to January 1, 2007; or (vii) bound by any modification of the Old Lease, as amended hereby (hereinafter referred to as the"Lease") made without Overlandlord's prior written consent. Tenant waives the provisions of any statute or rule of law now or hereafter in effect that may give or purport to give it any right or election to terminate or otherwise adversely affect this Lease or the obligations of Tenant thereunder by reason of any action or proceeding for the purpose of terminating the Prime Lease by reason of any default thereunder or the actual termination thereof by reason of such default. Nothing herein contained shall be deemed to release Landlord or Tenant from any liability accruing under the Old Lease and which survives the termination of the Old Lease.

ARTICLE II
DEFINITIONS

This Article II contains the basic terms of the Lease between Landlord and Tenant. All other provisions of this Lease are to be read in accordance with the provisions herein contained.

2.1 Base Rent . As set forth on the base rent schedule below, provided however during any Renewal Term, as hereinafter defined, the Base Rent shall be as provided in Section 4.2 hereof.

Period
Annual Rental Rate
Monthly Rental Rate
January 1, 2007 through December 31, 2008
$3,106,393.00
$258,866.08
January 1, 2009 through December 31, 2010
$3,289,122.00
$274,093.50
January 1, 2011 through December 31, 2012
$3,471,851.00
$289,320.92
January 1, 2013 through December 31, 2014
$3,654,580.00
$304,548.33
January 1, 2015 through December 31, 2016
$3,837,309.00
$319,775.75

2.2   Broker . Grubb & Ellis.

2.3   Building . A four story building located at 39 Old Ridgebury Road, Danbury, Connecticut.

2.4   Building Hours' . 7:00 a.m. to 5:30 p.m. on Monday through Friday (excluding legal public holidays), and such other hours, if any, as Landlord from time to time reasonably determines.

2.5   Commencement Date . December 30, 2006 at 11:59 pm (est).
1

2.6   CPI . The Consumer Price Index - for All Urban Consumers - U.S. City Average, All items (1982-1984 = 100) of the United States Bureau of Labor Statistics. If the Consumer Price Index shall be substantially revised (including but not limited to a change from using the 1982-1984 = 100) or become unavailable to the public, Landlord will substitute therefore, a comparable index based upon changes in the cost of living or purchasing power of the consumer dollar.

2.7   Landlord Notice Address . c/o Sunbelt Investment Holdings, Inc., 220 Congress Park Drive, Delray Beach, Florida 33445, Attention Richard Reeves, with a copy to Benjamin J. Randall, Randall & Kenig LLP, 455 North Cityfront Plaza, Suite 3160, Chicago, Illinois 60611.

2.8   Operating Expenses Base Year . Calendar year 2007.

2.9   Payment Address . 220 Congress Park Drive, Delray Beach, Florida 33445, or such other address designated by Landlord.

2.10   Parking Garage . The garage being part of the Building and consisting of: (i) eight (8) separate areas adjoining the four office levels of the Building; and (ii) the vehicular ramps permitting access to the Parking Garage from the Site Access Roads.

2.11   Premises . The area of the Building as more particularly designated on Exhibit"A"attached hereto and by this reference incorporated herein.

2.12   Real Estate Taxes Base Year . Fiscal tax year 2006-2007.

2.13   Prime Rate . The highest prime rate reported in the Money Rates column or section of The Wall Street Journal published on the second business day of that month, as having been the rate in effect for corporate loans at large U.S. money center commercial banks (whether or not such rate has actually been charged by any such bank) as of the first calendar day of such month. If The Wall Street Journal ceases publication of the Prime Rate, the"Prime Rate" shall mean the prime rate, or base rate, announced by such national bank as designated by Landlord from time to time, whether or not such rate has actually been charged by such bank.

2.14   Project . The Building and any real estate or improvements adjacent or under the Building owned by Landlord.

2.15   RECA . T hat certain Reciprocal Easement and Covenant Agreement dated December 29, 1986 by and among Nevada Investment Holdings, Inc., Sunbelt Stores, Inc., Union Carbide Corporation, and RC Development Associates Limited Partnership and recorded in volume 820 at page 942 of the Danbury Land Records.

2.16   Rent Commencement Date . January 1, 2007.

2.17   Site Access Roads . The roadways described in the RECA.

2.18   Tenant Notice Address . 39 Old Ridgebury Road, Danbury, Connecticut Attn: E. R. Durkin, with a copy to Praxair, Inc., 39 Old Ridgebury Road, Danbury, Connecticut 06810-5113, Attn: General Counsel.

2.19   Tenant's Share . Fifteen point Two Eight Five Percent (15.285%), subject to proportional adjustment in the event that any additions to the Building or demolitions of any portion of the Building cause an increase or decrease in the Rentable Area of the Building.

2.20   Term . The period commencing on the Commencement Date and ending on the Termination Date.

2.21   Termination Date . December 31, 2016 as same may be extended pursuant to Section 4.2 hereof.

ARTICLE III
PREMISES

3.1   Demise . In consideration of the rent set forth herein, Landlord hereby leases to Tenant and Tenant hereby hires from Landlord for the term and upon the conditions and covenants set forth in this Lease, the Premises, comprising an area that the parties agree for all purposes of this Lease consists of One Hundred Eighty Two Thousand Seven Hundred Twenty Nine (182,729) rentable square feet together with the right to use, in common with other parties, the common areas and facilities of the Project; provided, however, that: (i) all stairs, elevator shafts, utility closets and other service areas devoted to building operating systems shall be excluded from the Premises; (ii) Landlord reserves the right to use, in common with Tenant and other tenants and occupants, any common corridors and entranceways adjoining the Premises and the Parking Garage; and (iii) Landlord reserves the right to alter or reconfigure the common areas of the Project, including but not limited to, the Site Access Roads and entrances, provided however that no such alteration or reconfiguration shall unreasonably restrict access by Tenant to the Building, the Data Center (as defined in Article XXXII hereof) or other common areas of the Project and provided further that such access shall be maintained at all times. Landlord shall take all necessary commercial measures to minimize any interference with Tenant's business operations in connection with any activity of Landlord within the Project. The parties hereto agree that for all purposes of this Lease, the Building consists of an area of One Million Forty Six Thousand Eight Hundred Eleven (1,046,811) rentable square feet (hereinafter referred to as the"Rentable Area of the Building") which includes all office areas of the Building but excludes all non-office areas of the Building, which non-office areas include, but shall not be limited to those areas occupied by the fitness center, cafeteria and conference center referenced in Article XXVII hereof.

ARTICLE IV
TERM

4.1   Term . All of the provisions of this Lease shall be in full force and effect from and after the Commencement Date. The Term shall also include any properly exercised renewal or extension of the term of this Lease.

4.2   Renewal . Landlord hereby grants to Tenant the separate, exclusive, conditional rights, exercisable at Tenant's option, to renew the term of this Lease for up to two (2) terms of five (5) years each (each such term is hereinafter referred to as a "Renewal Term"). If exercised, and if the conditions set forth in this Section 4.2 have been satisfied, the first Renewal Term shall commence immediately following the end of the initial Term and the second Renewal Term shall commence immediately following the end of the first Renewal Term. The rights of renewal herein granted shall be applicable only to the entire Premises and the Data Center then leased by Tenant. The rights of renewal herein granted to Tenant shall be subject to, and shall be exercised in accordance with, the following terms and conditions:
2

(a)   Tenant shall exercise its right of renewal with respect to each Renewal Term by giving Landlord written notice (hereinafter referred to as the "Renewal Notice ") thereof not later than twelve (12) months prior to the expiration of the then-current Term of this Lease. If Tenant timely exercises its right to renew with respect to each applicable Renewal Term, at least six (6) months prior to the expiration of the then-current Term of this Lease, Landlord shall provide Tenant with Landlord's then estimate of its determination of the annual Market Rent, as hereinafter defined. The parties shall for the next thirty (30) days thereafter attempt to agree upon an annual Base Rent payable during the Renewal Term which would equal Ninety Five Percent (95%) of the Market Rent, as defined below, for the Premises prevailing as of the first day of the Renewal Term. Market Rent shall mean the net effective base annual rent rate that would be payable to tenants renting comparable space in comparable buildings in Northern Fairfield County Connecticut (hereinafter referred to as the "Market Area") for a comparable term commencing on or about the date of the commencement of the applicable Renewal Term, further adjusted to reflect the Tenant obligations to pay for electricity and any increases in Real Estate Taxes and Operating Expenses as herein contained which shall remain in effect during each Renewal Term. Market Rent shall not be adjusted for any vacancy period or other "down time" which may have been attributable to Landlord's reletting of the Premises had Tenant not exercised this option to extend. All relevant factors shall be considered by the parties during such negotiations in determining applicable Market Rent including, but not limited to, the general office rental market in the Market Area, rental rates then being quoted by Landlord to comparable tenants for comparable space in the Building, and the rents being charged similar tenants for similar office space in first-class office buildings. If during such thirty (30) day period the parties agree on the Market Rent during each year of the Renewal Term, then they shall promptly execute an amendment to this Lease stating Ninety Five Percent (95%) the Market Rent so agreed upon. If during such thirty (30) day period the parties are unable, for any reason whatsoever, to agree on such Market Rent, then within fifteen (15) days thereafter the Tenant shall advise Landlord of Tenant's determination of Market Rent and Landlord shall advise Tenant of Landlord's determination of Market Rent and each of the parties shall each appoint an unaffiliated real estate broker who shall be licensed in the state where the Premises are located and who specializes in the field of commercial office space leasing in the Market Area, has at least ten (10) years of experience and is recognized within the field as being reputable and ethical (hereinafter referred to as an "Appraiser"). Tenant's failure to timely notify Landlord of its designated Appraiser or its determination of Market Rent shall be deemed to be acceptance by Tenant of Landlord's determination of Market Rent. Such two individuals shall each determine within ten (10) days after their appointment whether Landlord's determination or Tenant's determination of Market Rent is closest to Market Rent. If such individuals do not agree on which determination of Market Rent is the closest to Market Rent, then the two individuals shall, within five (5) days, together appoint a third similarly qualified Appraiser. The third individual shall within ten (10) days after his or her appointment make a determination of the Market Rent whether Landlord's determination or Tenant's determination of the Market Rent is the closest to Market Rent and such shall be deemed the Market Rent hereunder. The Market Rent applicable during the applicable Renewal Term shall be the Market Rent determined pursuant to the forgoing procedure and shall be final and conclusive. Landlord and Tenant shall each bear the cost of its broker and shall share equally the cost of the third broker. Upon determination of the Market Rent payable pursuant to this Section, the parties shall promptly execute an amendment to this Lease stating Ninety Five Percent (95%) the Market Rent so determined or agreed upon as the Base Rent payable during the applicable Renewal Term.

(b)   If Tenant's renewal notice is not given timely, then Tenant's right of renewal shall lapse and be of no further force or effect.

(c)   If an Event of Default, as hereinafter defined, exists under this Lease on the date Tenant sends a Renewal Notice or any time thereafter until the applicable Renewal Term is to commence, then, at Landlord's election, the Renewal Term shall not commence and the term of this Lease shall expire at the expiration of the then-current term of this Lease.

(d)   Tenant's right of renewal under this Section may be exercised only by Tenant and a Permitted Transferee, as hereinafter defined, and may not be exercised by any other transferee, sublessee or other assignee of Tenant.


(e)   If at the time of exercise of any Renewal Term, in excess of thirty (30%) percent of the Premises has been subleased or if this Lease has been assigned to a party other than a Permitted Transferee, or if this Lease has been terminated, then Tenant's rights pursuant to this Section shall lapse and be of no further force or effect.

(f)   Tenant agrees to accept the premises to be covered by this Lease during each applicable Renewal Term in an "as is" physical condition, subject to Landlord's obligations herein contained, and Tenant shall not be entitled to receive any allowance, credit, concession or payment from Landlord for the improvement thereof.

(g)   Landlord and Tenant acknowledge and agree that no real estate brokerage commission or finder's fee shall be payable by Landlord in connection with any exercise by Tenant of any renewal option herein contained, provided that Landlord shall be liable to indemnify and hold harmless Tenant from all claims, damages, losses and liability, including reasonable attorneys' fees and expenses, due to any claims for commissions or finder's fees made by Broker in connection therewith.

ARTICLE V
BASE RENT

5.1     Base Rent . From and after the Rent Commencement Date, Tenant shall pay the Base Rent in monthly installments in advance on the first day of each month of the Term in the amount set forth in Article II above.

5.2   Rent Payments . All sums payable by Tenant under this Lease, whether or not stated to be Base Rent, additional rent or otherwise, shall be deemed to be rent to be paid to Landlord in legal tender of the United States, without setoff except as specifically provided in Section 10.2 hereof, counterclaim, deduction or demand, at the Landlord Payment Address, or to such other party or such other address as Landlord may designate in writing. Landlord's acceptance of rent after it shall have become due and payable shall not excuse a delay upon any subsequent occasion or constitute a waiver of any of Landlord's rights hereunder.

ARTICLE VI
INCREASES IN OPERATING EXPENSES AND REAL ESTATE TAXES

6.1   Operating Expenses .

(a)   Commencing on January 1, 2008 and continuing through the balance of the Term, Tenant shall pay as additional rent an amount equal to Tenant's Share of the amount by which the Operating Expenses, as defined in Section 6.1(b), for each calendar year falling entirely or partly within the Term exceed a base amount (hereinafter referred to as the "Operating Expenses Base Amount") equal to the Operating Expenses incurred during the Operating Expenses Base Year, or as otherwise provided in Section 6.1(f) hereof.
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(b)   "Operating Expenses" shall mean the sum of all expenses incurred by Landlord in the ownership, operation, maintenance, repair and cleaning of the Project, including the parking facilities serving the Project, which shall include, but not limited to, the following: (1) electricity, gas, water, HVAC, sewer and other utility charges of every type and nature with respect to the common areas and parking areas of the Project; (2) premiums and other charges for insurance which a prudent owner would carry with respect to the Project, provided that no such insurance policy shall have a deductible amount (hereinafter referred to as the "Deductible") in excess of One Million Dollars and No Cents ($1,000,000.00) as such amount is increased by the increase in the CPI from the CPI existing as of the date hereof; (3) commercially reasonable management fees, not to exceed Three Percent (3%) of gross revenues of the Project; (4) costs of service and maintenance contracts relating to the Project as a whole; (5) maintenance, repair and replacement expenses and supplies; (6) costs of capital expenditures made by Landlord to reduce operating expenses or to comply with legal or insurance requirements applicable to the Project after the date hereof or to replace existing equipment or machinery used in connection with the operation or maintenance of the Project, such capital costs to be amortized over a reasonable period in accordance with generally accepted accounting principles, together with interest at Two Percent (2%) in excess of the Prime Rate; (7) charges for janitorial, trash removal and cleaning services and supplies furnished to the Building as same may be revised pursuant to the provisions of Section 15.4 hereof; (8) any business, professional and occupational license tax payable by Landlord with respect to the Project; (9) costs of snow removal; and (10) the cost of operating the conference center, fitness center and main entrance area located in the Project, including wages, salaries, supplies and utilities to the extent not borne by user charges and fees. Notwithstanding anything to the contrary contained above in this paragraph, Operating Expenses shall not include: (i) principal or interest payments and any other charges, including late charges, default interest or other penalties, on any Mortgages, as defined in Section 22.1 hereof; (ii) all costs and expenses of leasing space in the Building, including advertising, promotion and other marketing expenses, commissions, legal fees, and allowances; (iii) capital expenditures, including without limitation any structural, foundation, piling or access ramp or concrete floor replacements and capital repairs thereto with respect to either or both the Building and the Parking Garage except to the extent specified above in clause (6) of the preceding sentence and except as resulting from casualty; (iv) all costs and expenses of providing any service to any tenant or occupant of, or to any leaseable space in, the Building that is not available to Tenant free of separate or additional charge, including, without limitation, overtime or supplemental HVAC service, overtime elevator service, supplemental cleaning, etc.; (v) costs in connection with damage, casualty or condemnation of all or a portion of the Project which are not reimbursed to Landlord by Landlord's insurers or by governmental authorities in eminent domain proceedings except to the extent of the Deductible; (vi) advertising for vacant space in the Building; (vii) all costs and expenses of any demolition in, painting, carpeting, or refurbishing of, or alterations or improvements to, any leaseable space made for any tenant or occupant or to enhance the marketability thereof or prepare the same for leasing; (viii) all charitable or political contributions; (ix) the costs to acquire and insure sculptures, paintings, and other works of art; (x) costs, expenses, fines and penalties imposed upon Landlord to the extent primarily and directly necessitated by the gross negligence or willful misconduct of Landlord or its employees; (xi) sums paid by Landlord for any indemnity, damages, fines, late charges, penalties or interest for any late payment or to correct violations of building codes or other laws, regulations or ordinances applicable to the Project that may exist as of the Commencement Date, except for expenditures for repairs, maintenance and replacement or other items that would otherwise reasonably constitute Operating Expenses; (xii) all costs and expenses attributable to any testing, monitoring, investigation, remediation, or removal of Hazardous Materials (other than any testing or monitoring which are customarily conducted by owners of similar office buildings in the ordinary course of operating and managing a building and not related to the violation of any Environmental Law, as hereinafter defined, by any party other than Tenant or an invitee of Tenant); (xiii) all legal, architectural, engineering, accounting and other professional fees unrelated to the management, maintenance or operation of the Project; (xiv) ground lease rents; (xv) that portion of any Operating Expenses that is paid to any entity affiliated with Landlord that is in excess of a commercially reasonably amount that would otherwise be paid to an entity that is not affiliated with Landlord for the provision of the same service; (xvi) costs and expenses of administration and management of the Landlord entity itself, as distinguished from the costs of management, operation and ownership of the Project; and (xvii) legal fees, space planners' fees or similar fees incurred in connection with disputes with tenants of the Project or the negotiation of leases with tenants or prospective tenants.

(c)   If the average occupancy rate for the Building during any calendar year, including the Operating Expenses Base Year, is less than eighty percent (80%), or if any tenant is separately paying for (or does not require) electricity or janitorial services furnished to its premises, then Operating Expenses for such year shall be deemed to include all additional expenses, as reasonably estimated by Landlord, which would have been incurred during such year if such average occupancy rate had been ninety-five percent (95%).

(d)   Tenant shall make estimated monthly payments to Landlord on account of the amount by which Operating Expenses that are expected to be incurred during each calendar year (or portion thereof) would exceed the Operating Expenses Base Amount. At the beginning of the Term and at the beginning of each calendar year thereafter, Landlord may submit a statement setting forth Landlord's reasonable estimate of such excess and Tenant's Share thereof. Tenant shall pay to Landlord on the first day of each month following receipt of such statement, until Tenant's receipt of a succeeding statement, an amount equal to one-twelfth (1/12) of Tenant's Share thereof. From time to time during any calendar year, Landlord may revise Landlord's estimate and adjust Tenant's monthly payments to reflect Landlord's reasonable revised estimate based upon updated information. As soon as practical after the end of each calendar year, but in any event within one hundred and sixty (160) days thereafter, Landlord shall submit to Tenant a statement for such calendar year showing: (1) Tenant's Share of the amount by which Operating Expenses incurred during the preceding calendar year exceeded the Operating Expenses Base Amount; and (2) the aggregate amount of Tenant's estimated payments made on account of Operating Expenses during such year. If such statement indicates that the aggregate amount of such estimated payments exceeds Tenant's actual liability, then Landlord shall credit the net overpayment toward Tenant's next estimated payment(s) pursuant to this Section, or, if this Lease has terminated, immediately refund to Tenant such net overpayment. If such statement indicates that Tenant's actual liability exceeds the aggregate amount of such estimated payments, then Tenant shall pay the amount of such excess as additional rent within fifteen (15) days of receipt of such statement.

(e)   For a period of ninety (90) days after Tenant's receipt of such statement, Tenant, or an independent, certified public accountant who is hired by Tenant on a noncontingent fee basis and who offers a full range of accounting services, shall have the right, during regular business hours and after giving at least ten (10) days' advance written notice to Landlord, to inspect and complete an audit of Landlord's books and records relating to Operating Expenses for the immediately preceding calendar year. Tenant shall (and shall cause its employees, agents and consultants to) keep the results of any such audit strictly confidential. If such audit shows that the amounts paid by Tenant to Landlord on account of increases in Operating Expenses exceed the amounts to which Landlord is entitled hereunder, Landlord shall credit the amount of such excess toward the next monthly payments of Operating Expenses due hereunder or, if this Lease has terminated, immediately refund to Tenant such net overpayment. All costs and expenses of any such audit or audited statement shall be paid by Tenant, provided that Landlord shall not impose charges or collect any expenses incurred in cooperating with such audit. If Tenant does not notify Landlord in writing of any objection to any statement within ninety (90) days after receipt thereof, then Tenant shall be deemed to have waived any objection thereto and such statement shall be binding upon Tenant.

(f)   Notwithstanding anything to the contrary contained in this Article VI, the Operating Expenses Base Amount shall not be less than the actual Operating Expenses for the calendar year 2007 (computed in accordance with this Article VI) which shall be adjusted if the actual Building occupancy rate is less than ninety five percent (95%) so as to include all additional expenses, as reasonably estimated by Landlord, which would have been incurred during such year if such average occupancy rate had been ninety-five percent (95%), provided however that in no event shall the the Operating Expenses Base Amount exceed Eight Million Five Hundred Thirty One Thousand Five Hundred Nine Dollars and Sixty Five Cents ($8,531,509.65), which the parties hereto agree for all purposes of this Lease is Eight Dollars and Fifteen Cents ($8.15) per square foot of the Rentable Area of the Building.

(g)   Notwithstanding anything to the contrary contained in this Article VI, Tenant shall not be obligated to pay to Landlord increases in Controllable Operating Charges for any calendar year after calendar year 2007 attributable to Controllable Operating Charges, as defined in the next sentence, that exceed, in the aggregate, the amount of Controllable Operating Charges that would have been in payable in such calendar year if Controllable Operating Charges increased by the percentage increase in the CPI, from the CPI existing as of the date hereof to the CPI as of the last month in any applicable calendar year. For purposes of this Section, "Controllable Operating Charges" are the Operating Expenses for ordinary cleaning and maintenance of the Building, the Premises and the common areas of the Project, including landscaping and snow removal, and for administrative costs and expenses.
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6.2   Real Estate Taxes .

(a)   Commencing on January 1, 2007 and continuing through the balance of the Term, Tenant shall pay as additional rent Tenant's Share of the amount by which Real Estate Taxes, as defined in Section 6.2(b), for each calendar year falling entirely or partly within the Term exceed a base amount (hereinafter referred to as the "Real Estate Taxes Base Amount") equal to the Real Estate Taxes incurred during the Real Estate Taxes Base Year, as finally determined all apportioned for any partial calendar year if the Lease is terminated prior to expiration of the full Term or any Renewal Term.

(b)   "Real Estate Taxes" shall mean and include: (1) all real estate taxes, personal property taxes, vault and/or public space rentals, business district or arena taxes, special user fees, rates, and assessments (including general and special assessments, if any), ordinary and extraordinary, foreseen and unforeseen, which are imposed upon Landlord or assessed against the Project or Landlord's personal property used in connection therewith, (2) any other present or future taxes or governmental charges that are imposed upon Landlord or assessed against the Project which are in the nature of or in substitution for real estate taxes, including any tax levied on or measured by the rents payable by tenants of the Project, and (3) expenses, including, without limitation, reasonable attorneys' and consultants' fees and expenses and court costs, incurred in reviewing, protesting or seeking a reduction of real estate taxes, whether or not such protest or reduction is ultimately successful, provided however that if such a protest or reduction is not successful and made after the fifth full year of the Term: (i) only Eighty Percent (80%) of the costs of same shall be included in Real Estate Taxes if such protest is made during the sixth year of the Term , only Sixty Percent (60%) of the costs of same shall be included in Real Estate Taxes if such protest is made during the seventh year of the Term, only Forty Percent (40%) of the costs of same shall be included in Real Estate Taxes if such protest is made during the eighth year of the Term, only Thirty Percent (30%) of the costs of same shall be included in Real Estate Taxes if such protest is made during the ninth year of the Term and only Twenty Percent (20%) of the costs of same shall be included in Real Estate Taxes if such protest is made during the tenth year of the Term; and (ii) only Eighty Percent (80%) of the costs of same shall be included in Real Estate Taxes if such protest is made during the first year of a Renewal Term , only Sixty Percent (60%) of the costs of same shall be included in Real Estate Taxes if such protest is made during the second year of a Renewal Term, only Forty Percent (40%) of the costs of same shall be included in Real Estate Taxes if such protest is made during the third year of a Renewal Term, only Thirty Percent (30%) of the costs of same shall be included in Real Estate Taxes if such protest is made during the fourth year of a Renewal Term and only Twenty Percent (20%) of the costs of same shall be included in Real Estate Taxes if such protest is made during the fifth year of a Renewal Term. Subject to the foregoing, Real Estate Taxes shall not include any inheritance, estate, gift, franchise, corporation, transfer, net income or net profits tax assessed against Landlord solely relating to the Project. Notwithstanding the foregoing, where any such Real Estate Taxes may be paid over a multi-year period, regardless of whether Landlord makes a lump sum payment, they shall be computed as though they are payable over a multi-year period.

(c)   If during any calendar year, including the Real Estate Taxes Base Year, the Project is not fully assessed for tax purposes, then Real Estate Taxes for such year shall be deemed to include all additional taxes, as reasonably estimated by Landlord, which would have been incurred during such year if the Project had been fully assessed and taxed, excluding any abatement or tax incentive program in effect. Notwithstanding anything contained herein to the contrary, the Real Estate Taxes Base Amount shall not be less than the actual Real Estate Taxes for fiscal year 2006-2007 as computed in accordance with this Article VI, provided however that in no event shall the Real Estate Taxes Base Amount be in excess of Two Million Two Hundred Fifty Thousand Six Hundred Forty Three Dollars and Sixty Five Cents ($2,250,643.65), which the parties hereto agree for all purposes of this Lease is Two Dollars and Fifteen Cents ($2.15) per square foot of the Rentable Area of the Building.

(d)   Tenant shall make estimated monthly payments to Landlord on account of the amount by which Real Estate Taxes that are expected to be incurred during each calendar year would exceed the Real Estate Taxes Base Amount. Commencing January 1, 2007 and at the beginning of each calendar year thereafter, Landlord may submit a statement setting forth Landlord's reasonable estimate of such amount and Tenant's Share thereof. Tenant shall pay to Landlord on the first day of each month following receipt of such statement, until Tenant's receipt of a succeeding statement, an amount equal to one-twelfth (1/12) of the such amount. From time to time during any calendar year, Landlord may revise Landlord's estimate and adjust Tenant's monthly payments to reflect Landlord's revised estimate. Within approximately one hundred twenty (120) days after the end of each calendar year, or as soon thereafter as is feasible, Landlord shall submit a statement showing (1) Tenant's Share of the amount by which Real Estate Taxes incurred during the preceding calendar year exceeded the Real Estate Taxes Base Amount, and (2) the aggregate amount of Tenant's estimated payments made during such year. If such statement indicates that the aggregate amount of such estimated payments exceeds Tenant's actual liability, then Landlord shall credit the net overpayment toward Tenant's next estimated payment(s) pursuant to this Section or immediately refund such amount to Tenant if this Lease has terminated. If such statement indicates that Tenant's actual liability exceeds the aggregate amount of such estimated payments, then Tenant shall pay the amount of such excess as additional rent within fifteen (15) days of receipt of such statement.

(e)   If the Term commences or expires on a day other than the first day or the last day of a calendar year, respectively, then Tenant's liabilities pursuant to this Article for such calendar year shall be apportioned by multiplying the respective amount of Tenant's proportionate share thereof for the full calendar year by a fraction, the numerator of which is the number of days during such calendar year falling within the Term, and the denominator of which is three hundred sixty-five (365).

ARTICLE VII
USE OF PREMISES

7.1   Use . Tenant shall use and occupy the Premises solely for general (non-medical and non-governmental) office purposes, including ancillary uses attendant thereto such as computer operations, and for no other use or purpose. Tenant shall not use or occupy the Premises for any unlawful purpose, or in any manner that will violate the certificate of occupancy for the Premises or the Building or that will constitute waste, nuisance or unreasonable annoyance to Landlord or to any other tenant or user of the Building. To the extent applicable to Tenant's particular use of the Premises, Tenant shall comply with all judicial decisions, orders, injunctions, writs, statutes, laws, rulings, rules, codes, regulations, permits, certificates, or ordinances of any courts, boards, agencies, commissions, offices, or authorities of any governmental unit (federal, state, county, district, municipal, city, or otherwise) and any insurance companies insuring the Project, whether now or hereafter in existence, which have jurisdiction over all or any portion of the Project in any way applicable to Tenant (hereinafter collectively referred to as "Laws") concerning the use, occupancy and condition of the Premises (including means of ingress and egress thereto) and all machinery, equipment, furnishings, fixtures and improvements therein, all of which shall be complied with in a timely manner at Tenant's sole expense. If any Law requires an occupancy or use permit or license for the Premises or the operation of the business conducted therein, then Tenant shall obtain and keep current such permit or license at Tenant's expense and shall promptly deliver a copy thereof to Landlord. Use of the Premises is subject to all covenants, conditions and restrictions of record which have been provided to Tenant prior to the execution hereof. Tenant shall not use any space in the Building for the sale of goods to the public at large or for the sale at auction of goods or property of any kind. Tenant shall not conduct any operations, sales, promotions, advertising or special events outside the Premises.

7.2   Tenants Charges . Tenant shall pay before delinquency any business, rent or other taxes or fees that are now or hereafter levied, assessed or imposed upon Tenant's use or occupancy of the Premises, the conduct of Tenant's business at the Premises, or Tenant's equipment, fixtures, furnishings, inventory or personal property. If any such tax or fee is enacted or altered so that such tax or fee is levied against Landlord or so that Landlord is responsible for collection or payment thereof, then Tenant shall pay as additional rent the amount of such tax or fee.
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7.3   Hazardous Materials .

(a)   Tenant shall not cause or permit any Hazardous Materials to be generated, used, released, stored or disposed of in or about the Project, provided that Tenant may use and store reasonable quantities of standard cleaning materials and materials used in conjunction with computers and standard office equipment as may be reasonably necessary for Tenant to conduct normal general office use and computer operations in the Premises provided the same are handled, stored and disposed of in accordance with all Laws. At the expiration or earlier termination of this Lease, Tenant shall surrender the Premises to Landlord free of Hazardous Materials generated, used, released, stored or disposed in the Premises by Tenant or any invitee of Tenant during the Term, and in compliance with all Environmental Laws. "Hazardous Materials" means (a) asbestos and any asbestos containing material and any substance that is then defined or listed in, or otherwise classified pursuant to, any Environmental Law or any other applicable Law as a "hazardous substance," "hazardous material," "hazardous waste," "infectious waste," "toxic substance," "toxic pollutant" or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, or Toxicity Characteristic Leaching Procedure (TCLP) toxicity, (b) any petroleum and drilling fluids, produced waters, and other wastes associated with the exploration, development or production of crude oil, natural gas, or geothermal resources, and (c) any petroleum product, polychlorinated biphenyls, urea formaldehyde, radon gas, radioactive material (including any source, special nuclear, or by-product material), medical waste, chlorofluorocarbon, lead or lead-based product. "Environmental Law" means any present and future Law and any amendments (whether common law, statute, rule, order, regulation or otherwise), permits and other requirements or guidelines of governmental authorities applicable to the Project and relating to the environment and environmental conditions or to any Hazardous Material including, without limitation, CERCLA, 42 U.S.C. §9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. §1801 et seq., the Federal Water Pollution Control Act, 33 U.S.C. §1251 et seq., the Clean Air Act, 33 U.S.C. §7401 et seq., the Toxic Substances Control Act, 15 U.S.C. §2601 et seq., the Safe Drinking Water Act, 42 U.S.C. §300f et seq., the Emergency Planning and Community Right-To-Know Act, 42 U.S.C. §1101 et seq., the Occupational Safety and Health Act, 29 U.S.C. §651 et seq., and any so-called "Super Fund" or "Super Lien" law, any Law requiring the filing of reports and notices relating to hazardous substances, environmental laws administered by the Environmental Protection Agency, and any similar Laws.

(b)   Notwithstanding any termination of this Lease, Tenant shall indemnify and hold Landlord, its employees and agents harmless from and against any damage, injury, loss, liability, charge, demand or claim based on or arising out of the presence or removal of, or failure to remove, Hazardous Materials generated, used, released, stored or disposed of by Tenant or any invitee, agent, employee, subtenant, assignee, contractor, client, family member, licensee, customer or guest of Tenant (hereinafter referred collectively to as "Invitees" and individually as an "Invitee") in or about the Building, whether before or after the Commencement Date. In addition, Tenant shall give Landlord immediate verbal and follow-up written notice of any actual or threatened Environmental Default, which Environmental Default Tenant shall cure in accordance with all Environmental Laws and only after Tenant has obtained Landlord's prior written consent, which shall not be unreasonably withheld or delayed. An "Environmental Default" means any of the following caused by the act or omission of Tenant or any Invitee: a violation of an Environmental Law; a release, spill or discharge of a Hazardous Material on or from the Premises, the Project or the Building; an environmental condition requiring responsive action; or an emergency environmental condition. Upon any Environmental Default, in addition to all other rights available to Landlord under this Lease, at law or in equity, Landlord shall have the right, but not the obligation, upon reasonable prior notice to Tenant, except in event of emergency where no notice shall be required, to immediately enter the Premises, to supervise and approve any actions taken by Tenant to address the Environmental Default, and, if Tenant fails to immediately address same to Landlord's reasonable satisfaction, to perform, upon reasonable prior written notice to Tenant at Tenant's sole reasonable cost and expense, any lawful action necessary to address same. If any lender or governmental agency shall require testing to ascertain whether an Environmental Default is pending or threatened, then Tenant shall pay the reasonable costs therefor as additional rent. Promptly upon request, Tenant shall execute from time to time affidavits, representations and similar documents concerning Tenant's best knowledge and belief regarding the presence of Hazardous Materials at or in the Building, the Project or the Premises generated, used, released, stored or disposed by Tenant or any invitee of Tenant.

7.4   Building Structure and Systems . Landlord at its expense, subject to reimbursement pursuant to Article VI only to the extent permitted thereby, shall comply with applicable Laws to the extent same apply directly to the Building Structure and Systems, as defined below, including portions thereof located within the Premises and to such Laws that apply directly to the common areas of the Project as a whole; provided, however, that to the extent any non-compliance is a result of the use or occupancy of the Premises or any action or inaction of Tenant or any Invitee, then such compliance shall be at Tenant's cost, except to the extent specifically required herein to be paid by Landlord. Tenant at its sole cost and expense shall be solely responsible for taking any and all measures which are required to comply with all applicable Laws concerning the Premises (including means of ingress and egress thereto) and the business conducted therein. Any Alterations, as hereinafter defined, made or constructed by Tenant for the purpose of complying with such Laws or which otherwise require compliance with such Laws shall be done in accordance with this Lease; provided, that Landlord's consent to such Alterations shall not constitute either Landlord's assumption, in whole or in part, of Tenant's responsibility for compliance with such Laws, or representation or confirmation by Landlord that such Alterations comply with the provisions of such Laws.

7.5   Hazardous Material Representation . Landlord represents that it has not received any written notice of violation of any Environmental Law which remains uncured, and that, to its actual knowledge as of the date hereof, no Hazardous Material (other than standard quantities of standard building cleaning, maintenance and repair materials or other de minimis amounts of same) are present in the Project that would adversely affect the Premises or Tenant's access thereto or are in violation of any Environmental Law.

ARTICLE VIII
ASSIGNMENT AND SUBLETTING

8.1   Alienation . Except as provided in Section 8.6 below, Tenant shall not assign, transfer or otherwise encumber (collectively, "assign") this Lease or all or any of Tenant's rights hereunder or interest herein, or sublet or permit anyone to use or occupy (collectively, "sublet") the Premises or any part thereof, without obtaining the prior written consent of Landlord, which consent may be withheld or granted in Landlord's sole and absolute discretion. Notwithstanding the foregoing, provided that Tenant has provided Landlord with any applicable Intention Notice described in Section 8.3 hereof and Landlord has not elected the available rights thereunder, and Tenant has provided Landlord with the Request Notice described in Section 8.2 hereof and all information required in connection therewith, Landlord shall not unreasonably withhold, condition, or delay its consent to any proposed assignment or subletting of the Premises, provided that: (i) no Event of Default exists; (ii) any portion of the Premises, or the means of ingress or egress to any the portion of the Premises, after such proposed sublease or assignment or the proposed use of any portion thereof by the proposed assignee or subtenant will not violate any Law or the provisions of this Lease; (iii) any proposed assignee is, under a commercially reasonable standard, sufficiently financially responsible to perform its obligations under the proposed sublease or assignment; (iv) the proposed assignee or subtenant is not a government, or subdivision or agency thereof; (v) the proposed assignee or subtenant is not a tenant in the Building, provided the condition set forth in this clause (v) shall not be applicable if the Building is Ninety Five Percent (95%) leased at the commencement of such assignment or sublease; (vi) such proposed sublease or assignment would increase the electricity consumption or heating ventilating and air-conditioning within the Premises in excess of the standards for which same are designed or violate any provision or restrictions herein relating to the use or occupancy of the Premises (including parking requirements); (vii) Landlord is not required by Law to make any alterations, installations, improvements, additions or other physical changes to be performed in or made to any portion of the Building or the Project; and (viii) such sublease or assignment does not contemplate use of the subject premises by more than one person for each two hundred fifty (250) rentable square feet of rentable area; provided, however, that the foregoing are merely examples of reasons for which Landlord may withhold its approval and shall not be deemed exclusive of any permitted reasons for reasonably withholding approval, whether similar or dissimilar to the foregoing examples. Any attempted assignment, transfer or other encumbrance of this Lease or all or any of Tenant's rights hereunder or interest herein not in accordance with this Article VIII, and any sublet or permission to use or occupy the Premises or any part thereof not in accordance with this Article VIII shall be void and of no force or effect. In the event of any assignment or subletting, Tenant shall remain fully liable as a primary obligor for the payment of all rent and other charges required hereunder and for the performance of all obligations to be performed by Tenant hereunder. Any assignment or subletting, Landlord's consent thereto, or Landlord's collection or acceptance of rent from any assignee or subtenant shall not be construed either as waiving or releasing Tenant from any of its liabilities or obligations under this Lease as a principal and not as a guarantor or surety, or as relieving Tenant or any assignee or subtenant from the obligation of obtaining Landlord's prior written consent to any subsequent assignment or subletting. For any period during which an Event of Default exists hereunder, Tenant hereby authorizes each such assignee or subtenant to pay said rent directly to Landlord upon receipt of notice from Landlord specifying same. Landlord's collection of such rent shall not be construed as an acceptance of such assignee or subtenant as a tenant. Tenant shall not mortgage, pledge, hypothecate or encumber (hereinafter referred to as collectively as "mortgage") this Lease without Landlord's prior written consent, which consent may be granted or withheld in Landlord's sole and absolute discretion. If Landlord's consent is required hereunder, then Tenant shall pay to Landlord an administrative fee equal to five hundred dollars ($500) plus all other expenses (including reasonable attorneys' fees and accounting costs) incurred by Landlord in connection with Tenant's request for Landlord to give its consent to any assignment, subletting, or mortgage. Tenant shall notify Landlord prior to engaging a real estate broker in connection with any proposed assignment or sublease, and any such broker shall be subject to the approval of Landlord, which approval shall not be unreasonably withheld or delayed. Any sublease, assignment or mortgage shall, at Landlord's option, be effected on forms reasonably approved by Landlord. Tenant shall deliver to Landlord a fully-executed copy of each agreement evidencing a sublease, assignment or mortgage within five (5) days after Tenant's execution thereof but not later than fifteen (15) days prior to the effective date thereof.
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8.2   Tenant's Request Notice . If at any time during the Term Tenant desires to assign, sublet or encumber all or part of this Lease or the Premises pursuant to an assignment, sublease or other document that requires Landlord's consent, then in connection with Tenant's request to Landlord for Landlord's consent thereto, Tenant shall, at least thirty (30) days prior to the effective date of such assignment, subletting or encumbrance, provide notice to Landlord in writing (hereinafter referred to as the "Tenant's Request Notice") containing: the identity of the proposed assignee, subtenant or other party and a description of its business; the terms of the proposed assignment, subletting or other transaction, the proposed applicable document, the commencement date of the proposed assignment, subletting or other transaction (hereinafter referred to as the "Proposed Sublease Commencement Date"); the area proposed to be assigned, sublet or otherwise encumbered (hereinafter referred to as the "Proposed Sublet Space"); the most recent financial statement or other evidence of financial responsibility of such proposed assignee, a certification executed by Tenant and such party stating whether or not any premium or other consideration is being paid for the assignment, sublease or other transaction and such other documentation as is reasonably required by Landlord. Landlord shall use reasonable commercial efforts to respond to Tenant within fifteen (15) days of receipt of the Tenant's Request Notice and the aforesaid information.

8.3   Recapture . In the event: (a) Tenant proposes to assign this Lease or sublease the Premises or any portion thereof for eighty percent (80%) or more of the balance of the Term; or (b) Tenant proposes to sublease twenty percent (20%) or more of the rentable area of the Premises, then Tenant shall notify Landlord thereof in writing, not less than ninety (90) days prior to the earliest date that Tenant proposes such assignment or subletting shall be effective, describing the Proposed Sublet Space, the term of any proposed sublease and the Proposed Sublease Commencement Date (hereinafter referred to as the "Intention Notice"). Landlord shall have the right in its sole and absolute discretion to terminate this Lease in the event of an assignment or, with respect to the Proposed Sublet Space, a sublease, as applicable, by sending Tenant written notice of such termination within thirty (30) days after Landlord's receipt of an Intention Notice from Tenant; provided, however, that with respect to a recapture that is triggered by a proposed sublease, Landlord shall recapture the Proposed Sublet Space for only the term of the proposed sublease (except that if the term of the proposed sublease is for eighty percent (80%) or more of the balance of the Term, then Landlord may recapture the Proposed Sublease Space for the entirety of the balance of the Term). If the Proposed Sublet Space does not constitute the entire Premises and Landlord exercises its option to terminate this Lease with respect to the Proposed Sublet Space, then (i) Tenant shall tender the Proposed Sublet Space to Landlord on the Proposed Sublease Commencement Date specified in Tenant's Intention Notice and such space shall thereafter be deleted from the Premises, and (ii) as to that portion of the Premises which is not part of the Proposed Sublet Space, this Lease shall remain in full force and effect except that Base Rent and additional rent shall be reduced pro rata. The cost of any construction required to permit the operation of the Proposed Sublet Space separate from the balance of the Premises shall be paid by Tenant to Landlord as additional rent hereunder. If the Proposed Sublet Space constitutes the entire Premises and Landlord elects to terminate this Lease, then Tenant shall tender the Proposed Sublet Space to Landlord, and this Lease shall terminate, on the Proposed Sublease Commencement Date.

8.4   Profit Share . If any sublease or assignment (whether by operation of law or otherwise, including without limitation an assignment pursuant to the provisions of the Bankruptcy Code or any other Insolvency Law) provides that the subtenant or assignee thereunder is to pay any amount in excess of the sum of (a) the rental and other charges due under this Lease plus (b) the reasonable, out-of-pocket expenses paid by Tenant in connection with the procurement of such sublease, assignment or other transfer, then whether such excess be in the form of an increased monthly or annual rental, a lump sum payment, payment for the sale, transfer or lease of Tenant's fixtures, leasehold improvements, furniture and other personal property, or any other form (and if the subleased or assigned space does not constitute the entire Premises, the existence of such excess shall be determined on a pro-rata basis), Tenant shall pay to Landlord fifty percent (50%) of any such excess or other premium applicable to the sublease or assignment, which amount shall be paid by Tenant to Landlord as additional rent within ten (10) days after any receipt thereof by Tenant. Acceptance by Landlord of any payments due under this Section shall not be deemed to constitute approval by Landlord of any sublease or assignment, nor shall such acceptance waive any rights of Landlord hereunder. Landlord shall have the right to inspect and audit Tenant's books and records relating to any sublease or assignment.

8.5   Compliance . All restrictions and obligations imposed pursuant to this Lease on Tenant shall be deemed to extend to any subtenant, assignee, licensee, concessionaire or other occupant or transferee, and Tenant shall cause such person to comply with such restrictions and obligations. Any assignee shall be deemed to have assumed obligations as if such assignee had originally executed this Lease and at Landlord's request shall execute promptly a document confirming such assumption. Each sublease is subject to the condition that if the Term is terminated or Landlord succeeds to Tenant's interest in the Premises by voluntary surrender or otherwise, at Landlord's sole option the subtenant shall be bound to Landlord for the balance of the term of such sublease and shall attorn to and recognize Landlord as its landlord under the then executory terms of such sublease or, at Landlord's sole option, the subtenant shall execute a direct lease with Landlord on the terms and conditions of such applicable sublease.

8.6   Affiliate Transfer . Notwithstanding anything contained in this Article VIII to the contrary, provided no Event of Default exists hereunder, Tenant may, upon at least twenty (20) days prior written notice to Landlord but without Landlord's prior written consent and without being subject to Landlord's rights and Tenant's obligations set forth in Sections 8.3 and 8.4, assign or transfer its entire interest in this Lease or sublease all or a portion of the Premises to a Permitted Transferee. The term "Permitted Transferee", when used herein shall mean: (a) a corporation or other business entity into or with which Tenant shall be merged, reorganized or consolidated, or to which substantially all of the assets of Tenant may be transferred, or (b) a corporation or other business entity which shall control, be controlled by or be under common control with Tenant, provided that any Permitted Transferee shall assume in writing all of the obligations and liabilities of Tenant under this Lease. For purposes of clause (b) herein, "control" shall be deemed to be ownership of more than fifty percent (50%) of the stock or other voting interest of the controlled corporation or other business entity. In the event of any assignment or subletting pursuant to this Section 8.6, Tenant shall remain fully liable as a primary obligor for the payment of all rent and other charges required hereunder and for the performance of all obligations to be performed by Tenant hereunder. Together with Tenant's notice to Landlord pursuant to this Section, Tenant shall submit to Landlord sufficient information regarding the transaction as is reasonably necessary for Landlord to confirm that the transaction meets the qualifications set forth in this Section.
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ARTICLE IX
MAINTENANCE AND REPAIRS

9.1   Tenant Maintenance . Except as otherwise specifically provided to the contrary in this Lease, Tenant, at Tenant's sole cost and expense, shall promptly make all repairs, perform all maintenance, and make all replacements in and to the Premises that are necessary or desirable to keep the Premises in as good a condition and repair as the condition existing on the Commencement Date, normal wear and tear and damage by fire or other casualty excepted, in a clean, safe and tenantable condition, and otherwise in accordance with all Laws and the requirements of this Lease. Notwithstanding anything contained in this Lease to the contrary, if a Law is enacted after the date hereof that requires alterations to the Premises but does not specifically relate to the use, density or occupancy of the Premises by Tenant, any such alteration shall be made by Landlord and shall be deemed an Operating Expense under this Lease. Tenant shall maintain all fixtures, furnishings and equipment located in, or exclusively serving the Premises, excluding Building Structure and Systems, in clean, safe and sanitary condition, shall take good care thereof and make all required repairs and replacements thereto. Tenant shall give Landlord prompt written notice of any defects or damage to the structure of, or Landlord's equipment or fixtures in, the Premises or any part thereof. Tenant shall suffer no waste or injury to any part of the Premises, and shall, at the expiration or earlier termination of the Term, surrender the Premises in an order and condition equal to or better than their order and condition on the Commencement Date, except for ordinary wear and tear and as otherwise provided in Article XVIII. Except as otherwise provided in Article XVIII and XVIX, all injury, breakage and damage to the Premises and to any other part of the Building or the Project caused by any act or omission of any Invitee or Tenant, shall be repaired by and at Tenant's expense, except that upon reasonable prior written notice to Tenant, Landlord shall have the right at Landlord's option to make any such repair and to charge Tenant for all reasonable costs and expenses incurred in connection therewith. Landlord shall provide and install replacement tubes for Building and Premises standard fluorescent light fixtures and maintain and service the ballasts for such fixtures and shall maintain and service individual HVAC units including without limitation, HVAC drive motors, valves, pipes and fan coils, within each office and other area of the Premises without additional charge to Tenant, provided the cost thereof shall be an Operating Expense.

9.2   Landlord Maintenance . Except as otherwise provided in this Lease, Landlord shall keep the exterior and demising walls, and floors, load bearing elements, foundations, roof and common areas, including the Parking Garage, that form a part of the Project, the mechanical, electrical, HVAC and plumbing systems, pipes and conduits that are provided by Landlord in the operation of the Building, and restrooms and elevators located within the Premises (hereinafter collectively referred to as the "Building Structure and Systems"), clean and in good operating condition and, promptly after becoming aware of any item needing repair, will make repairs and replacements thereto. Notwithstanding any of the foregoing to the contrary: (a) maintenance and repair of special tenant areas, facilities, finishes and equipment (including, but not limited to, any special fire protection equipment, telecommunications and computer equipment, kitchen/galley equipment, air-conditioning equipment serving the Premises only and all other furniture, furnishings and equipment of Tenant and all Alterations) shall be the sole responsibility of Tenant and shall be deemed not to be a part of the Building Structure and Systems; and (b) Landlord shall have no obligation to make any repairs brought about by any negligent or wrongful act or neglect of Tenant or any Invitee.

ARTICLE X
CONDITION OF PREMISES

10.1 Condition . Tenant acknowledges that it is currently occupying part of the Premises under the Old Lease (said part of the Premises is hereinafter referred to as the "Existing Premises"). To the extent that the Premises includes the Existing Premises, the Landlord shall deliver same to Tenant in its "as-is" condition as of the Commencement Date. The Overlandlord shall deliver the portions of the premises not included within the Existing Premises (said portions are hereinafter referred to as the "New Stuff") in the condition that exists as of the date hereof, ordinary wear and tear excepted, provided however that should Tenant take possession of any portion of the New Stuff under an agreement with Union Carbide Corporation, prior to the Commencement Date, the Tenant shall accept possession of such portions of the New Stuff in an "as-is" condition as of such prior date and Tenant shall have surrendered the same to Union Carbide Corporation in compliance with the Old Lease, and, further, Union Carbide Corporation shall have surrendered the same to Overlandlord in compliance with the Prime Lease. The Tenant's taking possession of the Premises shall be deemed to be Tenant's acceptance of the Premises in the order and condition as then exists. Overlandlord agrees to deliver and Tenant agrees to accept possession of the Premises in an "as is" condition. Overlandlord is under no obligation to make any structural or other alterations, decorations, additions, improvements or other changes (hereinafter referred to as the "Alterations") in or to the Premises, the Building or the Project, provided however the Premises shall be in a tenantable condition as required under the Old Lease. TENANT ACKNOWLEDGES AND REPRESENTS THAT IT HAS INSPECTED THE PREMISES, THAT, EXCEPT AS SPECIFICALLY SET FORTH IN THIS LEASE, NEITHER OVERLANDLORD NOR ANY PARTY ACTING ON BEHALF OF OVERLANDLORD HAS MADE ANY WARRANTY OR REPRESENTATION CONCERNING THE PREMISES AND TENANT IS LEASING THE PREMISES IN AN "AS-IS" CONDITION. Consistent with the foregoing, the parties acknowledge that, subsequent to the date hereof Tenant and Union Carbide Corporation may enter into an agreement to provide for Tenant's proposed relocation within the Complex to space that will constitute New Stuff (namely, Sections K 3, L 3, M 3 and M 4) in its then "as is" condition, such relocation to be accomplished prior to the termination of the Old Lease. The parties acknowledge further that the form of such agreement is currently intended to be an Omnibus Amendment that will constitute a Seventh (7th) Amendment to the Old Lease as well as an amendment to other relevant legal documents. Overlandlord shall not unreasonably withhold, condition or delay its consent to such intended Omnibus Amendment upon being furnished with a fully executed copy thereof, provided, however, that neither such document nor such consent shall be deemed to either increase or decrease the rights and obligations of the parties under the Old Lease.

10.2   Allowance . Provided that an Event of Default is not then existing Overlandlord agrees to pay to Tenant an amount equal to Four Million Five Hundred Sixty Eight Thousand Two Hundred Twenty Five Dollars and No Cents ($4,568,225.00) (hereinafter referred to as the "Landlord's Contribution") on or before December 31, 2007 as an inducement to enter into this Amendment; provided further that if Tenant shall not have received Landlord's Contribution on or before December 31, 2007, and so long as an Event of Default is not then existing, then upon five (5) days notice to Overlandlord, Tenant may setoff the amount of the Landlord's Contribution against the Rent next due hereunder. For the purposes of the immediately preceding sentence, an Event of Default shall not include a default of the Tenant which does not involve the payment of rent due hereunder or which is not a Material Default. In the event of such an Event of Default which is not a Material Default, the Overlandlord may withhold payment of a portion of the Landlord's Contribution in an amount reasonably determined by Overlandlord to be sufficient to cure such Event of Default (provided that Overlandlord shall not be obligated to utilize such funds to cure same) until Tenant has cured such Event of Default and Tenant's right of setoff contained in this Section 10.2 shall not be applicable to the amount so withheld until such Event of Default is cured. The term "Material Default" when used in this Section 10.2 shall mean a non-monetary default of the Tenant determined by Overlandlord in its good faith judgement to require an expenditure to cure such default which exceeds Ten Thousand Dollars and No Cents ($10,000.00).
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ARTICLE XI
ALTERATIONS

11.1   Tenant Alterations . Tenant shall not make or permit anyone to make any Alterations in or to the Premises or the Building, without the prior written consent of Landlord, which consent may be withheld or granted in Landlord's sole and absolute discretion with respect to any and all structural Alterations, Alterations which require a building permit and to those non-structural Alterations which are visible from the exterior of the Premises, and which consent shall not be unreasonably withheld or delayed with respect to all other non-structural Alterations, provided however that Tenant may, in compliance with the provisions of this Lease make decorations and improvements strictly cosmetic in nature, which do not require a building permit and which do not effect the Building Structure and Systems without the consent of Landlord, but shall provide Landlord prior written notice of same. Structural Alterations shall be deemed to consist of any Alterations that will necessitate any changes, replacements or additions to the walls, ceilings, partitions, columns or floor, or to the water, electrical, mechanical, plumbing, fire/ life safety, or HVAC systems, of the Premises or the Building. Any Alterations made by Tenant shall be made: (a) in a good, workmanlike, first-class and prompt manner; (b) using new materials only; (c) by a contractor, on days, at times and under the supervision of an architect approved in writing by Landlord, which approval shall not be unreasonably withheld or delayed; (d) in accordance with plans and specifications prepared by an engineer or architect, which, in all instances shall be approved in writing by Landlord, which approval shall not be unreasonably withheld or delayed; (e) in accordance with all Laws and the requirements of any insurance company insuring the Project or any portion thereof; and (f) after obtaining public liability, builder's risk and worker's compensation insurance policies in such limits as reasonably required by Landlord, which policies shall cover every person who will perform any work with respect to such Alteration and shall meet the requirements set forth in Section 14.2 hereof. If any lien (or a petition to establish such lien) is filed in connection with any Alteration, such lien (or petition) shall be discharged by Tenant within ten (10) days thereafter, at Tenant's sole cost and expense, by the payment thereof or by the filing of a bond acceptable to Landlord. If Landlord gives its consent to the making of any Alteration made by Tenant, such consent shall not: (i) be deemed to be an agreement or consent by Landlord to subject its interest in the Premises or the Project to any liens which may be filed in connection therewith; or (ii) constitute either Landlord's assumption, in whole or in part, of Tenant's responsibility for compliance with any applicable Laws, or representation or confirmation by Landlord that such Alterations comply with the provisions of such Laws. All Alterations made by Tenant (including, without limitation, those involving structural, electrical, mechanical or plumbing work, fire and life safety systems, the roof of the Building, the heating, ventilation and air conditioning system of the Premises or the Building, and the roof of the Building) shall, be performed by contractors or subcontractor chosen by Tenant under contracts approved by Landlord at Tenant's expense, provided however any such approval shall not be unreasonably withheld or delayed. Tenant shall reimburse Landlord for all reasonable costs of review, coordination and supervision in connection with any Alteration made by Tenant. Promptly after the completion of an Alteration made by Tenant, Tenant at its expense shall deliver to Landlord three (3) sets of accurate as-built drawings showing such Alteration in place.

11.2   Removal . If any Alterations are made without the prior written consent of Landlord, Landlord shall have the right upon reasonable prior written notice to Tenant and at Tenant's reasonable expense to remove and correct such Alterations and restore the Premises and the Building to their condition immediately prior thereto, or to require Tenant to do the same. All Alterations to the Premises or the Building (except any fixtures or equipment of Tenant) made by either party shall immediately become the property of Landlord and shall remain upon and be surrendered with the Premises as a part thereof at the expiration or earlier termination of the Term; provided, however, that (a) if no Event of Default shall then exist, then Tenant shall have the right to remove, prior to the expiration or earlier termination of the Term, all movable fixtures, furniture, furnishings and equipment installed in the Premises solely at the expense of Tenant, and (b) Tenant shall remove all Alterations made by or on behalf of Tenant and other items in the Premises and the Building which Landlord designates in writing for removal. Movable furniture, furnishings, equipment and trade fixtures shall be deemed to exclude without limitation any item the removal of which might cause material damage to the Premises or the Building. Landlord shall have the right upon reasonable prior written notice to Tenant and at Tenant's reasonable expense to repair all damage and injury to the Premises or the Building caused by such removal or to require Tenant to do the same. If such fixtures, furniture, furnishings and equipment are not removed by Tenant prior to the expiration or earlier termination of the Term, the same shall at Landlord's option become the property of Landlord and shall be surrendered with the Premises as a part thereof; provided, however, that Landlord shall have the right, upon reasonable prior written notice to Tenant and at Tenant's expense to remove from the Premises such fixtures, furniture, furnishings and equipment and any Alteration made by or on behalf of Tenant which Landlord designates in writing for removal or to require Tenant to do the same.
 
ARTICLE XII
SIGNS

12.1   Signs . Landlord will list the name of Tenant in the Building directory, if any. Landlord and Tenant will agree upon a mutually acceptable signage program to the entrance of the Building where Tenant will, at its sole cost and expense, be permitted to display the name of Tenant. Tenant shall maintain such signs and, upon the request of Landlord remove same at the termination of this Lease. Except as otherwise provided in this Section, no other sign, advertisement or notice referring to Tenant shall be inscribed, painted, affixed or otherwise displayed on any part of the exterior or interior of the Building (including windows and doors) and the Project without the prior written approval of Landlord, which may be granted or withheld in Landlord's sole and absolute discretion. If any such item that is not specifically provided for herein or has not been approved by Landlord is so displayed, then Landlord shall have the right upon reasonable prior written notice to Tenant to remove such item at Tenant's expense or to require Tenant to do the same. Landlord reserves the right to install and display and permit the installation and display of signs, advertisements and notices on any part of the exterior or interior of the Building and the Project.

ARTICLE XIII
INSPECTION

13.1   Inspection . After reasonable prior notice, except that no notice shall be required in the event of an emergency, Tenant shall permit Landlord, its agents and representatives, and the holder of any Mortgage, to enter the Premises without charge therefor and without diminution of the rent payable by Tenant in order to examine, inspect or protect the Premises and the Building, to make such alterations and/or repairs as in the sole and absolute judgment of Landlord may be deemed necessary or desirable, or to exhibit the same to brokers, prospective tenants, lenders, purchasers and others, provided, however, that in exercising any such right Landlord shall not prevent or unreasonably interfere with Tenant's possession, occupation or use of the Premises. Except in the event of an emergency, Landlord shall endeavor to minimize disruption to Tenant's normal business operations in the Premises in connection with any such entry.

ARTICLE XIV
INSURANCE

14.1   Adverse Activity . Tenant shall not conduct or permit to be conducted any activity, or place or permit to be placed any equipment or other item in or about the Premises or the Project, which will in any way increase the rate of fire insurance or other insurance on the Project because same is hazardous. If any increase in the rate of fire insurance or other insurance is due to any hazardous activity, equipment or other item of Tenant, then (whether or not Landlord has consented to such activity, equipment or other item) Tenant shall pay as additional rent due hereunder the amount of such increase. The statement of any applicable insurance company or insurance rating organization (or other organization exercising similar functions in connection with the prevention of fire or the correction of hazardous conditions) that an increase is due to any such activity, equipment or other item shall be conclusive evidence thereof.
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14.2   Tenant Insurance .

(a)   Throughout the Term, Tenant shall obtain and maintain: (1) commercial general liability insurance, written on an occurrence basis, including contractual liability coverage insuring the obligations assumed by Tenant under this Lease which shall include those set forth in Sections 7.3 and 16.2 hereof, premises and operations coverage, broad form property damage coverage independent contractors coverage, and personal injury coverage; (2) all-risk property insurance; (3) comprehensive automobile liability insurance, covering automobiles owned by Tenant, if any; (4) worker's compensation insurance, and (5) employer's liability insurance. Such commercial general liability insurance shall be in minimum amounts typically carried by prudent tenants engaged in similar operations, but in no event shall be in an amount less than Two Million Dollars ($2,000,000) combined single limit per occurrence with a Four Million Dollar ($4,000,000) annual aggregate. Such property insurance shall be in an amount not less than that required to replace the EG and the Antenna, as such terms are hereinafter defined, to the extent installed by Tenant. Such automobile liability insurance shall be in an amount not less than One Million Dollars ($1,000,000) for each accident. Such worker's compensation insurance shall carry minimum limits as defined by the law of the jurisdiction in which the Building is located (as the same may be amended from time to time). Such employer's liability insurance shall be in an amount not less than One Million Dollars ($1,000,000) for each accident, One Million Dollars ($1,000,000) disease-policy limit, and One Million Dollars ($1,000,000) disease-each employee.

(b)   All such insurance shall: (1) be issued by a company that is licensed to do business in the jurisdiction in which the Building is located, that has a rating equal to or exceeding A:VIII, from Best's Insurance Guide; (2) name Landlord, the managing agent of the Building and the holder of any Mortgage as additional insureds with respect to the commercial general liability insurance; (3) provide that the insurer thereunder waives all right of recovery by way of subrogation against Landlord, its partners, agents, employees, and representatives, in connection with any loss or damage covered by such policy; (4) be primary and non-contributory; (5) contains an endorsement (except for property insurance) for cross liability and severability of interests; and (6) contain an endorsement prohibiting cancellation, failure to renew, reduction of amount of insurance below the amounts required hereunder or change in coverage to provide less coverage than required hereunder without the insurer first giving Landlord thirty (30) days' prior written notice, of such proposed action. No such policy shall contain any deductible provision except as otherwise approved in writing by Landlord, which approval shall not be unreasonably withheld, other than the property insurance insuring the EG and the Antenna, which may include a deductible in an amount not in excess of Ten Percent (10%) of the cost of replacement thereof. Landlord reserves the right from time to time to require Tenant to obtain higher minimum amounts or different types of insurance if it becomes customary for other landlords of first-class office buildings in the Market Area to require similar sized tenants in similar industries to carry insurance of such higher minimum amounts or of such different types of insurance. Tenant shall deliver a certificate on ACORD Form 27 or similar form acceptable to Landlord which creates a direct obligation from the issuing company to Landlord, of all such insurance to Landlord concurrently with Tenant's execution of this Lease and at least annually thereafter. Tenant shall give Landlord immediate notice in case of fire, theft or accident in the Premises, and in the case of fire damaging the Building or theft or significant accident in the Building if involving Tenant, its agents, employees or Invitees. Neither the issuance of any insurance policy required under this Lease nor the minimum limits specified herein shall be deemed to limit or restrict in any way Tenant's liability arising under or out of this Lease.

14.3   Landlord Insurance . Landlord agrees to carry and maintain all-risk property insurance (with replacement cost coverage) covering the Building and Landlord's property therein in an amount required by its insurance company to avoid the application of any coinsurance provision. Landlord hereby waives its right of recovery against Tenant and releases Tenant from any and all liabilities, claims and losses for which Tenant may otherwise be liable to the extent Landlord is covered by property insurance therefor. Landlord shall use reasonable efforts to secure and maintain a waiver of subrogation endorsement from its insurance carrier and Landlord shall give prompt written notice to Tenant if such waiver is not available. Landlord also agrees to carry and maintain commercial general liability insurance in limits it reasonably deems appropriate. The policies of insurance obtained by Landlord may include a commercially reasonable deductible applied to each such occurrence and/or loss.

ARTICLE XV
SERVICES AND UTILITIES

15.1   Services . Landlord will: (a) furnish to all areas of the Premises air-conditioning, ventilation and heating required to provide comfortable occupancy, meeting the air temperature and humidity standards set forth on Exhibit "B" attached hereto and by this reference incorporated herein during the hours of 7:00 a.m. to 5:00 p.m. Monday through Friday ; (b) provide janitorial service on Monday through Friday (or, at Landlord's option, Sunday through Thursday) only (excluding legal public holidays) as provided on Exhibit "C"attached hereto and by this reference incorporated herein; (c) provide water for lavatory, sprinkler and drinking purposes; and (d) provide landscaping, including mowing of lawn, raking and removal of leaves, trimming of shrubs, bushes and trees, removal of snow and ice and the maintenance of the Parking Garage, roads and other site related amenities, all costs of which shall constitute Operating Expenses. Landlord shall not be liable for any failure to maintain comfortable atmosphere conditions in all or any portion of the Premises due to excessive heat generated by any equipment or machinery installed by Tenant (with or without Landlord's consent), or due to any adverse impact that Tenant's furniture, equipment, machinery, millwork or layout of the Premises may have upon the delivery of HVAC to the Premises or due to the occupancy load. Tenant shall abide by all reasonable regulations which Landlord promulgates for the proper functioning and protection of the heating, ventilating and air-conditioning system and for compliance with applicable governmental energy regulations and guidelines, provided Tenant has actual prior notice of all reasonable regulations which Landlord promulgates. If Tenant requires air-conditioning or heat beyond the Building Hours, then Landlord will furnish the same, provided Tenant gives Landlord sufficient advance notice of such requirement. Tenant shall pay for such extra service in accordance with Landlord's then-current charges to tenants of the Building. Notwithstanding anything above to the contrary, Tenant shall have access to the Building twenty-four (24) hours per day each day of the year (except in the event of an emergency). Tenant shall not permit anyone, except for Tenant's employees and authorized guests, to enter the Building at times other than the Building Hours. All persons entering or exiting the Building at times other than the normal hours of operation of the Building shall, at Landlord's discretion, be required to sign in and out and meet such reasonable requirements as Landlord may impose.

15.2   Utility Service . All telecommunication, signal and other utility and similar services used in the Premises during the Term shall be supplied by the utility companies serving the Building and Tenant shall be solely responsible for the payment of all charges therefore. All electricity used in the Premises during the Term shall be supplied by the utility companies serving the Building and Tenant shall be solely responsible for the payment of all charges therefore and Tenant's electric consumption shall be measured through a separate meters or submeters installed by and at the cost of Tenant on or before the Commencement Date. If the electrical utility charges are billed to the Landlord, Tenant shall pay the cost of such service as measured by submeters installed by Tenant to Landlord within ten (10) days of invoice therefore. If the electrical utility charges are billed to the directly to the Tenant, Tenant shall be responsible for the payment of such charges directly to the applicable utility provider and Tenant shall be solely responsible for making such arrangements with such company as may be necessary for the furnishing thereof to the Premises. Tenant shall have the right to cause the installation, maintenance, repair, replacement and removal of any telecommunications wiring and cables, and equipment and appurtenances ancillary thereto, in the Building that are necessary or useful for its operations within the Premises at locations reasonably approved by Landlord and to interconnect various areas of the Premises, including any computer and Data Center areas. As of the Commencement Date or the date upon which it ceases to require any telecommnication connection to the building at 55 Old Ridgebury Road, whichever is later, Tenant shall be deemed to have quit claimed to Landlord all right, title and interest in any telecommunication cable and wiring lying between the building at 55 Old Ridgebury Road and the Building.

15.3   Waste . Tenant shall reimburse Landlord for the cost of any excess water, sewer and chiller usage in the Premises. Excess usage shall mean the excess of the estimated usage in the Premises (per square foot of rentable area) during any billing period over a reasonable sum designated and documented by Landlord based upon the average usage (per square foot of rentable area) during the same period for the entire Building, as reasonably calculated by Landlord, adjusted to account for anomalies of usage based upon unique usage patterns.
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15.4   Cleaning Election . Tenant may elect, upon sixty (60) days prior written notice to Landlord, to provide all cleaning and janitorial service to the Premises with contractors reasonably acceptable to Landlord, provided that an Event of Default is not existing at the time of such election and during the period that Tenant so provides such services. In the event of such election Tenant will become solely responsible for providing all cleaning and janitorial services to the Premises and Landlord shall be relieved of any obligation to so provide cleaning and janitorial services to the Premises and the janitorial and cleaning services line-item component of Operating Expenses Base Amount and the Operating Expenses shall be proportionally reduced, to the extent of any reduction available to Landlord under its cleaning contract, commencing on the day Tenant provides such services. Landlord shall make appropriate adjustments to account for the fact that such adjustments may not coincide with a calendar year. All such cleaning and janitorial services so performed by Tenant shall be at least equal to the cleaning and janitorial services required to be performed by Landlord hereunder as provided on Exhibit "C"attached hereto and shall comply with such reasonable regulations as Landlord shall from time to time impose and which are similarly applicable to all other tenants providing like cleaning and janitorial service to their respective premises. Should Tenant so elect to perform such cleaning and janitorial services Tenant and any contractor of Tenant providing such services shall work in harmony and shall not interfere with the performance of the operations of the Building or with the activities of other tenants or occupants of the Building. If any time Tenant or any contractor of Tenant performing such services shall cause or threaten to cause, such disharmony or interference, Landlord may terminate such contractor's access to the premises upon 24 hours' written notice to Tenant, and thereupon, Tenant and such contractor causing such disharmony or interference shall immediately withdraw from the Premises and the Building until Landlord determines, in its reasonable discretion, such disturbance no longer exists.

15.5   Essential Services . If any services as described in Section 9.2 or in Sections 15.1(a), (c) or (d) above (such services are hereinafter collectively and individually referred to as the "Essential Services"), should cease or fail or if a reasonable means of ingress and egress to the Building and Premises is unavailable and if as a result thereof Tenant is unable to use the Premises or any portion thereof for its office and computer operation for any reason other than: (i) fire or other casualty; (ii) condemnation; (iii) the act or omission of Tenant or its agents, employees, contractors, invitees or licensees; or (iv) an Event of Default, as said term is hereinafter defined, and same continues for three (3) consecutive business days after Landlord has actual knowledge of or has received written notice from Tenant of such discontinuance, and if all or more than five percent (5%) of the total area of the Premises is rendered untenantable to the effect that Tenant cannot conduct business therein and Tenant does not in fact occupy such portion of the Premises for the conduct of business, then in such event, as Tenant' sole remedy therefore, all Rent for all or that portion of the Premises so rendered untenantable and not occupied by Tenant shall be abated on a per diem basis beginning with the first day of such cessation or failure and shall remain abated until the date such Essential Services are resumed, as of which date Rent shall resume. The interruption of Essential Services as a result of fire or other casualty or as a result of condemnation shall be treated pursuant to the provisions of Articles XVIII and XIX, respectively.

ARTICLE XVI
LIABILITY OF LANDLORD

16.1   Landlord Liability . Landlord, its employees and agents shall not be liable to Tenant, any Invitee or any other person or entity for any damage, including indirect and consequential damage, injury, loss or claim, including claims for the interruption of or loss to business, based on or arising out of any cause whatsoever, except as otherwise specifically provided in Sections 15.5 or in this Section, including without limitation the following: repair to any portion of the Premises or the Project or the EG or the Antenna; interruption in the use of the Premises or any equipment therein or the EG or the Antenna; any accident or damage resulting from any use or operation (by Landlord, Tenant or any other person or entity) of elevators or heating, cooling, electrical, sewerage or plumbing equipment or apparatus; termination of this Lease by reason of damage to the Premises or the Building; any fire, robbery, theft, vandalism, mysterious disappearance or any other casualty; actions of any other tenant of the Project or of any other person or entity; inability to furnish any service specified in this Lease; and leakage in any part of the Premises or the Building or the EG or the Antenna from water, rain, ice or snow that may leak into, or flow from, any part of the Premises or the Building, or from drains, pipes or plumbing fixtures in the Premises or the Building. If any condition exists which may be the basis of a claim of constructive eviction, then Tenant shall give Landlord written notice thereof and a reasonable opportunity to correct such condition. Any property placed by Tenant or any Invitee in or about the Premises or the Building shall be at the sole risk of Tenant, and Landlord shall not in any manner be held responsible therefor. Any person receiving an article delivered for Tenant shall be acting as Tenant's agent for such purpose and not as Landlord's agent. Notwithstanding the foregoing provisions of this Section, Landlord shall not be released from liability to Tenant: (i) for any physical injury to any natural person caused by Landlord's willful misconduct or gross negligence to the extent such injury is not covered by insurance (a) carried by Tenant or such person, or (b) required by this Lease to be carried by Tenant; or (ii) for a breach by Landlord under the terms of this Lease other than caused by a third party not under the control of Landlord, provided however, that Landlord shall not under any circumstances be liable for any consequential or indirect damages.

16.2   Indemnity . Tenant shall, as additional rent, reimburse Landlord, its employees and agents for, and shall indemnify, defend upon request and hold them harmless from and against all costs, damages, claims, liabilities, expenses (including reasonable attorneys' fees), penalties and court costs suffered by or claimed against them, directly or indirectly, to the extent based on or arising out of, in whole or in part: (a) use and occupancy of the Premises or the business conducted therein; and (b) any act or omission of Tenant or any Invitee. Notwithstanding anything to the contrary herein contained, Tenant shall in no event be liable for consequential, indirect or punitive damages of any kind, regardless of the legal theory upon which such claim may be based.

16.3   Ownership Period . No landlord hereunder shall be liable for any obligation or liability based on or arising out of any event or condition occurring during the period that such landlord was not the owner of the Building or a landlord's interest therein. Within five (5) days after request, Tenant shall attorn to any such transferee and execute, acknowledge and deliver any document submitted to Tenant confirming such attornment.

16.4   Set-off . Except as specifically permitted pursuant to Section 10.2 hereof, Tenant shall not have the right to set off or deduct any amount allegedly owed to Tenant pursuant to any claim against Landlord from any rent or other sum payable to Landlord. Tenant's sole remedy for recovering upon such claim shall be to institute an independent action against Landlord, which action shall not be consolidated with any action of Landlord.

16.5   Personal Liability . If Tenant or any Invitee is awarded a money judgment against Landlord, then recourse for satisfaction of such judgment shall be limited to execution against Landlord's estate and interest in the Building. No other asset of Landlord, any partner, director, member, officer or trustee of Landlord (each, an "officer") or any other person or entity related to or employed by Landlord shall be available to satisfy or be subject to such judgment, nor shall any officer or other person or entity be held to have personal liability for satisfaction of any claim or judgment against Landlord or any officer.

16.6   Encumbrance . Tenant has no authority or power to cause or permit any lien or encumbrance of any kind whatsoever, whether created by act of Tenant, operation of law or otherwise, to attach to or be placed upon Landlord's title or interest in the Project, and any liens and encumbrances created by Tenant shall attach to Tenant's interest only. Tenant covenants and agrees not to cause any lien of mechanics or materialmen or others to be placed against the Project, the Building or the Premises with respect to work or services claimed to have been performed for or materials claimed to have been furnished to Tenant or to the Premises on behalf of Tenant, and in case of any such lien attaching, Tenant covenants and agrees to cause it to be released and removed of record, or bonded in a fashion reasonably satisfactory to Landlord, within thirty (30) days of Tenant's knowledge of same. In the event that such lien is not so released and removed, Landlord, at its sole option, may take all action necessary to release and remove such lien (without any duty to investigate the validity thereof) and Tenant shall promptly upon notice, either before or after such release and removal, pay or reimburse Landlord for all reasonable sums, costs and expenses (including reasonable attorneys' fees) incurred by Landlord in connection with such lien, together with interest thereon at the Default Rate.
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ARTICLE XVII
RULES

17.1   Rules . Tenant and Invitees shall at all times abide by and observe the rules specified below. Tenant and Invitees shall also abide by and observe any other rule that Landlord may reasonably promulgate from time to time generally applicable for the operation and maintenance of the Project, provided that at least three (3) days prior notice thereof is given and such rule is not inconsistent with the provisions of this Lease. Landlord shall not be liable to Tenant for the violation of any such rule by any other tenant or its employees, agents, assignees, subtenants, invitees or licensees, provided however, that Landlord shall make reasonable, diligent efforts to evenly enforce any such rule.

(a)   Tenant shall not obstruct or encumber or use for any purpose other than ingress and egress to and from the Premises any sidewalk, entrance, passage, court, elevator, vestibule, stairway, corridor, hall or other part of the Project not exclusively occupied by Tenant. No bottles, parcels or other articles shall be placed, kept or displayed on window ledges, in windows or in corridors, stairways or other public parts of the Project. Tenant shall not place any showcase, mat or other article outside the Premises.

(b)   Landlord shall have the right to control and operate the public portions of the Project and the facilities furnished for common use of the tenants, in such manner as Landlord deems best for the benefit of the tenants generally and shall use reasonable commercial efforts to maintain reasonable access for Tenant to the entrances, elevators, corridors, elevators and other public portions of the Project. Tenant shall not permit the visit to the Premises of persons in such numbers or under such conditions as to interfere with the use and enjoyment of the entrances, corridors, elevators and other public portions or facilities of the Project by other tenants. Tenant shall coordinate and schedule in advance with Landlord's property management department all non-routine deliveries to the Building so that arrangements can be made to minimize such interference. Tenant shall not permit its employees and invitees to congregate in the elevator lobbies or corridors of the Building. Canvassing, soliciting and peddling in the Project are prohibited, and Tenant shall cooperate to prevent the same.

(c)   Tenant shall not attach, hang or use in connection with any window or door of the Premises any drape, blind, shade or screen, without Landlord's prior written consent which shall not be unreasonably withheld or delayed. All awnings, drapes projections, curtains, blinds, shades, screens and other fixtures shall be of a quality, type, design and color, and shall be attached in a manner, approved in writing by Landlord which shall not be unreasonably withheld or delayed.
 
    (d)   Tenant shall not use the water fountains, water and wash closets, and plumbing and other fixtures for any purpose other than those for which they were constructed, and Tenant shall not place any debris, rubbish, rag or other substance therein (including, without limitation, coffee grounds). All damages from misuse of fixtures shall be borne by the tenant causing same.

(e)   Tenant shall not construct, maintain, use or operate within the Premises any electrical device, wiring or apparatus in connection with a loudspeaker system or other sound system, in connection with any excessively bright, changing, flashing, flickering or moving light or lighting device, or in connection with any similar device or system visible or which can be heard outside the Premises, without Landlord's prior written consent. Tenant shall not construct, maintain, use or operate any such device or system outside of its Premises or within such Premises so that the same can be heard or seen from outside the Premises. No flashing, neon or search lights shall be used which can be seen outside the Premises.

(f)   Tenant shall not bring any bicycle, vehicle, animal, bird or pet of any kind into the Building, except seeing-eye or hearing-ear dogs for handicapped persons visiting the Premises, except as specifically permitted by Landlord.

(g)   Except as specifically provided to the contrary in the Lease, Tenant shall not cook or permit any cooking on the Premises, except for microwave cooking and use of coffee machines by Tenant's employees for their own and for Invitees consumption. Tenant shall not cause or permit any unusual or objectionable odor to be produced that will emanate from the Premises.

(h)   Tenant shall not make any unseemly or disturbing noise that disturbs or interferes with occupants use of the Project.

(i)   Tenant shall not place on any floor a load exceeding the floor load per square foot which such floor was designed to carry. Landlord shall have the right to prescribe the weight, position and manner of installation of safes and other heavy equipment and fixtures. Upon reasonable prior notice to Tenant Landlord shall have the right to repair at Tenant's reasonable expense any damage to the Premises or the Building caused by Tenant's moving property into or out of the Premises or due to the same being in or upon the Premises or to require Tenant to do the same. Any furniture, equipment and bulky item shall be delivered only through the designated delivery entrance of the Building and the designated freight elevator at designated times. Tenant shall remove promptly from any sidewalk adjacent to the Building any furniture, furnishing, equipment or other material there delivered or deposited for Tenant.

(j)   Tenant shall not place additional locks or bolts of any kind on any of the doors or windows, and shall not make any change in any existing lock or locking mechanism therein, without Landlord's prior written approval, which shall not be unreasonably withheld or delayed; provided, however that (i) Tenant may use door locks for any offices for which it requires the same for security purposes or otherwise secure any other limited areas requiring such security precautions, and (ii) Tenant may install and maintain a separate electric card reader system to control access to the Premises, provided that Tenant shall supply Landlord with all keys and cards necessary to enter the Premises and acknowledges that Landlord shall not be liable for damage caused due to required access thereto due to an emergency situation or safety purposes. Tenant shall keep doors leading to a corridor or main hall closed at all times except as such doors may be used for ingress or egress and shall lock such doors during all times the Premises are unattended.
 
               (k)   If any machine or equipment of Tenant causes noise or vibration that may be transmitted to such a degree as to be reasonably objectionable to Landlord or any tenant in the Building, then Landlord shall have the right upon reasonable prior written notice to Tenant to install at Tenant's reasonable expense vibration eliminators or other devices sufficient to reduce such noise and vibration to a level satisfactory to Landlord or to require Tenant to do the same.

(l)   Landlord reserves the right to exclude from the Project at all times any person who does not properly identify himself to the Building management or attendant on duty. Landlord shall have the right to exclude any undesirable or disorderly persons from the Project at any time. Landlord may require all persons admitted to or leaving the Project to show satisfactory identification and to sign a register.

(m)   Tenant shall not permit or encourage any loitering in or about the Premises and shall not use or permit the use of the Premises for lodging or dwelling.

(n)   Tenant, before closing and leaving the Premises at any time, shall use reasonable commercial efforts to see that all windows are closed and all flammable equipment such as coffee machines are turned off.

(o)   Tenant shall not request Landlord's employees to perform any work or do anything outside of such employees' regular duties without Landlord's prior written consent. Tenant's special requirements will be attended to only upon application to Landlord, and any such special requirements shall be billed to Tenant in accordance with the schedule of charges to tenants in the Building maintained by Landlord from time to time or as is agreed upon in writing in advance by Landlord and Tenant. Tenant shall not employ any of Landlord's employees for any purpose whatsoever without Landlord's prior written consent.
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(p)   There shall not be used in any space, or in the public halls of the Building, either by any tenant or by jobbers or others in the delivery or receipt of merchandise, any hand trucks, except those equipped with rubber tires and side guards or similar devices. Tenant shall be responsible for any loss or damage resulting from any deliveries made by or for Tenant.

(q)   Tenant shall not install or permit the installation of any wiring for any purpose on the exterior of the Premises, except in common conduits or as approved by Landlord and shall remove any wiring so installed at the request of Landlord at the end of the Term.

(r)   Tenant acknowledges that it is Landlord's intention that the Project be operated in a manner which is consistent with the highest standards of cleanliness, decency in the community which it serves. Toward that end, Tenant shall not sell, distribute, display or offer for sale any item which, in Landlord's reasonable judgment, is inconsistent with the quality of operation of the Project or may tend to impose or detract from the image of the Project. Tenant shall not use the Premises for any illegal purpose.

(s)   Unless otherwise expressly provided in the Lease, Tenant shall not use, occupy or permit any portion of the Premises to be used or occupied for the manufacture or sale of liquor.

(t)   Tenant shall not in any manner deface any part of the Premises or the Project. No stringing of wires including, but not limited to telecommunications wiring, boring or cutting shall be permitted except with Landlord's prior written consent which shall not be unreasonably withheld or delayed.

(u)   Landlord may close the Building in the event of an emergency or security risk for temporary periods and Tenant shall abide by any reasonable directions in connection therewith, provided that Landlord shall use reasonable commercial efforts to open the Building as soon a practical thereafter.

(v)   Tenant shall not bring or keep, or permit to be brought or kept, in the Project any weapon or flammable, combustible or explosive fluid, chemical or substance except as permitted in Section 7.3 hereof.

(w)   Tenant shall comply with all workplace smoking Laws. There shall be no smoking in bathrooms, elevator lobbies, elevators, and other common areas.

(x)   Landlord may, upon request of Tenant, waive Tenant's compliance with any of the rules, provided that (a) no waiver shall be effective unless signed by Landlord, (b) no waiver shall relieve Tenant from the obligation to comply with such rule in the future unless otherwise agreed in writing by Landlord, (c) no waiver granted to any tenant shall relieve any other tenant from the obligation of complying with these rules and regulations, and (d) no waiver shall relieve Tenant from any liability for any loss or damage resulting from Tenant's failure to comply with any rule.

ARTICLE XVIII
DAMAGE OR DESTRUCTION

18.1   Casualty . If the Premises or the Building are totally or partially damaged or destroyed thereby rendering the Premises totally or partially inaccessible or unusable, then Landlord shall diligently repair and restore the Premises and the Building to substantially the same condition they were in prior to such damage or destruction; provided, however, that if in Landlord's reasonable judgment such repair and restoration cannot be completed within one hundred and eighty (180) days after the occurrence of such damage or destruction and Landlord notifies Tenant of same within thirty (30) days after the occurrence of such damage or destruction, then Landlord and Tenant shall each have the right to terminate this Lease by giving written notice of termination within sixty (60) days after the occurrence of such damage or destruction. If this Lease is terminated pursuant to this Article, then rent shall be apportioned (based on the portion of the Premises which is usable after such damage or destruction) and paid to the date of termination. Notwithstanding the forgoing Landlord shall be under no obligation to repair or restore the EG or the Antenna in the event of any fire or other casualty, same being the sole responsibility of Tenant. If this Lease is not terminated as a result of such damage or destruction, then until such repair and restoration of the Premises are substantially complete, Tenant shall be required to pay rent only for the portion of the Premises that is used and usable while such repair and restoration are being made. Landlord shall proceed with and bear the expenses of such repair and restoration of the Premises and the Building; provided, however, that Landlord shall not be required to repair or restore any of contents of the Premises (including, without limitation, Tenant's trade fixtures, furnishings, equipment or personal property). Notwithstanding anything herein to the contrary, Landlord shall have the right to terminate this Lease if: (1) insurance proceeds are insufficient to pay the full cost of such repair and restoration; (2) the holder of any Mortgage fails or refuses to make such insurance proceeds available for such repair and restoration; (3) zoning or other applicable Laws or regulations do not permit such repair and restoration; or (4) the Building is damaged by fire or casualty (whether or not the Premises has been damaged) to such an extent that Landlord decides, in its sole and absolute discretion, not to rebuild or reconstruct the Building. Notwithstanding anything herein to the contrary, Tenant shall have the right to terminate this Lease by written notice to Landlord if Landlord does not complete any such repair and restoration work within two hundred fifty (250) days after the occurrence of such damage and destruction, such notice to be given within ten (10) days after the expiration of said two hundred fifty (250) days.
ARTICLE XIX
CONDEMNATION

19.1   Condemnation . If one-fifth or more of the Premises, or the use or occupancy thereof, shall be taken or condemned by any governmental or quasi-governmental authority for any public or quasi-public use or purpose or sold under threat of such a taking or condemnation (collectively, "condemned"), then this Lease shall terminate on the day prior to the date title thereto vests in such authority or such authority takes possession of the Premises, whichever is sooner, and rent shall be apportioned as of such date. If less than one- fifth of the Premises or occupancy thereof is condemned, then this Lease shall continue in full force and effect as to the part of the Premises not so condemned, except that as of the date title vests in such authority or such authority takes possession of the Premises, whichever is sooner, Tenant shall not be required to pay rent with respect to the part of the Premises so condemned. Notwithstanding anything herein to the contrary, if twenty-five percent (25%) or more of the Project or the Building is condemned, then whether or not any portion of the Premises is condemned, Landlord shall have the right to terminate this Lease as of the date title vests in such authority.

19.2   Awards . All awards, damages and other compensation paid on account of such condemnation shall belong to Landlord. Tenant shall not make any claim against Landlord or such authority for any portion of such award, damages or compensation attributable to damage to the Premises, value of the unexpired portion of the Term, loss of profits or goodwill, leasehold improvements or severance damages. Nothing contained herein, however, shall prevent Tenant from pursuing a separate claim against the authority for relocation expenses and for the value of furnishings, equipment and trade fixtures installed in the Premises at Tenant's expense and which Tenant is entitled pursuant to this Lease to remove at the expiration or earlier termination of the Term, provided that such claim shall in no way diminish the award, damages or compensation payable to or recoverable by Landlord in connection with such condemnation.
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ARTICLE XX
DEFAULT

20.1   Event of Default . Each of the following shall constitute an "Event of Default": (a) Tenant's failure to make any payment of the Base Rent or additional rent or other sum within five (5) days after notice to Tenant that same is due, provided however if two (2) or more five (5) day notices under this Section 20.1, are given in any twelve (12) month period, an Event of Default shall be deemed to occur upon any failure to make any payment of Base Rent or additional Rent or other sum when due, without the requirement of any notice from Landlord; (b) Tenant's failure to perform or observe any covenant or condition of this Lease not otherwise specifically described in this Section 20.1 which continues for twenty (20) days after Landlord delivers written notice thereof to Tenant, or such longer period as is appropriate provided that Tenant commence such cure within said twenty (20) days and diligently and continuously prosecute same; provided, however, that such cure period shall not be applicable if, in Landlord's reasonable discretion, such failure raises a life/safety issue with respect to the Building or its occupants or visitors, including but not limited to, a threat of personal injury or continuing physical injury to the Building or any portion of the Project, or if such failure is adversely affecting another tenant's use or occupancy of the Building or its premises; (c) Tenant's abandonment of the Premises; (d) an Event of Bankruptcy as specified in Article XXI; (e) Tenant's dissolution or liquidation; (f) any Environmental Default as specified in Section 7.3; or (g) any subletting, assignment, transfer, mortgage or other encumbrance of the Premises or this Lease not permitted by Article VIII.

20.2   Remedy . If there shall be an Event of Default, then the provisions of this Section shall apply. Landlord shall have the right, at its sole option, to terminate this Lease. In addition, with or without terminating this Lease, Landlord may re-enter, terminate Tenant's right of possession and take possession of the Premises. The provisions of this Article shall operate as a notice to quit, and Tenant hereby waives any other notice to quit or notice of Landlord's intention to re-enter the Premises or terminate this Lease except as specifically required herein. If necessary, Landlord may proceed to recover possession of the Premises under applicable Laws, or by such other proceedings, including re-entry and possession, as may be applicable. Upon an Event of Default, Landlord may elect to terminate this Lease and/or to terminate Tenant's right of possession upon five (5) days notice to Tenant, whereupon everything contained in this Lease on the part of Landlord to be done and performed shall cease without prejudice, however, to Tenant's liability for all Base Rent, additional rent and other sums specified herein. Whether or not this Lease and/or Tenant's right of possession is terminated, Landlord shall have the right, at its sole option, to terminate any renewal or expansion right contained in this Lease and to grant or withhold any consent or approval pursuant to this Lease in its sole and absolute discretion. Landlord may relet the Premises or any part thereof, alone or together with other premises, for such term(s) (which may extend beyond the date on which the Term would have expired but for Tenant's default) and on such terms and conditions (which may include any concessions or allowances granted by Landlord) as Landlord, in its sole and absolute discretion, may determine, but Landlord shall not be liable for, nor shall Tenant's obligations hereunder be diminished by reason of, any failure by Landlord to relet all or any portion of the Premises or to collect any rent due upon such reletting. Whether or not this Lease and/or Tenant's right of possession is terminated or any suit is instituted, Tenant shall be liable for any Base Rent, additional rent, any damages herein specified, direct damages and other sums which may be due or sustained prior to such Event of Default, and for all reasonable costs, fees and expenses (including, but not limited to, reasonable attorneys' fees and costs, brokerage fees, reasonable expenses incurred in enforcing any of Tenant's obligations under the Lease or in placing the Premises in first-class rentable condition, advertising expenses, and any concessions or allowances granted by Landlord) incurred by Landlord in pursuit of its remedies hereunder and/or in recovering possession of the Premises and renting the Premises to others from time to time plus other direct actual damages suffered or incurred by Landlord on account of Tenant's default (including, but not limited to late fees or other charges incurred by Landlord under any Mortgage). Tenant also shall be liable for additional damages which at Landlord's election shall be either one or a combination of the following: (a) an amount equal to the Base Rent, and additional rent due or which would have become due from the date of the applicable Event of Default through the remainder of the Term, less the amount of rental, if any, which Landlord receives during such period from others to whom the Premises may be rented (other than any additional rent received by Landlord as a result of any failure of such other person to perform any of its obligations to Landlord), which amount shall be computed and payable in monthly installments, in advance, on the first day of each calendar month following the applicable Event of Default and continuing until the date on which the Term would have expired but for such Event of Default, it being understood that separate suits may be brought from time to time to collect any such damages for any month(s) (and any such separate suit shall not in any manner prejudice the right of Landlord to collect any damages for any subsequent month(s)), or Landlord may defer initiating any such suit until after the expiration of the Term (in which event such deferral shall not be construed as a waiver of Landlord's rights as set forth herein and Landlord's cause of action shall be deemed not to have accrued until the expiration of the Term), and it being further understood that if Landlord elects to bring suits from time to time prior to reletting the Premises, Landlord shall be entitled to its full damages through the date of the award of damages without regard to any Base Rent, additional rent or other sums that are or may be projected to be received by Landlord upon reletting of the Premises; or (b) an amount equal to the sum of (i) all Base Rent, additional rent and other sums due or which would be due and payable under this Lease as of the date of Tenant's default through the end of the scheduled Term, plus (ii) the all expenses (including broker and reasonable attorneys' fees) and value of all vacancy periods projected by Landlord to be incurred in connection with the reletting of the Premises, minus (iii) any Base Rent, additional rent and other sums which Tenant proves by a preponderance of the evidence would be received by Landlord upon reletting of the Premises from the end of the vacancy period projected by Landlord through the expiration of the scheduled Term. Such amount shall be discounted using a discount factor equal to the yield of the Treasury Note or Bill, as appropriate, having a maturity period approximately commensurate to the remainder of the Term, and such resulting amount shall be payable to Landlord in a lump sum on demand, it being understood that upon payment of such liquidated and agreed final damages, Tenant shall be released from further liability under this Lease with respect to the period after the date of such payment, and that Landlord may bring suit to collect any such damages at any time after an Event of Default shall have occurred. In the event Landlord relets the Premises together with other premises or for a term extending beyond the scheduled expiration of the Term, it is understood that Tenant will not be entitled to apply any base rent, additional rent or other sums generated or projected to be generated by either such other premises or in the period extending beyond the scheduled expiration of the Term (hereinafter collectively referred to as the "Extra Rent") against Landlord's damages. Similarly in proving the amount that would be received by Landlord upon a reletting of the Premises as set forth in clause (iii) above, Tenant shall not take into account the Extra Rent. The provisions contained in this Section shall be in addition to, and shall not prevent the enforcement of, any claim Landlord may have against Tenant for anticipatory breach of this Lease. Nothing herein shall be construed to affect or prejudice Landlord's right to prove, and claim in full, unpaid rent accrued prior to termination of this Lease. If Landlord is entitled, or Tenant is required, pursuant to any provision hereof to take any action upon the termination of the Term, then Landlord shall be entitled, and Tenant shall be required, to take such action also upon the termination of Tenant's right of possession. In the event of a breach by Tenant of any of its obligations under the Lease, Landlord shall also have the right of injunction. Notwithstanding anything herein to the contrary the rights granted to Landlord pursuant to this Section 20.2 shall cease with respect to any particular Event of Default upon the specific written waiver of Landlord of any such particular Event of Default or on the cure of such Event of Default under the terms of this Lease. Notwithstanding the forgoing to the contrary, except for the costs, fees and expenses and damages set forth above, Tenant shall not be liable for consequential, indirect or punitive damages of any kind, regardless of the legal theory upon which such claim may be based.

20.3   Waiver and Exercise of Remedies .

(a)   Tenant on behalf of itself and all persons claiming under Tenant, including but not limited to its creditors, hereby expressly waives, for itself and all persons claiming by, through or under it, any right of redemption, repossession, re-entry or restoration of the operation of this Lease under any present or future Law, including without limitation any such right which Tenant would otherwise have in case Tenant shall be dispossessed for any cause, or in case Landlord shall obtain possession of the Premises as herein provided.

(b)   All rights and remedies of Landlord set forth in this Lease are cumulative and in addition to all other rights and remedies available to Landlord at law or in equity, including those available as a result of any anticipatory breach of this Lease. The exercise by Landlord of any such right or remedy shall not prevent the concurrent or subsequent exercise of any other right or remedy. No delay or failure by Landlord to exercise or enforce any of Landlord's rights or remedies or Tenant's obligations shall constitute a waiver of any such rights, remedies or obligations. Neither Landlord nor Tenant shall not be deemed to have waived any default by the other party unless such waiver expressly is set forth in a written instrument signed by such party. If Landlord waives in writing any default by Tenant, such waiver shall not be construed as a waiver of any covenant, condition or agreement set forth in this Lease except as to the specific circumstances described in such written waiver.

20.4   Proceedings . If Landlord shall institute proceedings against Tenant and a compromise or settlement thereof shall be made, then the same shall not constitute a future waiver of the same or of any other covenant, condition or agreement set forth herein, nor of any of Landlord's rights hereunder. Neither the payment by Tenant of a lesser amount than the monthly installment of Base Rent, additional rent or of any sums due hereunder nor any endorsement or statement on any check or letter accompanying a check for payment of rent or other sums payable hereunder shall be deemed an accord and satisfaction. Landlord may accept the same without prejudice to Landlord's right to recover the balance of such rent or other sums or to pursue any other remedy. Notwithstanding any request or designation by Tenant, Landlord may apply any payment received from Tenant to any payment then due. No re-entry by Landlord, and no acceptance by Landlord of keys from Tenant, shall be considered an acceptance of a surrender of this Lease.
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20.5   Payment . If Tenant fails to do any act or make any payment to a third party herein required to be made or done by Tenant, then Landlord may, upon ten (10) days written notice to Tenant, but shall not be required to, make such payment or do such act. The taking of such action by Landlord shall not be considered a cure of such default by Tenant or prevent Landlord from pursuing any remedy it is otherwise entitled to in connection with such default. If Landlord elects to make such payment or do such act, then all expenses incurred by Landlord, plus interest thereon at a rate (hereinafter referred to as the "Default Rate") equal to five (5) whole percentage points higher than the Prime Rate, from the date incurred by Landlord to the date of payment thereof by Tenant, shall constitute additional rent due hereunder; provided, however, that nothing contained herein shall be construed as permitting Landlord to charge or receive interest in excess of the maximum rate then allowed by law.

20.6   Interest . If Tenant fails to make any payment of Base Rent, additional rent or any other sum within five (5) days after the date such payment is due and payable, then Tenant shall pay to Landlord a late charge of One Thousand Dollars and No Cents ($1,000.00). In addition, such payment, if not so paid within five (5) days of the date due and such late fee shall bear interest at the Default Rate from the date such payment or late fee, respectively, became due to the date of payment thereof by Tenant; provided, however, that nothing contained herein shall be construed as permitting Landlord to charge or receive interest in excess of the maximum rate then allowed by law. Such late charge and interest shall constitute additional rent due hereunder without any notice or demand.
 
ARTICLE XXI
BANKRUPTCY

21.1   Event of Bankruptcy . An "Event of Bankruptcy" is the occurrence with respect to any of Tenant, a guarantor or any other person liable for Tenant's obligations hereunder (including, without limitation, any general partner (or, if Tenant is a limited liability company, any member of Tenant) of Tenant (hereinafter referred to as a "General Partner")) of any of the following: (a) such person becoming insolvent, as that term is defined in Title 11 of the United States Code (hereinafter referred to as the "Bankruptcy Code") or under the insolvency laws of any state (hereinafter referred to as the "Insolvency Laws"); (b) appointment of a receiver or custodian for any property of such person, or the institution of a foreclosure or attachment action upon any property of such person; (c) filing by such person of a voluntary petition under the provisions of the Bankruptcy Code or Insolvency Laws; and (d) filing of an involuntary petition against such person as the subject debtor under the Bankruptcy Code or Insolvency Laws, which either (1) is not dismissed within sixty (60) days after filing, or (2) results in the issuance of an order for relief against the debtor. At any time upon not less than five (5) days' prior written notice, Tenant shall submit such information concerning the financial condition of any such person as Landlord may request. Tenant warrants that all such information heretofore and hereafter submitted is and shall be correct and complete.

21.2   Bankruptcy Occurrence . Upon occurrence of an Event of Bankruptcy, Landlord shall have all rights and remedies available pursuant to Article XX; provided, however, that while a case (hereinafter referred to as the "Case") in which Tenant is the subject debtor under the Bankruptcy Code is pending, Landlord's right to terminate this Lease shall be subject, to the extent required by the Bankruptcy Code, to any rights of Tenant or its trustee in bankruptcy (hereinafter referred to collectively as the "Trustee") to assume or assume and assign this Lease pursuant to the Bankruptcy Code. After the commencement of the Case: (i) Trustee shall perform all post-petition obligations of Tenant under this Lease; and (ii) if Landlord is entitled to damages (including, without limitation, unpaid rent) pursuant to the terms of this Lease, then all such damages shall be entitled to administrative expense priority as specified in the Bankruptcy Code. Any person or entity to which this Lease is assigned pursuant to the Bankruptcy Code shall be deemed without further act or deed to have assumed all of the obligations arising under this Lease on and after the date of assignment, and any such assignee shall upon request execute and deliver to Landlord an instrument confirming such assumption. Trustee shall not have the right to assume or assume and assign this Lease unless Trustee promptly (a) cures all defaults under this Lease, (b) compensates Landlord for damages incurred as a result of such defaults, (c) provides adequate assurance of future performance on the part of Trustee as debtor in possession or Trustee's assignee, and (d) complies with all other requirements of the Bankruptcy Code. If Trustee fails to assume or assume and assign this Lease in accordance with the requirements of the Bankruptcy Code within sixty (60) days after the initiation of the Case, then Trustee shall be deemed to have rejected this Lease. If this Lease is rejected or deemed rejected, then Landlord shall have all rights and remedies available to it pursuant to Article XX.
ARTICLE XXII
SUBORDINATION

22.1   Subordination . This Lease is subject and subordinate to the lien, provisions, operation and effect of all mortgages, deeds of trust, ground leases or other security instruments which currently encumbers any potion of the Project (hereinafter referred to collectively as the "Mortgages"), to all funds and indebtedness intended to be secured thereby, and to all renewals, extensions, modifications, recastings or refinancings thereof. Subject to the terms of this Article XXII, this Lease shall be subject and subordinate to the lien, provisions, operation and effect of all Mortgages that may hereafter encumber the Project, to all funds and indebtedness intended to be secured thereby, and to all renewals, extensions, modifications, recastings or refinancings thereof. The holder of any Mortgage to which this Lease is subordinate shall have the right (subject to any required approval of the holders of any superior Mortgage) at any time to declare this Lease to be superior to the lien, provisions, operation and effect of such Mortgage and Tenant shall execute, acknowledge and deliver all reasonable documents required by such holder in confirmation thereof.

22.2   Attornment . Tenant shall at Landlord's request within ten (10) business days of request, promptly execute any requisite or appropriate document confirming the foregoing subordination. If Tenant fails to execute and deliver any such certificate or other document within such ten (10) business day period, Tenant shall pay Landlord as additional rent the sum of Five Thousand Dollars ($5,000) for each day after the tenth (10th) business day that Tenant has not executed and delivered such document. Tenant waives the provisions of any statute or rule of law now or hereafter in effect which may give or purport to give Tenant any right to terminate or otherwise adversely affect this Lease and Tenant's obligations hereunder in the event any foreclosure proceeding is prosecuted or completed or in the event the Building, the Project or Landlord's interest therein is transferred by foreclosure, by deed in lieu of foreclosure or otherwise. If this Lease is not extinguished upon any such transfer or by the transferee following such transfer, then, at the request of such transferee, Tenant shall attorn to such transferee and shall recognize such transferee as the landlord under this Lease. Tenant agrees that upon any such attornment, such transferee shall not be: (a) bound by any payment of the Base Rent or additional rent more than one (1) month in advance, except prepayments in the nature of security for the performance by Tenant of its obligations under this Lease, but only to the extent such prepayments have been delivered to such transferee; (b) bound by any amendment of this Lease made without the consent of the holder of each Mortgage existing as of the date of such amendment; (c) liable for damages for any breach, act or omission of any prior landlord, except for the payment of the Landlord's Contribution and except for any breach of any prior landlord which continues after such transferee has acquired title to the Building, the Project or Landlord's interest therein; or (d) subject to any offsets or defenses which Tenant might have against any prior landlord; provided, however, that after succeeding to Landlord's interest under this Lease, such transferee shall agree to perform in accordance with the terms of this Lease all obligations of Landlord arising after the date of transfer and provided further Tenant shall have received the Landlord's Contribution. Within five (5) days after the request of such transferee, Tenant shall execute, acknowledge and deliver any requisite or appropriate document submitted to Tenant confirming such attornment. Notwithstanding anything contained herein to the contrary, should the holder of any Mortgage desire that this Lease be subordinate to such Mortgage such holder shall enter into a Subordinaton, Attornment and Non-Disturbance Agreement, incorporating the above terms with respect to any attornment, and providing that said holder shall agree that provided an Event of Default is not in existence hereunder, said holder shall terminate this Lease nor disturb Tenant's use and possession of the Premises according to this Lease.

22.3   Modifications . If any prospective or current holder of a Mortgage requires that modifications to this Lease be obtained, and provided that such modifications: (a) are reasonable and do not increase any obligations or restrictions upon Tenant; (b) do not adversely affect Tenant's use of the Premises as herein permitted; and (c) do not increase the rent and other sums to be paid by Tenant, then Landlord may submit to Tenant a reasonable amendment to this Lease incorporating such required modifications, and Tenant shall negotiate in good faith and, subject to a suitable resolution of such negotiations, execute, acknowledge and deliver such amendment to Landlord within five (5) business days after Tenant's receipt thereof.

22.4   Assignment of Rent . If: (i) the Project or any portion thereof is, at any time subject to a Mortgage; (ii) this Lease and rent payable hereunder is assigned to the holder of the Mortgage; and (iii) the Tenant is given written notice of such assignment, including the name and address of the assignee, then, in that event, Tenant shall not terminate this Lease or make any abatement in the rent payable hereunder for any default on the part of the Landlord without first giving notice, in the manner provided elsewhere in this Lease for the giving of notices, to the holder of such Mortgage, specifying the default in reasonable detail, and affording such holder a reasonable opportunity to make performance, at its election, for and on behalf of the Landlord, except that: (x) such holder shall have at least 30 days to cure the default; (y) if such default cannot be cured with reasonable diligence and continuity within 30 days, such holder shall have any additional time as may be reasonably necessary to cure the default with reasonable diligence and continuity; and (z) if the default cannot reasonably be cured without such holder having obtained possession of the Building, such holder shall have such additional time as may be reasonably necessary under the circumstances to obtain possession of the Building and thereafter to cure the default with reasonable diligence and continuity. If more than one such holder makes a written request to Landlord to cure the default, the holder making the request whose lien is the most senior shall have such right.
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ARTICLE XXIII
HOLDING OVER

23.1   Holdover . Tenant acknowledges that if Tenant fails to surrender the Premises or any portion thereof at the expiration or earlier termination of the Term, then the value to Tenant of remaining in possession, and the loss that will be suffered by Landlord as a result thereof, may exceed the Base Rent and additional rent that would have been payable had the Term continued during such holdover period. Therefore, if Tenant (or anyone claiming through Tenant) does not immediately surrender the Premises or any portion thereof upon the expiration or earlier termination of the Term, then, unless Landlord and Tenant have executed an amendment to this Lease specifically agreeing to such continued possession, Tenant shall automatically forfeit all rights to any security deposit then being held by Landlord pursuant to this Lease and the rent payable by Tenant hereunder shall be increased to be: (i) one hundred twenty five percent (125%) of the sum of Base Rent plus the additional rent and other sums that would have been payable pursuant to the provisions of this Lease if the Term had continued during such holdover period during the first thirty (30) days of any such holdover; plus (ii) one hundred sixty percent (160%) of the sum of Base Rent plus the additional rent and other sums that would have been payable pursuant to the provisions of this Lease if the Term had continued during such holdover period during the second thirty (30) days of any such holdover; plus (iii) two hundred percent (200%) of the sum of Base Rent plus the additional rent and other sums that would have been payable pursuant to the provisions of this Lease if the Term had continued during such holdover period during the third thirty (30) days of any such holdover. Such rent shall be computed by Landlord and paid by Tenant on a monthly basis and shall be payable on the first day of such holdover period and the first day of each calendar month thereafter during such holdover period until the Premises have been vacated. Notwithstanding any other provision of this Lease, Landlord's acceptance of such rent shall not in any manner adversely affect Landlord's other rights and remedies, including, but not limited to, Landlord's right to evict Tenant. Any such holdover shall be deemed to be a tenancy at sufferance and not a tenancy at will or tenancy from month to month. In no event shall any holdover be deemed a permitted extension or renewal of the Term, and nothing contained herein shall be construed to constitute Landlord's consent to any holdover or to give Tenant any right with respect thereto.

ARTICLE XXIV
COVENANTS OF LANDLORD

24.1   Authority . Landlord covenants that it, including its general partner, has the right to enter into this Lease, and that if Tenant shall perform timely all of its obligations hereunder, then, subject to the provisions of this Lease, Tenant shall during the Term peaceably and quietly occupy and enjoy the full possession of the Premises without hindrance by Landlord or any party claiming through or under Landlord.

24.2   Reservation of Rights . Landlord reserves the following rights: (a) to change the street address and name of the Building; (b) to change the arrangement and location of entrances, passageways, doors, doorways, corridors, elevators, stairs, toilets or other public parts of the Project provided that in so doing Landlord shall not prevent or unreasonably interfere with Tenant's access to or possession or use of the Premises; (c) to change public parts of the Project, provided that in so doing Landlord shall not prevent or unreasonably interfere with Tenant's access to or possession or use of the Premises; (d) to erect, use and maintain pipes, wires, structural supports, ducts and conduits in and through the Premises, provided that in so doing Landlord shall not prevent or unreasonably interfere with Tenant's access to or possession or use of the Premises, and provided further same shall not disrupt or interfere with the business of Tenant therein; (e) to grant to anyone the exclusive right to conduct any particular business in the Project not inconsistent with Tenant's permitted use of the Premises; (f) to resubdivide the any portion of the Project or to combine any portion thereof with other lands, provided that in so doing Landlord shall not prevent or unreasonably interfere with Tenant's access to or possession or use of the Premises; (g) to exclusively use and/or lease the roof areas, the sidewalks and other exterior areas; (h) to reasonably relocate any parking areas designated for Tenant's use, provided that in so doing such designated areas shall remain reasonably adjacent to the Premises; (i) to prohibit smoking in the entire Project or portions thereof (including the Premises) and on the Land, so long as such prohibitions are in accordance with applicable law; and (j) if any excavation or other substructure work shall be made or authorized to be made upon land adjacent to the Building or the Project, to enter the Premises for the purpose of doing such work as is required to preserve the walls of the Building and to preserve the Project from injury or damage and to support such walls and land by proper foundations, provided that in so doing Landlord shall not prevent or unreasonably interfere with Tenant's access to or possession or use of the Premises; and (k) to construct improvements (including kiosks) within the Project and in the public and common areas of the Project. Landlord may exercise any or all of the foregoing rights without being deemed to be guilty of an eviction, actual or constructive, or a disturbance of Tenant's business or use or occupancy of the Premises, provided that Landlord shall use all commercially reasonable efforts not to unreasonably interfere with Tenant's use of the Premises.




ARTICLE XXV
PARKING

25.1   Parking . During the Term hereof, Tenant shall have the right to use on a non-exclusive basis three (3) automobile parking spaces for each 1,000 rentable square feet of office area in the Premises in the Parking Garage at no additional charge for the parking of automobiles. Landlord reserves the right to revise the parking locations in the Parking Garage, provided that, except for temporary revisions due to repairs and maintenance, no such revisions shall diminish the number of parking spaces hereinabove required, nor cause parking locations to be generally more inconvenient or at a greater distance from the Premises. Tenant and its employees shall observe reasonable safety precautions in the use of the Parking Garage and shall at all times abide by all reasonable rules and regulations governing the use of the Parking Garage promulgated by Landlord. In the event that Landlord temporarily closes the Parking Garage or portions thereof during periods of unusually inclement weather or for repairs, Landlord shall use all reasonable commercial efforts to provide Tenant reasonably convenient access to the Premises and alternative parking. Landlord does not assume any responsibility, and shall not be held liable, for any damage or loss to any automobile or personal property in or about any parking areas, or for any injury sustained by any person in or about the parking areas. Tenant shall not be permitted go store automobiles in the Parking Garage for any extended period of time.

In addition to the foregoing, Landlord shall, upon Tenant's request and only during such times as Landlord determines that additional parking spaces are available within the Parking Garage and/or the parking garage at the north end of the Building, permit Tenant to use, without charge, additional automobile parking spaces as are from time to time designated by Landlord within the Parking Garage and/or the parking garage at the north end of the Building.
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ARTICLE XXVI
GENERAL PROVISIONS

26.1   Representations . Tenant acknowledges that neither Landlord nor any broker, agent or employee of Landlord has made any representation or promise with respect to the Premises or the Project except as herein expressly set forth, and no right, privilege, easement or license is being acquired by Tenant except as herein expressly set forth.

26.2   Relationship . Nothing contained in this Lease shall be construed as creating any relationship between Landlord and Tenant other than that of landlord and tenant. Tenant shall not use the name of the Building for any purpose other than as the address of the business to be conducted by Tenant in the Premises, use the name of the Building as Tenant's business address after Tenant vacates the Premises, or do or permit to be done anything in connection with Tenant's business or advertising which in the reasonable judgment of Landlord may reflect unfavorably on Landlord or the Building or confuse or mislead the public as to any apparent connection or relationship between Landlord, the Building and Tenant.

26.3   Broker . Landlord and Tenant each warrants to the other that in connection with this Lease it has not employed or dealt with any broker, agent or finder, other than the Broker. Landlord acknowledges that Landlord shall pay any commission or fee due to the Broker pursuant to a separate agreement. Tenant shall indemnify and hold Landlord harmless from and against any claim for brokerage or other commissions asserted by any broker, agent or finder employed by Tenant or with whom Tenant has dealt, other than the Broker. Landlord shall indemnify and hold Tenant harmless from and against any claim for brokerage or other commissions asserted by any broker, agent or finder employed by Landlord or with whom Landlord has dealt, including the Broker.
 
26.4   Estoppel . At any time and from time to time, upon not less than ten (10) business days' prior written notice, Tenant and each subtenant, assignee, licensee or concessionaire or occupant of Tenant shall execute, acknowledge and deliver to Landlord and/or any other person or entity designated by Landlord, a written statement certifying: (a) that this Lease is unmodified and in full force and effect (or if there have been modifications, that this Lease is in full force and effect as modified and stating the modifications); (b) the dates to which the rent and any other charges have been paid and the amount of all current charges; (c) whether or not Landlord is in default in the performance of any obligation, and if so, specifying the nature of such default; (d) the address to which notices to Tenant are to be sent; (e) that this Lease is subject and subordinate to all Mortgages encumbering any portion of the Project pursuant to the provisions of Article XXII hereof; (f) that Tenant has accepted the Premises and that all work thereto has been completed (or if such work has not been completed, specifying the incomplete work); and (g) such other matters as Landlord may reasonably request. Any such statement may be relied upon by any owner of any portion of the Project, any prospective purchaser of any portion of the Project, any holder or prospective holder of a Mortgage or any other person or entity. Tenant acknowledges that time is of the essence to the delivery of such statements and that Tenant's failure to deliver timely such statements may cause substantial damages resulting from, for example, delays in obtaining financing secured by the Project. If Tenant fails to execute and deliver any such certificate or other document within such ten (10) business day period, Tenant shall pay Landlord as additional rent the sum of Five Thousand Dollars ($5,000) for each day after the tenth (10th) business day that Tenant has not executed and delivered such certificate or document.

26.5   JURY WAIVER . LANDLORD AND TENANT AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS EACH WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT IN CONNECTION WITH ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT HEREUNDER, TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE. TENANT CONSENTS TO SERVICE OF PROCESS AND ANY PLEADING RELATING TO ANY SUCH ACTION AT THE PREMISES; PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL BE CONSTRUED AS REQUIRING SUCH SERVICE AT THE PREMISES. LANDLORD AND TENANT AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS EACH WAIVES ANY OBJECTION TO THE VENUE OF ANY ACTION FILED IN ANY COURT SITUATED IN THE JURISDICTION IN WHICH THE BUILDING IS LOCATED, AND WAIVES ANY RIGHT, CLAIM OR POWER, UNDER THE DOCTRINE OF FORUM NON CONVENIENS OR OTHERWISE, TO TRANSFER ANY SUCH ACTION TO ANY OTHER COURT.

26.6   Notices . All notices or other communications required under this Lease shall be in writing and shall be deemed duly given and received when delivered, or if delivery is refused, upon such refusal, if delivered at the cost of the sender in person, with receipt therefor, sent by certified mail return receipt requested, or if sent by nationally recognized overnight courier service with evidence of delivery as follows: to the following addresses: (a) if to Landlord, at each of the Landlord Notice Addresses specified in Article II; (b) if to Tenant, at the Tenant Notice Address specified in Article II. Either party may change its address for the giving of notices by notice given in accordance with this Section. If Landlord or the holder of any Mortgage notifies Tenant that a copy of any notice to Landlord shall be sent to such holder at a specified address, then Tenant shall send (in the manner specified in this Section and at the same time such notice is sent to Landlord) a copy of each such notice to such holder, and no such notice shall be considered duly sent unless such copy is so sent to such holder. Any such holder shall have the rights set forth in Article XXII. Any cure of Landlord's default by such holder shall be treated as performance by Landlord.

26.7   Enforceable . Each provision of this Lease shall be valid and enforceable to the fullest extent permitted by law. If any provision of this Lease or the application thereof to any person or circumstance shall to any extent be invalid or unenforceable, then such provision shall be deemed to be replaced by the valid and enforceable provision most substantively similar to such invalid or unenforceable provision, and the remainder of this Lease and the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable shall not be affected thereby. Nothing contained in this Lease shall be construed as permitting Landlord to charge or receive interest in excess of the maximum rate allowed by law.

26.8   Gender . Feminine, masculine or neuter pronouns shall be substituted for those of another form, and the plural or singular shall be substituted for the other number, in any place in which the context may require such substitution.

26.9   Binding . The provisions of this Lease shall be binding upon and inure to the benefit of the parties and each of their respective representatives, successors and assigns, subject to the provisions herein restricting assignment or subletting.

26.10   Entire Agreement . This Lease contains and embodies the entire agreement of the parties hereto and supersedes all prior agreements, negotiations, letters of intent, proposals, representations, warranties, understandings, suggestions and discussions, whether written or oral, between the parties hereto. Any representation, inducement, warranty, understanding or agreement that is not expressly set forth in this Lease shall be of no force or effect. This Lease may be modified or changed in any manner only by an instrument signed by both parties. This Lease includes and incorporates all Exhibits attached hereto.

26.11   Jurisdiction . This Lease shall be governed by the Laws of the jurisdiction in which the Building is located. There shall be no presumption that this Lease be construed more strictly against the party who itself or though its agent prepared it, it being agreed that all parties hereto have participated in the preparation of this Lease and that each party had the opportunity to consult legal counsel before the execution of this Lease.

26.12   Captions . Headings are used for convenience and shall not be considered when construing this Lease.

26.13   Submission . The submission of an unsigned copy of this document to Tenant shall not constitute an offer or option to lease the Premises. This Lease shall become effective and binding only upon execution and delivery by both Landlord and Tenant.
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26.14   Time . Time is of the essence with respect to each of the obligations of Landlord and Tenant hereunder.

26.15   Counterparts . This Lease may be executed in multiple counterparts, each of which shall be deemed an original and all of which together constitute one and the same document.

26.16   Memorandum of Lease . Landlord and Tenant will, promptly upon the request of the other, execute a notice of this Lease in recordable form setting forth only the information required under General Statutes of Connecticut Section 47-19 and Tenant shall have the right to record same in the Danbury Land Records. Neither party shall otherwise record this Lease without the consent of the other party unless necessary for the enforcement of any right or remedy hereunder. Upon termination of this Lease, Tenant hereby irrevocably appoints Landlord as Tenant's attorney in fact (which appointment shall survive the expiration of the Term of earlier termination of the Term) with full power of substitution solely to execute, acknowledge and deliver a notice of termination of lease in Tenant's name if Tenant fails to do so within ten (10) business days after Landlord's written request therefore.

26.17   Additional Rent . Except as otherwise provided in this Lease, any additional rent or other sum owed by Tenant to Landlord (other than Base Rent), and any cost, expense, damage or liability incurred by Landlord for which Tenant is liable, shall be considered additional rent payable pursuant to this Lease to be paid by Tenant no later than ten (10) days after the date Landlord notifies Tenant of the amount thereof.

26.18   Survival . Tenant's liabilities and obligations with respect to the period prior to the expiration or earlier termination of the Term shall survive such expiration or earlier termination.

26.19   Time for Performance . If Landlord or Tenant is in any way delayed or prevented from performing any obligation, excluding the obligation of Tenant to pay Base Rent, additional rent, and such other sums payable by Tenant hereunder, due to fire, act of god, governmental act or failure to act, strike, labor dispute, inability to procure materials, or any cause beyond such party's reasonable control (whether similar or dissimilar to the foregoing events) (said events are hereinafter referred to as "Force Majeure "), then the time for performance of such obligation shall be excused for the period of such delay or prevention and extended for a period equal to the period of such delay, interruption or prevention.

26.20   Review. Landlord's review, approval and consent powers (including the right to review plans and specifications) are for its benefit only and may not be relied upon by Tenant or any other party. Such review, approval or consent, and any conditions imposed in connection therewith, shall not be deemed to constitute a representation concerning legality, safety or any other matter.

26.21   Deletion . The deletion of any printed, typed or other portion of this Lease shall not evidence the parties' intention to contradict such deleted portion. Such deleted portion shall be deemed not to have been inserted in this Lease.

26.22   Keys . At the expiration or earlier termination of the Term, Tenant shall deliver to Landlord all keys and security cards to the Building and the Premises, whether such keys were furnished by Landlord or otherwise procured by Tenant, and shall inform Landlord of the combination of each lock, safe and vault, if any, in the Premises at the expiration or earlier termination of the Term.

26.23   Authority . Tenant and the person executing and delivering this Lease on Tenant's behalf each represents and warrants that such person is duly authorized to so act; that Tenant is duly organized, is qualified to do business in the jurisdiction in which the Building is located, is in good standing under the Laws of the state of its organization and the Laws of the jurisdiction in which the Building is located, and has the power and authority to enter into this Lease; and that all action required to authorize Tenant and such person to enter into this Lease has been duly taken.

26.24   Light . Any elimination or shutting off of light, air, or view by any structure which may be erected on lands adjacent to the Building shall in no way effect this Lease or impose any liability on Landlord.

26.25   Rental . Neither Tenant nor any other person having an interest in the possession, use, occupancy or utilization of the Premises shall enter into any lease, sublease, license, concession, assignment or other agreement for use, occupancy or utilization for space in the Premises which provides for rental or other payment for such use, occupancy or utilization based in whole or in part on the net income or profits derived by any person from the party leased, used, occupied or utilized (other than an amount based on a fixed percentage or percentages of receipts or sales), and Tenant agrees that any such proposed lease, sublease, license, concession, assignment or other agreement shall be absolutely void and ineffective as a conveyance of any right or interest in the possession, use, occupancy or utilization of any part of the Premises. The parties intend that all payments made to Landlord under this Lease will qualify as rents from real property for purposes of Section 512(b)(3) of the Internal Revenue Code of 1986, as amended (hereinafter referred to as"Qualified Rents"). If Landlord, in its sole discretion, advises Tenant that there is any risk that all or part of any payments made under this Lease will not qualify as Qualified Rents, Tenant agrees (i) to cooperate with landlord to restructure this Lease in such manner as may be necessary to enable such payments to be treated as Qualified Rents, and (ii) to permit an assignment of this Lease, in each case provided such restructuring or assignment will not materially increase Tenant's economic obligations under this Lease.

ARTICLE XXVII
BUILDING AMENITIES

27.1     Fitness Center . During the Term and any Renewal Term, Landlord shall operate or cause to be operated a fitness center with hours of operation, services and equipment comparable to that which the existing facility currently offers, which shall be available to all employees of Tenant at then-current membership charges.

27.2     Cafeteria . During the Term and any Renewal Term, Landlord agrees to operate, or cause to be operated, at its cost, a cafeteria in the Building which shall be capable of serving Tenant and its officers, directors, employees, staff, consultants and business guests during the Term and any renewal thereof for the purpose of providing a lunch time food service at the then-current costs on weekdays that the Building is designated as open by Landlord. Landlord shall not be obligated to contribute to any meal subsidy program, or other specific benefit, furnished by Tenant to its staff and business guests. Landlord shall not participate in any meal subsidies that is charged to Tenant.

27.3     Conference Center . During the Term and any Renewal Term, Landlord shall operate or cause to be operated a conference center with hours of operation and services comparable to that which the existing facility currently offers, at then-current charges. Tenant shall be entitled to use such conference center on a first come, first serve basis, at then-current charges applicable to all other tenants of the Building. Landlord shall provide a receptionist during normal business hours to direct visitors to Tenant's premises and to arrange conference center appointments.
18
ARTICLE XXVIII
RIGHT OF FIRST REFUSAL

28.1   ROFR Option . Landlord hereby grants to Tenant the option to lease (hereinafter referred to as the "Right of First Refusal"), upon the terms and conditions hereinafter set forth, each portion of the Building that is contiguous to the Premises (hereinafter referred to as the "First Refusal Space"), upon the terms and conditions that Landlord is prepared to lease the First Refusal Space to a third party, during the Term hereof, including any extension thereof in accordance with the following terms and conditions:
 
(a)   The Tenant's rights hereunder shall not be applicable to any such First Refusal Space which becomes available for leasing during the last two (2) years of the Term or any Renewal Term. Tenant's Right of First Refusal is subject and subordinate to any expansion rights granted to another tenant if such expansion rights were set forth in a Refusal Notice, as hereinafter defined and Tenant declined to exercise its Right of First Refusal with respect to such Refusal Notice. Tenant may not exercise, and Landlord is not encumbered by, the Right of First Refusal at any time an Event of Default is existing hereunder.

(b)   Prior to Landlord's leasing any portion of the First Refusal Space, Landlord shall give Tenant a written notice (hereinafter referred to as the "Refusal Notice") which will include a copy of the proposal, letter of intent or term sheet which describes the terms under which Landlord is prepared to lease the First Refusal Space to a third party. The Refusal Notice or its attachments must set forth: (i) the location (which, for purposes of this Article XXVIII, is hereinafter referred to as the "Actual Refusal Space"); (ii) the Rentable Area of the Actual Refusal Space: (iii) the availability date (hereinafter referred to as the "First Refusal Space Commencement Date"); (iv) the rental rate; (v) the tenant improvement allowance, if any; and (vi) all other material economic terms being offered with respect to such Actual Refusal Space.

(c)   Tenant's exercise of its Right of First Refusal to lease all of the Actual Refusal Space on the terms described in the applicable Refusal Notice shall be made by written notice from Tenant to Landlord given not later than seven (7) business days after the Refusal Notice is delivered. If such right is not so exercised, Landlord may thereafter offer such Actual Refusal Space to third parties on the terms set forth in the Refusal Notice. If Landlord, within twelve (12) months after the date of the Refusal Notice, does not enter into a lease of such Actual Refusal Space under terms which are materially the same or more favorable to Landlord as those set forth in the applicable Refusal Notice and with a rental which is effectively ninety percent (90%) or more of the rental which was offered to Tenant in the applicable Refusal Notice, then Tenant's rights under this section to lease such Actual Refusal Space shall be in effect, and Landlord shall give the notice to Tenant required by this Article XXVIII.

(d)   If Tenant has validly exercised its Right of First Refusal, then effective as of the applicable First Refusal Space Commencement Date, such Actual Refusal Space shall be included in the Premises, subject to all of the terms, conditions and provisions of this Lease except that:

(i)
the rent per square foot of Rentable Area for such Actual Refusal Space shall be equal to the rental rate quoted by Landlord to Tenant in the Refusal Notice;

(ii)
the Rentable Area of the Premises shall be increased by the Rentable Area of the Actual Refusal Space as set forth in the Refusal Notice, and the Tenant's Share shall be increased by a fraction equal to the Rentable Area of the Actual Refusal Space divided by the Rentable Area of the Building;
 
(iii)
the term of the demise covering such Actual Refusal Space (hereinafter referred to as the "ROFR Term") shall commence on the last to occur    of:  (1)   the applicable First Refusal Space Commencement Date designated in the Refusal Notice; and (2) the date Landlord delivers possession of the First Refusal Space  to Tenant, and shall expire on the date set forth in the Refusal Notice. Landlord agrees to use commercially reasonable efforts to deliver the applicable First Refusal Space to Tenant on the First Refusal Space Commencement Date designated in the Refusal Notice; and
 
(iv)
Landlord shall provide any tenant improvement allowance and any rent-free period to allow completion of tenant improvements, all as quoted by Landlord to Tenant in the Refusal Notice (the amount of such free rent plus the amount if any improvement allowance is hereinafter referred to as the "ROFR Money").

(e)   Following exercise by Tenant of its Right of First Refusal, and within ten (10) days following written request by either Landlord or Tenant, Landlord and Tenant shall enter into an amendment to this Lease confirming the terms, conditions and provisions applicable to the First Refusal Space as determined in accordance herewith.

ARTICLE XXIX
NO DICE

29.1   Termination.  

(a)   Subject to and in accordance with the terms and conditions of this Section, Tenant shall have the one-time right during the initial Term of this Lease to terminate this Lease with respect to the entire Premises as of the last day of any calendar month during the twelve (12) month period commencing on the day (hereinafter referred to as the "Dice Day ") that a full service gaming casino facility, excluding single purpose gaming facilities such as off track betting, (hereinafter referred to as an "Casino") is open and operating within a one (1) mile radius of the perimeter of the Project, (such day is hereinafter referred to as the "Termination Date"). Tenant may exercise such right only by giving Landlord at least six (6) months prior written notice thereof (hereinafter referred to as the "Termination Notice") not later than thirty (30) days after the Dice Day. If Tenant timely exercises such right, and as a condition precedent to the effectiveness thereof, Tenant shall deliver to Landlord, with such written notice, a termination payment equal to the Unamortized Landlord's Contribution, as determined in Section 29.1(b) below (hereinafter referred to as the "Termination Payment"). Such Termination Payment shall be in addition to, and not in lieu of, the rental payments due through the Termination Date. Notwithstanding anything to the contrary herein, in the event that an Event of Default is existing at the time of the Termination Notice or at anytime thereafter prior to the Termination Date, then, at Landlord's sole option, the Termination Notice shall be deemed void and of no further force and effect. If Landlord elects to void Tenant's Termination Notice in accordance with the immediately preceding sentence, this Lease shall continue in full force and effect and Landlord shall promptly return the Termination Payment to Tenant. If Tenant does not timely exercise its right of termination pursuant to this Section, then such right shall immediately lapse and be of no further force or effect.

(b)   The Unamortized Landlord Contribution shall be; (i) the then-current balance of a hypothetical loan in the amount of the Landlord's Contribution made on the Commencement Date with interest to accrue from time to time on the outstanding principal balance of such loan at an annual rate equal to Two Percent (2%) in excess of the Prime Rate, from time to time in effect, compounded monthly, and with the loan to be fully amortized over a period of ten (10) years commencing on the Commencement Date; plus (ii) the then-current balance of a hypothetical loan or loans in the amount of the applicable ROFR Money made on the applicable commencement date the term of each demise covering such Actual Refusal Space with interest to accrue from time to time on the outstanding principal balance of such loan at an annual rate equal to Two Percent (2%) in excess of the Prime Rate, from time to time in effect, compounded monthly, and with the loan to be fully amortized over the ROFR Term.
 
                 (c)   Notwithstanding anything to the contrary herein contained, if at any time after construction of a Casino is publically announced to be constructed within a one (1) mile radius of the Building, Tenant exercises an option resulting in the extension of the Term or expansion of the Premises herein contained, the provisions of this Article XXIX shall be null and void, and Tenant shall not be so permitted to terminate this Lease.
19
 
ARTICLE XXX
ANTENNA

30.1   Antenna. Landlord grants to Tenant the right to install and maintain a satellite communications antenna or dish and any ancillary cables and wires (hereinafter collectively referred to as the "Antenna"), not exceeding two (2) meters in diameter at a location mutually acceptable to Landlord and Tenant subject to and in accordance with the following terms and conditions:

(a)   Tenant shall bear all costs of installation of the Antenna, related cables and all other related equipment, including Landlord approved modifications required for the installation and costs of fulfilling all the requirements set forth in this Article XXX.

(b)   Tenant shall provide Landlord with plans and specifications for the Antenna and related equipment showing, in detail, the screening which Tenant will provide to shield such Antenna and equipment from public view, which shall be subject to Landlord's approval, which shall not be unreasonably withheld or delayed.

(c)   Access to the roof, cables, mechanical rooms or other areas of the Building and all work undertaken by Tenant shall be in accordance with Landlord's required procedures and regulations.

(d)   Tenant shall secure all necessary building permits, FAA and FCC approvals, and any other approvals of Federal, State or local agency or government authority required for the Antenna installation, shall provide copies of same to Landlord, and shall comply with all requirements of any such agency or authority, including, but not limited to, height restrictions and screening requirements. Tenant shall provide all installation specifications and drawings required for the securing of said permits and approvals.

(e)   If required by local codes or ordinances, Tenant shall supply stamped engineering drawings for the state in which the installation is to be accomplished, certifying that the proposed site will safely and legally support the Antenna installation.

(f)   Installation shall be performed so as to cause no structural damage to the Building. Any damage to the Building or the Project caused by such installation or by the operation or existence of the Antenna shall be repaired by Tenant immediately. At the termination of this Lease by expiration of time or otherwise, Tenant, at Landlord's sole election and at Tenant's sole cost and expense, shall remove such Antenna or any components thereof elected by Landlord and all related equipment and shall restore the roof, or, if ground-mounted, the area in which the Antenna is mounted, to its condition existing prior to the installation of the Antenna. Tenant shall further repair, at its sole cost and expense, any damage or destruction caused by the removal of the Antenna. Restoration and repair hereby required to be performed by Tenant shall be completed under the supervision of a representative of Landlord at such time and in such manner as is satisfactory to Landlord. Landlord, at Landlord's option exercised by ten (10) days prior written notice to Tenant, shall have the right to perform any repairs and removal and restoration at Tenant's sole cost and expense and such expense shall be reimbursed to Landlord promptly upon demand. Notwithstanding anything contained herein, Tenant shall not remove, and shall not be reimbursed for the cost of any equipment which is affixed to, embedded in or permanently attached in or to the Building including, but not limited to, cables and other wiring, unless Landlord so directs otherwise.

(g)   Prior to operation of any Antenna, Tenant shall certify that the radio frequency transmissions of the Antenna will not endanger persons in the Building or within the Project. Tenant shall hold Landlord and Overlandlord harmless and shall indemnify and defend Landlord, Overlandlord, and their respective officers, directors, partners, employees and agents from any and against all loss, cost, injury, claims, demands and expenses of every kind (including reasonable attorneys' fees) which arise from Tenant's exercise of the rights granted under this Article XXX or actions pursuant thereto or any breach by Tenant of its obligations under this Article XXX.

(h)   Tenant shall insure that the installation is accomplished so that each applicable Antenna is securely attached to the roof or the ground, as the case may be, and Tenant assumes full responsibility for any physical damage to the roof or to the area in which mounted, if ground-mounted, which may be caused in whole or in part by the Antenna or its support equipment.

(i)   Tenant agrees to install and operate the Antenna in a manner which does not cause interference with existing and subsequent antenna installations at the Project and Landlord agrees to require any and all subsequent antenna installations in the Project to refrain from interfering with Tenant's installation.

(j)   If the entire roof of the Building shall be taken or condemned for any public purpose, Tenant's right granted hereunder shall terminate as of the effective date of the condemnation or taking. If less than the entire roof of the Building shall be taken or condemned, or a substantial portion of the Building shall be taken or condemned, and such condemnation or taking includes the area of the roof occupied by the Antenna, this right of Tenant shall, at the option of Landlord by notice to Tenant, terminate as of the effective date of the condemnation or taking. All proceeds from any taking or condemnation shall be the sole property of Landlord and Tenant shall have no right or interest to any portion thereof, but shall be entitled to remove its Antenna and related equipment, subject to the foregoing provisions of this Article XXX.

(k)   Landlord and its beneficiaries, and their officers, directors, shareholders, partners, agents and employees shall not be liable or responsible to Tenant with respect to the Antenna and any apparatus relating thereto, for any loss or damage to any property or person occasioned by theft, fire, act of god, public enemy, injunction, riot, strike, insurrection, war, court order, or for any damage or inconvenience which may arise through the maintenance, repair or alteration of any part of the Building, or the failure to make such repair, or any other cause beyond the reasonable control of Landlord. Landlord shall not be liable to Tenant for any interference with Tenant's operation of the Antenna caused by Landlord's repair, maintenance or replacement of the roof or Building and Landlord shall be entitled to temporarily suspend operation of the Antenna if reasonably necessary for performance of such activities by Landlord. With respect to the Antenna, Tenant hereby waives any and all damages, save and except the actual cost of property damage including, but not limited to, punitive or consequential damages, with respect to any such act or negligence of Landlord, its agents, employees or contractors.
20

ARTICLE XXXI
GENERATOR

31.1   Generator.   Landlord grants to Tenant the right to install and maintain an emergency electricity generator (hereinafter referred to as the "EG") to serve Tenant, in accordance with the following: (i) Tenant shall bear all costs of installation of the EG, and all other related equipment; (ii) Landlord shall designate the actual location of the EG, which shall be reasonably acceptable to Tenant; (iii) Tenant shall provide Landlord with plans and specifications for the EG and related equipment, which shall be subject to Landlord's approval which shall not be unreasonably withheld or delayed; (iv) Tenant shall secure all necessary building and operating permits, shall provide copies of same to Landlord and shall comply with all Laws with respect thereto and shall provide Landlord copies of all applications for permits, including all specifications and drawings required for the securing of said permits; (v) installation shall be performed by contractors approved by Landlord, which approval shall not be unreasonably withheld or delayed, and treated as an Alteration of a structural component; (vi) any damage to the Project caused by such installation or by the operation or existence of the EG shall be repaired by Tenant immediately; (vii) at the termination of this Lease by expiration of time or otherwise, at the request of Landlord, Tenant, at its sole cost and expense, shall remove the EG and all related equipment and shall restore the area of the Project to its condition prior to installation, provided that absent such request, the EG shall not be removed and shall become the property of Landlord; (viii) all restoration and repair hereby required to be performed by Tenant shall be completed under the supervision of a representative of Landlord at such time and in such manner as is satisfactory to Landlord; (ix) Tenant shall maintain property insurance, primary to any insurance maintained by Landlord with respect to the EG in a form reasonably satisfactory to Landlord, and Landlord shall have no obligation to repair or replace the EG in the event of any casualty or in the event of condemnation; and (x) neither Overlandlord nor Landlord, nor their officers, lenders, directors, shareholders, partners, agents or employees shall be liable or responsible to Tenant for any loss or damage to the EG or any to any other person relating to the operation, or installation of the EG occasioned by any act or occurrence whatsoever. Tenant hereby indemnifies and agrees to hold Landlord, Overlandlord and their affiliates and their respective officers, lenders, directors, shareholders, partners, agents, or employees harmless from and against any liability, claim cost or expense of any nature, including reasonable fees of counsel and litigation expenses arising out of or in connection with the installation, operation, existence, or removal of the EG, provided however Tenant shall in no event be liable for consequential, indirect or punitive damages of any kind, regardless of the legal theory upon which such claim may be based. Notwithstanding the foregoing, Tenant shall have no obligation to indemnify Landlord, Overlandlord or their respective affiliated entities, agents, officers, directors, partners, successors and assigns, to the extent the liability against which any such party is claiming indemnification is caused by the breach of this Lease by, or the misconduct or negligence of such party or its respective affiliated entities, agents, officers, directors, partners, successors, assigns, employees, contractors or invitees. With respect to the EG, Tenant hereby waives any and all damages, save and except the actual cost of property damage including, but not limited to, punitive or consequential damages, with respect to any such act or negligence of Landlord, its agents, employees or contractors.



ARTICLE XXXII
DATA CENTER

32.1   Data Center . In addition to the Premises, Landlord hereby leases to Tenant and Tenant hereby accepts that certain space (hereinafter referred to as the "Data Center ") comprising an area that the parties agree for all purposes of this Lease consists of 15,286 and is identified as areas N and O on Exhibit A attached hereto. Tenant agrees to accept the Data Center in an "as is" physical condition and Tenant shall not be entitled to receive any allowance, credit, concession or payment from Landlord for the improvement thereof. Landlord shall not be obligated to furnish any building services with respect to the Data Center.

32.2   Data Center Rent. In addition to all Rent required under the Lease for the Premises, Tenant shall pay to Landlord as rent for the Data Center and annual amount of One Hundred Thirty Seven Thousand Five Hundred Seventy Four Dollars and No Cents ($137,574.00) payable in equal monthly payments in the amount of Eleven Thousand Four Hundred Sixty Four Dollars and Fifty Cents ($11,464.50) (hereinafter referred to as the "Data Center Rent" payable at the same time and in the same manner as monthly Base Rent. The Data Center Rent for the Renewal Term shall be determined as part of the determination of the Market Rent. The Data Center shall be deemed rent for all purposes of this Lease.

32.3   Data Center Condition. Tenant shall be solely responsible to keep and maintain the Data Center in a safe, neat and orderly condition. Landlord hereby consents to all non-structural Alterations as Tenant desires to make to the Data Center, provided that all such Alterations shall be performed in a good, workman like manner in compliance with all laws and the requirements any insurer insuring the Premises or part thereof. Landlord shall consider and grant its consent to structural Alterations to the Data Center in accordance with the standards and procedures set forth in Section 11.1 for structural Alterations to the Premises, and the provisions of Article XI shall govern any Alterations to the Data Center.

  ARTICLE XXXIII
AMENDMENT

33.1   Continuing Effect . Except as expressly modified and amended by this instrument, the terms, covenants and conditions of the Old Lease are hereby ratified and confirmed, and remain in full force and effect. In the event of any conflict between the terms of the Old Lease and of this Amendment, the terms of this Amendment shall control.

33.2   Estoppel . As an inducement to Landlord and Overlandlord to enter into this Amendment the Tenant hereby warrants and represents to Landlord and Overlandlord that: (i) the Old Lease as amended hereby, has not been assigned or any of the Premises sublet; (ii) the Old Lease as amended hereby, is in full force and effect and has not been modified, supplemented, or amended; (iii) to the knowledge of Tenant Landlord is not in default under the Old Lease and, as of the date hereof, Tenant has no defenses, setoffs, claims or counterclaims against Landlord arising out of the Old Lease, as amended hereby, or in any way relating thereto; (iv) Tenant has accepted and is in full and complete occupancy and possession of all of the premises demised pursuant to the Old Lease and as of the date hereof Landlord has fulfilled all of its duties of an inducement nature required to have been fulfilled; and (v) to the knowledge of Tenant no payments, reimbursements, credits or offsets are by due Landlord to Tenant under the Old Lease, as amended hereby, and no work is required to be done by Landlord to any of the premises demised under the Old Lease.
[SIGNATURES ARE ON THE FOLLOWING PAGE]

21


IN WITNESS WHEREOF , Landlord, Overlandlord and Tenant have executed this Amendment as of the day and year first above written.

OVERLANDLORD:                                          DANBURY BUILDINGS CO., L.P. , a Delaware limited partnership
                                         BY: DANBURY BUILDINGS, INC. , a Florida corporation
Witnesses
       
 
 
By:
 
 
   
Name:
 
 
 
 
Title:
 
 


 
       
 
 
By:
 
 
   
Name:
 
 
 
 
Title:
 
 





TENANT:                                               PRAXAIR, INC., a Delaware corporation
Witnesses
       
 
 
By:
 
 
   
Name:
 
 
 
 
Title:
 
 

                      
 


                    LANDLORD:                                    UNION CARBIDE CORPORATION , a New York corporation
Witnesses
       
 
 
By:
 
 
   
Name:
 
 
 
 
Title:
 
 


 

EXHIBIT "A"

PREMISES AND ADDITIONAL PREMISES


The Premises are the areas of the Building commonly known as Areas: K-1, K-2, K-3, L-1, L-2, L-3, M-1, M-2, M-3, M-4.    

 
The Data Center is the areas of the Building commonly known as Areas N and O.

22


EXHIBIT B

Indoor Air Quality Specifications


(i)   Temperature:
                t      68 Degrees F - 75 Degrees F
                t      Heating and Cooling
 
         (ii)   Humidity:
t
25% Heating - minimum
t
60% Cooling - maximum

(iii)   Outside Air - 20 cfm per person (ASHRAE Standard 55 Guideline):
t
70 Employees Maximum Large Floor - (21,500 Square Feet) - approx. 300 RSF/person (1,400 cfm/Large Floor)
t
30 Employees Maximum Small Floor - (8,753 Square Feet) - approx. 300 RSF/person (600 cfm/Small Floor)
 
(iv)
 
Filtration Standards: MERV Standard of not less than 8




23


EXHIBIT "C"

JANITORIAL SPECIFICATIONS

Nightly Services (Premises) :

(i)   Vacuum main corridors.
(ii)   Clean conference rooms.
(iii)   Clean support center (if applicable).
(iv)   Empty waste baskets

Services Three Nights/Week (Premises) :

(i)   Remove trash to areas designated.
(ii)   Vacuum secondary corridors.

Weekly Services (Premises) :

(i)   Dust desks and tables.
(ii)   Dust cabinets, files, chairs and window sills.
(iii)   Vacuum carpets.

Outside Service, as required :

(i)   Sweep driveways curbs.
(ii)   Sweep and clean sidewalks.
(iii)   Snow removal from driveways, sidewalks and parking areas.

Occasional Service, when necessary (Premises) :

(i)   Dust walls and ceilings.
(ii)   High dust door tops, tops of partitions and high ledges.
(iii)   Damp mop floors.
 
Nightly Service - Rest Room Area (on floor leased by Tenant):

(i)   Clean commodes and toilet seats.
(ii)   Empty and clean towel and sanitary disposal receptacles.
(iii)   Clean urinals.
(iv)   Clean mirrors
(v)   Clean sinks.
(vi)   Replenish soap, toilet tissue and paper towels.
(vii)   Mop floors.

Occasional Service-Rest Room Area (on floor leased by Tenant):

(i)   High dust walls and ceilings
(ii)   Clean ceramic tile
(iii)   Spot clean ceramic wall tiles.

Public Areas and Multiple Tenancy Floors Supplemental Service :

(i)   Flooring on stairs corridors, foyers and elevators washed and waxed as
necessary.
(ii)   Elevator, stairway and utility doors washed with clear water or approved
cleanser, as necessary.
(iii)   Dust and clean electric fixtures and fittings in public corridors, flyers,
stairways, as necessary.

Window Cleaning Service :

Exterior windows and interior doors and partition glass will be washed
inside and outside once per year.


Landlord reserves the right to make reasonable changes to the foregoing schedule at any time.

24

CREDIT AGREEMENT

Praxair, Inc. and Subsidiaries
EXHIBIT 10.17

[EXECUTION COPY]
$1,000,000,000
 
CREDIT AGREEMENT


dated as of
 
December 23, 2004
 
among
 
PRAXAIR, INC.
 
THE ELIGIBLE SUBSIDIARIES REFERRED TO HEREIN
 
THE LENDERS LISTED HEREIN

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent

BANK OF AMERICA, N.A.,
as Syndication Agent

and

Citibank, N.A. and Credit Suisse First Boston
as Co-Documentation Agent s
 
______________________
 

 
J.P. Morgan Securities Inc.,
 
and
 
Banc of America Securities LLC
 
Co-Lead Arrangers and Bookrunners
 




TABLE OF CONTENTS
 

 
PAGE
ARTICLE 1
 
DEFINITIONS
 
     
Section 1.01.
Definitions
1
Section 1.02.
Accounting Terms and Determinations
15
Section 1.03.
Types of Borrowings
15
     
ARTICLE 2
 
THE CREDITS
 
     
Section 2.01.
Commitments to Lend
15
Section 2.02.
Making of Committed Borrowings
16
Section 2.03.
Competitive Bid Borrowings
17
Section 2.04.
Notice to Lenders; Funding of Loans
21
Section 2.05.
Registry; Notes
22
Section 2.06.
Maturity of Loans
22
Section 2.07.
Interest Rates
23
Section 2.08.
Fees
26
Section 2.09.
Optional Termination or Reduction of Commitments
26
Section 2.10.
Method of Electing Interest Rates
26
Section 2.11.
Scheduled Termination of Commitments
28
Section 2.12.
Optional Prepayments
28
Section 2.13.
General Provisions as to Payments
29
Section 2.14.
Funding Losses
30
Section 2.15.
Computation of Interest and Fees.
30
Section 2.16.
Letters of Credit
31
Section 2.17.
Regulation D Compensation
34
Section 2.18.
Takeout of Swingline Loans
34
Section 2.19.
Replacement of this Agreement
36
Section 2.20.
Increased Commitments, Additional Lenders
36
Section 2.21.
Currency Equivalents
37
     
ARTICLE 3
 
CONDITIONS
 
     
Section 3.01.
Effectiveness
38
Section 3.02.
Borrowings and Issuances of Letters of Credit
39
Section 3.03.
First Borrowing by Each Eligible Subsidiary
39
     
ARTICLE 4
 
REPRESENTATIONS AND WARRANTIES
 
     
Section 4.01.
Corporate Existence and Power
40



   
PAGE
Section 4.02.
Corporate and Governmental Authorization; No Contravention
40
Section 4.03.
Binding Effect
40
Section 4.04.
Financial Information.
40
Section 4.05.
Litigation
41
Section 4.06.
Compliance with ERISA
41
Section 4.07.
Environmental Matters
42
Section 4.08.
Subsidiaries
42
Section 4.09.
Not an Investment Company
42
Section 4.10.
Disclosure
42
     
ARTICLE 5
 
COVENANTS
 
     
Section 5.01.
Information
42
Section 5.02.
Maintenance of Property; Insurance
45
Section 5.03.
Negative Pledge
45
Section 5.04.
Consolidations, Mergers and Sales of Assets
47
Section 5.05.
Consolidated Capitalization
47
Section 5.06.
Use of Proceeds
47
     
ARTICLE 6
 
DEFAULTS
 
     
Section 6.01.
Events of Default
48
Section 6.02.
Notice of Default
50
Section 6.03.
Cash Cover
50
Section 6.04.
Rescission
50
     
ARTICLE 7
 
THE AGENTS
 
     
Section 7.01.
Appointment and Authorization
51
Section 7.02.
Administrative Agent and Affiliates
51
Section 7.03.
Action by Administrative Agent
51
Section 7.04.
Consultation with Experts
51
Section 7.05.
Liability of Administrative Agent
51
Section 7.06.
Indemnification
52
Section 7.07.
Credit Decision
52
Section 7.08.
Successor Administrative Agent
52
Section 7.09.
Agents' Fees
53
Section 7.10.
Other Agents
53
     
ARTICLE 8
 
CHANGE IN CIRCUMSTANCES
 
     
Section 8.01.
Basis for Determining Interest Rate Inadequate or Unfair
53
Section 8.02.
Illegality
54
Section 8.03.
Increased Cost and Reduced Return
54


 

   
PAGE
Section 8.04.
Taxes
55
Section 8.05.
Base Rate Loans Substituted for Affected Fixed Rate Loans
58
Section 8.06.
Substitution of Lender
58
     
ARTICLE 9
 
REPRESENTATIONS AND WARRANTIES OF ELIGIBLE SUBSIDIARIES
 
     
Section 9.01.
Corporate Existence and Power
59
Section 9.02.
Corporate Governmental Authorization; No Contravention
59
Section 9.03.
Binding Effect
59
     
ARTICLE 10
 
GUARANTY
 
     
Section 10.01.
The Guaranty
59
Section 10.02.
Guaranty Unconditional
60
Section 10.03.
Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances
60
Section 10.04.
Waiver by the Company
61
Section 10.05.
Subrogation
61
Section 10.06.
Stay of Acceleration
61
     
ARTICLE 11
 
MISCELLANEOUS
 
     
Section 11.01.
Notices
61
Section 11.02.
No Waivers
62
Section 11.03.
Expenses; Indemnification
62
Section 11.04.
Sharing of Set-offs
63
Section 11.05.
Amendments and Waivers
63
Section 11.06.
Successors and Assigns
64
Section 11.07.
Designated Lenders
66
Section 11.08.
Governing Law; Submission to Jurisdiction; Waiver of Jury Trial
67
Section 11.09.
Counterparts; Integration
67
Section 11.10.
Confidentiality
68
Section 11.11.
Severability
69
Section 11.12.
Termination of Existing Credit Agreement
69
Section 11.13.
Collateral
69
Section 11.14.
Judgment Currency
69
Section 11.15.
Patriot Act Notice
69



Pricing Schedule
Commitment Schedule
Mandatory Cost Schedule


 
Exhibit A C Note
 
Exhibit B C Competitive Bid Quote Request
 
Exhibit C C Invitation for Competitive Bid Quotes
 
Exhibit D C Competitive Bid Quote
 
Exhibit E C Opinion of Counsel for the Company
 
Exhibit F C Opinion of Special Counsel for the Administrative Agent
 
Exhibit G C Election to Participate
 
Exhibit H C Election to Terminate
 
Exhibit I C Opinion of Counsel for an Eligible Subsidiary
 
Exhibit J C Assignment and Assumption Agreement
 
Exhibit K C Designation Agreement
 
Exhibit L C Extension Agreement
 

 

 




CREDIT AGREEMENT
 
AGREEMENT dated as of December 23, 2004 among PRAXAIR, INC., the ELIGIBLE SUBSIDIARIES referred to herein, the LENDERS listed on the signature pages hereof, JPMORGAN CHASE BANK, N.A., as Administrative Agent, BANK OF AMERICA, N.A., as Syndication Agent and CITIBANK, N.A. and CREDIT SUISSE FIRST BOSTON as Co-Documentation Agents.
 
The parties hereto agree as follows:
 
 
     ARTICLE 1   
DEFINITIONS
 
Section 1.01    . Definitions . The following terms, as used herein, have the following meanings:
 
" Absolute Rate Auction " means a solicitation of Competitive Bid Quotes setting forth Competitive Bid Absolute Rates pursuant to Section 2.03 .
 
" Additional Lender " has the meaning set forth in Section 2.20 .
 
" Adjusted CD Rate " has the meaning set forth in Section 2.07(b) .
 
" Administrative Agent " means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders under the Loan Documents, and its successors in such capacity.
 
" Administrative Questionnaire " means, with respect to each Lender, an administrative questionnaire in the form prepared by the Administrative Agent and submitted to the Administrative Agent (which shall promptly following receipt thereof give a copy to the Company) duly completed by such Lender.
 
" Agents " means the Administrative Agent, the Syndication Agent and the Co-Documentation Agents.
 
" Alternative Currency " means Euro, British Sterling, Swiss Francs and Canadian Dollars; provided that any other currency (except Dollars) may also be an Alternative Currency if (i) the Company requests, by notice to the Administrative Agent, that such currency be included as an additional Alternative Currency for purposes of this Agreement, (ii) such currency is freely transferable and is freely convertible into Dollars in the London foreign exchange market, (iii) deposits in such currency are customarily offered to banks in the London interbank market, and (iv) each Lender, by notice to the Administrative Agent, approves the inclusion of such currency as an additional Alternative Currency for purposes hereof. The Lenders' approval of any such additional Alternative Currency may be limited to a specified maximum Dollar Amount or a specified period of time or both.
 
 
1
 
" Alternative Currency Loan " means a Syndicated Loan that is made in an Alternative Currency pursuant to the applicable Notice of Committed Borrowing.
 
" Applicable Interbank Offered Rate " has the meaning set forth in Section 2.07(c) .
 
" Applicable Lending Office " means, with respect to any Lender and any Loan made by it hereunder to any Borrower, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Applicable Lending Office for Loans of that nature) or such other office, branch or affiliate of such Lender as it may hereafter designate as its Applicable Lending Office for such purpose by not less than five Domestic Business Days' notice to the Company and the Administrative Agent.
 
" Assessment Rate " has the meaning set forth in Section 2.07(b) .
 
" Assignee " has the meaning set forth in Section 11.06(c) .
 
" Base Rate " means, for any day, a rate per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of ½ of 1% plus the Federal Funds Rate for such day.
 
" Base Rate Loan " means a Syndicated Loan which bears interest at the Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election or the provisions of Article 8 .
 
" Benefit Arrangement " means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group.
 
" Borrower " means the Company or any Eligible Subsidiary, as the context may require, and their respective successors, and " Borrowers " means all of the foregoing. When used in relation to any Loan or Letter of Credit, references to " the Borrower " are to the particular Borrower to which such Loan is or is to be made or at whose request such Letter of Credit is or is to be issued.
 
" Borrowing " has the meaning set forth in Section 1.03 .
 
" British Sterling " means the lawful currency of the United Kingdom.
 
" Canadian Dollars " or " Can $ " means the lawful currency of Canada.
 
" CD Base Rate " has the meaning set forth in Section 2.07(b) .
 
 
2
 
" CD Loan " means a Syndicated Loan which bears interest at a CD Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election.
 
" CD Margin " means a rate per annum determined in accordance with the Pricing Schedule.
 
" CD Rate " has the meaning set forth in Section 2.07(b) .
 
" CD Reference Banks " means JPMorgan Chase Bank, N.A., Bank of America, N.A. and Citibank, N.A.
 
" Co-Documentation Agents " means Citibank, N.A. and Credit Suisse First Boston.
 
" Commitment " means (i) with respect to each Lender, the amount of such Lender's Commitment, as such amount is set forth opposite the name of such Lender on the Commitment Schedule, (ii) with respect to any Additional Lender, the amount of the Commitment assumed by it pursuant to Section 2.20 and (iii) with respect to any Assignee, the amount of the transferor Lender's Commitment assigned to it pursuant to Section 11.06(c) , in each case as such amount may be changed from time to time pursuant to Section 2.09 , 2.20 or Section 11.06(c) ; provided that, if the context so requires, the term " Commitment " means the obligation of a Lender to extend credit up to such amount to the Borrowers hereunder.
 
" Commitment Schedule " means the Commitment Schedule attached hereto.
 
" Committed Loan " means a Syndicated Loan or a Swingline Loan.
 
" Company " means Praxair, Inc., a Delaware corporation, and its successors.
 
" Competitive Bid Absolute Rate " has the meaning set forth in Section 2.03(d) .
 
" Competitive Bid Absolute Rate Loan " means a loan to be made by a Lender pursuant to an Absolute Rate Auction.
 
" Competitive Bid LIBOR Loan " means a loan to be made by a Lender pursuant to a LIBOR Auction (including such a loan bearing interest at the Base Rate pursuant to Section 8.01 ).
 
" Competitive Bid Loan " means a Competitive Bid LIBOR Loan or a Competitive Bid Absolute Rate Loan.
 
" Competitive Bid Margin " has the meaning set forth in Section 2.03(d) .
 
" Competitive Bid Quote " has the meaning set forth in Section 2.03(d) .
 
" Competitive Bid Quote Request " has the meaning set forth in Section 2.03(b) .
 
" Consolidated Book Net Worth " means at any date the consolidated shareholders' equity of the Company and its Consolidated Subsidiaries, determined as of such date, calculated without giving effect to changes in the cumulative foreign currency translation adjustment after September 30, 2004.
 
" Consolidated Subsidiary " means at any date any Subsidiary or other entity the accounts of which would be consolidated with those of the Company in its consolidated financial statements if such statements were prepared as of such date.
 
" Consolidated Total Debt " means at any date all consolidated Debt of the Company and its Consolidated Subsidiaries determined as of such date.
 
 
3
 
" Continuing Director " means at any date a member of the Company's board of directors who was either (i) a member of such board twelve months prior to such date or (ii) nominated for election to such board by at least a majority of the Continuing Directors then in office.
 
" Credit Exposure " means, with respect to any Lender at any time, (i) the amount of its Commitment (whether used or unused) at such time or (ii) if the Commitments have terminated in their entirety, the sum of the aggregate Dollar Amount of its Loans at such time (including any participations in Swingline Loans purchased by it and excluding any participations in Swingline Loans sold by it) plus its Letter of Credit Liabilities at such time.
 
" Debt " of any Person means at any date, without duplication, to the extent required in accordance with generally accepted accounting principles to be included in the financial statements of such Person or the footnotes thereto,
 
 
(i)
all obligations of such Person for borrowed money,
 
 
(ii)
all obligations of such Person evidenced by bonds, debentures or notes,
 
 
(iii)
all obligations of such Person for installment purchase transactions involving the purchase of property or services over $5,000,000 for any particular transaction, except trade accounts payable and expense accruals arising in the ordinary course of business,
 
 
(iv)
all obligations of such Person as lessee which are capitalized in accordance with generally accepted accounting principles,
 
 
(v)
all obligations of such Person to reimburse any bank or other Person in respect of amounts paid under a letter of credit, and
 
 
(vi)
all Debt of others Guaranteed by such Person.
 
" Default " means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.
 
" Designated Lender " means, with respect to any Designating Lender, an Eligible Designee designated by it pursuant to Section 11.07(a) as a Designated Lender for purposes of this Agreement.
 
" Designating Lender " means, with respect to each Designated Lender, the Lender that designated such Designated Lender pursuant to Section 11.07(a) .
 
" Dollar Amount " means, at any time:
 
 
(i)
with respect to any Dollar-Denominated Loan, the principal amount thereof then outstanding;
 
 
4
 
(ii)
with respect to any Alternative Currency Loan, the principal amount thereof then outstanding in the relevant Alternative Currency, converted to Dollars in accordance with Section 2.21(a) ; and
 
 
(iii)
with respect to any Letter of Credit Liabilities, (A) if denominated in Dollars, the amount thereof and (B) if denominated in an Alternative Currency, the amount thereof converted to Dollars in accordance with Section 2.21(c) .
 
" Dollar-Denominated Loan " means a Loan that is made in Dollars pursuant to the applicable Notice of Borrowing.
 
" Dollars " and the sign " $ " mean lawful currency of the United States.
 
" Domestic Business Day " means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by law to close.
 
" Domestic Consolidated Subsidiary " with respect to any Person means a Consolidated Subsidiary of such Person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia.
 
" Domestic Loans " means CD Loans or Base Rate Loans or both.
 
" Domestic Reserve Percentage " has the meaning set forth in Section 2.07(b) .
 
" Effective Date " means the date this Agreement becomes effective in accordance with Section 3.01 .
 
" Election to Participate " means an Election to Participate substantially in the form of Exhibit G hereto.
 
" Election to Terminate " means an Election to Terminate substantially in the form of Exhibit H hereto.
 
" Eligible Designee " means a special purpose corporation that (i) is organized under the laws of the United States or any state thereof, (ii) is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and (iii) issues (or the parent of which issues) commercial paper rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's.
 
" Eligible Subsidiary " means (i) Praxair Canada Inc., an Ontario corporation, (ii) PESL and (iii) any other Wholly-Owned Consolidated Subsidiary, in each case, as to which an Election to Participate shall have been delivered to the Administrative Agent and as to which an Election to Terminate with respect to such Election to Participate shall not have been delivered to the Administrative Agent. Each such Election to Participate and Election to Terminate shall be duly executed on behalf of such Subsidiary and the Company in such number of copies as the Administrative Agent may request. If at any time a Subsidiary theretofore designated as an Eligible Subsidiary no longer qualifies as a Wholly-Owned Consolidated Subsidiary, the Company shall cause to be delivered to the Administrative Agent an Election to Terminate terminating the status of such Subsidiary as an Eligible Subsidiary. The delivery of an Election to Terminate shall not affect any obligation of an Eligible Subsidiary theretofore incurred or the Company's guaranty thereof. The Administrative Agent shall promptly give notice to the Lenders of the receipt of any Election to Participate or Election to Terminate.
 
 
5
 
" Environmental Laws " means all applicable federal, state, local and foreign laws, ordinances, codes, regulations, orders and requirements relating to the protection of, or discharge of materials into, the environment, including, without limitation, the Resource Conservation and Recovery Act of 1976, as amended; the Comprehensive Environmental Response, Compensation and Liability Act; the Toxic Substance Control Act; the Clean Water Act; the Clean Air Act; and the Safe Drinking Water Act.
 
" ERISA " means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute.
 
" ERISA Group " means the Company, any Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company or any Subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code.
 
" Euro " and the sign " € " mean the single shared currency of the participating member states of the European Union.
 
" Euro-Currency Business Day " means a Euro-Dollar Business Day, unless such term is used in connection with an Alternative Currency Loan, in which case such day shall only be a Euro-Currency Business Day if in addition such day is a day on which (i) in the case of an Alternative Currency Loan to be made in Euros, the Trans-European Automated Real-Time Gross Settlement Express Transfer system is open for business and (ii) in the case of an Alternative Currency Loan to be in a currency other than Euros, commercial banks are open for business (including dealings in deposits in such Alternative Currency) in London and the principal financial center in the country which issues the currency in which such Alternative Currency Loan is to be made.
 
" Euro-Currency Loan " means either a Euro-Dollar Loan or an Alternative Currency Loan.
 
" Euro-Currency Margin " means a rate per annum determined in accordance with the Pricing Schedule.
 
" Euro-Currency Rate " has the meaning set forth in Section 2.07(c) .
 
" Euro-Currency Reserve Percentage " means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of " Eurocurrency liabilities " (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Dollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Lender to the United States residents).
 
 
6
 
" Euro-Dollar Business Day " means any Domestic Business Day on which commercial banks are open for international business (including dealings in Dollar deposits) in London.
 
" Euro-Dollar Loan " means a Syndicated Loan denominated in Dollars which bears interest at a Euro-Currency Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election.
 
" Euro-Dollar Reference Banks " means the principal London offices of JPMorgan Chase Bank, N.A., Bank of America, N.A. and Citibank, N.A.
 
" Event of Default " has the meaning set forth in Article 6 .
 
" Evergreen Letter of Credit " means a Letter of Credit that is automatically extended unless the Issuing Lender gives notice to the beneficiary thereof stating that such Letter of Credit will not be extended.
 
" Existing Credit Agreement " means the Credit Agreement dated as of July 12, 2000 among the Company, the banks parties thereto and JPMorgan Chase Bank, N.A. of New York, as agent, as amended to the Effective Date.
 
" Federal Funds Rate " means, for any day, the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Domestic Business Day next succeeding such day, provided that (i) if such day is not a Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Domestic Business Day as so published on the next succeeding Domestic Business Day, and (ii) if no such rate is so published on such next succeeding Domestic Business Day, the Federal Funds Rate for such day shall be the average rate quoted to JPMorgan Chase Bank, N.A. on such day on such transactions as determined by the Administrative Agent.
 
" Fixed Rate Loans " means CD Loans, Euro-Currency Loans or Competitive Bid Loans (excluding Competitive Bid LIBOR Loans bearing interest at the Base Rate) or any combination of the foregoing.
 
" Group " means at any time a group of Loans consisting of (i) all Loans to the same Borrower which are Base Rate Loans at such time, (ii) all Loans to the same Borrower which are CD Loans having the same Interest Period at such time and (iii) all Euro-Currency Loans to the same Borrower denominated in the same currency and having the same Interest Period at such time; provided that, if a Committed Loan of any particular Lender is converted to or made as a Base Rate Loan pursuant to Article 8 , such Loan shall be included in the same Group or Groups of Loans from time to time as it would have been if it had not been so converted or made.
 
 
7
 
" Guarantee " by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt of any other Person, and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person:
 
 
(i)
to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or
 
 
(ii)
entered into for the purpose of ensuring in any legally enforceable manner the obligee of such Debt of the payment thereof or to protect such obligee in any legally enforceable manner against loss in respect thereof (in whole or in part);
 
provided that the term Guarantee shall not include:
 
(a)
endorsements for collection or deposit in the ordinary course of business;
 
(b)
obligations that are not required in accordance with generally accepted accounting principles to be included in the financial statements of such Person or the footnotes thereto;
 
(c)
"unconditional purchase obligations" (including take-or-pay contracts) as defined in and as required to be disclosed pursuant to Statement of Financial Accounting Standards No. 47 and the related interpretations, as the same may be amended from time to time, but only to the extent the aggregate present value amount of all such obligations of the Company and its Consolidated Subsidiaries (other than amounts reflected on the balance sheet of the Company and its Consolidated Subsidiaries) is equal to or less than 5% of the net sales of the Company and its Consolidated Subsidiaries as set forth in the Company's consolidated statement of income, determined as of the end of the preceding quarter for the twelve months then ending; and
 
(d)
any obligations required to be disclosed pursuant to the Statement of Financial Accounting Standards No. 105, Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit Risk, issued March 1990, the Statement of Financial Accounting Standards No. 107, Disclosure about Fair Value of Financial Instruments, issued December 1991, and the Statement of Financial Accounting Standards No. 119, Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments, issued October 1994, and their related interpretations, as the same may be amended from time to time (except to the extent any such obligation is required to be reflected on the balance sheet of the Company and its Consolidated Subsidiaries).
 
The term " Guarantee " used as a verb has a corresponding meaning.
 
 
8
 
" Interest Period " means: (1) with respect to each Euro-Currency Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing or on the date specified in the applicable Notice of Interest Rate Election and ending one, two, three or six months thereafter, as the Borrower may elect in the applicable notice, or, if each Lender agrees, nine or twelve months thereafter; provided that:
 
 
(a)
any Interest Period which would otherwise end on a day which is not a Euro-Currency Business Day shall be extended to the next succeeding Euro-Currency Business Day unless such Euro-Currency Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Currency Business Day;
 
 
(b)
any Interest Period which begins on the last Euro-Currency Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) below, end on the last Euro-Currency Business Day of the calendar month which is a number of months after the month in which such Interest Period begins equal to the length of such Interest Period; and
 
 
(c)
any Interest Period which would otherwise end after the Termination Date shall end on the Termination Date;
 
(2)
with respect to each Competitive Bid LIBOR Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such whole number of months thereafter as the Borrower may elect in accordance with Section 2.03 ; provided that:
 
 
(a)
any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall, subject to clause (c) below, be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day;
 
 
(b)
any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of the calendar month which is a number of months after the month in which such Interest Period begins equal to the length of such Interest Period; and
 
 
(c)
any Interest Period which would otherwise end after the Termination Date shall end on the Termination Date; and
 
(3)
with respect to each Competitive Bid Absolute Rate Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of days thereafter (but not less than 7 days) as the Borrower may elect in accordance with Section 2.03 ; provided that:
 
 
9
 
(a)
any Interest Period (other than an Interest Period determined pursuant to clause (b) below) which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day; and
 
 
(b)
any Interest Period which would otherwise end after the Termination Date shall end on the Termination Date;
 
(4)
with respect to each CD Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing or on the date specified in the applicable Notice of Interest Rate Election and ending 30, 60, 90 or 180 days thereafter, as the Borrower may elect in the applicable Notice of Borrowing; provided that:
 
 
(a)
any Interest Period (other than an Interest Period determined pursuant to clause (b) below) which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day; and
 
 
(b)
any Interest Period which would otherwise end after the Termination Date shall end on the Termination Date.
 
Notwithstanding the foregoing, all Interest Periods at any one time outstanding hereunder shall end on not more than 25 different dates, and the duration of any Interest Period which would otherwise exceed such limitation shall be adjusted so as to coincide with the remaining term of such other then current Interest Period as the Company and the Administrative Agent may agree.
 
" Internal Revenue Code " means the Internal Revenue Code of 1986, as amended, or any successor statute.
 
" Invitation for Competitive Bid Quotes " has the meaning set forth in Section 2.03(c) .
 
" Issuing Lender " means JPMorgan Chase Bank, N.A., Bank of America, N.A. and any other Lender that may agree to issue letters of credit hereunder pursuant to an instrument in form satisfactory to the Company, such Lender and the Administrative Agent, in each case in its capacity as issuer of a Letter of Credit hereunder. An Issuing Lender may, in its discretion, arrange for one or more Letters of Credit to be issued by affiliates of such Issuing Lender, in which case the term "Issuing Lender" shall include any such affiliate with respect to Letters of Credit issued by such affiliate.
 
" Lender " means each bank listed on the signature pages hereof, each Additional Lender or Assignee which becomes a Lender pursuant to Section 2.20 or Section 11.06(c) , and their respective successors, in each case for so long as such Person shall be a party to this Agreement
 
" Lender Parties " has the meaning set forth in Section 11.10 .
 
" Letter of Credit " means a letter of credit to be issued hereunder by the Issuing Lender in accordance with Section 2.16 .
 
 
10
 
" Letter of Credit Liabilities " means, for any Lender and at any time, such Lender's ratable participation in the sum of (x) the amounts then owing by the Borrower in respect of amounts drawn under Letters of Credit and (y) the aggregate amount then available for drawing under all Letters of Credit.
 
" Leverage Ratio " means, at any time, the ratio of (x) Consolidated Total Debt to (y) the sum of Consolidated Total Debt plus Consolidated Book Net Worth at such time.
 
" LIBOR Auction " means a solicitation of Competitive Bid Quotes setting forth Competitive Bid Margins based on the Applicable Interbank Offered Rate pursuant to Section 2.03 .
 
" Lien " means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset.
 
" Loan " means a Committed Loan or a Competitive Bid Loan and " Loans " means Committed Loans or Competitive Bid Loans or both.
 
" Loan Documents " means this Agreement and the Notes.
 
" Mandatory Cost " means the percentage per annum calculated by the Administrative Agent in accordance with the Mandatory Cost Schedule attached hereto.
 
" Margin Stock " means "margin stock" as defined in Regulation U.
 
" Material Adverse Effect " means a material adverse effect on (i) the business, financial position or results of operations of the Company and its Consolidated Subsidiaries, considered as a whole, which could reasonably be expected to materially and adversely affect the ability of the Company to perform its obligations under this Agreement or any Note or (ii) the rights and remedies of the Lender Parties under the Loan Documents.
 
" Material Debt " means Debt (other than the Loans) of the Company and/or one or more Material Subsidiaries, arising in one or more related or unrelated transactions, in an aggregate principal amount exceeding $150,000,000.
 
" Material Plan " means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $50,000,000.
 
" Material Subsidiary " means (i) any one or more Restricted Subsidiaries (but, solely for purposes of paragraphs (h) and (i) of Section 6.01 , only if such Subsidiaries have combined Net Tangible Assets of at least $150,000,000), (ii) any one or more other Subsidiaries having combined Net Tangible Assets of more than $500,000,000 and (iii) solely for purposes of paragraphs (h) and (i) of Section 6.01 , any Eligible Subsidiary not covered by (i) or (ii) to which any Loan is outstanding or for whose account any Letter of Credit Liabilities are outstanding.
 
" Multiemployer Plan " means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five-year period.
 
 
11
 
" Net Tangible Assets " means, as to any Person, its gross assets, net of depreciation and other proper reserves, less its goodwill and other intangible assets.
 
" Notes " means promissory notes of a Borrower, substantially in the form of Exhibit A hereto, evidencing the obligation of such Borrower to repay the Loans made to it, and " Note " means any one of such promissory notes issued hereunder.
 
" Notice of Borrowing " means a Notice of Committed Borrowing (as defined in Section 2.02 ) or a Notice of Competitive Bid Borrowing (as defined in Section 2.03(f) ).
 
" Notice of Committed Borrowing " has the meaning set forth in Section 2.02 .
 
" Notice of Competitive Bid Borrowing " has the meaning set forth in Section 2.03(f) .
 
" Notice of Interest Rate Election " has the meaning set forth in Section 2.10 .
 
" Notice of Issuance " has the meaning set forth in Section 2.16(b) .
 
" Obligor " means the Company or any Eligible Subsidiary.
 
" Other Taxes " has the meaning set forth in Section 8.04(a) .
 
" Outstanding Committed Amount " means, as to any Lender at any time, the sum of (i) the aggregate Dollar Amount of Committed Loans made by it which are outstanding at such time, plus (ii) the aggregate Dollar Amount of its Letter of Credit Liabilities at such time, plus (iii) in the case of any Lender other than the Swingline Lenders, the aggregate amount of its participating interests in any Unrefunded Swingline Loans.
 
" Parent " means, with respect to any Lender, any Person controlling such Lender.
 
" Participant " has the meaning set forth in Section 11.06(b) .
 
" PBGC " means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.
 
" Person " means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
 
" PESL " means Praxair Euroholding, S.L., a sociedad de responsabilidad limitada organized under the laws of Spain, and its successors.
 
" Plan " means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group.
 
 
12
 
" Pricing Schedule " means the Pricing Schedule attached hereto.
 
" Prime Rate " means the rate of interest publicly announced by JPMorgan Chase Bank, N.A. in New York City from time to time as its prime rate.
 
" Quarterly Date " means each March 31, June 30, September 30 and December 31; provided , that if any such date falls on a day that is not a Domestic Business Day, the Quarterly Date shall be the next succeeding Domestic Business Day.
 
" Reference Banks " means the CD Reference Banks or the Euro-Dollar Reference Banks, as the context may require, and " Reference Bank " means any one of such Reference Banks.
 
" Regulation D " and " Regulation U " means Regulation D and Regulation U, respectively, of the Board of Governors of the Federal Reserve System, as in effect from time to time.
 
" Reimbursement Obligation " has the meaning set forth in Section 2.16(d) .
 
" Required Lenders " means at any time Lenders with more than 50% of the aggregate amount of the Credit Exposures at such time.
 
" Restricted Subsidiary " means
 
(i)   any Domestic Consolidated Subsidiary of the Company, and
 
(ii)   Praxair Canada Inc.
 
" Revolving Credit Period " means the period from and including the Effective Date to and including the Termination Date.
 
" Spot Rate " means in relation to LIBOR, the British Bankers Association Interest Settlement Rate for the relevant currency and period displayed on the appropriate page of the Reuters screen. If the agreed page is replaced or service ceases to be available, the Administrative Agent may specify another page or service displaying the appropriate rate after consultation with the Company and the Lenders.
 
" Subsidiary " with respect to any Person means any corporation or other entity of which such Person directly or indirectly owns a majority of the securities or other ownership interests having ordinary voting power to elect the board of directors or other persons performing similar functions. Unless otherwise specified, " Subsidiary " means a Subsidiary of the Company.
 
" Swiss Francs " means the lawful currency of Switzerland.
 
" Swingline Lenders " means each of JPMorgan Chase Bank, N.A., Bank of America, N.A., and their respective successors.
 
 
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" Swingline Loan " means a loan made by a Swingline Lender pursuant to Section 2.01(b) .
 
" Swingline Takeout Loan " means a Base Rate Loan made pursuant to Section 2.18 .
 
" Syndicated Loan " means a Loan made by a Lender pursuant to Section 2.01(a) ; provided that, if any such loan or loans (or portions thereof) are combined or subdivided pursuant to a Notice of Interest Rate Election, the term " Syndicated Loan " shall refer to the combined principal amount resulting from such combination or to each of the separate principal amounts resulting from such subdivision, as the case may be.
 
" Syndication Agent " means Bank of America, N.A., in its capacity as syndication agent in respect of this Agreement.
 
" Taxes " has the meaning set forth in Section 8.04(a) .
 
" Termination Date " means (i) December 23, 2009, or (ii) such later day to which the Termination Date may be extended pursuant to Section 2.01(c) , but if such day is not a Euro-Currency Business Day, then the Termination Date shall be the next succeeding Euro-Currency Business Day unless such Euro-Currency Business Day falls in another calendar month, in which case the Termination Date shall be the next preceding Euro-Currency Business Day.
 
" Total Outstanding Amount " means, at any time, the aggregate Dollar Amount of all Loans outstanding at such time plus the aggregate Dollar Amount of the Letter of Credit Liabilities of all Lenders at such time.
 
" Unfunded Liabilities " means, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all benefits under such Plan exceeds (ii) the fair market value of all Plan assets allocable to such benefits (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA.
 
" United States " means the United States of America, including the States and the District of Columbia, but excluding its territories and possessions.
 
" Unrefunded Swingline Loans " has the meaning set forth in Section 2.18(b) .
 
" Wholly-Owned Consolidated Subsidiary " means any Consolidated Subsidiary all of the shares of capital stock or other ownership interests of which (except for qualifying shares held by directors or foreign nationals in accordance with applicable law) are at the time owned by the Borrower or one or more other Wholly-Owned Consolidated Subsidiaries.
 
 
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Section 1.02    . Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with U.S. generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Company's independent public accountants) with the most recent audited consolidated financial statements of the Company and its Consolidated Subsidiaries delivered to the Lenders; provided that, if the Company notifies the Administrative Agent that the Company wishes to amend any covenant in Article 5 to eliminate the effect of any change in U.S. generally accepted accounting principles on the operation of such covenant (or if the Administrative Agent notifies the Company that the Required Lenders wish to amend Article 5 for such purpose), then the Company's compliance with such covenant shall be determined on the basis of U.S. generally accepted accounting principles in effect immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Company and the Required Lenders.
 
Section 1.03    . Types of Borrowings. The term " Borrowing " denotes the aggregation of Loans of one or more Lenders to be made to a single Borrower pursuant to Article 2 in the same currency on the same date, all of which Loans are of the same type (subject to Article 8 ) and, except in the case of Base Rate Loans, have the same initial Interest Period. Borrowings are classified for purposes of this Agreement either by method of determining interest on the Loans comprising such Borrowing ( e.g. , a " Fixed Rate Borrowing " is a Euro-Currency Borrowing, a CD Borrowing or a Competitive Bid Borrowing (excluding any such Borrowing consisting of Swingline Loans or Competitive Bid LIBOR Loans bearing interest at the Base Rate), and a " Euro-Currency Borrowing " is a Borrowing comprised of Euro-Dollar Loans) or by reference to the provisions of Article 2 under which participation therein is determined ( i.e. , a " Syndicated Borrowing " is a Borrowing under Section 2.01(a) in which all Lenders participate in proportion to their Commitments, while a " Competitive Bid Borrowing " is a Borrowing under Section 2.03 in which the participating Lenders are determined on the basis of their bids in accordance therewith).
 
      ARTICLE 2   
THE CREDIT
 
Section 2.01    . Commitments to Lend. (a) Syndicated Loans . During the Revolving Credit Period each Lender severally agrees, on the terms and conditions set forth in this Agreement, to make Loans denominated in Dollars or in an Alternative Currency to any Borrower from time to time in amounts such that (i) such Lender's Outstanding Committed Amount shall not exceed its Commitment and (ii) the Total Outstanding Amount shall not exceed the aggregate amount of the Commitments. Each Borrowing under this subsection (other than a Swingline Takeout Borrowing) shall be in a minimum aggregate Dollar Amount of $5,000,000 and, in the case of a Dollar-Denominated Borrowing, a multiple of $1,000,000 (except that any such Borrowing may be in the aggregate amount available to the Borrowers in accordance with Section 3.02 and any such Borrowing pursuant to Section 2.16(a) or Section 2.18(a) may be in the amount specified therein) and shall be made from the several Lenders ratably in proportion to their respective Commitments. Within the foregoing limits, the Borrower may borrow under this Section, repay or prepay Loans and reborrow at any time during the Revolving Credit Period under this Section.
 
 
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(b)  
Swingline Loans . From time to time prior to the Termination Date, each Swingline Lender agrees, on the terms and conditions set forth in this Agreement, to make loans to the Company in Dollars pursuant to this subsection from time to time in amounts such that (i) its Outstanding Committed Amount shall not exceed the amount of its Commitment and (ii) the aggregate principal amount of Swingline Loans at any time outstanding shall not exceed $50,000,000. Within the foregoing limits, the Company may borrow under this subsection, repay or prepay Loans and reborrow at any time during the Revolving Credit Period under this subsection. Each Borrowing under this subsection 2.01(b) shall be in an aggregate principal amount of $100,000 or any larger multiple of $100,000 (except that any such Borrowing may be in the aggregate amount available in accordance with Section 3.02 ) , and shall be made from the Swingline Lenders ratably in proportion to their Commitments.
 
(c)  
The Termination Date may be extended on up to two occasions in the manner set forth in this subsection (c) for a period of one year from the Termination Date then in effect. If the Company wishes to request an extension of the Termination Date, the Company shall give written notice to that effect to the Administrative Agent not less than 45 nor more than 90 days prior to the first or second anniversary of the date hereof, whereupon the Administrative Agent shall promptly notify each of the Lenders of such request. Each Lender will use its best efforts to respond to such request, whether affirmatively or negatively, as it may elect in its sole and absolute discretion, within 30 days of such notice to the Administrative Agent. Any Lender not responding to such request within such time period shall be deemed to have responded negatively to such request. The Company may request the Lenders that do not elect to extend the Termination Date to assign their Commitments in their entirety to one or more Assignees pursuant to Section 11.06 which Assignees will agree to extend the Termination Date. If all Lenders (including such Assignees and excluding their respective transferor Lenders) respond affirmatively, then, subject to receipt by the Administrative Agent of counterparts of an Extension Agreement in substantially the form of Exhibit L hereto duly completed and signed by all of the parties thereto, the Termination Date shall be extended to the first anniversary of the Termination Date then in effect.
 
Section 2.02    . Making of Committed Borrowings. The Borrower shall give the Administrative Agent notice (a " Notice of Committed Borrowing ") (i) not later than 12:00 Noon (New York City time) on (w) the date of each Base Rate Borrowing, (x) the first Domestic Business Day before each CD Borrowing, (y) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing, and (z) the fourth Euro-Currency Business Day before each Alternative Currency Borrowing and (ii) not later than 2:00 P.M. (New York City time) on the date of each Swingline Loan, specifying:
 
(a)  
the date of such Borrowing, which shall be a Domestic Business Day in the case of a Domestic Borrowing or a Swingline Loan and a Euro-Currency Business Day in the case of a Euro-Currency Borrowing;
 
 
 
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(b)  
the currency and the aggregate amount (in such currency) of such Borrowing;
 
(c)  
whether the Loans comprising such Borrowing are to be Swingline Loans;
 
(d)  
in the case of a Syndicated Borrowing in Dollars, whether the Loans comprising such Borrowing are to bear interest initially at the Base Rate, a CD Rate or a Euro-Currency Rate; and
 
(e)  
in the case of a Fixed Rate Borrowing, the duration of the initial Interest Period applicable thereto, subject to the provisions of the definition of Interest Period.
 
Section 2.03    . Competitive Bid Borrowings. (a)   The Competitive Bid Option . In addition to Committed Borrowings pursuant to Section 2.01 , the Borrower may, as set forth in this Section, request the Lenders to make offers to make Competitive Bid Loans in Dollars or in Canadian Dollars to the Borrower from time to time during the Revolving Credit Period. The Lenders may, but shall have no obligation to, make such offers and the Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section.
 
(b)  
Competitive Bid Quote Request . When the Borrower wishes to request offers to make Competitive Bid Loans under this Section, it shall transmit to the Administrative Agent a request (a " Competitive Bid Quote Request ") substantially in the form of Exhibit B hereto so as to be received not later than (x) 11:00 A.M. (New York City time) on the fourth Euro-Dollar Business Day before the date of Borrowing proposed therein, in the case of a LIBOR Auction or (y) 9:00 A.M. (New York City time) on the Domestic Business Day which is the date of Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Lenders not later than the date of the Competitive Bid Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective) specifying:
 
(i)  
the proposed date of Borrowing, which shall be a Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic Business Day in the case of an Absolute Rate Auction,
 
(ii)  
the currency and aggregate Dollar Amount of such Borrowing, which shall be not less than $5,000,000 and, in the case of Dollar-Denominated Loans, a multiple of $1,000,000,
 
(iii)  
the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period, and
 
(iv)  
whether the Competitive Bid Quotes requested are to set forth a Competitive Bid Margin or a Competitive Bid Absolute Rate.
 
 
 
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The Borrower may request offers to make Competitive Bid Loans for more than one Interest Period in a single Competitive Bid Quote Request.
 
(c)  
Invitation for Competitive Bid Quotes . Promptly after receiving a Competitive Bid Quote Request, the Administrative Agent shall send to the Lenders an invitation (an " Invitation for Competitive Bid Quotes ") substantially in the form of Exhibit C hereto, which shall constitute an invitation by the Borrower to each Lender to submit Competitive Bid Quotes offering to make the Competitive Bid Loans to which such Competitive Bid Quote Request relates in accordance with this Section.
 
(d)  
Submission and Contents of Competitive Bid Quotes . (i) Each Lender may submit a quote (a " Competitive Bid Quote ") containing an offer or offers to make Competitive Bid Loans in response to any Invitation for Competitive Bid Quotes. Each Competitive Bid Quote must comply with the requirements of this subsection 2.03(d) and must be submitted to the Administrative Agent by telex or facsimile at its address referred to in Section 11.01 not later than 11:00 A.M. (New York City time) on (x) the third Euro-Dollar Business Day before the proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Lenders not later than the date of the Competitive Bid Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective); provided that Competitive Bid Quotes submitted by the Administrative Agent (or any affiliate of the Administrative Agent) in the capacity of a Lender may be submitted, and may only be submitted, if the Administrative Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than (x) one hour before the deadline for the other Lenders, in the case of a LIBOR Auction or (y) 15 minutes before the deadline for the other Lenders, in the case of an Absolute Rate Auction. Subject to Articles 3 and 8 , any Competitive Bid Quote so made shall not be revocable except with the written consent of the Administrative Agent given on the instructions of the Borrower.
 
(ii)  
Each Competitive Bid Quote shall be substantially in the form of Exhibit D hereto and shall in any case specify:
 
(A)    the proposed date of Borrowing,
 
(B)  
the principal amount of the Competitive Bid Loan for which each such offer is being made, which principal amount (w) may be greater than or less than the Commitment of the quoting Lender, (x) must be a Dollar Amount of at least $5,000,000 and, in the case of a Dollar-Denominated Loan, a multiple of $1,000,000, (y) may not exceed the principal amount of Competitive Bid Loans for which offers were requested and (z) may be subject to an aggregate limitation as to the principal amount of Competitive Bid Loans for which offers being made by such quoting Lender may be accepted,
 
 
 
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(C)  
in the case of a LIBOR Auction, the margin above or below the Applicable Interbank Offered Rate (the " Competitive Bid Margin ") offered for each such Competitive Bid Loan, expressed as a percentage (specified to the nearest 1/10,000th of 1%) to be added to or subtracted from such base rate,
 
(D)  
in the case of an Absolute Rate Auction, the rate of interest per annum (specified to the nearest 1/10,000th of 1%) (the " Competitive Bid Absolute Rate ") offered for each such Competitive Bid Loan, and
 
(E)    the identity of the quoting Lender.
 
A Competitive Bid Quote may set forth up to five separate offers by the quoting Lender with respect to each Interest Period specified in the related Invitation for Competitive Bid Quotes.
 
(iii)    Any Competitive Bid Quote shall be disregarded if it:
 
(A)  
is not substantially in conformity with Exhibit D hereto or does not specify all of the information required by subsection (d) (ii) above;
 
(B)  
contains qualifying, conditional or similar language;
 
(C)  
proposes terms other than or in addition to those set forth in the applicable Invitation for Competitive Bid Quotes; or
 
(D)    arrives after the time set forth in subsection (d) (i) .
 
(e)  
Notice to Borrower . The Administrative Agent shall promptly notify the Borrower of the terms of (i) any Competitive Bid Quote submitted by a Lender that is in accordance with subsection (d) and (ii) any Competitive Bid Quote that amends, modifies or is otherwise inconsistent with a previous Competitive Bid Quote submitted by such Lender with respect to the same Competitive Bid Quote Request. Any such subsequent Competitive Bid Quote shall be disregarded by the Administrative Agent unless such subsequent Competitive Bid Quote is submitted solely to correct a manifest error in such former Competitive Bid Quote. The Administrative Agent's notice to the Borrower shall specify (A) the aggregate principal amount of Competitive Bid Loans for which offers have been received for each Interest Period specified in the related Competitive Bid Quote Request, (B) the respective principal amounts and Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be, so offered and (C) if applicable, limitations on the aggregate principal amount of Competitive Bid Loans for which offers in any single Competitive Bid Quote may be accepted.
 
 
 
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(f)  
Acceptance and Notice by Borrower . Not later than 12:00 Noon (New York City time) on (x) the third Euro-Dollar Business Day before the proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Lenders not later than the date of the Competitive Bid Quote Request for the first LIBOR Auction or Absolute Rate Auction for which such change is to be effective), the Borrower shall notify the Administrative Agent of its acceptance or non-acceptance of the offers so notified to it pursuant to subsection (e). In the case of acceptance, such notice (a " Notice of Competitive Bid Borrowing ") shall specify the aggregate principal amount of offers for each Interest Period that are accepted. The Borrower may accept any Competitive Bid Quote in whole or in part; provided that:
 
(i)  
the aggregate principal amount of each Competitive Bid Borrowing may not exceed the applicable amount set forth in the related Competitive Bid Quote Request;
 
(ii)  
the Dollar Amount of each Competitive Bid Borrowing must be at least $5,000,000 and, in the case of Dollar-Denominated Loans, a multiple of $1,000,000;
 
(iii)  
acceptance of offers may only be made on the basis of ascending Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be; and
 
(iv)  
the Borrower may not accept any offer that is described in subsection (d)(iii) or that otherwise fails to comply with the requirements of this Agreement.
 
(g)  
Allocation by Administrative Agent . If offers are made by two or more Lenders with the same Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Competitive Bid Loans in respect of which such offers are accepted shall be allocated by the Administrative Agent among such Lenders as nearly as possible (in multiples of $1,000,000 or Can $1,000,000, as the Administrative Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers. Determinations by the Administrative Agent of the amounts of Competitive Bid Loans shall be conclusive in the absence of manifest error.
 
 
 
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Section 2.04    . Notice to Lenders; Funding of Loans.   (a)   Upon receipt of a Notice of Borrowing, the Administrative Agent shall promptly (but in any event on the same day) notify each Lender participating therein of the contents thereof and of such Lender's ratable share of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the Borrower.
 
(b)  
On the date of each Borrowing, each Lender participating therein shall make available its ratable share of such Borrowing:
 
(A)  
if such Borrowing is to be made in Dollars, not later than 12:00 Noon (New York City time), in funds immediately available in New York City, to the Administrative Agent at its office specified in or pursuant to Section 11.01 ; or
 
(B)  
if such Borrowing is to be made in an Alternative Currency, in such Alternative Currency (in funds immediately available to the Administrative Agent or such funds as may then be customary for the settlement of international transactions in such Alternative Currency) to the account of the Administrative Agent at such time and place as shall have been notified by the Administrative Agent to the Borrower and the Lenders.
 
Unless the Administrative Agent determines that any applicable condition specified in Article 3 has not been satisfied, (i) if such Borrowing is to be made in Dollars or Canadian Dollars, the Administrative Agent shall make such aggregate funds available to the Borrower by depositing the proceeds thereof, in like funds as received by the Administrative Agent, in the account of the Borrower with the Administrative Agent as promptly as practicable, but in no event later than 2:00 P.M. (New York City time) on the date of such Borrowing and (ii) if such Borrowing is to be made in another Alternative Currency, the Administrative Agent will make the funds so received from the Lenders available to the Borrower at the aforesaid address.
 
(c)  
Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available to the Administrative Agent on the date of such Borrowing in accordance with subsection (b) of this Section 2.04 and the Administrative 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 share available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative 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 Administrative Agent, at the Federal Funds Rate (if such Borrowing is in Dollars) or the Applicable Interbank Offered Rate (if such Borrowing is in an Alternative Currency). If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender's Loan included in such Borrowing for purposes of this Agreement. Nothing contained in this subsection (c) shall relieve any Lender which has failed to make available its share of any Borrowing hereunder from its obligation to do so in accordance with the terms hereof.
 
 
 
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(d)  
The failure of any Lender to make available to the Administrative Agent its share of any Borrowing on the date of such Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make available to the Administrative Agent its share of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make available the share of any Borrowing to be made available by such other Lender on such date of Borrowing.
 
Section 2.05    . Registry; Notes. (a) The Administrative Agent shall maintain a register (the " Register ") on which it will record the Commitment of each Lender, each Loan made by such Lender and each repayment of any Loan made by such Lender. Any such recordation by the Administrative Agent on the Register shall be presumptively correct, absent manifest error. Failure to make any such recordation, or any error in such recordation, shall not affect any Borrower's obligations hereunder.
 
(b)  
Each Borrower hereby agrees that, promptly upon the request of any Lender at any time, such Borrower shall deliver to such Lender a single Note, in substantially the form of Exhibit A hereto, duly executed by such Borrower and payable to the order of such Lender and representing the obligation of such Borrower to pay the unpaid principal amount of all Loans made to such Borrower by such Lender, with interest as provided herein on the unpaid principal amount from time to time outstanding.
 
(c)  
Each Lender shall record the date, amount and maturity of each Loan made by it and the date and amount of each payment of principal made by the Borrower with respect thereto, and each Lender receiving a Note pursuant to this Section, if such Lender so elects in connection with any transfer or enforcement of any Note, may endorse on the schedule forming a part thereof appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding; provided that neither the failure of such Lender to make any such recordation or endorsement nor any error therein shall affect the obligations of any Borrower hereunder or under the Notes. Such Lender is hereby irrevocably authorized by each Borrower so to endorse any Note and to attach to and make a part of any Note a continuation of any such schedule as and when required .
 
Section 2.06    . Maturity of Loans. (a) Each Committed Loan shall mature, and the principal amount thereof shall be due and payable, together with accrued interest thereon on the Termination Date.
 
(b)  
Each Competitive Bid Loan included in any Competitive Bid Borrowing shall mature, and the principal amount thereof shall be due and payable (together with interest accrued thereon) on the last day of the Interest Period applicable to such Borrowing.
 
 
 
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Section 2.07    . Interest Rates. (a) Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made to but excluding the date it becomes due, at a rate per annum equal to the Base Rate for such day. Such interest shall be payable to but excluding the date of actual payment in arrears on each Quarterly Date and, with respect to the principal amount of any Base Rate Loan converted to a CD Loan or a Euro-Dollar Loan, on each date a Base Rate Loan is so converted. Any overdue principal of or overdue interest on any Base Rate Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 1% plus the Base Rate for such day.
 
(b)  
Each CD Loan shall bear interest on the outstanding principal amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum (the " CD Rate ") equal to the sum of the CD Margin for such day plus the Adjusted CD Rate applicable to such Interest Period; provided that if any CD Loan shall, as a result of clause (4)(b) of the definition of Interest Period, have an Interest Period of less than 30 days, such CD Loan shall bear interest during such Interest Period at the Base Rate during such period. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than 90 days, at intervals of 90 days after the first day thereof. Any overdue principal of or overdue interest on any CD Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 1% plus the Base Rate for such day.
 
The " Adjusted CD Rate " applicable to any Interest Period means a rate per annum determined pursuant to the following formula:
 
ACDR =
[ CDBR ]*
[ - - -] + AR
[ 1.00 - DRP ]
 
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
 
_________________
*
The amount in brackets being rounded upward, if necessary, to the next higher 1/100 of 1%

The " CD Base Rate " applicable to any Interest Period is the rate of interest determined by the Administrative Agent to be the average (rounded upward, if necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the first day of such Interest Period by two or more New York certificate of deposit dealers of recognized standing for the purchase at face value from each CD Reference Bank of its certificates of deposit in an amount comparable to the principal amount of the CD Loan of such CD Reference Bank to which such Interest Period applies and having a maturity comparable to such Interest Period.
 
 
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" Domestic Reserve Percentage " means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including without limitation any basic, supplemental or emergency reserves) for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of new non-personal time deposits in dollars in New York City having a maturity comparable to the related Interest Period and in an amount of $100,000 or more. The Adjusted CD Rate shall be adjusted automatically on and as of the effective date of any change in the Domestic Reserve Percentage.
 
" Assessment Rate " means for any day the annual assessment rate in effect on such day which is payable by a member of the Bank Insurance Fund classified as adequately capitalized and within supervisory subgroup " A " (or a comparable successor assessment risk classification) within the meaning of 12 C.F.R. ¡¨¬ 327.4(a) (or any successor provision) to the Federal Deposit Insurance Corporation (or any successor) for such Corporation's (or such successor's) insuring time deposits at offices of such institution in the United States. The Adjusted CD Rate shall be adjusted automatically on and as of the effective date of any change in the Assessment Rate.
 
(c)  
Each Euro-Currency Loan shall bear interest on the outstanding principal amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum (the " Euro-Currency Rate ") equal to the sum of (i) the Euro-Currency Margin for such day plus (ii) the Applicable Interbank Offered Rate applicable to such Interest Period plus (iii) the applicable Mandatory Cost, if any. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof.
 
The " Applicable Interbank Offered Rate " applicable to any Euro-Currency Loan for any Interest Period means the rate appearing on the Screen at approximately 11:00 A.M. (London time) on the Rate Fixing Date as the rate for deposits in Dollars or the relevant Alternative Currency with a maturity comparable to such Interest Period. If no rate appears on the Screen for the necessary currency and period, then the " Applicable Interbank Offered Rate " with respect to such Euro-Currency Loan for such Interest Period shall be the average of the rates (rounded, if necessary, to the next higher 1/100 of 1%) at which deposits of that currency with a maturity comparable to such Interest Period are offered to each of the Reference Banks in the London interbank market at approximately 11:00 A.M. (London time), on the Rate Fixing Date.
 
The " Screen " means (i) with respect to Dollar-Denominated Loans, Telerate Page 3750 and (ii) with respect to Alternative Currency Loans, the Telerate page selected by the Administrative Agent that displays rates for interbank deposits in the appropriate Alternative Currency. If these pages are replaced by others which display rates for interbank deposits offered by leading banks in London, the Administrative Agent may use such pages as an alternative source of screen rates.
 
 
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" Rate Fixing Date " means, with respect to any Interest Period, (i) in respect of British Sterling, the first day of such Interest Period and (ii) in respect of any other currency, the date falling two Euro-Currency Business Days before the first day of such Interest Period.
 
(d)  
Any overdue principal of or interest on any Euro-Currency Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to (x) in case of any Euro-Dollar Loan, the sum of 1% plus the Base Rate for such date and (y) in case of any Alternative Currency Loan (i) from and including the date the payment thereof was due to but excluding the last day of the Interest Period then in effect, the sum of 1% plus the Euro-Currency Margin for such day plus the Applicable Interbank Offered Rate applicable to such Loan at the date such payment was due and (ii) thereafter, the sum of 1% plus the Euro-Currency Margin for such day plus the quotient obtained (rounded upward, if necessary, to the next higher 1/100 of 1%) by dividing (A) the average (rounded upward, if necessary, to the next higher 1/100 of 1%) of the respective rates per annum at which one day (or, if such amount due remains unpaid more than three Euro-Currency Business Days, then for such other period of time not longer than three months as the Administrative Agent may select) deposits in an amount approximately equal to such overdue payment due to each of the Reference Banks are offered to such Reference Bank in the London interbank market for the applicable period determined as provided above by (B) 1.00 minus the Euro-Currency Reserve Percentage.
 
(e)  
Each Swingline Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the Base Rate for such day. Interest on each Swingline Loan shall be payable in arrears on each Quarterly Date. Any overdue principal of or interest on any Swingline Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 1% plus the Base Rate for such day.
 
(f)  
Subject to Section 8.01 , the unpaid principal amount of each Competitive Bid LIBOR Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the Applicable Interbank Offered Rate for such Interest Period (determined in accordance with Section 2.07(c) as if the related Competitive Bid LIBOR Borrowing were a Euro-Currency Borrowing) plus (or minus) the Competitive Bid Margin quoted by the Lender making such Loan. The unpaid principal amount of each Competitive Bid Absolute Rate Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Competitive Bid Absolute Rate quoted by the Lender making such Loan. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. Any overdue principal of or interest on any Competitive Bid Loan shall bear interest, payable on demand, for each day until paid at the applicable rate per annum determined in accordance with Section 2.07(d) as if such Competitive Bid Loan were a Committed Loan denominated in the same currency.
 
 
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(g)  
The Administrative Agent shall determine each interest rate applicable to the Loans hereunder. The Administrative Agent shall give prompt notice to the Borrower and the participating Lenders of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error.
 
Section 2.08    . Fees. (a) The Company shall pay to the Administrative Agent for the account of the Lenders ratably a facility fee in Dollars at the Facility Fee Rate (determined daily in accordance with the Pricing Schedule) on the daily aggregate amount of the Credit Exposures. Such facility fee shall accrue from and including the Effective Date to but excluding the date that the Credit Exposures are reduced to zero.
 
(b)  
The Company shall pay to the Administrative Agent (i) for the account of the Lenders ratably a letter of credit fee in Dollars accruing daily on the Dollar Amount of the aggregate amount available for drawing under all outstanding Letters of Credit at the Letter of Credit Fee Rate (determined daily in accordance with the Pricing Schedule) and (ii) for the account of each Issuing Lender a letter of credit fronting fee accruing daily on the aggregate Dollar Amount of all Letters of Credit issued by such Issuing Lender at a rate per annum mutually agreed from time to time by the Company and such Issuing Lender.
 
(c)  
Accrued fees under this Section shall be payable quarterly in arrears on each Quarterly Date and on the date of termination of the Commitments in their entirety (and, if later, the date the Credit Exposures are reduced to zero).
 
Section 2.09    . Optional Termination or Reduction of Commitments. During the Revolving Credit Period, the Company may, upon at least three Domestic Business Days' notice to the Administrative Agent, (i) terminate the Commitments at any time, if no Loans or Letter of Credit Liabilities are outstanding at such time or (ii) ratably and permanently reduce from time to time by an aggregate amount of at least $25,000,000 or a larger multiple of $5,000,000, the aggregate amount of the Commitments in excess of the Total Outstanding Amount.
 
Section 2.10    . Method of Electing Interest Rates. (a) The Loans included in each Syndicated Borrowing of Dollar-Denominated Loans shall bear interest initially at the type of rate specified by the Borrower in the applicable Notice of Committed Borrowing. Thereafter, the Borrower may from time to time elect to change or continue the type of interest rate borne by each Group of Loans (subject in each case to the provisions of Article 8 and the last sentence of this subsection (a)), as follows:
 
(i)  
if such Loans are Base Rate Loans, the Borrower may elect to convert such Loans to CD Loans as of any Domestic Business Day or to Euro-Dollar Loans as of any Euro-Dollar Business Day;
 
 
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(ii)  
if such Loans are CD Loans, the Borrower may elect to convert such Loans to Base Rate Loans or Euro-Dollar Loans or elect to continue such Loans as CD Loans for an additional Interest Period, subject to Section 2.14 in the case of any such conversion or continuation effective on any day other than the last day of the then current Interest Period applicable to such Loans; and
 
(iii)  
if such Loans are Euro-Dollar Loans, the Borrower may elect to convert such Loans to Base Rate Loans or elect to continue such Loans as Euro-Dollar Loans for an additional Interest Period, subject to Section 2.14 in the case of any such conversion or continuation effective on any day other than the last day of the then current Interest Period applicable to such Loans.
 
Each such election shall be made by delivering a notice (a " Notice of Interest Rate Election ") to the Administrative Agent not later than 11:00 A.M. (New York City time) on the third Euro-Dollar Business Day before the conversion or continuation selected in such notice is to be effective (unless the relevant Loans are to be converted to Domestic Loans of the other type or are CD Rate Loans to be continued as CD Rate Loans for an additional Interest Period, in which case such notice shall be delivered to the Administrative Agent not later than 11:00 A.M. (New York City time) on the second Domestic Business Day before such conversion or continuation is to be effective). A Notice of Interest Rate Election may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans, provided that (i) such portion is allocated ratably among the Loans comprising such Group and (ii) the portion to which such Notice of Interest Rate Election applies, and the remaining portion to which it does not apply, are each $5,000,000 or any larger multiple of $1,000,000 (unless such portion is comprised of Base Rate Loans).
 
(b)    Each Notice of Interest Rate Election shall specify:
 
(i)  
the Group of Loans (or portion thereof) to which such notice applies;
 
(ii)  
the date on which the conversion or continuation selected in such notice is to be effective, which shall comply with the applicable clause of subsection 2.10(a) above;
 
(iii)  
if the Loans comprising such Group are to be converted, the new type of Loans and, if the Loans being converted are to be Fixed Rate Loans, the duration of the next succeeding Interest Period applicable thereto; and
 
(iv)  
if such Loans are to be continued as CD Loans or Euro-Dollar Loans for an additional Interest Period, the duration of such additional Interest Period.
 
Each Interest Period specified in a Notice of Interest Rate Election shall comply with the provisions of the definition of the term " Interest Period ".
 
 
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(c)  
Upon receipt of a Notice of Interest Rate Election from the Borrower pursuant to subsection 2.10(a) above, the Administrative Agent shall promptly notify each Lender of the contents thereof and such notice shall not thereafter be revocable by the Borrower. If no Notice of Interest Rate Election is timely received prior to the end of an Interest Period for any Group of Fixed Rate Loans, the Borrower shall be deemed to have elected that such Group of Loans be continued on the last day of such Interest Period for an additional Interest Period of 30 days or one month, as the case may be (subject to the provisions of the definition of Interest Period).
 
(d)  
An election by the Borrower to change or continue the rate of interest applicable to any Group of Loans pursuant to this Section shall not constitute a Borrowing subject to the provisions of Section 3.02 .
 
(e)  
The initial Interest Period for each Syndicated Borrowing of Alternative Currency Loans shall be specified by the Borrower in the applicable Notice of Committed Borrowing. The Borrower may specify the duration of each subsequent Interest Period applicable to such Group of Loans by delivering to the Administrative Agent not later than 11:00 A.M. (New York City time) on the fourth Euro-Currency Business Day before the end of the immediately preceding Interest Period a notice specifying the Group of Loans to which such notice applies and the duration of such subsequent Interest Period (which shall comply with the provisions of the definition of Interest Period). Such notice may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans; provided that (i) such portion is allocated ratably among the Loans comprising such Group and (ii) the Dollar Amounts of the portion to which such notice applies, and the remaining portion to which it does not apply, are each at least $5,000,000. If no such notice is timely received by the Administrative Agent before the end of any applicable Interest Period, the Borrower shall be deemed to have elected that the subsequent Interest Period for such Group of Loans shall have a duration of one month (subject to the provisions of the definition of Interest Period).
 
Section 2.11    . Scheduled Termination of Commitments. The Commitments shall terminate on the Termination Date, and any Loans then outstanding (together with accrued interest thereon) shall be due and payable on such date.
 
Section 2.12    . Optional Prepayments. (a) Subject in the case of any Fixed Rate Loan to Section 2.14 , the Borrower may, upon at least one Domestic Business Day's notice to the Administrative Agent, prepay any Group of Domestic Loans, any Swingline Loans or any Competitive Bid Borrowing bearing interest at the Base Rate pursuant to Section 8.01 , upon at least three Euro-Dollar Business Day's notice to the Administrative Agent, prepay any Group of Euro-Dollar Loans or upon at least four Euro-Currency Business Days' notice to the Administrative Agent, prepay any Group of Euro-Currency Loans, in each case in whole at any time, or from time to time in part in Dollar Amounts aggregating not less than $5,000,000 ($100,000 in the case of a Swingline Loan), by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. Each such optional prepayment shall be applied to prepay ratably the Loans of the several Lenders included in such Borrowing.
 
 
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(b)  
Except as provided in subsection 2.12(a) above, the Borrower may not prepay all or any portion of the principal amount of any Competitive Bid Loan prior to the maturity thereof without the consent of the Lender of such Competitive Bid Loan.
 
(c)  
Upon receipt of a notice of prepayment pursuant to this Section, the Administrative Agent shall promptly notify each Lender of the contents thereof and of such Lender's ratable share (if any) of such prepayment and such notice shall not thereafter be revocable by the Borrower.
 
Section 2.13    . General Provisions as to Payments. (a) The Borrowers shall make each payment of principal of, and interest on, the Dollar-Denominated Loans, of Letter of Credit Liabilities denominated in Dollars and of fees hereunder, not later than 12:00 Noon (New York City time) on the date when due, in Dollars in funds immediately available in New York City, to the Administrative Agent at its address referred to in Section 11.01 . The Borrowers shall make each payment of principal of, and interest on, the Alternative Currency Loans in the relevant Alternative Currency in such funds as may then be customary for the settlement of international transactions in such Alternative Currency, to such account and at such time and at such place as shall have been agreed by the Administrative Agent and the Company. In any event, all payments to be made by the Borrowers hereunder shall be made without condition or deduction for any counterclaim, defense, recoupment or set-off. The Administrative Agent will promptly distribute to each Lender its ratable share of each such payment received by the Administrative Agent for the account of the Lenders. Whenever any payment of principal of, or interest on, the Domestic Loans, Swingline Loans or Letter of Credit Liabilities denominated in Dollars or of fees shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the next succeeding Domestic Business Day. Whenever any payment of principal of, or interest on, the Euro-Currency Loans shall be due on a day which is not a Euro-Currency Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Currency Business Day unless such Euro-Currency Business Day falls in another calendar month, in which case the date for payment thereof shall be the next preceding Euro-Currency Business Day. Whenever any payment of principal of, or interest on, the Competitive Bid Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day. Whenever any payment of Letter of Credit Liabilities denominated in an Alternative Currency shall be due on a day which is not a Euro-Currency Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Currency Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time.
 
(b)  
Unless the Administrative 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 Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative 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 that the Borrower shall not have so made such payment, each Lender shall repay to the Administrative 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 Administrative Agent, at (i) the Federal Funds Rate (if such amount was distributed in Dollars) or (ii) the rate per annum at which one-day deposits in the relevant currency are offered by the principal London office of the Administrative Agent in the London interbank market for such day (if such amount was distributed in an Alternative Currency).
 
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Section 2.14    . Funding Losses. If:  
 
(a)  
the Borrower makes any payment of principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is converted (pursuant to Article 2 , Article 6 or 8 or otherwise) on any day other than the last day of an Interest Period applicable thereto, or the last day of an applicable period fixed pursuant to Section 2.07(d) ;
 
(b)  
any lender or lenders purchase the outstanding Loans of any Lender pursuant to Section 8.06 on any day other than the last day of an Interest Period applicable thereto; or
 
(c)  
the Borrower fails to borrow, prepay, convert or continue any Fixed Rate Loans after notice has been given to any Lender in accordance with Section 2.04 , 2.10(c) or 2.12(c) ;
 
then the Borrower shall reimburse each Lender through the Administrative Agent within 30 days after demand for any resulting loss or expense incurred by it (or by an existing or prospective Participant in the related Loan), including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of margin for the period after any such payment or conversion or failure to borrow, prepay, convert or continue, provided that such Lender shall have delivered to the Borrower and the Administrative Agent a certificate containing a computation in reasonable detail as to the amount of such loss or expense, which certificate shall be conclusive in the absence of manifest error.
 
Section 2.15    . Computation of Interest and Fees. (a)   Interest (i) on Alternative Currency Loans denominated in British Sterling or (ii) based on the Prime Rate hereunder shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest and fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day); provided that if the Administrative Agent reasonably determines that a different basis of computation is the market convention for a particular Alternative Currency, such different basis shall be used, so long as the Company shall have consented thereto (such consent not to be unreasonably withheld).
 
(b)  
For the purposes of the Interest Act (Canada), (i) whenever a rate of interest or fee rate hereunder is calculated on the basis of a year (the "deemed year") that contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest or fee rate shall be expressed as a yearly rate by multiplying such rate of interest or fee rate by the actual number of days in the calendar year of calculation and dividing it by the number of days in the deemed year, (ii) the principal of deemed reinvestment of interest shall not apply to any interest calculation hereunder and (iii) the rates of interest stipulated herein are intended to be nominal rates and not effective rates or yields.
 
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Section 2.16    . Letters of Credit. (a) Subject to the terms and conditions hereof, the Issuing Lender designated by a Borrower for a specific issuance shall issue Letters of Credit hereunder denominated in Dollars or in an Alternative Currency (as designated by the Borrower) from time to time before the fifth Euro-Currency Business Day preceding the Termination Date upon such Borrower's request; provided that, immediately after each Letter of Credit is issued (i) the Total Outstanding Amount shall not exceed the aggregate amount of the Commitments and (ii) the aggregate Dollar Amount of Letter of Credit Liabilities shall not exceed $200,000,000. Upon the date of issuance by the Issuing Lender of a Letter of Credit, the Issuing Lender shall be deemed, without further action by any party hereto, to have sold to each Lender, and each Lender shall be deemed, without further action by any party hereto, to have purchased from the Issuing Lender, a participation in such Letter of Credit and the related Letter of Credit Liabilities in the proportion their respective Commitments bear to the aggregate Commitments.
 
(b)  
The Borrower shall give the Issuing Lender notice at least four Euro-Currency Business Days prior to the requested issuance of a Letter of Credit specifying the date such Letter of Credit is to be issued, the amount thereof, whether it is to be issued in Dollars or an Alternative Currency, the expiry thereof, the beneficiary thereof and the conditions to drawing thereunder (such notice, including any such notice given in connection with the extension of a Letter of Credit, a " Notice of Issuance "). Upon receipt of a Notice of Issuance, the Issuing Lender shall promptly notify the Administrative Agent, and the Administrative Agent shall promptly notify each Lender of the contents thereof and of the amount of such Lender's participation in such Letter of Credit. The issuance by the Issuing Lender of each Letter of Credit shall, in addition to the conditions precedent set forth in Article 3 , be subject to the conditions precedent that such Letter of Credit shall be in such form and contain such terms as shall be reasonably satisfactory to the Issuing Lender and that the Borrower shall have executed and delivered such other customary instruments and agreements relating to such Letter of Credit as the Issuing Lender shall have reasonably requested. Each Issuing Lender hereby acknowledges that a notice period not less than 30 days for non-extension of an Evergreen Letter of Credit is satisfactory to it. The Borrower shall also pay to the Issuing Lender for its own account issuance, drawing, amendment and extension charges in the amounts and at the times as agreed between the Borrower and the Issuing Lender. The extension or renewal of any Letter of Credit shall be deemed to be an issuance of such Letter of Credit.
 
(c)  
No Letter of Credit shall have a term extending or be so extendible beyond the fifth Euro-Currency Business Day preceding the Termination Date. Subject to the preceding sentence, each Letter of Credit issued hereunder shall expire on or before the first anniversary of the date of such issuance; provided that the expiry date of any Letter of Credit may be extended from time to time (i) at the Borrower's request or (ii) in the case of an Evergreen Letter of Credit, automatically, in each case so long as such extension is for a period not exceeding one year and, in the case of an Evergreen Letter of Credit, so long as the Borrower shall not have timely instructed the Issuing Lender to give notice of non-extension thereunder. Each Issuing Lender shall, upon giving such notice of non-extension, give the Borrower a copy of such notice.
 
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(d)  
Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the Issuing Lender shall notify the Administrative Agent and the Administrative Agent shall promptly notify the Borrower and each other Lender as to the date and amount of the payment by the Issuing Lender as a result of such demand or drawing (such date, the " Payment Date "). The Borrower shall be irrevocably and unconditionally obligated forthwith to reimburse the Issuing Lender for any amounts paid by the Issuing Lender upon any drawing under any Letter of Credit, in the currency of such payment (a " Reimbursement Obligation "), within one Euro-Dollar Business Day of the Payment Date, if the Reimbursement Obligation is denominated in Dollars, and within four Euro-Currency Business Days of the Payment Date, if the Reimbursement Obligation is denominated in an Alternative Currency (in either case, the " Reimbursement Date "), without presentment, demand, protest or other formalities of any kind. Unless the Borrower notifies the Issuing Lender on or before the Payment Date that it will otherwise make payment of such Reimbursement Obligation, the Borrower shall have been deemed to make a request for a Base Rate Loan (or a Euro-Currency Loan in an Alternative Currency if the Reimbursement Obligation is denominated in such currency) in an amount equal to such Reimbursement Obligation. All such amounts paid by the Issuing Lender shall bear interest, payable on demand, for each day from the Payment Date until paid at a rate per annum equal to (i) if such amount is denominated in Dollars, the Base Rate for such day and (ii) if such amount is denominated in an Alternative Currency, the sum of the Euro-Currency Margin plus the rate per annum at which one-day deposits in the relevant currency are offered by the principal London office of the Administrative Agent in the London interbank market for such day plus, for each day on or after the Reimbursement Date on which such amount remains unpaid, 1.00% per annum. In addition, each Lender will pay to the Administrative Agent, for the account of the Issuing Lender, immediately upon the Issuing Lender's demand at any time during the period commencing on the Payment Date until reimbursement therefor in full by the Borrower, an amount equal to such Lender's ratable share of such drawing (in proportion to its participation therein), together with interest on such amount for each day from the Payment Date to the date of payment by such Lender of such amount at a rate of interest per annum equal to the (i) if such amount is denominated in Dollars, the Federal Funds Rate and (ii) if such amount is denominated in an Alternative Currency, the rate per annum at which one-day deposits in the relevant currency are offered by the principal London office of the Administrative Agent in the London interbank market for such day. The Issuing Lender will pay to each Lender ratably all amounts received from the Borrower for application in payment of its reimbursement obligations in respect of any Letter of Credit, but only to the extent such Lender has made payment to the Issuing Lender in respect of such Letter of Credit pursuant hereto.
 
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(e)  
The obligations of the Borrower and each Lender under Section 2.16(d) above shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including without limitation the following circumstances:
 
(i)  
the use which may be made of the Letter of Credit by, or any acts or omission of, a beneficiary of a Letter of Credit (or any Person for whom the beneficiary may be acting);
 
(ii)  
the existence of any claim, set-off, defense or other rights that the Borrower may have at any time against a beneficiary of a Letter of Credit (or any Person for whom the beneficiary may be acting), the Lenders (including the Issuing Lender) or any other Person, whether in connection with this Agreement or the Letter of Credit or any document related hereto or thereto or any unrelated transaction;
 
(iii)  
any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect whatsoever;
 
(iv)  
payment under a Letter of Credit to the beneficiary of such Letter of Credit against presentation to the Issuing Lender of a draft or certificate that does not comply with the terms of the Letter of Credit; or
 
(v)  
any other act or omission to act or delay of any kind by any Lender (including the Issuing Lender), the Administrative Agent or any other Person or any other event or circumstance whatsoever that might, but for the provisions of this subsection (v) , constitute a legal or equitable discharge of the Borrower's or the Lender's obligations hereunder.
 
33
(f)  
The Borrower hereby indemnifies and holds harmless each Lender (including the Issuing Lender) and the Administrative Agent from and against any and all claims, damages, losses, liabilities, costs or expenses which such Lender or the Administrative Agent may incur (including, without limitation, any claims, damages, losses, liabilities, costs or expenses which the Issuing Lender may incur by reason of or in connection with the failure of any other Lender to fulfill or comply with its obligations to such Issuing Lender hereunder (but nothing herein contained shall affect any rights the Borrower may have against such defaulting Lender)), and none of the Lenders (including the Issuing Lender) nor the Administrative Agent nor any of their officers or directors or employees or agents shall be liable or responsible, by reason of or in connection with the execution and delivery or transfer of or payment or failure to pay under any Letter of Credit, including without limitation any of the circumstances enumerated in Section 2.16(e) above, as well as (i) any error, omission, interruption or delay in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, (ii) any loss or delay in the transmission of any document required in order to make a drawing under a Letter of Credit, and (iii) any consequences arising from causes beyond the control of the Issuing Lender, including without limitation any government acts, or any other circumstances whatsoever in making or failing to make payment under such Letter of Credit; provided that the Borrower shall not be required to indemnify the Issuing Lender for any claims, damages, losses, liabilities, costs or expenses, and the Borrower shall have a claim for direct (but not consequential) damage suffered by it, to the extent finally determined by a court of competent jurisdiction to have been caused by (x) the willful misconduct or gross negligence of the Issuing Lender in determining whether a request presented under any Letter of Credit complied with the terms of such Letter of Credit or (y) the Issuing Lender's failure to pay under any Letter of Credit after the presentation to it of a request strictly complying with the terms and conditions of the Letter of Credit. Nothing in this subsection 2.16(f) is intended to limit the obligations of the Borrower under any other provision of this Agreement. To the extent the Borrower does not indemnify the Issuing Lender as required by this subsection, the Lenders agree to do so ratably in accordance with their Commitments.
 
Section 2.17    . Regulation D Compensation. (a) So long as Regulation D shall require reserves to be maintained against " Eurocurrency liabilities "   (or against any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Currency Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Lender to United States residents), each Lender subject to and actually inc urring such reserve requirement may require the Borrower to pay, contemporaneously with each payment of interest on the Euro-Currency Loans, additional interest on the related Euro-Currency Loan of such Lender at a rate per annum determined by such Lender up to but not exceeding the excess of (i)   (A) the Applicable Interbank Offered Rate divided by (B) one minus the Euro-Currency Reserve Percentage over (ii) the Applicable Interbank Offered Rate. Any Lender wishing to require payment of such additional interest (x) shall so notify the Company and the Administrative Agent, in which case such additional interest on the Euro-Currency Loans of such Lender shall be payable to such Lender at the place indicated in such notice with respect to each Interest Period commencing at least three Euro-Currency Business Days after such Lender gives such notice and (y) shall notify the Borrower at least five Euro-Currency Business Days before each date on which interest is payable on the Euro-Currency Loans of the amount then due it under this Section.
 
Section 2.18    . Takeout of Swingline Loans. (a) In the event that (i) the outstanding Swingline Loans shall not be repaid in full on the maturity thereof or (ii) any Swingline Lender (in its discretion) requests it to do so, the Administrative Agent shall, on behalf of the Company (the Company hereby irrevocably directing and authorizing the Administrative Agent so to act on its behalf), give a Notice of Borrowing requesting the Lenders, including the Swingline Lenders, to make a Base Rate Borrowing in an amount equal to the aggregate unpaid principal amount of the outstanding Swingline Loans. Each Lender will make the proceeds of its Base Rate Loan included in such Borrowing available to the Administrative Agent for the account of the Swingline Lenders on such date in accordance with Section 2.04 . The proceeds of such Base Rate Borrowing shall be immediately applied to repay such Swingline Loans.
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(b)  
If, for any reason, a Base Rate Borrowing may not be (as reasonably determined by the Administrative Agent), or is not, made pursuant to subsection (a) above to refund Swingline Loans as required by said clause, then, effective on the date such Borrowing would otherwise have been made, each Lender severally, unconditionally and irrevocably agrees that it shall purchase an undivided participating interest in such Swingline Loans (" Unrefunded Swingline Loans ") in an amount equal to the amount of the Loan which otherwise would have been made by such Lender pursuant to subsection (a) , which purchase shall be funded by the time such Loan would have been required to be funded pursuant to Section 2.04 by transfer to the Administrative Agent, for the account of each Swingline Lender, in immediately available funds, of the amount of its participation.
 
(c)  
Whenever, at any time after a Swingline Lender has received from any Lender payment in full for such Lender's participating interest in a Swingline Loan, such Swingline Lender (or the Administrative Agent on its behalf) receives any payment on account thereof, such Swingline Lender (or the Administrative Agent, as the case may be) will promptly distribute to such Lender its participating interest in such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded); provided , however , that in the event that such payment is subsequently required to be returned, such Lender will return to such Swingline Lender (or the Administrative Agent, as the case may be) any portion thereof previously distributed by such Swingline Lender (or the Administrative Agent, as the case may be) to it.
 
(d)  
Each Lender's obligation to purchase and fund participating interests pursuant to this Section shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation: (i) any setoff, counterclaim, recoupment, defense or other right which such Lender or the Company may have against any Swingline Lender, or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default or the failure to satisfy any of the conditions specified in Article 3 ; (iii) any adverse change in the condition (financial or otherwise) of the Company; (iv) any breach of this Agreement by the Company or any Lender; or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.
 
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Section 2.19    . Replacement of this Agreement. If the Company wishes at any time to replace this Agreement with another credit facility, the Company may give prior notice of the termination of the Commitments hereunder as required by Section 2.09 and prior notice of the prepayment of any Loans outstanding hereunder as required by Section 2.12 , in each case on a conditional basis ( i.e., conditioned upon such other credit facility becoming available to the Company), provided that the Company gives definitive notice of such termination of the Commitments and prepayment of outstanding Loans (if any) to the Administrative Agent before 10:00 A.M. (New York City time) on the date of such termination and prepayment (if any) and complies with the applicable requirements of Section 2.09 and Section 2.12 in all other respects.
 
Section 2.20    . Increased Commitments, Additional Lenders. (a) From time to time the Company may, upon at least five Domestic Business Days' notice to the Administrative Agent (which shall promptly provide a copy of such notice to the Lenders), increase the aggregate amount of the Commitments by an amount not less than $25,000,000 (the amount of any such increase, the " Increased Commitments ").
 
(b)  
To effect such an increase, the Company may designate one or more of the existing Lenders or other financial institutions reasonably acceptable to the Administrative Agent, each Issuing Lender and the Company which at the time agree to (i) in the case of any such lender that is an existing Lender, increase its Commitment and (ii) in the case of any other such lender (an " Additional Lender "), become a party to this Agreement with a Commitment of not less than $5,000,000.
 
(c)  
Any increase in the Commitments pursuant to this Section 2.20 shall be subject to satisfaction of the following conditions:
 
(i)  
before and after giving effect to such increase, all representations and warranties contained in Article 4 shall be true;
 
(ii)  
at the time of such increase, no Default shall have occurred and be continuing or would result from such increase; and
 
(iii)  
after giving effect to such increase, the aggregate amount of all increases in Commitments made pursuant to this Section 2.20 shall not exceed $500,000,000.
 
(d)  
An increase in the aggregate amount of the Commitments pursuant to this Section 2.20 shall become effective upon the receipt by the Administrative Agent of (i) an agreement in form and substance reasonably satisfactory to the Administrative Agent signed by the Company, by each Additional Lender and by each other Lender whose Commitment is to be increased, setting forth the new Commitments of such Lenders and setting forth the agreement of each Additional Lender to become a party to this Agreement and to be bound by all the terms and provisions hereof, (ii) such evidence of appropriate corporate authorization on the part of the Company with respect to the Increased Commitments and such opinions of counsel for the Company with respect to the Increased Commitments as the Administrative Agent may reasonably request and (iii) a certificate of the Company stating that the conditions set forth in subsection (c) above have been satisfied.
 
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(e)  
Upon any increase in the aggregate amount of the Commitments pursuant to this Section 2.20 , (i) the respective Letter of Credit Liabilities of the Lenders shall be redetermined as of the effective date of such increase and (ii) within five Domestic Business Days, in the case of Base Rate Loans then outstanding, and at the end of the then current Interest Period with respect thereto, in the case of Committed Fixed Rate Loans then outstanding, the Borrower shall prepay or repay such Loans in their entirety and, to the extent the Borrower elects to do so and subject to the conditions specified in Article 3 , the Borrower shall reborrow Committed Loans from the Lenders in proportion to their respective Commitments after giving effect to such increase, until such time as all outstanding Committed Loans are held by the Lenders in such proportion.
 
Section 2.21    . Currency Equivalents. (a)   The Administrative Agent shall determine the Dollar Amount of each Alternative Currency Loan as of the first day of each Interest Period applicable thereto and, in the case of any such Interest Period of more than three months, at three month intervals after the first day thereof, on each Quarterly Date thereafter.
 
(b)  
Each such determination of the Dollar Amount shall be based on the Spot Rate on the date of the related Notice of Committed Borrowing for purposes of the initial such determination for any Alternative Currency Loan and, on the fourth Euro-Currency Business Day prior to the date as of which such Dollar Amount is to be determined, for purposes of any subsequent determination.
 
(c)  
The Administrative Agent shall determine the Dollar Amount of the Letter of Credit Liabilities related to each Letter of Credit denominated in an Alternative Currency as of the date of issuance thereof and at three month intervals after the date of issuance thereof. Each such determination shall be based on the Spot Rate on the date of the related Notice of Issuance, in the case of the initial determination in respect of any Letter of Credit and on the fourth Euro-Currency Business Day prior to the date as of which such Dollar Amount is to be determined, in the case of any subsequent determination with respect to an outstanding Letter of Credit.
 
(d)  
The Administrative Agent shall promptly notify the Borrower and the Lenders of each Dollar Amount so determined by it.
 
(e)  
If after giving effect to any such determination of a Dollar Amount, the Total Outstanding Amount exceeds 107% of the aggregate amount of the Commitments, the Borrowers shall within five Euro-Currency Business Days prepay outstanding Loans (as selected by the Company and notified to the Lenders through the Administrative Agent not less than three Euro-Currency Business Days prior to the date of prepayment) or take other action to the extent necessary to cause such percentage not to exceed 100%.
 
 
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      ARTICLE 3   
CONDITIONS
 
Section 3.01    . Effectiveness. This Agreement shall become effective on the date (the " Effective Date ") on which the Administrative Agent shall have received (x) a fee paid by the Company to the Administrative Agent for the account of each Lender in the amount heretofore mutually agreed and (y) each of the following documents, each dated the Effective Date unless otherwise indicated:
 
(a)  
counterparts hereof signed by each of the parties hereto (or, in the case of any party as to which an executed counterpart shall not have been received, receipt by the Administrative Agent in form satisfactory to it of telegraphic, telex, facsimile transmission or other written confirmation from such party of execution of a counterpart hereof signed by such party);
 
(b)  
an opinion of Cahill Gordon & Reindel LLP, substantially in the form of Exhibit E hereto;
 
(c)  
an opinion of Davis Polk & Wardwell, special counsel for the Administrative Agent, substantially in the form of Exhibit F hereto;
 
(d)  
evidence satisfactory to the Administrative Agent of the payment of all principal of and interest on any loans outstanding under, and all accrued facility fees under, the Existing Credit Agreement;
 
(e)  
receipt by the Administrative Agent of a copy of the Company's certificate of incorporation, certified by the Secretary of State of Delaware; and
 
(f)  
receipt by the Administrative Agent of a certificate on behalf of the Company signed by the Secretary or an Assistant Secretary of the Company or such other authorized officer of the Company satisfactory to the Administrative Agent certifying
 
(i)  
that the Company's certificate of incorporation has not been amended since the date of the certificate referred to in clause (f) above,
 
(ii)  
that no proceeding for the dissolution or liquidation of the Company exists,
 
(iii)  
that the copy of the By-laws of the Company attached to the certificate is true, correct and complete,
 
(iv)  
that the copies of the resolutions of the Company's Board of Directors attached to the certificate are true and correct and in full force and effect, and
 
(v)  
as to the incumbency of each officer of the Company who signed this Agreement and the Notes on behalf of the Company.
 
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The Administrative Agent shall promptly notify the Company and the Lenders of the Effective Date, and such notice shall be conclusive and binding on all parties hereto.
 
Section 3.02    . Borrowings and Issuances of Letters of Credit. The obligation of any Lender to make a Loan and the obligation of the Issuing Lender to issue (or renew or extend the term of) any Letter of Credit is subject to the satisfaction of the following conditions; provided that if the related Borrowing is a Swingline Takeout Borrowing, only the conditions set forth in clauses 3.02(a) and 3.02(b) must be satisfied:
 
(a)  
receipt (or deemed receipt pursuant to Section 2.16(d) or 2.18(a)) by the Administrative Agent of a Notice of Borrowing as required by Section 2.02 or Section 2.03 or receipt by the Issuing Lender of a Notice of Issuance as required by Section 2.16 , as the case may be;
 
(b)  
the fact that, immediately after such Borrowing or issuance of such Letter of Credit (i) the Total Outstanding Amount will not exceed the aggregate amount of the Commitments, (ii) the aggregate outstanding principal amount of Swingline Loans will not exceed $50,000,000, and (iii) the aggregate Dollar Amount of Letter of Credit Liabilities will not exceed $200,000,000;
 
(c)  
the fact that, immediately before and after such Borrowing or issuance of such Letter of Credit, no Default shall have occurred and be continuing; and
 
(d)  
the fact that the representations and warranties of the Borrower contained in this Agreement (except the representations and warranties set forth in Sections 4.04(c) , 4.05 and 4.07 ) shall be true on and as of the date of such Borrowing or issuance, except to the extent that any such representations or warranties refer specifically to an earlier date, in which case they shall be true as of such earlier date.
 
Each Borrowing and issuance of a Letter of Credit hereunder shall be deemed to be a representation and warranty by the Borrower (and by the Company if it is not the Borrower) on the date of such Borrowing as to the facts specified in clauses 3.02(c) and 3.02(d) (unless such Borrowing is a Swingline Takeout Borrowing).
 
Section 3.03    . First Borrowing by Each Eligible Subsidiary. The obligation of each Lender to make a Loan, and the obligation of an Issuing Lender to issue a Letter of Credit, on the occasion of the first Borrowing by or issuance of a Letter of Credit for the account of each Eligible Subsidiary is subject to the satisfaction of the following further conditions:
 
(a)  
receipt by the Administrative Agent of an opinion of counsel for such Eligible Subsidiary (who may be an employee of the Company or such Eligible Subsidiary) reasonably acceptable to the Administrative Agent, substantially to the effect of Exhibit I hereto (with such qualifications and limitations as are reasonably acceptable to the Administrative Agent) and covering such additional matters relating to the transactions contemplated hereby as the Required Lenders may reasonably request; and
 
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(b)  
receipt by the Administrative Agent of all documents which it may reasonably request relating to the existence of such Eligible Subsidiary, the corporate authority for and the validity of the Election to Participate of such Eligible Subsidiary, this Agreement and the Notes of such Eligible Subsidiary, and any other matters relevant thereto, all in form and substance reasonably satisfactory to the Administrative Agent.
 
 
ARTICLE 4   
REPRESENTATIONS AND WARRANTIES
 
The Company represents and warrants that:
 
Section 4.01    . Corporate Existence and Power. The Company is (a) a corporation duly incorporated, validly existing under the laws of Delaware and (b) is in good standing under the laws of Delaware, and (c) has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted , except in the case of clause (b) and clause (c) to the extent the failure to do so could not reasonably be expected to have a Material Adverse Effect.
 
Section 4.02    . Corporate and Governmental Authorization; No Contravention. The execution, delivery and performance by the Company of this Agreement and the Notes are within the Company's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official (other than routine informational filings) and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Company or of any material agreement, judgment, injunction, order, decree or other instrument binding upon the Company or any of its Restricted Subsidiaries or result in or permit the termination or modification of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or any of its Restricted Subsidiaries or result in the creation or imposition of any Lien on any asset of the Company or any of its Restricted Subsidiaries , except, in each case, as could not reasonably be expected to have a Material Adverse Effect.
 
Section 4.03    . Binding Effect. This Agreement constitutes a valid and binding agreement of the Company and, when executed and delivered in accordance with this Agreement, any of its Notes will constitute valid and binding obligations of the Company , except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity.
 
Section 4.04    . Financial Information.  
 
(a)  
The consolidated balance sheet of the Company and its Consolidated Subsidiaries as of December 31, 2003 and the related statements of income and cash flows for the fiscal year then ended, reported on by Pricewaterhouse Coopers LLP, copies of which have been delivered to each of the Lenders, fairly present, in all material respects in conformity with U.S. generally accepted accounting principles, the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year.
 
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(b)  
The unaudited consolidated balance sheet of the Company and its Consolidated Subsidiaries as of September 30, 2004 and the related unaudited consolidated statements of income and cash flows for the nine months then ended, copies of which have been delivered to each of the Lenders, fairly present in all material respects in conformity with U.S. generally accepted accounting principles applied on a basis consistent with the consolidated financial statements referred to in subsection (a) of this Section (except as stated therein), the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such nine month period (subject to normal year-end adjustments and the absence of footnotes).
 
(c)  
Since September 30, 2004 there has been no change in the business, financial position or results of operations of the Company and its Consolidated Subsidiaries, which could reasonably be expected to materially and adversely affect the ability of the Company to perform its obligations under this Agreement or any Note or which in any manner draws into question the validity or enforceability of any Loan Document.
 
Section 4.05    . Litigation. There is no action, suit or proceeding pending against or to the knowledge of the Company threatened against the Company or any of its Restricted Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which could materially and adversely affect the ability of the Company to perform its obligations under this Agreement or any Note or which in any manner draws into question the validity of this Agreement or the Notes.
 
Section 4.06    . Compliance with ERISA. After it has become a member of the ERISA Group, except as could not reasonably be expected to have a Material Adverse Effect, each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all material respects with the currently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan. After it has become a member of the ERISA Group, except as could not reasonably be expected to have a Material Adverse Effect, no member of the ERISA Group has:
 
(i)  
sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan,
 
(ii)  
failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code, or
 
41
(iii)  
incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA.
 
Section 4.07    . Environmental Matters. In the ordinary course of its business, the Company considers the effects of Environmental Laws on the business, operations and properties of the Company and its Restricted Subsidiaries, in the course of which it identifies and evaluates associated liabilities and costs. Based on the foregoing, the Company has reasonably concluded that Environmental Laws are unlikely to have an effect on the business, financial condition or results of operations of the Company and its Consolidated Subsidiaries taken as a whole during the term of the Agreement, which could materially and adversely affect the ability of the Company to perform its obligations under this Agreement or any Note.
 
Section 4.08    . Subsidiaries. Each corporate Restricted Subsidiary of the Company (a) is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and (b) has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted , except to the extent the failure to do so could not reasonably be expected to have a Material Adverse Effect.
 
Section 4.09    . Not an Investment Company. The Company is not an " investment company " within the meaning of the Investment Company Act of 1940, as amended.
 
Section 4.10    . Disclosure. As of the Effective Date, the written material theretofore furnished to the Agents and the Lenders by or on behalf of the Company in connection herewith, taken as a whole, did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading ; provided that to the extent any such written material was based upon or constitutes a forecast or projection, the Company represents only that such material was prepared in good faith based on assumptions it believed to be reasonable at the time such material was prepared.
 
 
      ARTICLE 5   
COVENANTS
 
The Company agrees that, so long as any Lender has any Credit Exposure hereunder:
 
Section 5.01    . Information. The Company will deliver to the Administrative Agent (which shall promptly forward to the Lenders):
 
(a)  
within 113 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in accordance with generally accepted auditing standards by Pricewaterhouse Coopers LLP or other independent public accountants of nationally recognized standing;
 
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(b)  
within 53 days after the end of each of the first three quarters of each fiscal year of the Company, a consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such quarter and comparative financial information as of the end of the previous fiscal year, the related consolidated statement of income for such quarter and the related consolidated statements of income and cash flows for the portion of the Company's fiscal year ended at the end of such quarter, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of the Company's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation in all material respects, generally accepted accounting principles and consistency by the principal financial officer or the principal accounting officer of the Company or a person designated in writing by either of the foregoing persons. If such financial statements are filed with the SEC, then they shall be reported on in conformity with the financial reporting requirements of the SEC;
 
(c)  
simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate of the principal financial officer, principal accounting officer, treasurer or comptroller of the Company, or a person designated in writing by either of the foregoing persons
 
(i)  
setting forth in reasonable detail the calculations required to establish whether the Company was in compliance with any applicable requirements of Section 5.05 ; and
 
(ii)  
stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto;
 
(d)  
promptly upon the incurrence of Debt in connection with an acquisition that caused the Leverage Ratio to exceed 65% a certificate of the principal financial officer, principal accounting officer, treasurer or comptroller of the Company, or a person designation in writing by either of the foregoing persons setting forth in reasonable detail the calculations required to establish whether the Company was in compliance with Section 5.05 ;
 
(e)  
simultaneously with the delivery of each set of financial statements referred to in clause (a) above, a statement of the firm of independent public accountants which reported on such statements whether anything has come to their attention to cause them to believe that the Company was not in compliance with Section 5.05 , insofar as they relate to accounting matters, on the date of such statements;
 
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(f)  
within five days after any officer of the Company obtains knowledge of any Default, if such Default is then continuing, a certificate of the principal financial officer or the principal accounting officer of the Company setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto;
 
(g)  
promptly upon the mailing thereof to the public shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed;
 
(h)  
promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which the Company shall have filed with the SEC;
 
(i)  
within five days after any officer of the Company obtains knowledge thereof, if and when any member of the ERISA Group (after it has become a member of the ERISA Group):
 
(i)  
gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC;
 
(ii)  
receives notice of complete or partial withdrawal liability in excess of $5,000,000, under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice;
 
(iii)  
receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer, any Plan, a copy of such notice;
 
(iv)  
applies for a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code, a copy of such application;
 
(v)  
gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC;
 
(vi)  
gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or
 
(vii)  
fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a bond or other security;
 
a certificate of the principal financial officer, principal accounting officer, treasurer or comptroller of the Company setting forth details as to such occurrence and action, if any, which the Company or applicable member of the ERISA Group is required or proposes to take;
 
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(j)  
promptly after the Company is notified by any rating agency referred to in the Pricing Schedule of any actual change in any rating referred to in the Pricing Schedule, written notice of such change; and
 
(k)  
from time to time such additional information regarding the financial position or business of the Company's Subsidiaries as the Administrative Agent, at the request of any Lender, may reasonably request.
 
The Administrative Agent will deliver a copy of each document it receives pursuant to this Section 5.01 to each Lender within four Domestic Business Days after receipt thereof.
 
Information required to be delivered pursuant to clauses 5.01(a) , 5.01(b) , 5.01(g) or 5.01(h) above shall be deemed to have been delivered on the date on which the Company provides notice to the Administrative Agent that such information has been posted on the Company's website on the Internet at www.praxair.com, at sec.gov/edaux/searches.htm or at another website identified in such notice and accessible by the Lenders without charge; provided that such notice may be included in a certificate delivered pursuant to clause 5.01(c) .
 
Section 5.02    . Maintenance of Property; Insurance. (a) The Company will keep, and will cause each of its Subsidiaries to keep, all property useful and necessary in its respective business in good working order and condition, ordinary wear and tear excepted , and except as could not reasonably be expected to have a Material Adverse Effect.
 
(b)  
The Company will maintain, and will cause each of its Subsidiaries to maintain, insurance policies on its assets covering such risks as are usually insured against in the same general area by companies of established repute engaged in the same or a similar business as the Company or such Subsidiary, as the case may be; and, upon request of the Administrative Agent, will promptly furnish to the Administrative Agent for distribution to the Lenders information presented in reasonable detail as to the insurance so carried.
 
Section 5.03    . Negative Pledge. The Company will not, and will not permit any of its Restricted Subsidiaries to, create, assume or suffer to exist any Lien securing Debt on any asset now owned or hereafter acquired by it, except:
 
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(a)  
Liens existing on the date of this Agreement securing Debt outstanding on the date of this Agreement in an aggregate principal amount not exceeding $125,000,000;
 
(b)  
any Lien existing on any asset of any Person at the time such Person becomes a Restricted Subsidiary and not created in contemplation of such event;
 
(c)  
any Lien on any asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring such asset, provided that such Lien attaches to such asset concurrently with or within 180 days after the acquisition thereof;
 
(d)  
any Lien on any improvements constructed on any property of the Company or any such Restricted Subsidiary and any theretofore unimproved real property on which such improvements are located securing Debt incurred for the purpose of financing all or any part of the cost of constructing such improvements, provided that such Lien attaches to such improvements within 180 days after the later of (1) completion of construction of such improvements and (2) commencement of full operation of such improvements;
 
(e)  
any Lien existing on any asset prior to the acquisition thereof by the Company or a Restricted Subsidiary and not created in contemplation of such acquisition;
 
(f)  
Liens on property of the Company or a Restricted Subsidiary in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, or any other government or department, agency, instrumentality or political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any Debt incurred for the purpose of financing all or any part of the purchase price or the cost of construction of the property subject to such Liens;
 
(g)  
Liens resulting from judgments, provided that the execution or other enforcement of such Liens is effectively stayed and that the claims secured thereby are being actively contested in good faith and by appropriate proceedings, and for which adequate reserves to the extent required by and in conformity with U.S. generally accepted accounting principles are maintained on the books of the Company or a Restricted Subsidiary, as the case may be;
 
(h)  
Liens on property of any Restricted Subsidiary of the Company in favor of one or more of the Company or any of its Restricted Subsidiaries;
 
(i)  
any Lien arising out of the refinancing, extension, renewal or refunding of any Debt secured by any Lien permitted by any of the foregoing clauses of this Section 5.03 , provided that such Debt is not increased and is not secured by any additional assets other than improvements thereon; and
 
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(j)  
Liens not otherwise permitted by the foregoing clauses of this Section securing Debt in an aggregate principal amount at any time outstanding not to exceed $600,000,000.
 
Section 5.04    . Consolidations, Mergers and Sales of Assets. The Company will not merge or consolidate with or into any other Person or sell, lease, transfer or otherwise dispose of all or substantially all of its assets, property or business in any single transaction or series of related transactions, unless
 
(i)  
in the case of any such merger or consolidation, the Company shall be the continuing corporation, or, in the case of any such sale, lease, transfer or other disposition, the transferee or transferees shall be one or more Wholly-Owned Consolidated Subsidiaries of the Company organized and existing under the laws of the United States of America or any State thereof which shall expressly assume, in the case of any such Wholly-Owned Consolidated Subsidiary, the due and punctual performance and observance of all of the covenants and agreements of the Company contained in this Agreement and any Notes, and
 
(ii)  
immediately after giving effect to such merger or consolidation, or such sale, lease, transfer or other disposition, no Default shall have occurred and be continuing.
 
Section 5.05    . Consolidated Capitalization. The Leverage Ratio will not exceed 65% (the " Maximum Leverage Ratio ") as of any Compliance Date; provided that if the Leverage Ratio shall exceed 65% solely by reason of the incurrence of Debt in connection with an acquisition, and at the time and after giving effect thereto no other Default existed, then the Maximum Leverage Ratio shall be 70% for a period of 180 days following the date of such incurrence of Debt (the " Increase Date ").
 
For purposes of the foregoing, " Compliance Date " means (i) the last day of each fiscal quarter of the Company, measured when financial statements are or are required to be delivered pursuant to Section 5.01(a) or (b), and (ii) if an Increase Date occurs, (x) such Increase Date; provided that for the purpose of this clause (x) the Leverage Ratio shall be calculated using the Consolidated Book Net Worth as of the end of the latest fiscal month for which internal financial statements are available, and (y) the last day of each fiscal month of the Company falling within the period of 180 days following such Increase Date, measured, in the case of this clause (y), when internal financial statements are available for such fiscal month.
 
Section 5.06    . Use of Proceeds. The proceeds of the Loans made under this Agreement will be used by the Company for working capital, capital expenditures and other general corporate purposes. None of such proceeds will be used, directly or indirectly, in violation of any applicable law or regulation, and no use of such proceeds for general corporate purposes will include any use thereof, whether immediate, incidental or ultimate, of buying or carrying any Margin Stock.
 
 
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      ARTICLE 6   
DEFAULTS
 
Section 6.01    . Events of Default. If one or more of the following events (each, an " Event of Default ") shall have occurred and be continuing:
 
(a)  
any principal of any Loan or Reimbursement Obligation shall not be paid when due;
 
(b)  
any Borrower shall fail to pay within five Domestic Business Days of the due date thereof any interest on any Loan or Reimbursement Obligation, any fees or any other amount payable by it hereunder;
 
(c)  
the Company shall fail to observe or perform any covenant contained in Sections Section 5.03 through Section 5.06 , inclusive;
 
(d)  
the Company shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those covered by clause (a) , (b) or (c) of this Section 6.01 ) for 30 days after written notice thereof has been given to the Company;
 
(e)  
any representation, warranty, certification or statement made (or deemed made) by any Borrower in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been false or misleading in any material respect when made (or deemed made);
 
(f)  
the Company or any Material Subsidiary shall fail to make any principal payment in respect of any Material Debt when due after giving effect to any applicable grace period;
 
(g)  
any event or condition shall occur which results in the acceleration of the maturity of any Material Debt;
 
(h)  
the Company or any Material Subsidiary shall:
 
(i)  
commence a voluntary case or other proceeding seeking (1) liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or (2) the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property;
 
(ii)  
consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it;
 
(iii)  
make a general assignment for the benefit of creditors;
 
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(iv)  
except for trade payables, fail generally to pay its debts as they become due; or
 
(v)  
take any corporate action to authorize any of the foregoing;
 
(i)  
     (i) an involuntary case or other proceeding shall be commenced against the Company or any Material Subsidiary seeking (1) liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or (2) the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or
 
(ii)  
an order for relief shall be entered against the Company or any Material Subsidiary under the federal bankruptcy laws as now or hereafter in effect;
 
(j)  
      (i) any member of the ERISA Group shall fail to pay when due an amount or amounts that it shall have become liable to pay under Title IV of ERISA and such  failure could be reasonably expected to have a Material Adverse Effect;
 
(ii)  
notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing;
 
(iii)  
the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer, any Material Plan;
 
(iv)  
a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or
 
(v)  
there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more members of the ERISA Group to incur a current payment obligation, which withdrawal or default could reasonably be expected to have a Material Adverse Effect;
 
(k)  
a final judgment or order for the payment of money in excess of $150,000,000 (net of amounts covered by insurance) shall be rendered against the Company or any Material Subsidiary, and such judgment or order is not bonded, stayed, discharged or otherwise paid or satisfied for a period of 30 consecutive days during which 30-day period execution shall not be effectively stayed;
 
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(l)  
any person or group of persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the SEC under said Act) of 30% or more of the outstanding shares of common stock of the Company; or Continuing Directors shall cease to constitute a majority of the board of directors of the Company; or
 
(m)  
the provisions of Article 10 shall cease to constitute valid, binding and enforceable obligations of the Company for any reason, or the Company or any Eligible Subsidiary shall have so asserted in writing;
 
then, and in every such event, the Administrative Agent shall, if so requested by the Required Lenders:
 
(i)  
by notice to the Company, terminate the Commitments and they shall thereupon terminate, and
 
(ii)  
by notice to the Company, declare the Loans (together with accrued interest thereon) to be, and the Loans (together with accrued interest thereon) shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Obligors;
 
provided that in the case of any of the Events of Default specified in clause (h) or (i) above with respect to the Company, without any notice to any Obligor or any other act by the Administrative Agent or the Lenders, the Commitments shall thereupon automatically terminate and the Loans (together with accrued interest thereon) shall automatically become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Obligors.
 
Section 6.02    . Notice of Default. The Administrative Agent shall give notice under Section 6.01(d) promptly upon being requested to do so by any Lender and shall thereupon notify all the Lenders thereof.
 
Section 6.03    . Cash Cover. The Company agrees, in addition to the provisions of Section 6.01 hereof, that upon the occurrence and during the continuance of any Event of Default, it shall, if requested by the Administrative Agent upon the instruction of the Required Lenders, pay to the Administrative Agent an amount in immediately available funds (which funds shall be held as collateral pursuant to arrangements satisfactory to the Administrative Agent) equal to the aggregate amount available for drawing under all Letters of Credit then outstanding at such time, provided that, upon the occurrence of any Event of Default specified in Section 6.01(h) or Section 6.01(i) with respect to the Company, the Company shall pay such amount forthwith without any notice or demand or any other act by the Administrative Agent or the Lenders.
 
Section 6.04    . Rescission. If at any time after termination of the Commitments or acceleration of the maturity of the Loans, the Borrowers shall pay all arrears of interest and all payments on account of principal of the Loans and Reimbursement Obligations owing by them that shall have become due otherwise than by acceleration and all Events of Default (other than non-payment of principal of and accrued interest on the Loans due and payable solely by virtue of acceleration) shall be remedied or waived pursuant to Section 11.05 , then upon the written consent of the Required Lenders and written notice to the Company, the termination of the Commitments and the acceleration and their consequences may be rescinded and annulled; but such action shall not affect any subsequent Default or impair any right or remedy consequent thereon.
 
 
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      ARTICLE 7   
THE AGENTS
 
Section 7.01    . Appointment and Authorization. Each Lender irrevocably appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with all such powers as are reasonably incidental thereto.
 
Section 7.02    . Administrative Agent and Affiliates. JPMorgan Chase Bank, N.A., shall have the same rights and powers under the Loan Documents as any other Lender and may exercise or refrain from exercising the same as though it were not the Administrative Agent, and JPMorgan Chase Bank, N.A., and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Company or any Subsidiary or affiliate of the Company as if it were not the Administrative Agent hereunder.
 
Section 7.03    . Action by Administrative Agent. The obligations of the Administrative Agent under the Loan Documents are only those expressly set forth therein. Without limiting the generality of the foregoing, the Administrative Agent shall not be required to take any action with respect to any Default, except as expressly provided in Article 6 .
 
Section 7.04    . Consultation with Experts. The Administrative Agent may consult with legal counsel (who may be counsel for a Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts.
 
Section 7.05    . Liability of Administrative Agent. Neither the Administrative Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection with the Loan Documents (i) with the consent or at the request of the Required Lenders or (ii) in the absence of its own gross negligence or willful misconduct. Neither the Administrative Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with the Loan Documents or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of any Borrower; (iii) the satisfaction of any condition specified in Article 3 , except receipt of items required to be delivered to the Administrative Agent; or (iv) the validity, effectiveness or genuineness of the Loan Documents other than its own execution and delivery thereof or any other instrument or writing furnished in connection therewith. The Administrative Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex, facsimile transmission or similar writing) believed by it to be genuine or to be signed by the proper party or parties. Without limiting the generality of the foregoing, the use of the term " agent " in this Agreement with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom and is intended to create or reflect only an administrative relationship between independent contracting parties.
 
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Section 7.06    . Indemnification. Each Lender shall, ratably in accordance with its Commitment, indemnify the Administrative Agent, its affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Borrowers) against any cost, expense (including counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct) that such indemnitees may suffer or incur in connection with the Loan Documents or any action taken or omitted by such indemnitees thereunder.
 
Section 7.07    . Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender, and on the basis of such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender, and on the basis of such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under the Loan Documents.
 
Section 7.08    . Successor Administrative Agent. (a) Effective upon the acceptance of an appointment of a successor Administrative Agent in accordance with the provisions below, the Administrative Agent may resign at any time by giving 30 days' prior written notice thereof to the Lenders and the Company. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Administrative Agent with (so long as no Default shall have occurred and be continuing) the consent of the Company, which consent shall not be unreasonably withheld. If no successor Administrative Agent shall have been so appointed by the Required Lenders with the Company's consent, and shall have accepted such appointment, within 60 days after the retiring Administrative Agent gives notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a commercial bank organized or licensed 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 and reasonably satisfactory to the Company. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent.
 
(b)  
If at any time a successor Administrative Agent shall have been appointed pursuant to subsection (a) of this Section 7.08 , the Company shall have the right (with the consent of such successor) to substitute such successor for JPMorgan Chase Bank, N.A. as an Issuing Lender and Swingline Lender, provided that all Swingline Loans made by JPMorgan Chase Bank, N.A. shall be repaid in full together with accrued interest thereon and any outstanding Letters of Credit issued by JPMorgan Chase Bank, N.A. shall be cancelled.
 
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Section 7.09    . Agents' Fees. The Company shall pay to each Agent for its own account fees in the amounts and at the times previously agreed upon between the Company and such Agent.
 
Section 7.10    . Other Agents. Nothing in this Agreement shall impose upon any Agent other than the Administrative Agent, in its capacity as such an Agent, any obligation or liability whatsoever.
 
 
ARTICLE 8   
CHANGE IN CIRCUMSTANCES
 
Section 8.01    . Basis for Determining Interest Rate Inadequate or Unfair. If on or prior to the first day of any Interest Period for any CD Loan, Euro-Currency Loan or Competitive Bid LIBOR Loan:
 
(a)  
the Administrative Agent is advised by the Reference Banks that deposits in the applicable currency are not being offered to the Reference Banks in the relevant market for such Interest Period, or
 
(b)  
in the case of CD Loans or Euro-Currency Loans, Lenders having 50% or more of the aggregate amount of the Commitments advise the Administrative Agent that the Adjusted CD Rate or the Applicable Interbank Offered Rate, as the case may be, as determined by the Administrative Agent will not adequately and fairly reflect the cost to such Lenders of funding their CD Loans or Euro-Currency Loans, as the case may be, for such Interest Period,
 
the Administrative Agent shall forthwith give notice thereof to the Borrower and the Lenders, whereupon until the Administrative Agent notifies the Borrower that the circumstances giving rise to such suspension no longer exist, (i) the obligations of the Lenders to make CD Loans or Euro-Currency Loans (in the affected currency) or to continue or convert outstanding Loans as or into CD Loans or Euro-Currency Loans (in the affected currency) shall be suspended and (ii) each outstanding CD Loan or Euro-Currency Loan (in the affected currency) shall be prepaid (or, in the case of a Dollar-Denominated Loan, converted into a Base Rate Loan) on the last day of the then current Interest Period applicable thereto and (iii) if the Administrative Agent or the Company so requires, the Administrative Agent and the Company shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of interest applicable to Euro-Currency Loans in the affected currency. Any alternative basis agreed pursuant to this clause ‎(c) shall, with the prior consent of all the Lenders and the Company, be binding on all parties to this Agreement. Unless the Borrower notifies the Administrative Agent at least two Domestic Business Days before the date of any Fixed Rate Borrowing for wh ich a Notice of Borrowing has previously been given that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a Syndicated Borrowing, such Borrowing shall instead be made as a Base Rate Borrowing in an equal Dollar Amount and (ii) if such Fixed Rate Borrowing is a Competitive Bid LIBOR Borrowing, then the Competitive Bid LIBOR Loans comprising such Borrowing shall bear interest for each day from and including the first day to but excluding the last day of the Interest Period applicable thereto at the Base Rate for such day.
 
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Section 8.02    . Illegality. If, on or after the date of this Agreement, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its Euro-Currency Lending Office) with any request or directive (whether or not having the force of law) issued after the date of this Agreement by any such authority, central bank or comparable agency shall make it unlawful or impossible for any Lender (or its Euro-Currency Lending Office) to make, maintain or fund any of its Euro-Currency Loans in any currency and such Lender shall so notify the Administrative Agent, the Administrative Agent shall forthwith give notice thereof to the other Lenders and the Borrower, whereupon until such Lender notifies the Borrower and the Administrative Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Lender to make Euro-Currency Loans in such currency, or to convert outstanding Loans into Euro-Currency Loans in such currency, shall be suspended. Before giving any notice to the Administrative Agent pursuant to this Section, such Lender shall designate a different Euro-Currency Lending Office if such designation will avoid the need for giving such notice and will not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender. If such notice is given, each Euro-Currency Loan in such currency of such Lender then outstanding shall be converted to a Base Rate Loan (in the case of an Alternative Currency Loan, in a principal amount determined on the basis of the Spot Rate on the date of conversion) either (a) on the last day of the then current Interest Period applicable to such Euro-Dollar Loan if such Lender may lawfully continue to maintain and fund such Loan to such day or (b) immediately if such Lender shall determine that it may not lawfully continue to maintain and fund such Loan to such day. Interest and principal on any such Base Rate Loan shall be payable on the same dates as, and on a pro rata basis with, the interest and principal payable on the related Euro-Currency Loans of the other Lenders.
 
Section 8.03    . Increased Cost and Reduced Return. (a) If on or after (x) the date hereof, in the case of any Committed Loan or Letter of Credit or any obligation to make Committed Loans or issue or participate in any Letter of Credit or (y) the date of any related Competitive Bid Quote, in the case of any Competitive Bid Loan (in each case described in (x) and (y), the " Applicable Date "), the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) issued after the date of this Agreement by any such authority, central bank or comparable agency shall impose, modify or deem applicable any reserve (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding (i) with respect to any CD Loan any such requirement included in an applicable Domestic Reserve Percentage and (ii) with respect to any Euro-Currency Loan any such requirement included in an applicable Euro-Currency Reserve Percentage), special deposit, insurance assessment (excluding, with respect to any CD Loan, any such requirement reflected in an applicable Assessment Rate) or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (or its Applicable Lending Office) or shall impose on any Lender (or its Applicable Lending Office) or the London interbank market any other condition affecting its Fixed Rate Loans, its Note or its obligation to make Fixed Rate Loans or its obligations hereunder in respect of Letters of Credit and the result of any of the foregoing is to increase the cost to such Lender (or its Applicable Lending Office) of making or maintaining any Fixed Rate Loan or of issuing or participating in any Letter of Credit, or to reduce the amount of any sum received or receivable by such Lender (or its Applicable Lending Office) under this Agreement or under its Note with respect thereto, by an amount deemed by such Lender to be material, then, within 15 days after demand by such Lender (with a copy to the Administrative Agent), the Company shall pay, or shall cause another Borrower to pay, such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction.
 
(b)  
If any Lender shall have determined that, after the Applicable Date, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on capital of such Lender (or its Parent) as a consequence of such Lender's obligations hereunder to a level below that which such Lender (or its Parent) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, within 15 days after demand by such Lender (with a copy to the Administrative Agent), the Company shall pay to such Lender such additional amount or amounts as will compensate such Lender (or its Parent) for such reduction.
 
(c)  
Each Lender will promptly notify the Company and the Administrative Agent of any event of which it has knowledge, occurring after the Applicable Date, which will entitle such Lender to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender. A certificate of any Lender claiming compensation under this Section shall be delivered to the Company and the Administrative Agent setting forth the additional amount or amounts to be paid to it hereunder which certificate, accompanied by a computation thereof in reasonable detail, shall be conclusive in the absence of manifest error. In determining such amount, such Lender may use any reasonable averaging and attribution methods. Notwithstanding subsection (a) of this Section, the Company shall only be obligated to compensate any Lender for any amount arising or accruing during (i) any time or period commencing not more than 90 days prior to the date on which such Lender notifies the Administrative Agent and the Company that it proposes to demand such compensation and identifies to the Administrative Agent and the Company the statute, regulation or other basis upon which the claimed compensation is or will be based and (ii) any time or period during which, because of the retroactive application of such statute, regulation or other such basis, such Lender did not know that suc h amount would arise or accrue.
 
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(d)    Section 8.03 does not apply to the extent any Increased Cost is:
 
(i)  
attributable to any taxes, whether or not such taxes are excluded from the definition of " Taxes " for the purpose of Section 8.04 ;
 
(ii)  
compensated for by the payment of the Mandatory Cost; or
 
(iii)  
attributable to the willful breach by the relevant Lender or its affiliates of any law or regulation.
 
(e)  
If the cost to any Lender of making or maintaining any Loan to or of issuing or maintaining any Letter of Credit for the account of an Eligible Subsidiary (other than Praxair Canada Inc. and PESL) is increased, or the amount of any sum received or receivable by any Lender (or its Applicable Lending Office) is reduced by an amount deemed by such Lender to be material, by reason of the fact that an Eligible Subsidiary (other than Praxair Canada Inc. and PESL) is incorporated in, or conducts business in, a jurisdiction outside the United States, the legal basis therefor shall be deemed to come into effect initially on the date such Person becomes an Eligible Subsidiary hereunder ( i.e. , to constitute a change in law subsequent to the Applicable Date for purposes of this Section 8.03 ).
 
Section 8.04    . Taxes. (a) For purposes of this Section 8.04 , the following terms have the following meanings:
 
" Taxes " means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, including any surcharges, penalties, or interest imposed by any governmental authority, with respect to any payment by any Obligor pursuant to this Agreement, excluding in the case of the Administrative Agent and each Lender, (a) taxes, duties, levies, imposts, deductions, charges or withholdings imposed on or measured by net income, profits (including taxes in the nature of branch profit taxes) or overall gross receipts and franchise or similar taxes imposed by a jurisdiction under the laws of which such Lender or the Administrative Agent (as the case may be) is organized or resident or in which its principal executive office is located or in which its Applicable Lending Office is located or with which the Administrative Agent or such Lender has any other connection (other than a connection that is deemed to arise solely by reason of both (A) the transactions contemplated by this Agreement and (B) an Obligor being organized in, maintaining an office in, conducting business in, or having a connection with, such jurisdiction) and (b) any tax, duty, levy, impost, deduction, charge or withholding, that is imposed on amounts payable to the Administrative Agent or a Lender (i) in respect of a Competitive Bid Loan under a law that is in effect on the date of the related Competitive Bid Quote or (ii) under a law of the United States or Spain that is in effect at the time the Administrative Agent or such Lender becomes a party to this Agreement, except to the extent that such Person's predecessor or assignor, if any, was entitled, immediately prior to the change of the Administrative Agent or the assignment, to receive additional amounts from an Obligor with respect to such tax pursuant to this Section.
 
" Other Taxes " means any present or future stamp or documentary taxes and any other excise or property taxes, or similar charges or levies, including any surcharges, penalties or interest, which arise from any payment made pursuant to this Agreement or from the execution, delivery, registration or enforcement of this Agreement.
 
(b)  
All payments by any Obligor to or for the account of any Lender or the Administrative Agent hereunder shall be made without deduction for any Taxes or Other Taxes; provided that, if any Obligor shall be required by law to deduct any Taxes or Other Taxes from any such payment, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) such Lender or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Obligor shall make such deductions, (iii) such Obligor shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law and (iv) such Obligor shall furnish to the Administrative Agent, at its address specified in or pursuant to Section 11.01 , the original or a certified copy of a receipt evidencing payment thereof.
 
(c)  
The Obligors agree to indemnify each Lender and the Administrative Agent for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted (whether or not correctly) by any jurisdiction on amounts payable under this Section) paid by such Lender or the Administrative Agent (as the case may be) and any penalties, charges, surcharges and interest arising therefrom or with respect thereto, provided , however , that no Obligor shall be required to indemnify any Lender or the Administrative Agent under this Section 8.04 for any liability arising as a result of such Lender's or Administrative Agent's willful misconduct or gross negligence. This indemnification shall be paid within 30 days after such Lender or the Administrative Agent (as the case may be) makes demand therefor.
 
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(d)  
If any Obligor is (or would be) required to pay additional amounts or indemnification payments to or for the account of any Lender pursuant to this Section, then such Lender will, at such Obligor's request, change the jurisdiction of its Applicable Lending Office, or take any other action reasonably requested by such Obligor, if in the judgment of such Lender, such change or action (i) will eliminate or reduce any such additional payment which may thereafter accrue and (ii) is not otherwise deemed by such Lender to be materially disadvantageous to it. Upon the reasonable request of any Obligor, and at such Obligor's expense, each Lender shall use reasonable efforts to cooperate with such Obligor with a view to obtaining a refund of any Taxes which were not correctly or legally imposed and for which such Obligor has indemnified such Lender under this Section 8.04 if such cooperation would not, in the good faith judgment of such Lender, be materially disadvantageous to such Lender; provided that nothing in this Section 8.04(d) shall be construed to require any Lender to institute any administrative proceeding (other than the filing of a claim for any such refund) or judicial proceeding to obtain any such refund if such proceeding would, in the judgment of such Lender, be disadvantageous or materially adverse to such Lender.
 
(e)  
If a Lender determines, in its reasonable discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by an Obligor or with respect to which an Obligor has paid additional amounts pursuant to this Section, it shall pay over such refund to such Obligor (but only to the extent of indemnity payments made, or additional amounts paid, by such Obligor under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Lender and without interest (other than any interest paid by the relevant governmental authority with respect to such refund); provided that such Obligor, upon the request of the Lender, agrees to repay the amount paid over to such Obligor (plus any penalties, surcharges or interest imposed by the relevant governmental authority) to the Lender in the event the Lender is required to repay such refund to such governmental authority. This subsection shall not be construed to require any Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to any Obligor or any other Person.
 
(f)  
Each Lender organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Lender listed on the signature pages hereof and on or prior to the date on which it becomes a Lender in the case of each other Lender, and from time to time thereafter if requested in writing by the Company (but only so long as such Lender remains lawfully able to do so), shall provide the Company with (i) Internal Revenue Service Form W-8BEN or any successor form prescribed by the Internal Revenue Service, certifying that such Lender is entitled to benefits under an income tax treaty to which the United States is a party which exempts the Lender from United States withholding tax or reduces the rate of withholding tax on payments for the account of such Lender, (ii) Internal Revenue Service Form W-8ECI or any successor form prescribed by the Internal Revenue Service, certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States or (iii) in the case of a Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Internal Revenue Code, (x) a certificate to the effect that such Lender is not (A) a "bank" within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (B) a "10 percent shareholder" of the Company within the meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or (C) a "controlled foreign corporation" described in Section 881(c)(3)(C) of the Internal Revenue Code and (y) two duly completed originals of Internal Revenue Service Form W-8BEN, or any successor form prescribed by the Internal Revenue Service, establishing the Lender's status as beneficial owner and (to the extent the Lender is legally entitled) establishing any applicable exemption from or reduction in Tax with respect to payments other than interest (under an applicable tax treaty). Each such Lender further undertakes to deliver to the Company such renewals or additional copies of such forms (or successor forms) on or before the date that such form expires or becomes obsolete, and after the occurrence of any event requiring a change in the most recent forms so delivered by it, such additional forms or amendments thereto necessary to reflect such change.
 
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(g)  
For any period with respect to which a Lender has failed to provide the Company with the appropriate form pursuant to Section 8.04(f) (unless such failure is due to a change in treaty, law or regulation occurring subsequent to the date on which such form originally was required to be provided), such Lender shall not be entitled to indemnification under Section 8.04(b) or 8.04(c) with respect to Taxes imposed by the United States; provided that if a Lender, which is otherwise exempt from or subject to a reduced rate of withholding tax, becomes subject to Taxes because of its failure to deliver a form required hereunder, the Company shall take such steps as such Lender shall reasonably request, and at the expense of such Lender, to assist such Lender to recover such Taxes.
 
(h)  
Each Lender, before it signs and delivers this Agreement in the case of each Lender listed on the signature pages hereof and before it becomes a Lender in the case of each other Lender, and from time to time thereafter if requested in writing by any Obligor (but only so long as such Lender remains lawfully able to do so), shall provide the relevant Obligor and the Administrative Agent any form or certificate required under law in order that any payment by any Obligor under this Agreement to such Lender may be made without deduction or withholding for or on account of any Taxes imposed by a jurisdiction outside the United States (or to allow any such deduction or withholding to be at a reduced rate), provided that (i) such Lender is legally entitled to complete, execute and deliver such form or certificate, (ii) such completion, execution and submission is not materially disadvantageous to such Lender and (iii) the relevant Obligor has requested that such Lender deliver such form or certificate with respect to such jurisdiction. To the extent it can lawfully do so at such time, each such Lender shall deliver appropriate revisions to or replacements of the above referenced forms or certificates to the relevant Obligor and the Administrative Agent on or before the earlier of (i) the date on which such forms expire or otherwise become obsolete and (ii) 30 days after the occurrence of an event which would require a change in the most recently delivered form or certificate.
 
(i)  
For any period with respect to which a Lender has failed to provide the relevant Obligor or the Administrative Agent with the appropriate form referred to in Section 8.04(h) when it is required to do so, such Lender shall not be entitled to additional amounts or indemnification under Section 8.04(b) or (c) with respect to any Taxes imposed by a jurisdiction outside the United States as a result of such failure; provided that if a Lender, that is otherwise exempt from or subject to a reduced rate of withholding tax, becomes subject to Taxes because of its failure to deliver a form required here-under, the relevant Obligor shall take such steps as such Lender shall reasonably request, and at the expense of such Lender, to assist such Lender to recover such Taxes.
 
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Section 8.05    . Base Rate Loans Substituted for Affected Fixed Rate Loans. If (i) the obligation of any Lender to make, or convert outstanding Loans to, Euro-Currency Loans in Dollars has been suspended pursuant to Section 8.02 or (ii) any Lender has demanded compensation under Section 8.03 with respect to its CD Loans or Euro-Currency Loans in any currency and the Borrower shall, by at least five Euro-Dollar Business Days' prior notice to such Lender through the Administrative Agent, have elected that the provisions of this Section shall apply to such Lender, then, unless and until such Lender notifies the Borrower that the circumstances giving rise to such suspension or demand for compensation no longer exist:
 
(a)  
all Loans which would otherwise be made by such Lender as (or continued as or converted into) CD Loans or Euro-Currency Loans (in the affected currency) shall instead be Base Rate Loans (in the case of Alternative Currency Loans, in the same Dollar Amount as the Euro-Currency Loan that such Lender would otherwise have made in the Alternative Currency) on which interest and principal shall be payable contemporaneously with the related Fixed Rate Loans of the other Lenders; and
 
(b)  
after each of its CD Loans or Euro-Currency Loans (in the affected currency) has been repaid (or converted to a Base Rate Loan), all payments of principal which would otherwise be applied to repay such Fixed Rate Loans shall be applied to repay its Base Rate Loans instead.
 
If such Lender notifies the Borrower that the circumstances giving rise to such notice no longer apply, the principal amount of each such Base Rate Loan shall be converted into a CD Loan or Euro-Currency Loan on the first day of the next succeeding Interest Period applicable to the related CD Loans or Euro-Currency Loans of the other Lenders. If such Loan is converted into an Alternative Currency Loan, such Lender, the Agent and the Borrower shall make such arrangements as shall be required (including increasing or decreasing the amount of such Alternative Currency Loan) so that such Alternative Currency Loan shall be in the same amount as it would have been if the provisions of this Section had never applied thereto.
 
Section 8.06    . Substitution of Lender. If (i) the obligation of any Lender to make Euro-Currency Loans or to convert or continue outstanding Loans into Euro-Currency Loans in any currency shall be suspended pursuant to Section 8.02 , (ii) any Lender shall demand compensation pursuant to Section 8.03 or 8.04 , or (iii) there is a non-extending Lender as contemplated by Section 2.01(c) the Company shall have the right, with the assistance of the Administrative Agent and the Issuing Lenders, to require such Lender to assign its Loans, Commitments and Letter of Credit Liabilities to a lender or lenders (which may be one or more of the Lenders) in accordance with Section 11.06 .
 
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ARTICLE 9   
REPRESENTATIONS AND WARRANTIES OF ELIGIBLE SUBSIDIARIES
 
Each Eligible Subsidiary shall be deemed by the execution and delivery of its Election to Participate to have represented and warranted as of the date thereof that:
 
Section 9.01    . Corporate Existence and Power. It is a corporation duly incorporated, validly existing and, except as could not reasonably be expected to have a Material Adverse Effect, in good standing under the laws of its jurisdiction of incorporation and is a Wholly-Owned Consolidated Subsidiary.
 
Section 9.02    . Corporate Governmental Authorization; No Contravention. The execution and delivery by it of its Election to Participate and its Notes, and the performance by it of this Agreement and its Notes, are within its corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official (other than routine informational filings) and do not contravene, or constitute a default under, any provision of applicable law or regulation or of its certificate or incorporation or by-laws or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or such Eligible Subsidiary or result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries, except as could not reasonably be expected to have a Material Adverse Effect.
 
Section 9.03    . Binding Effect. This Agreement constitutes a valid and binding agreement of such Eligible Subsidiary and when and if executed and delivered in accordance with this Agreement, its Notes, will constitute valid and binding obligations of such Eligible Subsidiary, in each case enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity.
 
 
       ARTICLE 10   
GUARANTY
 
Section 10.01    . The Guaranty. The Company hereby unconditionally and absolutely guarantees the full and punctual payment (whether at stated maturity, upon acceleration or otherwise) of the principal of and interest on each Loan made to and each Reimbursement Obligation incurred by each Eligible Subsidiary pursuant to this Agreement, and the full and punctual payment of all other amounts payable by each Eligible Subsidiary under this Agreement. Upon failure by any Eligible Subsidiary to pay punctually any such amount, the Company shall forthwith on demand pay the amount not so paid at the place and in the manner specified in this Agreement.
 
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Section 10.02    . Guaranty Unconditional. The obligations of the Company hereunder shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by:
 
(a)  
any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of any Eligible Subsidiary under this Agreement or any Note, by operation of law or otherwise;
 
(b)  
any modification or amendment of or supplement to this Agreement or any Note;
 
(c)  
any change in the corporate existence, structure or ownership of any Eligible Subsidiary, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Eligible Subsidiary or its assets or any resulting release or discharge of any obligation of any Eligible Subsidiary contained in this Agreement or any Note;
 
(d)  
the existence of any claim, set-off or other rights which the Company may have at any time against any Eligible Subsidiary, the Administrative Agent, any Lender or any other Person, whether in connection herewith or any unrelated transactions; provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim;
 
(e)  
any invalidity or unenforceability relating to or against any Eligible Subsidiary for any reason of this Agreement or any Note, or any provision of applicable law or regulation purporting to prohibit the payment by any Eligible Subsidiary of the principal of or interest on any Note or any other amount payable by it under this Agreement; or
 
(f)  
any other act or omission to act or delay of any kind by any Eligible Subsidiary, the Administrative Agent, any Lender or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of or defense to the Company's obligations hereunder.
 
Section 10.03    . Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances. The Company's obligations hereunder shall remain in full force and effect until the Commitments shall have terminated and the principal of and interest on the Loans, the Reimbursement Obligations and all other amounts payable by the Company and each Eligible Subsidiary under this Agreement shall have been paid in full. If at any time any payment of the principal of or interest on any Loan or any other amount payable by any Eligible Subsidiary under this Agreement is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of any Eligible Subsidiary or otherwise, the Company's obligations hereunder with respect to such payment shall be reinstated at such time as though such payment had been due but not made at such time.
 
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Section 10.04    . Waiver by the Company. The Company irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any Eligible Subsidiary or any other Person.
 
Section 10.05    . Subrogation. Upon making any payment with respect to any Eligible Subsidiary hereunder, the Company shall be subrogated to the rights of the payee against such Eligible Subsidiary with respect to such payment; provided that the Company shall not enforce any payment by way of subrogation unless all amounts of principal of and interest on the Loans to such Eligible Subsidiary and all other amounts payable by such Eligible Subsidiary under this Agreement have been paid in full.
 
Section 10.06    . Stay of Acceleration. If acceleration of the time for payment of any amount payable by any Eligible Subsidiary under this Agreement or its Notes is stayed upon insolvency, bankruptcy or reorganization of such Eligible Subsidiary, all such amounts otherwise subject to acceleration under the terms of this Agreement shall nonetheless be payable by the Company hereunder forthwith on demand by the Administrative Agent made at the request of the Required Lenders.
 
 
      ARTICLE 11   
MISCELLANEOUS
 
Section 11.01    . Notices. (a) Except as provided in Section 11.01(b) below, all notices, requests, instructions and other communications to any party hereunder shall be in writing (including bank wire, telex, facsimile transmission or similar writing) and shall be given to such party: (w) in the case of the Company or the Administrative Agent, at its address, facsimile number or telex number (if any) set forth on the signature pages hereof, (x) in the case of any Lender, at its address, facsimile number or telex number (if any) set forth in its Administrative Questionnaire, (y) in the case of any Eligible Subsidiary, to it in care of the Company or (z) in the case of any party hereto, such other address, facsimile number or telex number as such party may hereafter specify for the purpose by notice to the Administrative Agent and the Company. Each such notice, request or other communication shall be effective (i) if given by telex, when such telex is transmitted to the telex number specified in this Section and the appropriate answerback is received, (ii) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (iii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (iv) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Administrative Agent under Article 2 or Article 8 shall not be effective until received.
 
(b)  
Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article 2 if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Company may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.
 
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(c)  
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender's receipt of an acknowledgement from the intended recipient (such as by the "return receipt requested" function, as available, return e-mail or other written acknowledgement); provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.
 
Section 11.02    . No Waivers. No failure or delay by the Administrative Agent or any Lender in exercising any right, power or privilege under any Loan Document shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided in the Loan Documents shall be cumulative and not exclusive of any rights or remedies provided by law.
 
Section 11.03    . Expenses; Indemnification. (a) The Company shall pay (i) all reasonable out-of-pocket expenses of the Agents, including reasonable fees and disbursements of one special counsel (Davis Polk & Wardwell) for the Agents, in connection with the preparation of this Agreement, any waiver or consent hereunder or any amendment hereof or any Default or alleged Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by the Agents or any Lender, including reasonable fees and disbursements of counsel (including the cost of staff counsel when used in lieu of separate special counsel), in connection with such Event of Default and collection and other enforcement proceedings resulting therefrom.
 
(b)  
The Company shall indemnify each Lender and its directors, officers and employees for, and hold each Lender and its directors, officers and employees harmless from and against (i) any and all damages, losses and other liabilities of any kind, including, without limitation, judgments and costs of settlement, and (ii) any and all out-of-pocket costs and expenses of any kind, including, without limitation, reasonable fees and disbursements of counsel, including the cost of staff counsel where used in lieu of separate special counsel, and any other costs of defense, including, without limitation, costs of discovery and investigation, for such Lender and its officers and directors (all of which shall be paid or reimbursed by the Company within 30 days of receipt of an invoice thereof), suffered or incurred in connection with any investigative, administrative or judicial proceeding (whether or not such Lender shall be designated a party thereto) relating to or arising out of this Agreement or any actual or proposed use of proceeds of Loans hereunder; provided that such Lender and its directors, officers and employees shall have no right to be indemnified or held harmless hereunder for the gross negligence or willful misconduct of such Lender or its directors, officers or employees as finally determined by a court of competent jurisdiction. The Company shall indemnify and hold harmless each Agent, in its capacity as an Agent hereunder, to the same extent that the Company indemnifies and holds harmless each Lender pursuant to this Section.
 
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Section 11.04    . Sharing of Set-offs. Each Lender agrees that if it shall, by exercising any right of set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate amount then due with respect to the Loans and Letter of Credit Liabilities held by it which is greater than the proportion received by any other Lender in respect of the aggregate amount then due with respect to the Loans and Letter of Credit Liabilities held by such other Lender, the Lender receiving such proportionately greater payment shall purchase such participations in the Loans and Letter of Credit Liabilities held by the other Lenders, and such other adjustments shall be made, as may be required so that all such payments shall be shared by the Lenders pro rata; provided that if at any time thereafter, the Lender that originally received such payment is required to repay (whether to the Company or to any other Person) all or any portion of such payment, each other Lender shall promptly (and in any event within five Domestic Business Days of its receipt of notification from such Lender requiring such repayment) repay to such Lender the portion of such payment previously received by it under this Section 11.04 , together with such amount (if any) as is equal to the appropriate portion of any interest (in respect of the period during which such other Lender held such amount) such Lender shall have been obligated to pay when repaying such amount as aforesaid, in exchange for such participation in the Loans and Letter of Credit Liabilities of such other Lender as was previously purchased by such Lender. Nothing in this Section shall impair the right of any Lender to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of any Borrower other than its indebtedness under the Loan Documents.
 
Section 11.05    . Amendments and Waivers.   (a)   Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Company and the Required Lenders (and, if the rights or duties of any Agent are affected thereby, by such Agent). Notwithstanding the foregoing, no such amendment or waiver shall,
 
(i)    unless signed by all affected Lenders,
 
(A)  
increase any Commitment,
 
(B)  
reduce the principal of or rate of interest on any Loan or the amount to be reimbursed in respect of any Letter of Credit or any interest thereon or any fees hereunder,
 
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(C)  
postpone the date fixed for any payment of principal of or interest on any Loan or for reimbursement in respect of any Letter of Credit or interest thereon or any fees hereunder or for termination of any Commitment; or,
 
(ii)    unless signed by all Lenders,
 
(A)  
release the Company from any obligation under Article 10 ,
 
(B)  
change the percentage of the Credit Exposures, which shall be required for the Lenders or any of them to take any action under this Section or any other provision of this Agreement,
 
(C)  
amend or waive the provisions of this Section 11.05 ; or
 
(iii)  
unless signed by a Designated Lender or its Designating Lender, (A) subject such Designated Lender to any additional obligation, (B) affect its rights hereunder (unless the rights of all the Lenders hereunder are similarly affected) or (C) change this clause 11.05(a)(iii) .
 
(b)  
The exercise of the Borrower of its right to extend the Termination Date by operation of Section 2.01(c) shall not constitute an amendment subject to this Section 11.05. Furthermore, the exercise by the Company of its right to decrease the Commitments pursuant to Section 2.09 shall not be deemed to require the consent of any party to this Agreement. For the avoidance of doubt the exercise by the Company of its option to increase the aggregate amount of the Commitments pursuant to Section 2.20 shall not require the consent of any Person except for the consent of the Administrative Agent, any Additional Lender and each Lender whose Commitment is to be increased.
 
(c)  
In addition, the Company and the Administrative Agent may mutually agree on supplemental or modified terms and procedures for the making of Competitive Bid Loans denominated in an Alternative Currency. Such terms and procedures shall govern Competitive Bid Loans covered thereby and made pursuant to Competitive Bid Quote Requests given after the Lenders shall have received notice of such supplemental or modified procedures, notwithstanding any inconsistent provisions in this Agreement.
 
Section 11.06    . Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that no Borrower may assign or otherwise transfer any of its rights under this Agreement (other than in accordance with Section 5.04 ) without the prior written consent of all Lenders.
 
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(b)  
Any Lender may at any time grant to one or more banks or other institutions (each a " Participant ") participating interests in its Commitment or any or all of its Loans and Letter of Credit Liabilities. In the event of any such grant by a Lender of a participating interest to a Participant, whether or not upon notice to any Borrower and the Agents, such Lender shall remain responsible for the performance of its obligations hereunder, and the Borrowers and the Agents shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and such Lender's Note. Any agreement pursuant to which any Lender may grant such a participating interest shall provide that such Lender shall retain the sole right and responsibility to enforce the obligations of the Borrowers hereunder and under the Notes including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that such Lender will not agree to any modification, amendment or waiver of this Agreement described in clause (A) (only to the extent such modification, amendment or waiver would increase the Commitment of such Lender), (B) or (C) of Section 11.05(a)(i) or to any modification, amendment or waiver that would have the effect of increasing the amount of a Participant's participation in such Lender's Commitment, in any such case without the consent of the Participant. The Borrowers agree that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Article 8 with respect to its participating interest, subject to subsection (e) below and the foregoing provisions of this subsection (b). An assignment or other transfer which is not permitted by subsection (c) or (d) below shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b).
 
(c)  
Any Lender may at any time assign to one or more Lenders or other institutions (each an " Assignee ") all, or a proportionate part of all, of its rights and obligations under this Agreement and the Notes, and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit J hereto executed by such Assignee and such transferor Lender, with the subscribed consent of the Company, the Administrative Agent and each Issuing Lender, in each case not to be unreasonably withheld; provided that if an Assignee is (i) any Person which controls, is controlled by, or is under common control with, or is otherwise substantially affiliated with such transferor Lender or (ii) another Lender, no such consent of the Company or the Administrative Agent shall be required; and provided further that any assignment shall not be less than $5,000,000, or, if less, shall constitute an assignment of all of such Lender's rights and obligations under this Agreement and the Notes. Upon execution and delivery of such instrument and payment by such Assignee to such transferor Lender of an amount equal to the purchase price agreed between such transferor Lender and such Assignee, such Assignee shall be a Lender party to this Agreement and shall have all the rights and obligations of a Lender with a Commitment as set forth in such instrument of assumption, and the transferor Lender shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection (c), the transferor Lender, the Administrative Agent and the Company shall make appropriate arrangements so that, if required, new Notes are issued to the Assignee and the transferor Lender and the original Note is canceled, and the Administrative Agent shall notify the other Agents of such assignment. In connection with any such assignment, the transferor Lender shall pay to the Administrative Agent an administrative fee of $3,500 for processing such assignment.
 
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(d)  
Any Lender may at any time assign all or any portion of its rights under this Agreement and its Note to a Federal Reserve Bank. No such assignment shall release the transferor Lender from its obligations hereunder.
 
(e)  
No Assignee, Participant or other transferee of any Lender's rights shall be entitled to receive any greater payment under Section 8.03 or 8.04 than such Lender would have been entitled to receive with respect to the rights transferred, unless such transfer is made (i) with the Company's prior written consent, (ii) by reason of the provisions of Section 8.02 , 8.03 or 8.04 requiring such Lender to designate a different Applicable Lending Office or (iii) solely in the case of an Assignee, to the extent that the right to a greater payment results from a change in treaty, law, rule or regulation occurring after the date such Assignee became an Assignee.
 
Section 11.07    . Designated Lenders. (a) Subject to the provisions of this subsection (a), any Lender may at any time designate an Eligible Designee to provide all or a portion of the Loans to be made by such Lender pursuant to this Agreement; provided that such designation shall not be effective unless the Company and the Administrative Agent consent thereto in writing (which consents shall not be unreasonably withheld). When a Lender and its Eligible Designee shall have signed an agreement substantially in the form of Exhibit K hereto (a " Designation Agreement ") and the Company and the Administrative Agent shall have signed their respective consents thereto, such Eligible Designee shall become a Designated Lender for purposes of this Agreement. The Designating Lender shall thereafter have the right to permit such Designated Lender to provide all or a portion of the Loans to be made by such Designating Lender pursuant to Section 2.01 or 2.03 , and the making of such Loans or portion thereof shall satisfy the obligation of the Designating Lender to the same extent, and as if, such Loans or portion thereof were made by the Designating Lender. As to any Loans or portion thereof made by it, each Designated Lender shall have all the rights that a Lender making such Loans or portion thereof would have had under this Agreement and otherwise; provided that (x) its voting rights under this Agreement shall be exercised solely by its Designating Lender and (y) its Designating Lender shall remain solely responsible to the other parties hereto for the performance of such Designated Lender's obligations under this Agreement, including its obligations in respect of the Loans or portion thereof made by it and its obligations to mitigate and make assignments under Article 8 . No additional Note shall be required to evidence the Loans or portion thereof made by a Designated Lender; and the Designating Lender shall be deemed to hold its Note as agent for its Designated Lender to the extent of the Loans or portion thereof funded by such Designated Lender. Each Designating Lender shall act as administrative agent for its Designated Lender and give and receive notices and other communications on its behalf. Any payments for the account of any Designated Lender shall be paid to its Designating Lender as administrative agent for such Designated Lender and neither the Company nor the Administrative Agent shall be responsible for any Designating Lender's application of such payments. In addition, any Designated Lender may, with notice to (but without the prior written consent of) the Company and the Administrative Agent, (i) assign all or portions of its interest in any Loans to its Designating Lender or to any financial institutions consented to in writing by the Company and the Administrative Agent that provide liquidity and/or credit facilities to or for the account of such Designated Lender to support the funding of Loans or portions thereof made by it and (ii) disclose on a confidential basis any non-public information relating to its Loans or portions thereof to any rating agency, commercial paper dealer or provider of any guarantee, surety, credit or liquidity enhancement to such Designated Lender.
 
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(b)  
Each party to this Agreement agrees that it will not institute against, or join any other person in instituting against, any Designated Lender any bankruptcy, insolvency, reorganization or other similar proceeding under any federal or state bankruptcy or similar law, for one year and a day after all outstanding senior indebtedness of such Designated Lender is paid in full. The Designating Lender for each Designated Lender agrees to indemnify, save, and hold harmless each other party hereto for any loss, cost, damage and expense arising out of its inability to institute any such proceeding against such Designated Lender. This subsection (b) shall survive the termination of this Agreement.
 
Section 11.08    . Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT AND EACH NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE BORROWER, THE AGENTS AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
Section 11.09    . Counterparts; Integration. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement and the fee agreements contemplated by Sections 2.08(b)(ii) and 7.09 constitute the entire agreement and understanding among the parties hereto and supersede any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.
 
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Section 11.10    . Confidentiality. In addition to any confidentiality requirements under applicable law, each of the Agents and Lenders (each a " Lender Party " and, collectively, the " Lender Parties ") agrees that through and including the later of (x) the Termination Date and (y) a date three years from the relevant Lender Party's receipt of the relevant information, it will take normal and reasonable precautions so that
 
 
(i)
all information provided to it by the Company, any Person on behalf of the Company, or by any other Lender Party on behalf of the Company, in connection with this Agreement or the transactions contemplated hereby will be held and treated by such Lender Party and its respective directors, affiliates, officers, agents and employees in confidence and
 
 
(ii)
neither it nor any of its respective directors, affiliates, officers, agents or employees shall, without the prior written consent of the Company, use any such information for any purpose or in any manner other than pursuant to the terms of and for the purposes contemplated by this Agreement.
 
Notwithstanding the immediately preceding sentence, any Lender Party may disclose any such information or portions thereof
 
(a)  
that is or becomes publicly available other than through a breach by such Lender Party of its obligations hereunder;
 
(b)  
that is also provided to such Lender Party by a Person other than the Company not in violation, to the actual knowledge of such Lender Party, of any duty of confidentiality;
 
 (c)   at the request of any bank regulatory authority or examiner;
 
 (d)   pursuant to subpoena or other court process;
 
 (e)   when required by applicable law;
 
(f)  
at the written request or the express direction of any other authorized government agency;
 
(g)  
on a confidential basis, to its independent auditors, counsel and other professional advisors in connection with their provision of professional services to such Lender Party;
 
(h)  
to any (i) Participant or (ii) prospective Participant or prospective Lender, if such Participant, prospective Participant or prospective Lender (which prospective Lender is promptly identified to the Company), prior to any such disclosure, agrees in writing to keep such information confidential to the same extent required of the Lender Parties hereunder; or
 
(i)  
to any affiliate of such Lender Party, solely to enable such affiliate to assess the creditworthiness of the Company in connection with any transaction between such affiliate and the Company or any of its Subsidiaries;
 
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provided that any Lender Party's failure to comply with the provisions of this Section 11.10 shall not affect the obligations of the Company hereunder.
 
Section 11.11    . Severability. Any provision of this Agreement that is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction.
 
Section 11.12    . Termination of Existing Credit Agreement. The Company and each of the Lenders that is also a party to the Existing Credit Agreement agree that the " Commitments " as defined in the Existing Credit Agreement shall terminate in their entirety on the Effective Date. Each such Lender waives (a) any requirement of notice of such termination pursuant to Section 2.09 of the Existing Credit Agreement and (b) any claim to any commitment fees or other fees under the Existing Credit Agreement for any day on or after the Effective Date. The Company agrees that (i) no loans will be outstanding under the Existing Credit Agreement on or at any time after the Effective Date and (ii) all accrued and unpaid facility fees and other amounts due and payable under the Existing Credit Agreement on or before the Effective Date will be paid on or before the Effective Date.
 
Section 11.13    . Collateral. Each of the Lenders represents to the Agents and each of the other Lenders that it in good faith is not relying upon any Margin Stock as collateral in the extension or maintenance of the credit provided for in this Agreement.
 
Section 11.14    . Judgment Currency. If, under any applicable law and whether pursuant to a judgment being made or registered against any Obligor or for any other reason, any payment under or in connection with this Agreement, is made or satisfied in a currency (the " Other Currency ") other than that in which the relevant payment is due (the " Required Currency ") then, to the extent that the payment (when converted into the Required Currency at the rate of exchange on the date of payment or, if it is not practicable for the party entitled thereto (the " Payee ") to purchase the Required Currency with the other Currency on the date of payment, at the rate of exchange as soon thereafter as it is practicable for it to do so) actually received by the Payee falls short of the amount due under the terms of this Agreement, the Company shall, to the extent permitted by law, as a separate and independent obligation, indemnify and hold harmless the Payee against the amount of such shortfall. For the purpose of this Section, " rate of exchange " means the rate at which the Payee is able on the relevant date to purchase the Required Currency with the Other Currency and shall take into account any premium and other costs of exchange.
 
Section 11.15    . Patriot Act Notice. Each Lender that is subject to the Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to the requirements of the Patriot Act, it may be required to obtain, verify and record information that identifies each Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Borrower in accordance with the Patriot Act.
 
69
 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
 
PRAXAIR, INC.
 
By:
 
 
Name:
 
Title:
 
 
39 Old Ridgebury Road
 
Danbury, CT 06810-5113
 
Telecopy number: (203) 837-2480
 
Attention: Treasurer

 



70


JPMORGAN CHASE BANK, N.A., as Administrative Agent and Lender
   
By:
 
 
Name:
 
Title:

71


BANK OF AMERICA, N.A., as Syndication Agent and Lender
   
By:
 
 
Name:
 
Title:

72


BANK OF AMERICA, N.A., Spanish Branch as Lender
   
By:
 
 
Name:
 
Title:

73


BANK OF AMERICA, N.A., Canada Branch as Lender
   
By:
 
 
Name:
 
Title:

74


CITIBANK, N.A., as Co-Documentation Agent and Lender
   
By:
 
 
Name:
 
Title:

75


CREDIT SUISSE FIRST BOSTON, acting through its Cayman Islands Branch, as Co-Documentation Agent and Lender
   
By:
 
 
Name:
 
Title:

 
By:
 
 
Name:
 
Title:

76


 

 
ABN AMRO BANK N.V.
   
By:
 
 
Name:
 
Title:

 
By:
 
 
Name:
 
Title:

77


 
BANCO BILBAO VIZCAYA ARGENTARIA S.A.
   
By:
 
 
Name:
 
Title:

 
By:
 
 
Name:
 
Title:

78


 
BANCO SANTANDER CENTRAL HISPANO S.A., New York Branch
   
By:
 
 
Name:
 
Title:

 
By:
 
 
Name:
 
Title:

79


 
BANK OF TOKYO-MITSUBISHI, LTD.
   
By:
 
 
Name:
 
Title:

80


 
DEUTSCHE BANK A.G. NEW YORK BRANCH
   
By:
 
 
Name:
 
Title:

 
By:
 
 
Name:
 
Title:

81


 
HSBC BANK USA, N.A.
   
By:
 
 
Name:
 
Title:

82


 
MELLON BANK, N.A.
   
By:
 
 
Name:
 
Title:

83


 
MERRILL LYNCH BANK USA
   
By:
 
 
Name:
 
Title:

84


 
SOCIETE GENERALE
   
By:
 
 
Name:
 
Title:

85


 
TORONTO DOMINION (TEXAS) LLC
   
By:
 
 
Name:
 
Title:

86


 
TORONTO DOMINION BANK
   
By:
 
 
Name:
 
Title:

 


87


PRICING SCHEDULE
 
The " Euro-Currency Margin ", " CD Margin ", " Letter of Credit Fee Rate " and " Facility Fee Rate " for any day are the respective percentages set forth below (in basis points per annum) in the applicable row under the column corresponding to the Status that exists on such day; provided that for any day on which Utilization exceeds 50%, the Euro-Currency Margin, the CD Margin and the Letter of Credit Fee Rate shall be increased by 10 basis points per annum:
 
Status
Level I
Level II
Level III
Level IV
Level V
Level VI
Euro-Currency Margin/Letter of Credit Fee Rate
10.00
14.00
17.50
31.00
43.50
55.00
Facility Fee Rate
5.00
6.00
7.50
9.00
11.50
15.00
CD Margin
22.50
26.50
30.00
43.50
56.00
67.50

For purposes of this Schedule, the following terms have the following meanings:
 
" Level I Status " exists at any date if, at such date, the Company's long-term debt is rated at least A+ by S&P or at least A1 by Moody's.
 
" Level II Status " exists at any date if, at such date, (i) the Company's long-term debt is rated at least A by S&P or at least A2 by Moody's and (ii) Level I Status does not exist.
 
" Level III Status " exists at any date if, at such date, (i) the Company's long-term debt is rated at least A- by S&P or at least A3 by Moody's and (ii) neither Level I Status or Level II Status exists.
 
" Level IV Status " exists at any date if, at such date, (i) the Company's long-term debt is rated at least BBB+ by S&P or at least Baa1 by Moody's and (ii) none of Level I Status, Level II Status or Level III Status exists.
 
" Level V Status " exists at any date if, at such date, (i) the Company's long-term debt is rated at least BBB by S&P or at least Baa2 by Moody's and (ii) none of Level I Status, Level II Status, Level III Status or Level IV Status exists.
 
" Level VI Status " exists at any date if, at such date, no other Status exists.
 
" Moody's " means Moody's Investors Service, Inc.
 
" S&P " means Standard & Poor's.
 
" Status " refers to the determination of which of Level I Status, Level II Status, Level III Status, Level IV Status, or Level V or Level VI Status exists at any date.
 
" Utilization " means at any date the percentage equivalent of a fraction (i) the numerator of which is the Total Outstanding Amount at such date, after giving effect to any borrowing or payment on such date and (ii) the denominator of which is the aggregate amount of the Commitments at such date, after giving effect to any reduction of the Commitments on such date.
 
The credit ratings to be utilized for purposes of this Schedule are those assigned to the senior unsecured long-term debt securities of the Company without third-party credit enhancement and any rating assigned to any other debt security of the Company shall be disregarded. The rating in effect at any date is that in effect at the close of business on such date.
 
If there is a difference in rating levels between S&P and Moody's, then the higher rating shall be used to determine Status; provided that if the difference is more than one notch, a rating one notch higher than the lower of the two shall be used.
 

 

88


COMMITMENT SCHEDULE
 
BANK
COMMITMENT
 
JPMorgan Chase Bank, N.A.
 
$100,000,000
 
Bank of America, N.A.
 
$100,000,000
 
Citibank, N.A.
 
$90,000,000
 
Credit Suisse First Boson, acting through its Cayman Islands Branch
 
$90,000,000
 
ABN AMRO Bank N.V.
 
$70,000,000
 
Bank of Tokyo-Mitsubishi, Ltd.
 
$70,000,000
 
Deutsche Bank A.G. New York Branch
 
$70,000,000
 
HSBC Bank USA, N.A.
 
$70,000,000
 
Merrill Lynch Bank USA
 
$70,000,000
 
Banco Santander Central Hispano S.A.
 
$70,000,000
 
Banco Bilbao Vizcaya Argentaria S.A.
 
$50,000,000
 
Mellon Bank, N.A.
 
$50,000,000
 
Societe Generale
 
$50,000,000
 
Toronto Dominion Bank
 
$50,000,000
 
TOTAL
$1,000,000,000


 

89


MANDATORY COST
 
1.
The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank, in each case, in respect of the Loans.
 
2.
On the first day of each Interest Period (or as soon as possible thereafter) the Administrative Agent shall calculate, as a percentage rate, a rate (the " Additional Cost Rate ") for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Administrative Agent as a weighted average of the Lenders' Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Group of Loans of all the Lenders) and will be expressed as a percentage rate per annum.
 
3.
The Additional Cost Rate for any Lender lending from an Applicable Lending Office in a member state of the European Community that adopts or has adopted the Euro as its lawful currency in accordance with legislation of the European Community relating Economic and Monetary Union will be the percentage notified by that Lender to the Administrative Agent. This percentage will be certified by that Lender in its notice to the Administrative Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender's participation in the relevant Group of Loans of all the Lenders made from such Applicable Lending Office) of complying with the minimum reserve requirements of the European Central Bank in respect of Loans made from such Applicable Lending Office.
 
4.
The Additional Cost Rate for any Lender lending from an Applicable Lending Office in the United Kingdom will be calculated by the Administrative Agent as follows:
 
(a)   in relation to a Revolving Credit Loan denominated in Sterling:
 

AB + C (B-D) + E * 0.01     % per annum    
100 - (A + C)  

(b)   in relation to a Loan denominated in any currency other than Sterling:
 

E * 0.01       % per annum   
   300 

Where:
 
A
is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which such Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements.
 
B
is the percentage rate of interest (excluding the Applicable Margin and the Mandatory Cost and, if the Loan is an Unpaid Sum, the additional rate of interest specified in Section 2.07(d) payable for the relevant Interest Period on the Loan.
 
C
is the percentage (if any) of Eligible Liabilities which such Lender is required from time to time to maintain as interest bearing Special Deposits with the Bank of England.
 
D
is the percentage rate per annum payable by the Bank of England to the Administrative Agent on interest bearing Special Deposits.
 
E
is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Administrative Agent as being the average of the most recent rates of charge supplied by the Reference Banks to the Administrative Agent pursuant to paragraph 7 below and expressed in pounds per £1,000,000.
 
5.   For the purposes of this Schedule:
 
(a)   " Eligible Liabilities " and " Special Deposits " have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England;
 
(b)   " Fees Rules " means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits;
 
(c)   " Fee Tariffs " means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate); and
 
(d)   " Tariff Base " has the meaning given to it in, and will be calculated in accordance with, the Fees Rules.
 
6.
In application of the above formulae, A, B, C and D will be included in the formulae as percentages ( i.e. , 5% will be included in the formula as 5 and not as 0.05). A negative result obtained by subtracting D from B shall be taken as zero. The resulting figures shall be rounded to four decimal places.
 
7.
If requested by the Administrative Agent, each Reference Bank shall, as soon as practicable after publication by the Financial Services Authority, supply to the Administrative Agent, the rate of charge payable by that Reference Bank to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by that Reference Bank as being the average of the Fee Tariffs applicable to that Reference Bank for that financial year) and expressed in pounds per £1,000,000 of the Tariff Base of that Reference Bank.
 
8.
Each Lender shall supply any information required by the Administrative Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Lender shall supply the following information on or prior to the date on which it becomes a Lender:
 
(a)   the jurisdiction of its Applicable Lending Office; and
 
(b)
any other information that the Administrative Agent may reasonably require for such purpose.
 
Each Lender shall promptly notify the Administrative Agent of any change to the information provided by it pursuant to this paragraph.
 
9.
The percentages of each Lender for the purpose of A and C above and the rates of charge of each Reference Bank for the purpose of E above shall be determined by the Administrative Agent based upon the information supplied to it pursuant to paragraphs 7 and 8 above and on the assumption that, unless a Lender notifies the Administrative Agent to the contrary, each Lender's obligations in relation to cash ratio deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with an Applicable Lending Office in the same jurisdiction as its Applicable Lending Office.
 
10.
The Administrative Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender or Reference Bank pursuant to paragraphs 3, 7 and 8 above is true and correct in all respects.
 
11.
The Administrative Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender and each Reference Bank pursuant to paragraphs 3, 7 and 8 above.
 
12.
Any determination by the Administrative Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all parties to this Agreement.
 
13.
The Administrative Agent may from time to time, after consultation with the Guarantor and the Lenders, determine and notify to all parties to this Agreement any amendments which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all parties to this Agreement.
 

90


EXHIBIT A
 
NOTE
 
                                                                                                                                                                                                                           New York, New York
                                                                                                                                                             _______________, 200_
 
For value received, [NAME OF BORROWER] (the " Borrower "), promises to pay to the order of _____________ (the " Lender "), for the account of its Applicable Lending Office, the unpaid principal amount of each Loan made by the Lender to the Borrower pursuant to the Credit Agreement referred to below on the maturity date provided for in the Credit Agreement. The Borrower promises to pay interest on the unpaid principal amount of each such Loan on the dates and at the rate or rates provided for in the Credit Agreement. All such payments of principal and interest shall be made (i) if in Dollars, in lawful money of the United States in immediately available funds at the office of JPMorgan Chase Bank, N.A., at 270 Park Avenue, New York, New York or (ii) if in an Alternative Currency, in such funds as may then be customary for the settlement of international transactions in such Alternative Currency at the place specified for payment thereof pursuant to the Credit Agreement.
 
All Loans made by the Lender, the respective types and maturities thereof and all repayments of the principal thereof shall be recorded by the Lender and, if the Lender so elects in connection with any transfer or enforcement hereof, appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding may be endorsed by the Lender on the schedule attached hereto, or on a continuation of such schedule attached to and made a part hereof; provided that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Credit Agreement.
 

91

This note is one of the Notes referred to in the Credit Agreement dated as of December 23, 2004 among Praxair, Inc., a Delaware corporation, the Eligible Subsidiaries referred to therein, the banks listed on the signature pages thereof, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent and Citibank, N.A. and Credit Suisse First Boston, as Co-Documentation Agents (as the same may be amended from time to time, the " Credit Agreement "). Terms defined in the Credit Agreement and not otherwise defined herein are used herein with the same meanings. Reference is made to the Credit Agreement for provisions for the prepayment hereof and the acceleration of the maturity hereof.
 
[NAME OF BORROWER]
By:
 
 
Name:
 
Title:

92

Note (cont'd)
 
LOANS AND PAYMENTS OF PRINCIPAL
 
Date
Currency and Amount of Loan
Type of Loan
Principal Repaid
Maturity Date
Notation Made By
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           


 


93


EXHIBIT B - Competitive Bid Quote Request
 
Form of Competitive Bid Quote Request
 
[Date]
 
To:
JPMorgan Chase Bank, N.A.
 
(the " Administrative Agent ")
 
From:
[Name of Borrower] (the " Borrower ")
 
Re:
Credit Agreement (as the same may be amended from time to time, the " Credit Agreement ") dated as of December 23, 2004 among Praxair, Inc., the Eligible Subsidiaries referred to therein, the Lenders party thereto, the Administrative Agent, Bank of America, N.A., as Syndication Agent and Citibank, N.A. and Credit Suisse First Boston, as Co-Documentation Agents
 
We hereby give notice pursuant to Section 2.03 of the Credit Agreement that we request Competitive Bid Quotes for the following proposed Competitive Bid Borrowing(s):
 
Date of Borrowing: __________________
 
Principal Amount *  
Interest Period *   *
   
[$]
 
[Can $]
 
   
Such Competitive Bid Quotes should offer a Competitive Bid [Margin] [Absolute Rate]. [The applicable base rate is the Applicable Interbank Offered Rate.]
 
Terms used herein and not otherwise defined herein have the meanings assigned to them in the Credit Agreement.
 
[NAME OF BORROWER]
   
By:
 
 
Name:
 
Title:

 

* Amount must be not less than $5,000,000, and, in the case of Dollar-Denominated Loans, a multiple of $1,000,000.
 
** Not less than one month (LIBOR Auction) or not less than 7 days (Absolute Rate Auction), subject to the provisions of the definition of Interest Period.
 


94


EXHIBIT C - Invitation for Competitive Bid Quotes
 
Form of Invitation for Competitive Bid Quotes
 
To:   [Name of Lender]
 
Re:
Invitation for Competitive Bid Quotes to [Name of Borrower] (the " Borrower ")
 
Pursuant to Section 2.03 of the Credit Agreement dated as of December 23, 2004 among Praxair, Inc., the Eligible Subsidiaries referred to therein, the Lenders party thereto, the undersigned, as Administrative Agent, Bank of America, N.A., as Syndication Agent and Citibank, N.A. and Credit Suisse First Boston, as Co-Documentation Agents, we are pleased on behalf of the Borrower to invite you to submit Competitive Bid Quotes to the Borrower for the following proposed Competitive Bid Borrowing(s):
 
Date of Borrowing: __________________
 
Principal Amount
Interest Period
   
[$]
 
[Can $]
 
Such Competitive Bid Quotes should offer a Competitive Bid [Margin] [Absolute Rate]. [The applicable base rate is the Applicable Interbank Offered Rate.]
 
Please respond to this invitation by no later than [2:00 P.M.] [9:30 A.M.] (New York City time) on [date].
 
Terms used herein and not otherwise defined herein have the meanings assigned to them in the Credit Agreement.
 

 
JPMORGAN CHASE BANK, N.A.,
 
as Administrative Agent
   
By
 
 
Authorized Officer

 

95


EXHIBIT D - Competitive Bid Quote
 
Form of Competitive Bid Quote
 
To:   JPMorgan Chase Bank, N.A., as Administrative Agent
 
Re:   Competitive Bid Quote to [Name of Borrower] (the " Borrower ")
 
In response to your invitation on behalf of the Borrower dated _____________, ____, we hereby make the following Competitive Bid Quote on the following terms:
 
 
1.
Quoting Lender: ________________________________
 
2.
Person to contact at Quoting Lender:
_____________________________
 
3.
Date of Borrowing: ____________________ *  
 
4.
We hereby offer to make Competitive Bid Loan(s) in the following principal amounts, for the following Interest Periods and at the following rates:
 
Principal Amount * *
Interest Period * **
Competitive Bid
[Margin * *** ] [Absolute Rate * **** ]
 
[$]
   
[Can $]
   
     
[Provided, that the aggregate principal amount of Competitive Bid Loans for which the above offers may be accepted shall not exceed $____________.] **
 
We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in the Credit Agreement dated as of December 23, 2004 among Praxair, Inc., the Eligible Subsidiaries referred to therein, the Lenders party thereto, yourselves, as Administrative Agent, Bank of America, N.A., as Syndication Agent and Citibank, N.A. and Credit Suisse First Boston, as Co-Documentation Agents, irrevocably obligate(s) us to make the Competitive Bid Loan(s) for which any offer(s) are accepted, in whole or in part.
 
       Very truly yours,
 
     
[NAME OF BANK]
 
             
Dated:
 
 
By:
 
 
 
       
Authorized Officer
 

 

* As specified in the related Invitation.
 
** Principal amount bid for each Interest Period may not exceed principal amount requested. Specify aggregate limitation if the sum of the individual offers exceeds the amount the Lender is willing to lend. Each bid must be not less than $5,000,000, and, in the case of Dollar-Denominated Loans, a multiple of $1,000,000.
 
*** Not less than one month (LIBOR auction) or not less than 7 days (Absolute Rate Auction), as specified in the related Invitation. No more than five bids are permitted for each Interest Period.
 
**** Margin over or under the Applicable Interbank Offered Rate determined for the applicable Interest Period. Specify percentage (to the nearest 1/10,000th of 1%) and specify whether "PLUS" or "MINUS".
 
***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
 

96


EXHIBIT G
 
ELECTION TO PARTICIPATE
 
________________ __, 200_
 
JPMorgan Chase Bank, N.A., as
Administrative Agent for
the Lenders party to the Credit
Agreement dated as of December 23, 2004
among Praxair, Inc.,
the Eligible Subsidiaries referred to therein,
such Lenders, the Administrative Agent,
Bank of America, N.A., as Syndication Agent
and Citibank, N.A. and Credit Suisse First Boston,
as Co-Documentation Agents
(as the same may be amended from time
to time, the " Credit Agreement ")
 
Dear Sirs:
 
Reference is made to the Credit Agreement described above. Terms not defined herein which are defined in the Credit Agreement have for purposes hereof the meanings provided therein.
 
The undersigned, [Name of Eligible Subsidiary], a [jurisdiction] [type of entity], hereby elects to be an Eligible Subsidiary for purposes of the Credit Agreement, effective from the date hereof until an Election to Terminate shall have been delivered on behalf of the undersigned in accordance with the Credit Agreement. The undersigned confirms that the representations and warranties set forth in Article 9 of the Credit Agreement are true and correct as to the undersigned as of the date hereof, and the undersigned agrees to perform all the obligations of an Eligible Subsidiary under, and to be bound in all respects by the terms of, the Credit Agreement, including without limitation Section 11.09 thereof, as if the undersigned were a signatory party thereto as an Eligible Subsidiary.
 
This instrument shall be construed in accordance with and governed by the laws of the State of New York.
 
Very truly yours,
[NAME OF ELIGIBLE SUBSIDIARY]
By:
 
 
Name:
 
Title:
The undersigned confirms that [Name of Eligible Subsidiary] is an Eligible Subsidiary for purposes of the Credit Agreement described above.
 
PRAXAIR, INC.
   
By:
 
 
Name:
 
Title:

 
Receipt of the above Election to Participate is acknowledged on and as of the date set forth above.
 
JPMORGAN CHASE BANK, N.A.,
 
as Administrative Agent
   
By:
 
 
Name:
 
Title:

 

97


EXHIBIT H
 
ELECTION TO TERMINATE
 
________________ __, 200_
 
JPMorgan Chase Bank, N.A., as
Administrative Agent for
the Lenders party to the Credit
Agreement dated as of December 23, 2004
among Praxair, Inc.,
the Eligible Subsidiaries referred to therein,
such Lenders, the Administrative Agent,
Bank of America, N.A., as Syndication Agent and
Citibank, N.A. and Credit Suisse First Boston,
as Co-Documentation Agents
(as the same may be amended from time
to time, the " Credit Agreement ")
 
Dear Sirs:
 
Reference is made to the Credit Agreement described above. Terms not defined herein which are defined in the Credit Agreement have for purposes hereof the meanings provided therein.
 
The undersigned, [Name of Eligible Subsidiary], a [jurisdiction] [type of entity], hereby elects to terminate its status as an Eligible Subsidiary for purposes of the Credit Agreement, effective as of the date hereof. The undersigned represents and warrants that all principal and interest on all Loans made to the undersigned and all other amounts payable by the undersigned pursuant to the Credit Agreement have been paid in full on or before the date hereof. Notwithstanding the foregoing, this Election to Terminate shall not affect any obligation of the undersigned heretofore incurred under the Credit Agreement or any Note.
 

98

This instrument shall be construed in accordance with and governed by the laws of the State of New York.
 
Very truly yours,
[NAME OF ELIGIBLE SUBSIDIARY]
By:
 
 
Name:
 
Title:

 
The undersigned confirms that [Name of Eligible Subsidiary] is an Eligible Subsidiary for purposes of the Credit Agreement described above is terminated as of the date hereof.
 
PRAXAIR, INC.
By:
 
 
Name:
 
Title:

 
Receipt of the above Election to Terminate is acknowledged on and as of the date set forth above.
 
JPMORGAN CHASE BANK, N.A.,
 
as Administrative Agent
   
By:
 
 
Name:
 
Title:

 

99


EXHIBIT J
 
ASSIGNMENT AND ASSUMPTION AGREEMENT
 
AGREEMENT dated as of _________, 20__ among [ASSIGNOR] (the " Assignor "), [ASSIGNEE] (the " Assignee "), PRAXAIR, INC. (the " Company "), JPMORGAN CHASE BANK, N.A., as Administrative Agent (the " Administrative Agent ") and [ISSUING BANK(S)], as Issuing Lender(s).
 
W I T N E S S E T H
 
WHEREAS, this Assignment and Assumption Agreement (the " Agreement ") relates to the Credit Agreement dated as of December 23, 2004 among the Company, the Eligible Subsidiaries referred to therein, the Assignor and the other Lenders party thereto, as Lenders, the Administrative Agent, Bank of America, N.A., as Syndication Agent and Citibank, N.A. and Credit Suisse First Boston, as Co-Documentation Agents (the " Credit Agreement ");
 
WHEREAS, as provided under the Credit Agreement, the Assignor has a Commitment to make Loans and participate in Letters of Credit in an aggregate Dollar Amount at any time outstanding not to exceed $___,000,000;
 
WHEREAS, [Syndicated] Loans made to the Borrower by the Assignor under the Credit Agreement in the aggregate Dollar Amount of $__________ are outstanding at the date hereof;
 
WHEREAS, Letters of Credit with a total Dollar Amount available for drawing thereunder of $__________ are outstanding at the date hereof; and
 
WHEREAS, the Assignor proposes to assign to the Assignee all of the rights of the Assignor under the Credit Agreement and the other Loan Documents in respect of a portion of its Commitment thereunder in an amount equal to $__________ (the " Assigned Amount "), together with a corresponding portion of its outstanding [Syndicated] Loans and Letter of Credit Liabilities, and the Assignee proposes to accept assignment of such rights and assume the corresponding obligations from the Assignor on such terms;
 
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows:
 
Section 1. Definitions . All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Credit Agreement.
 
Section 2. Assignment . The Assignor hereby assigns and sells to the Assignee all of the rights of the Assignor under the Credit Agreement and the other Loan Documents to the extent of the Assigned Amount, and the Assignee hereby accepts such assignment from the Assignor and assumes all of the obligations of the Assignor under the Credit Agreement to the extent of the Assigned Amount, including the purchase from the Assignor of the corresponding portion of the principal amount of the Syndicated Loans made by, and Letter of Credit Liabilities of, the Assignor outstanding at the date hereof. Upon the execution and delivery hereof by the Assignor, the Assignee, the Company and the Administrative Agent and the payment of the amounts specified in Section 3 required to be paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed to the rights and be obligated to perform the obligations of a Lender under the Credit Agreement with a Commitment in an amount equal to the Assigned Amount, and (ii) the Commitment of the Assignor shall, as of the date hereof, be reduced by a like amount and the Assignor released from its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee. The assignment provided for herein shall be without recourse to the Assignor.
 
Section 3. Payments . As consideration for the assignment and sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the date hereof in immediately available funds the amount heretofore agreed between them. *   It is understood that facility and Letter of Credit fees accrued to the date hereof in respect of the Assigned Amount are for the account of the Assignor and such fees accruing from and including the date hereof are for the account of the Assignee. Each of the Assignor and the Assignee hereby agrees that if it receives any amount under the Credit Agreement which is for the account of the other party hereto, it shall receive the same for the account of such other party to the extent of such other party's interest therein and shall promptly pay the same to such other party.
 
Section 4. Consents . This Agreement is conditioned upon the consent of the Company, the Issuing Lenders and the Administrative Agent pursuant to Section 11.06 of the Credit Agreement; provided, if an Assignee is (i) any Person which controls, is controlled by, or is under common control with, or is otherwise substantially affiliated with such transferor Lender or (ii) another Lender, no such consent of the Company or the Administrative Agent shall be required. The execution of this Agreement by the Company, the Issuing Lenders and the Administrative Agent, as applicable, is evidence of this consent.
 
Section 5. Non-Reliance on Assignor . The Assignor makes no representation or warranty in connection with, and shall have no responsibility with respect to, the solvency, financial condition or statements of the Company or any of its Subsidiaries, or the validity and enforceability of the obligations of the Company or any of its Subsidiaries in respect of any Loan Document. The Assignee acknowledges that it has, independently and without reliance on the Assignor, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and will continue to be responsible for making its own independent appraisal of the business, affairs and financial condition of the Company and its Subsidiaries.
 
Section 6. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
 
Section 7. Counterparts . This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
 

100

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written.
 
[ASSIGNOR]
By:
 
 
Title:

 
[ASSIGNEE]
By:
 
 
Title:

 

 
PRAXAIR, INC.
   
By:
 
 
Title:

 
JPMORGAN CHASE BANK, N.A.
   
By:
 
 
Title:

 

 
[ISSUING BANK]
   
By:
 
 
Title:


 

* Amount should combine principal together with accrued interest and breakage compensation, if any, to be paid by the Assignee, net of any portion of any upfront fee to be paid by the Assignor to the Assignee. It may be preferable in an appropriate case to specify these amounts generically or by formula rather than as a fixed sum.
 

101


EXHIBIT K
 
DESIGNATION AGREEMENT
 
Reference is made to the Credit Agreement dated as of December 23, 2004 (as amended from time to time, the " Credit Agreement ") among Praxair, Inc., a Delaware corporation (the " Company "), the Eligible Subsidiaries referred to therein, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent (the " Administrative Agent "), Bank of America, N.A., as Syndication Agent and Citibank, N.A. and Credit Suisse First Boston, as Co-Documentation Agents. Terms defined in the Credit Agreement are used herein with the same meaning. _________________ (the " Designator ") and ________________ (the " Designee ") agree as follows:
 
1.
The Designator designates the Designee as its Designated Lender under the Credit Agreement and the Designee accepts such designation.
 
2.
The Designator makes no representations or warranties and assumes no responsibility with respect to the financial condition of any Borrower or the performance or observance by any Borrower of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto.
 
3.
The Designee (i) confirms that it is an Eligible Designee; (ii) appoints and authorizes the Designator as its administrative agent and attorney-in-fact and grants the Designator an irrevocable power of attorney to receive payments made for the benefit of the Designee under the Credit Agreement and to deliver and receive all communications and notices under the Credit Agreement, if any, that the Designee is obligated to deliver or has the right to receive thereunder; (iii) acknowledges that the Designator retains the sole right and responsibility to vote under the Credit Agreement, including, without limitation, the right to approve any amendment or waiver of any provision of the Credit Agreement; and (iv) agrees that the Designee shall be bound by all such votes, approvals, amendments and waivers and all other agreements of the Designator pursuant to or in connection with the Credit Agreement, all subject to Section 11.05(a)(iii) of the Credit Agreement.
 
4.
The Designee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements referred to in Article 4 or delivered pursuant to Article 5 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Designation Agreement and (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Designator 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 any action it may be permitted to take under the Credit Agreement.
 
5.
Following the execution of this Designation Agreement by the Designator and the Designee and the consent hereto by the Company, it will be delivered to the Administrative Agent for its consent. This Designation Agreement shall become effective when the Administrative Agent consents hereto or on any later date specified on the signature page hereof.
 
6.
Upon the effectiveness hereof, the Designee shall have the right to make Loans or portions thereof as a Lender pursuant to Section 2.01 or 2.03 of the Credit Agreement and the rights of a Lender related thereto. The making of any such Loans or portions thereof by the Designee shall satisfy the obligations of the Designator under the Credit Agreement to the same extent, and as if, such Loans or portions thereof were made by the Designator.
 
7.
This Designation Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.
 
IN WITNESS WHEREOF, the parties have caused this Designation Agreement to be executed by their respective officers hereunto duly authorized, as of the date first above written.
 
Effective Date: ___________ __, 200_
 
[NAME OF DESIGNATOR]
   
By:
 
 
Name:
 
Title:

 
[NAME OF DESIGNEE]
 
By:
 
Name:  
Title:  
 

 

 

102

The undersigned consent to the foregoing designation.
 
PRAXAIR, INC.
   
By:
 
 
Name:
 
Title:

 

 
JPMORGAN CHASE BANK, N.A.,
 
as Administrative Agent
   
By:
 
 
Name:
 
Title:

 

 
103


EXHIBIT L
 
EXTENSION AGREEMENT
 
JPMorgan Chase Bank, N.A.,
as Administrative Agent
under the Credit Agreement
referred to below
[Address]
 
Gentlemen:
 
The undersigned hereby agrees to extend, effective [Extension Date], the Termination Date under the Credit Agreement dated as of December 23, 2004 (as amended from time to time, the " Credit Agreement ") among Praxair, Inc., a Delaware corporation (the " Company "), the Subsidiaries referred to therein, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent (the " Administrative Agent "), Bank of America, N.A., as Syndication Agent and Citibank, N.A. and Credit Suisse First Boston, as Co-Documentation Agents, for one year to [date to which the Termination Date is extended]. Terms defined in the Credit Agreement are used herein with the same meaning.
 
This Extension Agreement shall be construed in accordance with and governed by the law of the State of New York.
 
[LENDERS]
   
By:
 
 
Name:
 
Title:

Agreed and accepted:
 
PRAXAIR, INC.
   
By:
 
 
Name:
 
Title:

JPMORGAN CHASE BANK, N.A., as
 
Administrative Agent
   
By:
 
 
Name:
 
Title:
 
 
104



FACILITY AGREEMENT

Praxair, Inc. and Subsidiaries
EXHIBIT 10.18

EXECUTION COPY
 

 
€450,000,000
 
FACILITY AGREEMENT
 
dated as of
 
November 29, 2004
 
among
 
Praxair Euroholding, S.L.,
as Borrower
 
Praxair, Inc.,
as Guarantor
 
The Lenders Party Hereto
 
Citigroup Global Markets, Inc.,
as Syndication Agent
 
and
 
ABN AMRO Bank N.V.,
as Administrative Agent and
Documentation Agent
 
 
 
ABN AMRO Bank N.V.
and
Citigroup Global Markets, Inc.,
Co-Lead Arrangers and Bookrunners
 
 
 

TABLE OF CONTENTS
 

ARTICLE 1
PAGE
DEFINITIONS
 
   
Section 1.01. Definitions
1
Section 1.02. Accounting Terms and Determinations
13
   
ARTICLE 2
 
THE CREDITS
 
   
Section 2.01. Commitments to Lend.
13
Section 2.02. Notice of Borrowings
14
Section 2.03. Notice to Lenders; Funding of Loans.
14
Section 2.04. Evidence of Debt
15
Section 2.05. Maturity of Loans
16
Section 2.06. Interest Rates.
16
Section 2.07. Participation Fee
17
Section 2.08. Commitment Fee
17
Section 2.09. Optional Termination or Reduction of Commitments
17
Section 2.10. Optional Prepayments
18
Section 2.11. Mandatory Prepayment
18
Section 2.12. General Provisions as to Payments
18
Section 2.13. Computation of Interest and Fees
20
Section 2.14. Method of Electing Interest Periods
20
Section 2.15. Optional Increase in Commitments
21
Section 2.16. Currency Equivalents
22
Section 2.17. Conditions Relating to Optional Currencies.
23
Section 2.18. Control Accounts
24
   
ARTICLE 3
 
CONDITIONS
 
   
Section 3.01. First Borrowing
25
Section 3.02. All Borrowings
28
   
ARTICLE 4
 
REPRESENTATIONS AND WARRANTIES
 
   
Section 4.01. Corporate Existence and Power
28
Section 4.02. Corporate and Governmental Authorization; No Contravention
29
Section 4.03. Binding Effect
29
Section 4.04. Financial Information.
29
Section 4.05. Litigation
30
Section 4.06. Compliance with ERISA
30




 
PAGE
Section 4.07. Environmental Matters
31
Section 4.08. Subsidiaries
31
Section 4.09. Not an Investment Company
31
Section 4.10. Disclosure
31
Section 4.11. Acquisition
31
   
ARTICLE 5
 
COVENANTS
 
   
Section 5.01. Information
31
Section 5.02. Maintenance of Property; Insurance
34
Section 5.03. Negative Pledge
35
Section 5.04. Consolidations, Mergers and Sales of Assets
36
Section 5.05. Minimum Consolidated Book Net Worth
36
Section 5.06. Leverage Ratio
37
Section 5.07. Use of Proceeds
37
   
ARTICLE 6
 
DEFAULTS
 
   
Section 6.01. Events of Default
37
Section 6.02. Notice of Default
40
   
ARTICLE 7
 
AGENTS
 
   
Section 7.01. Appointment and Authorization
40
Section 7.02. Agents and Affiliates
40
Section 7.03. Action by Administrative Agent
41
Section 7.04. Consultation with Experts
41
Section 7.05. Liability of Administrative Agent.
41
Section 7.06. Indemnification
41
Section 7.07. Credit Decision
42
Section 7.08. Successor Administrative Agent
42
Section 7.09. Other Agents
42
   
ARTICLE 8
 
CHANGE IN CIRCUMSTANCES
 
   
Section 8.01. Market Disruption
43
Section 8.02. Increased Cost
43
Section 8.03. Illegality
44
Section 8.04. Taxes
45
Section 8.05. Mitigation by the Lenders
48
Section 8.06. Substitution of Lender
48




 
PAGE
ARTICLE 9
 
GUARANTEE
 
Section 9.01. The Guarantee
49
Section 9.02. Guarantee Unconditional
49
Section 9.03. Discharge Only Upon Payment in Full; Reinstatement in
 
             Certain Circumstances
50
Section 9.04. Waiver
51
Section 9.05. Subrogation and Contribution
51
Section 9.06. Stay of Acceleration
51
   
ARTICLE 10
 
MISCELLANEOUS
 
Section 10.01. Notices
51
Section 10.02. No Waivers
52
Section 10.03. Expenses; Indemnification
52
Section 10.04. Sharing of Set-offs.
52
Section 10.05. Amendments and Waivers
53
Section 10.06. Successors and Assigns
54
Section 10.07. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial
56
Section 10.08. Notarization
57
Section 10.09. Counterparts; Integration.
58
Section 10.10. Confidentiality
58
Section 10.11. Severability.
59
Section 10.12. Collateral
59
Section 10.13. "Know Your Customer" Checks
59
Section 10.14. Judgment Currency
60





Schedules
 
Schedule I
—
Commitments
Schedule II
—
Pricing
Schedule III
—
Mandatory Cost
Exhibits
 
Exhibit A
—
Notice of Borrowing
Exhibit B
—
Form of Opinion of Cahill Gordon & Reindel LLP , Special
   
U.S. Counsel for the Obligors
Exhibit C
—
Form of Opinion of Jiménez de Parga Abogados, Special
   
Spanish Counsel to the Obligors
Exhibit D
—
Form of Opinion of Davis Polk & Wardwell, Special U.S.
   
Counsel for the Agents
Exhibit E
—
Form of Opinion of Uría Menendez, Special Spanish
   
Counsel to the Agents
Exhibit F
—
Assignment and Assumption Agreement





FACILITY AGREEMENT
 
AGREEMENT dated as of November 29, 2004 among PRAXAIR EUROHOLDING, S.L., PRAXAIR, INC., the LENDERS party hereto, CITIGROUP GLOBAL MARKETS INC., as Syndication Agent, and ABN AMRO BANK N.V., as Administrative Agent.
 
The parties hereto agree as follows:
 
 
ARTICLE 1
DEFINITIONS
 
Section 1.01 . Definitions. The following terms, as used herein, have the following meanings:
 
“ Acquisition ” means the acquisition by the Borrower pursuant to the Acquisition Agreement of all of the shares in Erste Divest Gas GmbH & Co. KG and Dritte Divest Gas GmbH & Co. KG.
 
“ Acquisition Agreement ” means the Share Purchase Agreement between Air Liquide Deutschland GmbH, Air Liquide GmbH, Air Liquide Zweite Vermögensverwaltungsgesellschaft mgH, Air Liquide International S.A., the Borrower and the Guarantor which was notarized before the Notary Johann Rossbach on October 7, 2004.
 
“ Administrative Agent ” means ABN AMRO Bank N.V., in its capacity as administrative agent and documentation agent for the Lenders hereunder, and its successors in such capacity.
 
“ Administrative Questionnaire ” means, with respect to each Lender, an administrative questionnaire in the form prepared by the Administrative Agent and submitted to the Administrative Agent (which shall promptly following receipt thereof give a copy to the Borrower) duly completed by such Lender.
 
“ Agents ” means the Administrative Agent and the Syndication Agent.
 
“ Applicable Lending Office ” means, with respect to any Lender and any Loan made by it hereunder, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Applicable Lending Office for Loans of that nature) or such other office, branch or affiliate of such Lender as it may hereafter designate as its Applicable Lending Office for such purpose by not less than five Business Days’ notice to the Borrower and the Administrative Agent.
1
 
“ Applicable Margin ” means a rate per annum determined in accordance with Schedule II.
 
“ Approved Amount ” means (i) with respect to Euro, Dollars, Swiss Francs or Sterling, a number of units of such currency equal to 5,000,000 or a larger multiple of l,000,000 and (ii) with respect to any other currency, such comparable amount denominated in such currency as the Administrative Agent and the Borrower may mutually agree.
 
“ Assignee ” has the meaning set forth in Section 10.06(c) .
 
“ Available Commitment ” means, with respect to each Lender and each Class of its Commitments, the excess, if any, of such Commitment over the Base Currency Amount of such Lender’s outstanding Loans of such Class.
 
“ Base Currency ” means Euro.
 
“ Base Currency Amount ” means, at any time:
 
 
(a)
with respect to any Loan denominated in Euro, the principal amount thereof then outstanding; and
 
 
(b)
with respect to any other Loan, the principal amount thereof then outstanding, converted to Euro in accordance with Section 2.16 .
 
“ Benefit Arrangement ” means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group.
 
“ Borrower ” means Praxair Euroholding, S.L., a sociedad de responsabilidad limitada organized under the laws of Spain, and its successors.
 
“ Borrowing ” means the aggregation of Loans to be made to the Borrower pursuant to Section 2.01(a) or Section 2.01(b) , as the case may be, on the same date, all of which Loans are of the same Class and currency and have the same initial Interest Period.
 
“ Borrowing Date ” means, with respect to any Borrowing, the date of such Borrowing as set forth in the Notice of Borrowing relating thereto.
 
“ Business Day ” means any day (other than a Saturday or Sunday) on which banks are open for general business in London and:
 
(a)  
(in relation to any date for payment or purchase of currency other than Euro) the principal financial center of the country of that currency;
 
2
 
(b)  
(in relation to any date for payment or purchase of Euro) any TARGET Day; or
 
(c)  
(in relation to any date to be determined pursuant to Section 10.08 ), New York City.
 
“ Class ” (a) when used with respect to Lenders, refers to whether such Lenders are Revolving Credit Lenders or Term Lenders, (b) when used with respect to Commitments, refers to whether such Commitments are Revolving Credit Commitments or Term Commitments and (c) when used with respect to Loans or a Borrowing, refers to whether such Loans, or the Loans comprising such Borrowing, are Revolving Credit Loans or Term Loans.
 
“ Closing Date ” means the first date all the conditions precedent in Section 3.01 are satisfied or waived in accordance with Section 10.01 .
 
“ Commitment ” means a Term Commitment or a Revolving Credit Commitment, as the context may require.
 
“ Commitment Fee Rate ” has the meaning set forth in Schedule II.
 
“ Consolidated Book Net Worth ” means at any date the consolidated shareholders’ equity of the Guarantor and its Consolidated Subsidiaries, calculated without giving effect to (i) changes in the cumulative foreign currency translation adjustment after March 31, 2000, (ii) any mark-to-market of a derivative or hedging instrument or any other adjustment related to any derivative or hedging instrument that might be required under FAS 133 after March 31, 2000, and (iii) after-tax restructuring charges taken after March 31, 2000 up to a maximum cumulative amount of $75,000,000.
 
“ Consolidated Net Income ” for any period means the consolidated net income of the Guarantor and its Consolidated Subsidiaries for such period, excluding any extraordinary items of gain or loss.
 
“ Consolidated Subsidiary ” with respect to any Person means at any date any Subsidiary or other entity the accounts of which would be consolidated with those of such Person in its consolidated financial statements if such statements were prepared as of such date; it being understood that with respect to the Borrower, “Consolidated Subsidiaries” means those Subsidiaries of the Borrower that are consolidated, from time to time, in management’s reporting of the European industrial gases business.
 
“ Consolidated Total Debt ” means at any date all consolidated Debt of the Guarantor and its Consolidated Subsidiaries determined as of such date.
 
“ Continuing Director ” means at any date a member of the Guarantor’s board of directors who was either (i) a member of such board twelve months prior to such date or (ii) nominated for election to such board by at least two-thirds of the Continuing Directors then in office.
 
3
“ Debt ” of any Person means at any date, without duplication, to the extent required in accordance with generally accepted accounting principles to be included in the financial statements of such Person or the footnotes thereto,
 
 
(i)
all obligations of such Person for borrowed money,
 
 
(ii)
all obligations of such Person evidenced by bonds, debentures or notes,
 
 
(iii)
all obligations of such Person for installment purchase transactions involving the purchase of property or services over $5,000,000 for any particular transaction, except trade accounts payable and expense accruals arising in the ordinary course of business,
 
 
(iv)
all obligations of such Person as lessee which are capitalized in accordance with generally accepted accounting principles,
 
 
(v)
all contingent or non-contingent obligations of such Person to reimburse any bank or other Person in respect of amounts paid or to be paid under a letter of credit, and
 
 
(vi)
all Debt of others Guaranteed by such Person.
 
“ Default ” means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.
 
“ Dollars ” and the sign “$” mean lawful money of the United States of America.
 
“ Domestic Consolidated Subsidiary ” with respect to any Person means a Consolidated Subsidiary of such Person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia.
 
“ ECB Screen Rate ” means the rate of exchange appearing on the relevant screen maintained by the European Central Bank for the purchase of the relevant currency with the Base Currency on a particular day.
 
“ Environmental Laws ” means all applicable federal, state, local and foreign laws, ordinances, codes, regulations, orders and requirements relating to the protection of, or discharge of materials into, the environment, including, without limitation, the Resource Conservation and Recovery Act of 1976, as amended; the Comprehensive Environmental Response, Compensation and Liability Act; the Toxic Substance Control Act; the Clean Water Act; the Clean Air Act; and the Safe Drinking Water Act.
 
4
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute.
 
“ ERISA Group ” means the Guarantor, any Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Guarantor or any Subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code.
 
“ EURIBOR ” means, in relation to any Loan denominated in Euro:
 
 
(a)
the applicable Screen Rate; or
 
 
(b)
(if no Screen Rate is available for the Interest Period of such Loan, or such Loan relates to the initial Borrowing denominated in Euro and the Notice of Borrowing in respect thereof is delivered less than three Business Days before the proposed Borrowing Date for such Borrowing) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Administrative Agent at its request quoted by the Reference Banks to leading banks in the European interbank market,
 
as of the Specified Time on the Quotation Day for the offering of deposits in Euro for a period comparable to the Interest Period of the relevant Loan.
 
“ EURIBOR Loan ” means a Loan denominated in Euro.
 
“ Euro ” and the sign “ € ” mean the single shared currency of the participating member states of the European Union.
 
“ Event of Default ” has the meaning set forth in Section 6.01 .
 
“ Existing Credit Agreement ” means the Credit Agreement dated as of July 12, 2000 among Praxair, Inc., the Banks and Co-Syndication Agents party thereto, and JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank), as Administrative Agent, as heretofore amended and in effect on the Closing Date.
 
“ Exposure ” means a Revolving Credit Exposure or a Term Exposure.
 
“ Final Maturity Date ” means December 2, 2009.
 
“ Group of Loans ” means, at any time, a group of Loans consisting of (i) all EURIBOR Loans of the same Class having the same Interest Period at such time or (ii) all LIBOR Loans of the same Class having the same Interest Period at such time and denominated in the same currency.
 
“ Guarantee ” by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt of any other Person, and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person:
 
5
 
(i)
to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or
 
 
(ii)
entered into for the purpose of ensuring in any legally enforceable manner the obligee of such Debt of the payment thereof or to protect such obligee in any legally enforceable manner against loss in respect thereof (in whole or in part);
 
provided that the term Guarantee shall not include
 
(a)   endorsements for collection or deposit in the ordinary course of business;
 
(b)   obligations that are not required in accordance with generally accepted accounting principles to be included in the financial statements of such Person or the footnotes thereto;
 
(c)   “unconditional purchase obligations” (including take-or-pay contracts) as defined in and as required to be disclosed pursuant to Statement of Financial Accounting Standards No. 47 and the related interpretations, as the same may be amended from time to time, but only to the extent the aggregate present value amount of all such obligations of the Guarantor and its Consolidated Subsidiaries (other than amounts reflected on the balance sheet of the Guarantor and its Consolidated Subsidiaries) is equal to or less than 5% of the net sales of the Guarantor and its Consolidated Subsidiaries as set forth in the Guarantor’s consolidated statement of income, determined as of the end of the preceding quarter for the twelve months then ending; and
 
(d)   any obligations required to be disclosed pursuant to the Statement of Financial Accounting Standards No. 105, Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit Risk, issued March 1990, the Statement of Financial Accounting Standards No. 107, Disclosure about Fair Value of Financial Instruments, issued December 1991, and the Statement of Financial Accounting Standards No. 119, Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments, issued October 1994, and their related interpretations, as the same may be amended from time to time (except to the extent any such obligation is required to be reflected on the balance sheet of the Guarantor and its Consolidated Subsidiaries).
 
The term “ Guarantee ” used as a verb has a corresponding meaning.
 
6
“ Guarantor ” means Praxair, Inc., a Delaware corporation, and its successors.
 
“ Interest Period ” means, with respect to each Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing or on the date specified in an applicable Notice of Interest Period Election and ending one, two, three or six months thereafter and any other period agreed between the Borrower and the Administrative Agent (acting on the instruction of all of the Lenders of the applicable Class), as the Borrower may elect in the applicable notice; provided that:
 
(a)   any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; and
 
(b)   any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month;
 
provided further that no Interest Period may end after the Final Maturity Date.
 
Notwithstanding the foregoing, all Interest Periods at any one time outstanding hereunder shall end on not more than 15 different dates, and the duration of any Interest Period which would otherwise exceed such limitation shall be adjusted so as to coincide with the remaining term of such other then current Interest Period as the Borrower and the Administrative Agent may agree.
 
“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended, or any successor statute.
 
“ Lender Parties ” has the meaning set forth in Section 10.10 .
 
“ Lenders ” means the Persons listed as Lenders on the signature pages hereof and any other Person that shall become a Lender hereunder pursuant to Section 10.06(c) , in each case for so long as such Person shall be a party to this Agreement.
 
“ Leverage Ratio ” means the ratio of (x) Consolidated Total Debt to (y) Consolidated Book Net Worth.
 
“ LIBOR ” means, in relation to any LIBOR Loan:
 
(a)   the applicable Screen Rate; or
 
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(b)
(if no Screen Rate is available for the currency or Interest Period of that Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Administrative Agent at its request quoted by the Reference Banks to leading banks in the London interbank market,
 
as of the Specified Time on the Quotation Day for the offering of deposits in the currency of that Loan and for a period comparable to the Interest Period for that Loan.
 
“ LIBOR Loan ” means a Loan denominated in Dollars or an Optional Currency.
 
“ Lien ” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset.
 
“ Loan ” means a Term Loan or a Revolving Credit Loan.
 
“ Mandatory Cost ” means the percentage per annum calculated by the Administrative Agent in accordance with Schedule III.
 
“ Margin Stock ” means “ margin stock ” as such term is defined in Regulation U of the Federal Reserve Board, as the same may be amended, supplemented or modified from time to time.
 
“ Material Plan ” means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $25,000,000.
 
“ Multiemployer Plan ” means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five year period.
 
“ Notice of Borrowing ” has the meaning set forth in Section 2.02 .
 
“ Notice of Interest Period Election ” has the meaning set forth in Section 2.14(a) .
 
“ Obligors ” means the Borrower and the Guarantor.
 
“ Optional Currency ” means a currency (other than the Base Currency, Sterling, Swiss Francs and Dollars) which complies with the conditions set out in Section 2.17 .
 
“ Participant ” has the meaning set forth in Section 10.06(b) .
 
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“ PBGC ” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.
 
“ Person ” means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
 
“ Plan ” means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either:
 
 
(i)
is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group; or
 
 
(ii)
has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group.
 
“ Process Agent ” has the meaning set forth in Section 10.07(b) .
 
“ Quarterly Payment Dates ” means each March 31, June 30, September 30 and December 31.
 
“ Quotation Day ” means, in relation to any period for which an interest rate is to be determined:
 
 
(a)
(if the currency is Euro) two TARGET Days before the first day of that period;
 
 
(b)
(if the currency is Sterling) the first day of that period; or
 
 
(c)
(for any other currency) two Business Days before the first day of that period,
 
provided that if market practice differs in the Relevant Interbank Market for a currency, the Quotation Day for that currency will be determined by the Administrative Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days); provided, further , that in relation to any period for which an interest rate is to be determined in connection with the initial Borrowing denominated in Euro, if the Notice of Borrowing in respect thereof is received less than three Business Days before the proposed Borrowing Date for such Borrowing, the Quotation Day for such period shall be such Borrowing Date.
 
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“ Reference Banks ” means, in relation to LIBOR and Mandatory Cost, the principal London offices of ABN AMRO Bank N.V., Citibank N.A. and JPMorgan Chase Bank, N.A. and, in relation to EURIBOR, the principal Amsterdam office of ABN AMRO Bank N.V. and the principal London offices of Citibank, N.A. and JPMorgan Chase Bank, N.A.
 
“ Regulation U ” means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time.
 
“ Relevant Interbank Market ” means in relation to Euro, the European interbank market and, in relation to any other currency, the London interbank market.
 
“ Required Lenders ” means, at any time, Lenders having more than 50% of the aggregate amount of the Exposures at such time.
 
“ Required Revolving Credit Lenders ” means, at any time, Revolving Credit Lenders having more than 50% of the aggregate amount of the Revolving Credit Exposures at such time.
 
“ Required Term Lenders ” means, at any time, Term Lenders having more than 50% of the aggregate amount of the Term Exposures at such time.
 
“ Restricted Subsidiary ” means
 
 
(i)
any Domestic Consolidated Subsidiary of the Guarantor, and
 
(ii)   Praxair Canada Inc.
 
“ Revolving Credit Commitment ” means, with respect to any Revolving Credit Lender at any time, the commitment of such Lender to make Revolving Credit Loans, expressed as an amount representing the maximum Base Currency Amount of such Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.06(c) . The initial amount of each Lender’s Revolving Credit Commitment is set forth on Schedule I, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its initial Revolving Credit Commitment, as applicable. The initial aggregate amount of the Revolving Credit Commitments is €150,000,000.
 
“ Revolving Credit Exposure ” means, with respect to any Lender at any time, (i) the amount of such Lender’s Revolving Credit Commitment, if the Revolving Credit Commitments are still in existence, or (ii) if the Revolving Credit Commitments have terminated or expired, the amount of its Revolving Credit Outstandings.
 
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“ Revolving Credit Facility ” means, at any time, the aggregate amount of the Revolving Credit Exposures at such time.
 
“ Revolving Credit Lender ” means any Lender with a Revolving Credit Exposure.
 
“ Revolving Credit Loan ” has the meaning specified in Section 2.01(b) .
 
“ Revolving Credit Outstandings ” means, with respect to any Revolving Credit Lender at any time, the aggregate outstanding Base Currency Amount of such Lender’s Revolving Credit Loans at such time.
 
“ Revolving Credit Period ” means the period from and including the Closing Date to and including the date falling one month prior to the Final Maturity Date.
 
“ Screen Rate ” means:
 
 
(a)
in relation to LIBOR, the British Bankers Association Interest Settlement Rate for the relevant currency and period; and
 
 
(b)
in relation to EURIBOR, the percentage rate per annum determined by the Banking Federation of the European Union for the relevant period,
 
displayed on the appropriate page of the Reuters screen. If the agreed page is replaced or service ceases to be available, the Administrative Agent may specify another page or service displaying the appropriate rate after consultation with the Borrower and the Lenders.
 
“ SEC ” means the Securities and Exchange Commission.
 
“ Specified Time ” means, in relation to any period for which an interest rate is to be determined and with respect to the Quotation Day for such interest rate:
 
 
(a)
(if the currency is Euro) as of 11:00 A.M. (Brussels time) on such Quotation Day; or
 
 
(b)
(for any other currency) as of 11:00 A.M. (London time) on such Quotation Day.
 
“ Sterling ” and the sign “ £ ” mean lawful money of the United Kingdom.
 
“ Subsidiary ” with respect to any Person means any corporation or other entity of which such Person directly or indirectly owns a majority of the securities or other ownership interests having ordinary voting power to elect the board of directors or other persons performing similar functions. Unless otherwise specified, “ Subsidiary ” means a Subsidiary of the Guarantor.
 
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“ Swiss Francs ” means the lawful currency of Switzerland.
 
“ Syndication Agent ” means Citigroup Global Markets Inc., in its capacity as syndication agent for the credit facility provided hereunder.
 
“ TARGET ” means Trans-European Automated Real-time Gross Settlement Express Transfer payment system.
 
“ TARGET Day ” means any day on which TARGET is open for the settlement of payments in Euro.
 
“ Taxes ” has the meaning set forth in Section 8.04(a) .
 
“ Term Availability Period ” means the period from and including the Closing Date to and including December 31, 2004.
 
“ Term Commitment ” means, with respect to any Term Lender at any time, the commitment of such Lender to make Term Loans, expressed as an amount representing the maximum Base Currency Amount of such Term Loans, as such commitment may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.06(c) . The initial amount of each Lender’s Term Commitment is set forth on Schedule I, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its initial Term Commitment, as applicable. The initial aggregate amount of the Term Commitments is €300,000,000.
 
“ Term Exposure ” means, with respect to any Lender at any time, the sum of (i) the unused amount of its Term Commitment, if the Term Commitments are still in existence plus (ii) the aggregate outstanding Base Currency Amount of its Term Loans.
 
“ Term Facility ” means, at any time, the aggregate amount of the Term Exposures at such time.
 
“ Term Lender ” means any Lender with a Term Exposure.
 
“ Term Loan ” has the meaning specified in Section 2.01(a) .
 
“ Unfunded Liabilities ” means, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all benefits under such Plan exceeds (ii) the fair market value of all Plan assets allocable to such benefits (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA.
 
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“ Unpaid Sum ” means any sum due and payable but unpaid by an Obligor under this Agreement.
 
“ VAT ” means value added tax as provided for in the Sixth Council Directive of the European Union 77/388/EEC of May 17, 1977 on the harmonization of the laws of the Member States relating to turnover taxes as amended or supplemented, or any other tax of a similar nature.
 
“ Wholly-Owned Consolidated Subsidiary ” with respect to any Person means any Consolidated Subsidiary all of the shares of capital stock or other ownership interests of which (except directors’ qualifying shares) are at the time directly or indirectly owned by such Person.
 
Section 1.02    . Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Guarantor’s independent public accountants) with the most recent audited consolidated financial statements of the Guarantor and its Consolidated Subsidiaries delivered to the Lenders; provided that, if the Guarantor notifies the Administrative Agent that the Guarantor wishes to amend any covenant in Article 5 to eliminate the effect of any change in generally accepted accounting principles on the operation of such covenant (or if the Administrative Agent notifies the Guarantor that the Required Lenders wish to amend Article 5 for such purpose), then the Guarantor’s compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Guarantor and the Required Lenders.
 
 
ARTICLE 2
THE CREDITS
 
Section 2.01 . Commitments to Lend.  
 
(a)  
Term Facility . Each Term Lender severally agrees, on the terms and conditions set forth in this Agreement, to make one or more loans (“ Term Loans ”) to the Borrower from time to time during the Term Availability Period denominated in Euro or Dollars in an aggregate Base Currency Amount not to exceed such Lender’s Term Commitment. The Term Commitments are not revolving in nature, and amounts borrowed under this Section 2.01(a) and repaid or prepaid may not be reborrowed.
 
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(b)  
Revolving Credit Facility . Each Revolving Credit Lender severally agrees, on the terms and conditions set forth in this Agreement, to make loans (“ Revolving Credit Loans ”) to the Borrower from time to time during the Revolving Credit Period denominated in Euro, Dollars, Sterling, Swiss Francs or any Optional Currency in amounts such that the aggregate Base Currency Amount of the Revolving Credit Loans at no time exceeds the amount of such Lender’s Revolving Credit Commitment. Within the limits of the Revolving Credit Commitments, the Borrower may borrow under this Section 2.01(b) , prepay pursuant to Section 2.10 and reborrow under this Section 2.01(b) .
 
(c)  
Amounts . Each Borrowing under this Section shall be in an Approved Amount (except that any such Borrowing may be in the aggregate amount available under the applicable Commitments) and shall be made from the several Lenders ratably in proportion to their respective applicable Commitments.
 
Section 2.02 . Notice of Borrowings. (a) The Borrower shall give the Administrative Agent irrevocable notice in substantially the form of Exhibit A hereto (a “ Notice of Borrowing ”) not later than 9:30 A.M. (London time) on: (x) the date of the initial Borrowing denominated in Euro and (y) subject to Section 2.02(b) , the third Business Day before each other Borrowing, specifying:
 
(i)  
the date of such Borrowing, which shall be a Business Day,
 
(ii)  
the aggregate amount and currency of such Borrowing which shall comply with Section 2.01 ,
 
(iii)  
the Class of Loans comprising such Borrowing, and
 
(iv)  
the duration of the initial Interest Period applicable thereto, subject to the provisions of the definition of Interest Period.
 
(b)  
The Borrower shall give the Administrative Agent a Notice of Borrowing not later than 9:30 A.M. (London time) on the fifth Business Day before each initial Borrowing denominated in an Optional Currency. Such Notice of Borrowing shall be irrevocable unless the currency requested therein is not approved as an Optional Currency pursuant to Section 2.17(b) .
 
Section 2.03 . Notice to Lenders; Funding of Loans.
 
(a)  
Upon receipt of a Notice of Borrowing, the Administrative Agent shall promptly notify each Lender of the relevant Class of the contents thereof and of such Lender’s share (if any) of such Borrowing.
 
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(b)  
On the date of each Borrowing, each Lender of the relevant Class participating therein shall make the amount of its share of such Borrowing available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent specified in or pursuant to Section 10.01 in funds immediately available to the Administrative Agent. Unless the Administrative Agent determines that any applicable condition specified in Article 3 has not been satisfied, the Administrative Agent shall make such aggregate funds available to the Borrower by depositing the proceeds thereof, in like funds as received by the Administrative Agent, in the account of the Borrower with the Administrative Agent for value on the date of such Borrowing.
 
(c)  
Unless the Administrative Agent shall have received notice from a Lender of the relevant Class prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available to the Administrative Agent on the date of such Borrowing in accordance with subsection (b) of this Section 2.03 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If the Administrative Agent does, in such circumstances, make available to the Borrower such amount, such Lender shall within three Business Days following such Borrowing make such share available to the Administrative Agent, together with interest thereon for each day from and including the date of such Borrowing that such share was not made available, calculated by the Administrative Agent to reflect its cost of funds. If such amount is so made available, such payment to the Administrative Agent shall constitute such Lender’s share of such Borrowing for all purposes of this Agreement. If such amount is not so made available to the Administrative Agent, then the Administrative Agent shall on the third Business Day following such Borrowing notify the Borrower of such failure and on the fourth Business Day following the date of such Borrowing, the Borrower shall pay to the Administrative Agent such share, together with interest thereon for each day that the Borrower had the use of such share, calculated by the Administrative Agent to reflect its cost of funds. Nothing contained in this subsection (c) shall relieve any Lender which has failed to make available its share of any Borrowing hereunder from its obligation to do so in accordance with the terms hereof.
 
(d)  
The failure of any Lender to make available to the Administrative Agent its share of any Borrowing on the date of such Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make available to the Administrative Agent its share of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make available the share of any Borrowing to be made available by such other Lender on such date of Borrowing.
 
Section 2.04  
. Evidence of Debt. The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender in the ordinary course of business and by the Administrative Agent in accordance with Section 2.18 . The accounts or records so maintained shall be conclusive absent manifest error as to the amount of Loans made by the Lenders and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligations of the Obligors hereunder to pay any amounts owing. Any certificate of a Lender as to (a) the amount required at any time to cover such Lender’s cost of funding a Loan as set forth in Section 8.01 , (b) the amount required at any time to indemnify such Lender against any cost, payment or liability referred to in Section 8.02 or (c) the amount by which a sum payable to such Lender is to be increased under Section 8.04 , shall, in the absence of manifest error, be prima facie evidence of the existence and amounts of the specified obligations of the Obligors.
 
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Section 2.05 . Maturity of Loans. Each Loan shall mature, and the principal amount thereof shall be due and payable (together with interest accrued thereon), on the Final Maturity Date.
 
Section 2.06 . Interest Rates.  
 
(a)  
Subject to Section 8.01 , each EURIBOR Loan shall bear interest on the outstanding principal amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum equal to the sum of (i) the Applicable Margin for such day, (ii) the applicable EURIBOR and (iii) the Mandatory Cost, if any. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof and, with respect to the principal amount of any EURIBOR Loan that is prepaid, on the date of such prepayment.
 
(b)  
Subject to Section 8.01 , each LIBOR Loan shall bear interest on the outstanding principal amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum equal to the sum of (i) the Applicable Margin for such day, (ii) the applicable LIBOR and (iii) the Mandatory Cost, if any. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof and, with respect to the principal amount of any LIBOR Loan that is prepaid, on the date of such prepayment.
 
(c)  
If an Obligor fails to pay any amount payable by it under this Agreement on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to clause (i) below, is 1% per annum higher than the rate which would have been payable if the overdue amount had, during the period of nonpayment, constituted a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Administrative Agent (acting reasonably). Any interest accruing under this Section 2.06(c) shall be immediately payable by the Obligor on demand by the Agent.
 
(i)  
If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:
 
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(A)  
the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and
 
(B)  
the rate of interest applying to the overdue amount during that first Interest Period shall be 1% per annum higher than the rate which would have applied if the overdue amount had not become due.
 
(ii)  
Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.
 
(d)  
The Administrative Agent shall determine each interest rate applicable to the Loans hereunder. The Administrative Agent shall give to the Borrower and the Lenders making such Loans prompt notice of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error.
 
Section 2.07 . Participation Fee. The Borrower shall pay to the Administrative Agent for the account of the Lenders a participation fee equal to 0.075% of the Commitments. Such participation fee shall be payable in the Base Currency on the earlier of (a) the tenth day after the date hereof and (b) the first Borrowing Date.
 
Section 2.08 . Commitment Fee. The Borrower shall pay to the Administrative Agent for the account of the Lenders a commitment fee at the Commitment Fee Rate (determined for each day in accordance with Schedule II). Such commitment fee shall accrue from and including the date hereof to but excluding the date on which the applicable Class of Commitments are terminated in their entirety, on the daily aggregate amount of the Available Commitments of such Lender.
 
Such commitment fee shall be payable in the Base Currency quarterly on each Quarterly Payment Date (in arrears), commencing on December 31, 2004, and upon the date of termination of the Commitments in their entirety.
 
Section 2.09 . Optional Termination or Reduction of Commitments. The Borrower may, upon at least five Business Days’ notice to the Administrative Agent,
 
(i)  
terminate the Commitments of any Class at any time, if no Loans of such Class are outstanding at such time or
 
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(ii)  
ratably reduce from time to time by an aggregate amount of €10,000,000 or any larger multiple of €5,000,000, the aggregate amount of any Class of Commitments, provided that the Borrower shall not reduce any Class of Commitments if, after giving effect thereto and to any concurrent prepayment of the Loans of such Class pursuant to Section 2.10 , the aggregate outstanding Base Currency Amount of the Loans of such Class would exceed the total Commitments of such Class.
 
Promptly after receiving a notice pursuant to this subsection, the Administrative Agent shall notify each Lender of the contents thereof.
 
Section 2.10 . Optional Prepayments. (a) Subject to Section 2.12(d) , the Borrower may upon at least five Business Days’ irrevocable notice to the Administrative Agent, prepay any Group of Loans, in each case in whole at any time, or from time to time in part in Approved Amounts, by paying the principal amount to be prepaid together with interest accrued thereon to the date of prepayment. Each such optional prepayment shall be applied to prepay ratably the Loans of the several Lenders included in such Group of Loans.
 
(b)  
Upon receipt of a notice of prepayment pursuant to this Section, the Administrative Agent shall promptly notify each applicable Lender of the contents thereof and of such Lender’s ratable share (if any) of such prepayment.
 
Section 2.11 . Mandatory Prepayment. If the Guarantor ceases (a) to own directly or indirectly more than 50% of the issued share capital of the Borrower or (b) to control the Borrower:
 
(i)  
the Guarantor shall promptly notify the Administrative Agent upon becoming aware of such event;
 
(ii)  
if the Required Lenders so require, the Administrative Agent shall, by not less than five Business Days’ notice to the Borrower, cancel the Commitments and declare all outstanding Loans, together with accrued interest, and all other amounts accrued under this Agreement immediately due and payable, whereupon the Commitments will be cancelled and all such outstanding amounts will become immediately due and payable.
 
For the purpose of Section 2.11 “ control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the Borrower, whether through the ability to exercise voting power, by contract or otherwise.
 
Section 2.12 . General Provisions as to Payments. (a) The Borrower shall make each payment of principal of, and interest on, the Loans and of fees hereunder in the currency specified in Section 2.12(b) not later than 11:00 A.M. (London time) on the date when due to the Administrative Agent at its address specified in or pursuant to Section 10.01 and without reduction by reason of any set-off or counterclaim. The Administrative Agent will promptly distribute to each Lender its share of each such payment received by the Administrative Agent for the account of the Lenders. Whenever any payment shall be due on a day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case the date for payment thereof shall be the next preceding Business Day.
 
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(b)  
Each Obligor shall make each payment hereunder in the applicable currency specified below:
 
(i)  
a repayment of a Loan or a part of a Loan shall be made in the currency in which that Loan is denominated;
 
(ii)  
each payment of interest shall be made in the currency in which the Loan or fee in respect of which the interest is payable was denominated, or, in the case of any fee, payable, when such interest accrued; and
 
(iii)  
each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred, provided that if such cost, expense or Tax is incurred in a currency (the “ Relevant Currency ”) other than the Base Currency, Sterling, Swiss Francs or Dollars, payment in respect thereof shall be in an amount of the Base Currency equal to the sum of (A) the amount of such cost, expense or Tax converted to the Base Currency at the ECB Screen Rate at or about 11:00 A.M. (London time) on the date such payment is made and (B) if any Agent or Lender determines that its obligations in respect of such cost, expense or Tax in the Relevant Currency exceed the amount of the Relevant Currency obtained by such Agent or Lender upon its conversion of the amount of the Base Currency received under clause (A) of this paragraph (iii) , such excess converted into the Base Currency at a rate specified by such Agent or Lender on the date such excess is paid.
 
(c)  
Unless the Administrative 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 Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative 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 that the Borrower shall not have so made such payment, each Lender shall repay to the Administrative 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 Administrative Agent, calculated by the Administrative Agent to reflect its cost of funds.
 
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(d)  
If the Borrower makes any payment of principal with respect to any Loan (whether such payment is pursuant to Article 2 , 6 or 8 or otherwise) or any payment of an Unpaid Sum on any day other than the last day of an Interest Period applicable thereto, or if the Borrower fails to borrow, prepay or continue any Loan after notice has been given to any Lender in accordance with Section 2.03(a) , Section 2.10(b) or Section 2.14(c) , the Borrower shall reimburse each Lender through the Administrative Agent within 30 days after demand for any resulting loss or expense incurred by it (or by an existing or prospective Participant in the related Loan), including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of margin for the period after such payment or failure to borrow, prepay or continue; provided that such Lender shall have delivered to the Borrower a certificate containing a computation in reasonable detail of the amount of such loss or expense, which certificate shall be conclusive in the absence of manifest error.
 
Section 2.13 . Computation of Interest and Fees. Interest on any Revolving Credit Loans denominated in Sterling as an Optional Currency shall be computed on the basis of a year of 365 days and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest and fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day).
 
Section 2.14 . Method of Electing Interest Periods. (a) The initial Interest Period for Loans included in each Borrowing shall be as specified by the Borrower in the applicable Notice of Borrowing. Thereafter, the Borrower may from time to time elect the duration of each subsequent Interest Period applicable thereto in accordance with this Section 2.14 .
 
Each such election shall be made by delivering a notice (a “ Notice of Interest Period Election ”) to the Administrative Agent not later than the Specified Time. A Notice of Interest Period Election may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans; provided that (i) such portion is allocated ratably among the Loans comprising such Group and (ii) the portion to which such Notice applies, and the remaining portion to which it does not apply, are each at least in Approved Amounts. If no such notice is timely received before the end of an Interest Period for any Group of Loans, the Borrower shall be deemed to have elected that such Group of Loans be continued at the end of such Interest Period with an additional Interest Period of one month.
 
(b)    Each Notice of Interest Period Election shall specify:
 
(i)  
the Group of Loans (or portion thereof) to which such notice applies; and
 
(ii)  
the duration of the additional Interest Period applicable thereto.
 
 
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Each Interest Period specified in a Notice of Interest Period Election shall comply with the provisions of the definition of Interest Period.
 
(c)  
Promptly after receiving a Notice of Interest Period Election from the Borrower pursuant to Section 2.14(a) , the Administrative Agent shall notify each Lender of the contents thereof and such notice shall not thereafter be revocable by the Borrower.
 
Section 2.15 . Optional Increase in Commitments. (a) At any time prior to the Final Maturity Date, if (i) no Default shall have occurred and be continuing, and (ii) the representations and warranties of the Obligors set forth in Article 4 shall be true in all material respects (any request pursuant to this Section 2.15 being deemed, in the case of clauses (i) and (ii) , to be a confirmation by the Borrower to such effect), the Borrower may, upon notice to the Administrative Agent (which shall promptly provide a copy of such notice to the Lenders), propose to increase the aggregate amount of the Revolving Credit Commitments by an amount not greater than €50,000,000 (the amount of any such increase, the “ Increased Revolving Credit Commitments ”), provided that after giving effect to any increase in the Revolving Credit Commitments pursuant to this Section 2.15 , the aggregate Revolving Credit Commitments shall not exceed €200,000,000. Each Revolving Credit Lender party to this Agreement at such time shall have the right (but no obligation), for a period of 30 days following receipt of such notice to elect by notice to the Borrower and the Administrative Agent to increase its Revolving Credit Commitment by a principal amount which bears the same ratio to the Increased Revolving Credit Commitments as its then Revolving Credit Commitment bears to the aggregate Revolving Credit Commitments then existing. Any Lender not responding within 30 days of receipt of such notice shall be deemed to have declined to increase its Revolving Credit Commitment.
 
(b)  
If any Lender party to this Agreement shall not elect to increase its Revolving Credit Commitment pursuant to subsection (a) of this Section, the Borrower may, within 21 days of the Revolving Credit Lenders’ response, designate one or more of the existing Lenders or other financial institutions acceptable to the Administrative Agent and the Borrower (which consent of the Administrative Agent shall not be unreasonably withheld) which at the time agree to (i) in the case of any such Person that is an existing Revolving Credit Lender, increase its Revolving Credit Commitment, (ii) in the case of any such Person that is an existing Term Lender, become a Revolving Credit Lender and (iii) in the case of any other such Person (an “ Additional Lender ”), become a party to this Agreement. The sum of (x) the increases in the Revolving Credit Commitments of the existing Revolving Credit Lenders pursuant to this subsection (b) , (y) the Revolving Credit Commitments of any other existing Lenders that becomes a Revolving Credit Lender pursuant to this subsection (b) and (z) the Revolving Credit Commitments of the Additional Lenders shall not in the aggregate exceed the unsubscribed amount of the Increased Revolving Credit Commitments.
 
 
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(c)  
An increase in the aggregate amount of the Revolving Credit Commitments pursuant to this Section 2.15 shall become effective upon the receipt by the Administrative Agent of (i) an agreement in form and substance satisfactory to the Administrative Agent signed by the Borrower, by each Additional Lender, by each Revolving Credit Lender whose Revolving Credit Commitment is to be increased and each other Lender who is becoming a Revolving Credit Lender, setting forth the new Revolving Credit Commitments of such Lenders and setting forth the agreement of each Additional Lender to become a party to this Agreement and to be bound by all the terms and provisions hereof and (ii) such evidence of appropriate corporate authorization on the part of the Obligors with respect to the Increased Revolving Credit Commitments and such opinions of counsel for the Obligors with respect to the Increased Revolving Credit Commitments as the Administrative Agent may reasonably request.
 
(d)  
Upon any increase in the aggregate amount of the Revolving Credit Commitments pursuant to this Section 2.15 , at the end of the then current Interest Period with respect any Revolving Credit Loans then outstanding, the Borrower shall prepay such Group in its entirety and, to the extent the Borrower elects to do so and subject to the conditions specified in Article 3 , the Borrower shall reborrow Revolving Credit Loans from the Revolving Credit Lenders in proportion to their respective Revolving Credit Commitments after giving effect to such increase, until such time as all outstanding Revolving Credit Loans are held by the Revolving Credit Lenders in such proportion.
 
Section 2.16 . Currency Equivalents.    (a) The Administrative Agent shall determine the Base Currency Amount of each Revolving Credit Loan as of the first day of each Interest Period applicable thereto and, in the case of any such Interest Period of more than six months, at six-month intervals after the first day thereof, and shall promptly notify the Borrower and the applicable Lenders of each Base Currency Amount so determined by it. Each such determination shall be based on the ECB Screen Rate (x) at 11:00 A.M. (London time) on the date of the related Notice of Borrowing for purposes of the initial such determination for any Loan and (y) at the Specified Time in relation to the relevant Interest Period for purposes of any subsequent determination.   If after giving effect to any such determination of a Base Currency Amount, the aggregate outstanding Base Currency Amount of the Revolving Credit Loans exceeds 107.5% of the then aggregate Revolving Credit Commitments, the Borrower shall, within five (5) Business Days of receipt of such notice from the Administrative Agent, prepay outstanding Revolving Credit Loans (as selected by the Borrower and notified to the Lenders through the Administrative Agent not less than three Business Days prior to the date of prepayment) to the extent necessary cause such percentage not to exceed 100.0%.
 
 
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(b)  
The Administrative Agent shall determine the Base Currency Amount of each Term Loan as of the first day of the initial Interest Period applicable thereto and as of each subsequent May 31 and November 30, beginning with May 31, 2005, and shall promptly notify the Borrower and the applicable Lenders of each Base Currency Amount so determined by it. Each such determination shall be based on the ECB Screen Rate at 11:00 A.M. (London time) (x) on the date of the related Notice of Borrowing for purposes of the initial such determination for any Term Loan and (y) on the specified date (or the immediately succeeding Business Day if such date is not a Business Day) for purposes of any subsequent determination. If after giving effect to any such determination of a Base Currency Amount, the aggregate outstanding Base Currency Amount of the Term Loans exceeds 107.5% of the aggregate Base Currency Amount of the Term Loans initially borrowed hereunder (reduced by the aggregate Base Currency Amount of any Term Loans theretofore prepaid), the Borrower shall, on the last day of each then current Interest Period, prepay outstanding Term Loans to the extent necessary to cause such percentage not to exceed 100.0%.
 
Section 2.17 . Conditions Relating to Optional Currencies.  
 
(a)  
A currency will constitute an Optional Currency in relation to a Borrowing comprised of Revolving Credit Loans if:
 
(i)  
it is readily available in the amount required and freely convertible into the Base Currency in the Relevant Interbank Market on the Quotation Day and the Borrowing Date for such Borrowing; and
 
(ii)  
it is or has been approved by the Administrative Agent (acting on the instructions of all the Revolving Credit Lenders) prior to the initial Borrowing in such currency.
 
(b)  
If the Administrative Agent has received a written request from the Borrower for a currency to be approved under paragraph (a) (i) above, the Administrative Agent will confirm to the Borrower by 11:00 A.M. (London time) two Business Days prior to the Quotation Day for such Loan (i) whether or not the Lenders have granted their approval and (ii) if such approval has been granted, the Approved Amount for such currency.
 
(c)    If before 9:30 A.M. (London time) on any Quotation Day:
 
(i)  
a Lender notifies the Administrative Agent that the Optional Currency requested is not readily available to it in the amount required; or
 
(ii)  
a Lender notifies the Administrative Agent that compliance with its obligation to make a Loan in the proposed Optional Currency would contravene a law or regulation applicable to it,
 
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the Administrative Agent will give notice to the Borrower to that effect by 10:30 A.M. (London time) on such Quotation Day. In this event, any Lender that gives notice pursuant to this Section 2.17(c) will be required to make a Loan in the Base Currency (in an amount equal to that Lender’s proportion of the Base Currency Amount of the related Borrowing) and its participation will be treated as a separate Loan of the same Class denominated in the Base Currency during the Interest Period applicable to such Borrowing.
 
Section 2.18 . Control Accounts. (a) The Administrative Agent shall maintain on its books a control account or accounts in which shall be recorded:
 
(i)  
the amount of any Borrowing made and each Lender’s share of such Borrowing;
 
(ii)  
the amount of all principal, interest and other sums due from the Borrower to any of the Lenders and each Lender’s share of each such amount; and
 
(iii)  
the amount of any sum received or recovered by the Administrative Agent and each Lender’s share of such amount.
 
(b)  
For the purposes of article 572 of the Spanish Civil Procedure Law ( Ley de Enjuiciamiento Civil ), all parties to this Agreement expressly agree that the exact amount due at any time by the Borrower to any Lender will be the amount specified in a certificate issued by the Administrative Agent as representative of any Lender or by any Lender with respect to the amount owed to such Lender and reflecting the balance of the control accounts referred to in paragraph (a) above. The amount so specified will be considered as liquid, due and payable, provided that the relevant certificate has been formalized in a public deed ( documento fehaciente ) authorized by a Spanish notary public who will certify that the calculation of the balance has been made consistently with the procedure agreed by the parties to this Agreement.
 
(c)  
As a consequence of paragraphs (a) and (b) of this Section 2.18 , enforcement against the Borrower may be initiated in Spain if all or any portion of the Loans has been declared immediately due and payable pursuant to this Agreement, by presenting:
 
(i)  
the first authorized copy of the notarized deed formalizing this Agreement issued by a Spanish notary public or an original of this Agreement executed as a notarial deed attested to by a Spanish notary public;
 
(ii)  
the public deed which incorporates the certificate issued by the Administrative Agent or by any Lender referred to in paragraph (b) of this Section 2.18 , setting forth the total amount owed by the Borrower and confirming that the computation of such amount has been made consistently with the procedure agreed upon by the parties in this Section 2.18 ;
 
 
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(iii)  
an excerpt of the credits and debits which appears in the relevant control account referred to in paragraph (a) of this Section 2.18 ; and
 
(iv)  
a document evidencing that the Borrower and the Guarantor have been served notice of the amount due and payable.
 
 
     ARTICLE 3   
CONDITIONS
 
Section 3.01 . First Borrowing. The obligation of any Lender to make a Loan on the occasion of the first Borrowing is subject to the satisfaction of the following conditions not later than December 31, 2004:
 
(a)  
receipt by the Administrative Agent of counterparts hereof signed by each of the parties hereto (or, in the case of any party as to which an executed counterpart shall not have been received, receipt by the Administrative Agent in form satisfactory to it of telegraphic, telex, facsimile or other written confirmation from such party of execution of a counterpart hereof by such party);
 
(b)   [Reserved];
 
(c)  
receipt by the Administrative Agent of an opinion of Cahill Gordon & Reindel llp , special U.S. counsel for the Obligors, covering the matters described in Exhibit B hereto;
 
(d)  
receipt by the Administrative Agent of an opinion of Jiménez de Parga Abogados, special Spanish counsel for the Obligors, covering the matters described in Exhibit C hereto;
 
(e)  
receipt by the Administrative Agent of an opinion of Davis Polk & Wardwell, special U.S. counsel for the Agents, substantially in the form of Exhibit D hereto;
 
(f)  
receipt by the Administrative Agent of an opinion of Uría Menendez, special Spanish counsel for the Agents, covering the matters described in Exhibit E hereto;
 
(g)  
receipt by the Administrative Agent of a certificate signed by (i) the Chairman, the President, any Vice President, the Treasurer (or such Treasurer’s designee) or any Assistant Treasurer of the Guarantor and (ii) an individual empowered by notarial deed to sign on behalf of the Borrower, dated the Closing Date, to the effect set forth in paragraphs (c) and (d) of Section 3.02 ;
 
(h)  
receipt by the Administrative Agent of (i) a copy of the complete certification (“ certificación literal ”) of the Borrower from the Mercantile Registry of Madrid and (ii) if such certification is dated more than 21 days prior to the Closing Date, an excerpt (“ nota simple informativa ”) of the Borrower from the Mercantile Registry of Madrid dated no more than 10 days prior to the Closing Date, containing all of the notations (“ inscripciones ”) registered between the date of such certification and the date of such excerpt;
 
 
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(i)  
receipt by the Administrative Agent of a copy of the Guarantor’s certificate of incorporation, certified by the Secretary of State of Delaware;
 
(j)  
receipt by the Administrative Agent of a certificate on behalf of the Borrower signed by the Secretary of the Board of Directors of the Borrower with the approval of the Chairman of the Board of Directors satisfactory to the Administrative Agent certifying
 
(i)  
that no resolutions or steps have been taken that may amend, replace or otherwise modify the contents of the certificación literal issued by the Mercantile Registry and referred to in clause (h) above,
 
(ii)  
that no proceeding for the dissolution or liquidation of the Borrower exists,
 
(iii)  
that the copy of the By-laws of the Borrower attached to the certificate is true, correct and complete,
 
(iv)  
that the copies of the resolutions of the Borrower’s Board of Directors attached to the certificate are true and correct and in full force and effect,
 
(v)  
that the Borrowings will not breach any restriction in the by-laws or any similar constitutive document of the Borrower or any contractual obligations binding on the Borrower,
 
(vi)  
that the Borrower has received the Número de Operación Financiera (“ NOF ”) from the Bank of Spain, and a copy of the P-1A form with the seal of the Bank of Spain and
 
(vii)  
as to the authority of the individual who signed this Agreement on behalf of the Borrower;
 
(k)  
receipt by the Administrative Agent of a certificate on behalf of the Guarantor signed by the Secretary or an Assistant Secretary of the Guarantor or such other authorized officer of the Guarantor satisfactory to the Administrative Agent certifying
 
(i)  
that the Guarantor’s certificate of incorporation has not been amended since the date of the certificate referred to in clause (i) above,
 
 
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(ii)  
that no proceeding for the dissolution or liquidation of the Guarantor exists,
 
(iii)  
that the copy of the by-laws of the Guarantor attached to the certificate is true, correct and complete,
 
(iv)  
that the copies of the resolutions of the Guarantor’s Board of Directors attached to the certificate are true and correct and in full force and effect, and
 
(v)  
as to the incumbency of each officer of the Guarantor who signed this Agreement on behalf of any Obligor;
 
(l)    receipt by the Administrative Agent of
 
(i)  
evidence satisfactory to it that immediately after, but otherwise substantially simultaneously with the making of the initial Term Loan, the Acquisition shall be consummated on terms provided to the Administrative Agent prior to the Closing Date and in compliance with applicable laws; and
 
(ii)  
an executed copy of the Acquisition Agreement (without any exhibits, schedules or other attachments thereto), certified as of the Closing Date as a true, complete and correct copy thereof by the Secretary or an Assistant Secretary of the Guarantor or such other authorized officer of the Guarantor satisfactory to the Administrative Agent;
 
(m)  
receipt by the Administrative Agent of evidence satisfactory to it of approval of (i) the Acquisition by the German Federal Cartel Office and (ii) the Acquisition Agreement by the European Commission;
 
(n)  
receipt by the Lenders of (i) a balance sheet of the Borrower and its Consolidated Subsidiaries as of December 31, 2003, together with the related statements of income and cash flows for the fiscal year then ended, and (ii) a projected balance sheet of the Borrower and its Consolidated Subsidiaries as of December 31, 2004, prepared as if the Acquisition was consummated on such date ;
 
(o)  
receipt by the Administrative Agent of evidence satisfactory to it of the appointment by the Borrower of the Process Agent pursuant to Section 10.07(b) ;
 
(p)  
the fact that all fees payable on or before the Closing Date by the Borrower for the account of the Lenders and their affiliates in connection with this Agreement have been paid in full on or before such date in the amounts previously agreed upon in writing; and
 
 
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(q)  
receipt by the Administrative Agent of all other documents that the Agents may reasonably request relating to the existence of each Obligor, the corporate authority for and the validity of this Agreement and any other matters relevant hereto, all in form and substance reasonably satisfactory to the Administrative Agent.
 
Section 3.02 . All Borrowings. The obligation of any Lender to make a Loan on the occasion of any Borrowing (including the first Borrowing) is subject to the satisfaction of the following conditions:
 
(a)  
receipt by the Administrative Agent of a Notice of Borrowing as required by Section 2.02 ;
 
(b)  
immediately after such Borrowing, the Base Currency Amount of the applicable Class of Loans will not exceed the aggregate amount of the applicable Class of Commitments;
 
(c)  
immediately after such Borrowing, no Default shall have occurred and be continuing;  
 
(d)  
the fact that the representations and warranties of each Obligor contained in this Agreement (except, in the case of any Borrowing subsequent to the first Borrowing, the representations and warranties set forth in Sections 4.04(c) , 4.05 and 4.07 ) shall be true in all material respects on and as of the date of such Borrowing.
 
Each Borrowing hereunder shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing as to the facts specified in paragraphs (b) , (c) and (d) of this Section, and each Notice of Borrowing shall be deemed to be a confirmation by the Borrower to such effect.
 
 
ARTICLE 4   
REPRESENTATIONS AND WARRANTIES
 
Each of the Guarantor and the Borrower represents and warrants that:
 
Section 4.01 . Corporate Existence and Power.   (a)   The Borrower is a sociedad de responsabilidad limitada duly organized, validly existing and in good standing under the laws of Spain, and has all powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted.
 
(b)  
The Guarantor is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted.
 
 
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Section 4.02 . Corporate and Governmental Authorization; No Contravention. The execution, delivery and performance by each Obligor of this Agreement are within such Obligor’s corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official (other than routine informational filings) and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of such Obligor or of any material agreement, judgment, injunction, order, decree or other instrument binding upon such Obligor or, in the case of the Guarantor, any of its Restricted Subsidiaries or result in or permit the termination or modification of any agreement, judgment, injunction, order, decree or other instrument binding upon such Obligor or, in the case of the Guarantor, any of its Restricted Subsidiaries or result in the creation or imposition of any Lien on any asset of such Obligor or, in the case of the Guarantor, any of its Restricted Subsidiaries.
 
Section 4.03 . Binding Effect. This Agreement constitutes a valid and binding agreement of each Obligor.
 
Section 4.04 . Financial Information.  
 
(a)  
The consolidated balance sheet of the Guarantor and its Consolidated Subsidiaries as of December 31, 2003 and the related statements of income and cash flows for the fiscal year then ended, reported on by PricewaterhouseCoopers LLP, copies of which have been delivered to each of the Lenders, fairly present, in conformity with generally accepted accounting principles, the consolidated financial position of the Guarantor and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year.
 
(b)  
The unaudited consolidated balance sheet of the Guarantor and its Consolidated Subsidiaries as of June 30, 2004 and the related unaudited consolidated statements of income and cash flows for the three months then ended, copies of which have been delivered to each of the Lenders, fairly present, in conformity with generally accepted accounting principles applied on a basis consistent with the consolidated financial statements referred to in subsection (a) of this Section (except as stated therein), the consolidated financial position of the Guarantor and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such three month period (subject to normal year-end adjustments).
 
(c)  
Since June 30, 2004 there has been no change in the business, financial position or results of operations of the Guarantor and its Consolidated Subsidiaries, which could materially and adversely affect the ability of either Obligor to perform its obligations under this Agreement or which in any manner draws into question the validity or enforceability of this Agreement.
 
 
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(d)  
The unaudited balance sheet of the Borrower and its Consolidated Subsidiaries as of December 31, 2003, together with the related statements of income and cash flows for the fiscal year then ended, copies of which have been delivered to each of the Lenders pursuant to Section 3.01(n)(i) , fairly present the financial position of the Borrower and its Consolidated Subsidiaries as of December 31, 2003, and their results of operations and cash flows for the fiscal year then ended.
 
(e)  
The projected balance sheet of the Borrower and its Consolidated Subsidiaries as of December 31, 2004, prepared as if the Acquisition was consummated on such date, copies of which have been delivered to each of the Lenders pursuant to Section 3.01(n)(ii) , was prepared in good faith based on assumptions that the Borrower believed were reasonable at the time it was prepared.
 
Section 4.05 . Litigation. There is no action, suit or proceeding pending against, or to the knowledge of the Borrower or the Guarantor threatened against or affecting, the Borrower, the Guarantor or any of its Restricted Subsidiaries before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision which could materially and adversely affect the ability of either Obligor to perform its obligations under this Agreement or which in any manner draws into question the validity of this Agreement.
 
Section 4.06 . Compliance with ERISA. After it has become a member of the ERISA Group, each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all material respects with the currently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan. After it has become a member of the ERISA Group, no member of the ERISA Group has:
 
(i)  
sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan,
 
(ii)  
failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code, or
 
(iii)  
incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA and aggregate withdrawal liabilities not in excess of $5,000,000 at any one time outstanding.
 
 
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Section 4.07 . Environmental Matters. In the ordinary course of its business, the Guarantor conducts reviews of the effect of Environmental Laws on the business, operations and properties of the Guarantor, its Restricted Subsidiaries and the Borrower, in the course of which it identifies and evaluates associated liabilities and costs. On the basis of this review, the Guarantor has reasonably concluded that Environmental Laws are unlikely to have an effect on the business, financial condition or results of operations of the Guarantor and its Consolidated Subsidiaries taken as a whole during the term of this Agreement, which could materially and adversely affect the ability of either Obligor to perform its obligations under this Agreement.
 
Section 4.08 . Subsidiaries. Each corporate Restricted Subsidiary of the Guarantor is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted.
 
Section 4.09 . Not an Investment Company. Neither Obligor is an “ investment company ” within the meaning of the Investment Company Act of 1940, as amended.
 
Section 4.10 . Disclosure. None of the material furnished to the Agents and the Lenders by or on behalf of any Obligor in connection herewith contains, or contained at the time so furnished, any untrue statement of a material fact or omits, or omitted at the time so furnished, to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
 
Section 4.11 . Acquisition. No governmental consents or approvals are required for the consummation of the Acquisition, other than the approvals described in Section 3.01(m) .
 
 
     ARTICLE 5   
COVENANTS
 
 
Each of the Guarantor and (as to Section 5.04 and 5.07 ) the Borrower agrees that, so long as any Lender has any Commitment hereunder or any amount of principal or interest payable hereunder remains unpaid:
 
Section 5.01 . Information. The Guarantor will deliver to the Administrative Agent (and, in the case of a certificate delivered pursuant to clause (f) below, to each Lender):
 
(a)  
as promptly as practicable and in any event within 113 days after the end of each fiscal year of the Guarantor, a consolidated balance sheet of the Guarantor and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in accordance with generally accepted accounting principles by PricewaterhouseCoopers LLP or other independent public accountants of nationally recognized standing;
 
 
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(b)  
as promptly as practicable and in any event within 53 days after the end of each of the first three quarters of each fiscal year of the Guarantor, a consolidated balance sheet of the Guarantor and its Consolidated Subsidiaries as of the end of such quarter and comparative financial information as of the end of the previous fiscal year, the related consolidated statement of income for such quarter and the related consolidated statements of income and cash flows for the portion of the Guarantor’s fiscal year ended at the end of such quarter, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of the Guarantor’s previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation, generally accepted accounting principles and consistency by the principal financial officer or the principal accounting officer of the Guarantor or a person designated in writing by either of the foregoing persons. If such financial statements are filed with the SEC, then they shall be reported on in conformity with the financial reporting requirements of the SEC;
 
(c)  
simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate of the principal financial officer, principal accounting officer, treasurer or comptroller of the Guarantor, or a person designated in writing by either of the foregoing persons
 
(i)  
setting forth in reasonable detail the calculations required to establish whether the Guarantor was in compliance with any applicable requirements of Sections 5.05 and 5.06 ;
 
(ii)  
stating whether the Guarantor was in compliance with the requirements of Sections 5.02 and 5.03 ; and
 
(iii)  
stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Guarantor is taking or proposes to take with respect thereto;
 
(d)  
simultaneously with the delivery of each set of financial statements referred to in clause (a) above, a statement of the firm of independent public accountants which reported on such statements whether anything has come to their attention to cause them to believe that the Guarantor was not in compliance with Sections 5.05 and 5.06 , insofar as they relate to accounting matters, on the date of such statements;
 
 
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(e)  
as promptly as practicable and in any event within 113 days after the end of each fiscal year of the Borrower, a balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and the related statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all certified by the principal financial officer or the principal accounting officer of the Borrower as to fairness of presentation and consistency with the form of the information delivered pursuant to Section 3.01(n) ;
 
(f)  
within five days after any officer of either Obligor obtains knowledge of any Default, if such Default is then continuing, a certificate of the principal financial officer or the principal accounting officer of such Obligor setting forth the details thereof and the action which such Obligor is taking or proposes to take with respect thereto;
 
(g)  
promptly upon the mailing thereof to the public shareholders of the Guarantor generally, copies of all financial statements, reports and proxy statements so mailed;
 
(h)  
promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which the Guarantor shall have filed with the SEC;
 
(i)  
if and when any member of the ERISA Group (after it has become a member of the ERISA Group):
 
(i)  
gives or is required to give notice to the PBGC of any “reportable event” (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC;
 
(ii)  
receives notice of complete or partial withdrawal liability in excess of €5,000,000, under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice;
 
(iii)  
receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer, any Plan, a copy of such notice;
 
 
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(iv)  
applies for a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code, a copy of such application;
 
(v)  
gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC;
 
(vi)  
gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or
 
(vii)  
fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a bond or other security,
 
a certificate of the principal financial officer, principal accounting officer, treasurer or comptroller of the Guarantor setting forth details as to such occurrence and action, if any, which the Guarantor or applicable member of the ERISA Group is required or proposes to take;
 
(j)  
promptly after the Guarantor is notified by any rating agency referred to in Schedule II of any actual change in any rating referred to in Schedule II, written notice of such change; and
 
(k)  
from time to time such additional information regarding the financial position or business of the Guarantor and its Subsidiaries, including the Borrower, as the Administrative Agent, at the request of any Lender, may reasonably request.
 
The Administrative Agent will deliver a copy of each document it receives pursuant to this Section 5.01 to each Lender within four Business Days after receipt thereof.
 
Information required to be delivered pursuant to Sections 5.01(a) , 5.01(b) , 5.01(g) or 5.01(h) above shall be deemed to have been delivered on the date on which the Guarantor provides notice to the Lenders that such information has been posted on the Guarantor’s website on the Internet at www.praxair.com, at sec.gov/edaux/searches.htm or at another website identified in such notice and accessible by the Lenders without charge; provided that such notice may be included in a certificate delivered pursuant to Section 5.01(c) .
 
Section 5.02 . Maintenance of Property; Insurance. (a) The Guarantor will keep, and will cause each of its Subsidiaries to keep, all property useful and necessary in its respective business in good working order and condition, ordinary wear and tear excepted.
 
 
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(b)  
The Guarantor will maintain, and will cause each of its Subsidiaries to maintain, insurance policies on its assets at coverage levels that are at least as high as the coverage levels that are usually insured against in the same general area by companies of established repute engaged in the same or a similar business as the Guarantor or such Subsidiary, as the case may be; and, upon request of the Administrative Agent, will promptly furnish to the Administrative Agent for distribution to the Lenders information presented in reasonable detail as to the insurance so carried.
 
Section 5.03 . Negative Pledge. The Guarantor will not, and will not permit any of its Restricted Subsidiaries to, create, assume or suffer to exist any Lien securing Debt on any asset now owned or hereafter acquired by it, except:
 
(a)  
Liens existing on the date of this Agreement securing Debt outstanding on the date of this Agreement in an aggregate principal amount not exceeding $125,000,000;
 
(b)  
any Lien existing on any asset of any corporation at the time such corporation becomes a Restricted Subsidiary and not created in contemplation of such event;
 
(c)  
any Lien on any asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring such asset, provided that such Lien attaches to such asset concurrently with or within 90 days after the acquisition thereof;
 
(d)  
any Lien on any improvements constructed on any property of the Guarantor or any such Restricted Subsidiary and any theretofore unimproved real property on which such improvements are located securing Debt incurred for the purpose of financing all or any part of the cost of constructing such improvements, provided that such Lien attaches to such improvements within 90 days after the later of (1) completion of construction of such improvements and (2) commencement of full operation of such improvements;
 
(e)  
any Lien existing on any asset prior to the acquisition thereof by the Guarantor or a Restricted Subsidiary and not created in contemplation of such acquisition;
 
(f)  
Liens on property of the Guarantor or a Restricted Subsidiary in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, or any other government or department, agency, instrumentality or political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any Debt incurred for the purpose of financing all or any part of the purchase price or the cost of construction of the property subject to such Liens;
 
 
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(g)  
any Lien arising out of the refinancing, extension, renewal or refunding of any Debt secured by any Lien permitted by any of the foregoing clauses of this Section, provided that such Debt is not increased and is not secured by any additional assets; and
 
(h)  
Liens not otherwise permitted by the foregoing clauses of this Section securing Debt in an aggregate principal amount at any time outstanding not to exceed $400,000,000.
 
Section 5.04 . Consolidations, Mergers and Sales of Assets. Neither Obligor will merge or consolidate with or into any other Person or sell, lease, transfer or otherwise dispose of all or substantially all of its assets, property or business in any single transaction or series of related transactions, unless
 
(i)  
for the Guarantor, in the case of any such merger or consolidation, it shall be the continuing corporation, or, in the case of any such sale, lease, transfer or other disposition, the transferee or transferees shall be one or more Wholly-Owned Consolidated Subsidiaries of the Guarantor organized and existing under the laws of the United States of America or any State thereof which shall expressly assume the due and punctual performance and observance of all of the covenants and agreements of the Guarantor contained in this Agreement,
 
(ii)  
for the Borrower, in the case of any such merger or consolidation, the continuing corporation, or, in the case of any such sale, lease, transfer or other disposition, the transferee or transferees shall be one or more Wholly-Owned Consolidated Subsidiaries of the Guarantor organized and existing under the laws of Spain, which shall expressly assume, in the case of any such Wholly-Owned Consolidated Subsidiary other than the Borrower, the due and punctual performance and observance of all of the covenants and agreements of the Borrower contained in this Agreement, and
 
(iii)  
immediately after giving effect to such merger or consolidation, or such sale, lease, transfer or other disposition, no Default shall have occurred and be continuing.
 
Section 5.05 . Minimum Consolidated Book Net Worth. Consolidated Book Net Worth will not at any time be less than the sum of
 
(a)    $1,700,000,000,
 
(b)  
50% of Consolidated Net Income (calculated before giving effect to any charges referred to in the definition of Consolidated Book Net Worth) for each fiscal quarter beginning after March 31, 2000 for which such Consolidated Net Income (as so calculated) is positive, and
 
 
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(c)  
50% of the proceeds from the sale on or subsequent to March 31, 2000 of capital stock of the Guarantor or any of its Subsidiaries; provided that the proceeds from capital stock issued pursuant to any employee benefit plan, stock option plan or dividend reinvestment plan shall not be included in any determination under this Section 5.05 .
 
Section 5.06 . Leverage Ratio. The Leverage Ratio will not exceed at any time 1.9:1.
 
Section 5.07 . Use of Proceeds.   (a)   The proceeds of the Term Loans made under this Agreement will be used by the Borrower to finance the Acquisition, including the fees and expenses incurred in connection therewith.
 
(b)  
The proceeds of the Revolving Loans made under this Agreement will be used by the Borrower for general corporate purposes, including to finance part of the Acquisition. None of such proceeds will be used, directly or indirectly, in violation of any applicable law or regulation, and no use of such proceeds for general corporate purposes will include any use thereof, whether immediate, incidental or ultimate, of buying or carrying any Margin Stock.
 
 
     ARTICLE 6   
DEFAULTS
 
 
Section 6.01 . Events of Default. If one or more of the following events (each, an “ Event of Default ”) shall have occurred and be continuing:
 
(a)  
any payment of any principal of any Loan shall not be made when due;
 
(b)  
any payment of any interest on any Loan, any fees or any other amount payable hereunder shall not be made within five Business Days of the due date thereof;
 
(c)  
the Borrower or the Guarantor shall fail to observe or perform any covenant contained in Sections 5.03 through 5.07 , inclusive;
 
(d)  
the Borrower or the Guarantor shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those covered by clause (a) , (b) or (c) above) for 20 days after written notice thereof has been given to the Guarantor;
 
(e)  
any representation, warranty, certification or statement made (or deemed made) by the Borrower or the Guarantor in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect in any materially adverse respect when made (or deemed made);
 
 
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(f)  
the Guarantor or any Subsidiary of the Guarantor shall fail to make any payment in respect of any Debt having an aggregate principal amount outstanding at such time equal to or exceeding $100,000,000 (other than the Loans) when due or within any applicable grace period;
 
(g)  
any event or condition shall occur which results in the acceleration of the maturity of any Debt having an aggregate principal amount outstanding at such time equal to or exceeding $100,000,000 of the Guarantor or any Subsidiary of the Guarantor or enables (or, with the giving of notice or lapse of time or both, would enable) the holder of such Debt or any Person acting on such holder’s behalf to accelerate the maturity thereof or terminate its commitment in respect thereof;
 
(h)  
the Borrower, the Guarantor or any Subsidiary of the Guarantor shall:
 
(i)  
commence a voluntary case or other proceeding seeking (1) liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or (2) the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property;
 
(ii)  
consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it;
 
(iii)  
make a general assignment for the benefit of creditors;
 
(iv)  
except for trade payables, fail generally to pay its debts as they become due; or
 
                    (v)   take any corporate action to authorize any of the foregoing;
 
provided that no event with respect to any Subsidiary of the Guarantor (other than the Borrower) otherwise constituting an Event of Default under this clause (h) shall be an Event of Default if the total assets of all entities with respect to which events have occurred and are continuing (calculated in each case at the time such event occurred) which would otherwise have constituted Events of Default under this clause (h) or clause (i) below do not exceed $150,000,000 on a cumulative basis;
 
(i)  
(i) an involuntary case or other proceeding shall be commenced against the Borrower, the Guarantor or any Subsidiary of the Guarantor seeking (1) liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or (2) the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or
 
 
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(ii)  
an order for relief shall be entered against the Borrower, the Guarantor or any Subsidiary of the Guarantor under the federal bankruptcy laws as now or hereafter in effect;
 
provided that no event with respect to any Subsidiary of the Guarantor (other than the Borrower) otherwise constituting an Event of Default under this clause (i) shall be an Event of Default if the total assets of all entities with respect to which events have occurred and are continuing (calculated in each case at the time such event occurred) which would otherwise have constituted Events of Default under this clause (i) or clause (h) above do not exceed $150,000,000 on a cumulative basis;
 
(j)  
(i) any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $25,000,000 which it shall have become liable to pay under Title IV of ERISA;
 
(ii)  
notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing;
 
(iii)  
the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer, any Material Plan;
 
(iv)  
a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or
 
(v)  
there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more members of the ERISA Group to incur a current payment obligation in excess of $25,000,000;
 
(k)  
a judgment or order for the payment of money in excess of $50,000,000 shall be rendered against the Guarantor or any Subsidiary and shall remain unsatisfied for a period of ten consecutive days during which ten-day period execution shall not be effectively stayed; or
 
(l)  
any person or group of persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by the SEC under said Act) of 30% or more of the outstanding shares of common stock of the Guarantor; or Continuing Directors shall cease to constitute a majority of the board of directors of the Guarantor;
 
 
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then, and in every such event, the Administrative Agent shall:
 
(i)  
if requested by Lenders having more than 50% in aggregate amount of the Commitments, by notice to the Borrower, terminate the Commitments and they shall thereupon terminate, and
 
(ii)  
if requested by Lenders holding more than 50% in aggregate Base Currency Amount of the Loans, by notice to the Borrower, declare the Loans (together with accrued interest thereon) to be, and the Loans (together with accrued interest thereon) shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower;
 
provided that in the case of any of the Events of Default specified in clause (h) or (i) above with respect to the Borrower or the Guarantor, without any notice to the Borrower or any other act by the Administrative Agent or the Lenders, the Commitments shall thereupon automatically terminate and the Loans (together with accrued interest thereon) shall automatically become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.
 
Section 6.02 . Notice of Default. The Administrative Agent shall give notice under Section 6.01(d) promptly upon being requested to do so by any Lender and shall thereupon notify all the Lenders thereof.
 
 
ARTICLE 7
AGENTS
 
Section 7.01 . Appointment and Authorization. Each Lender irrevocably appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto.
 
Section 7.02 . Agents and Affiliates. ABN AMRO Bank N.V. shall have the same rights and powers under this Agreement as any other Lender and may exercise or refrain from exercising the same as though it were not the Administrative Agent, and ABN AMRO Bank N.V. and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Guarantor or any Subsidiary or affiliate of the Guarantor as if it were not the Administrative Agent hereunder.
 
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Section 7.03 . Action by Administrative Agent. The obligations of the Administrative Agent hereunder are only those expressly set forth herein. Without limiting the generality of the foregoing, the Administrative Agent shall not be required to take any action with respect to any Default, except as expressly provided in Article 6 .
 
Section 7.04 . Consultation with Experts. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower or the Guarantor), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts.
 
Section 7.05 . Liability of Administrative Agent. Neither the Administrative Agent nor any of its directors, officers, agents, or employees shall be liable for any action taken or not taken by it in connection herewith (i) with the consent or at the request of the Required Lenders (or such different number of Lenders as any provision hereof expressly requires for such consent or request) or (ii) in the absence of its own gross negligence or willful misconduct. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of the Borrower or the Guarantor; (iii) the satisfaction of any condition specified in Article 3 , except receipt of items required to be delivered to the Administrative Agent; or (iv) the validity, effectiveness or genuineness of this Agreement or any other instrument or writing furnished in connection herewith. The Administrative Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex or similar writing) believed by it to be genuine or to be signed by the proper party or parties. Nothing in this Agreement shall oblige the Administrative Agent to carry out any “know your customer” or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Administrative Agent that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Administrative Agent. Without limiting the generality of the foregoing, the use of the term “ agent ” in this Agreement with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom and is intended to create or reflect only an administrative relationship between independent contracting parties.
 
Section 7.06 . Indemnification. Each Lender shall, ratably in accordance with its Commitment, indemnify the Administrative Agent (to the extent not reimbursed by the Borrower or the Guarantor) against any cost, expense (including counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees’ gross negligence or willful misconduct) that such indemnitees may suffer or incur in connection with this Agreement or any action taken or omitted by such indemnitees hereunder.
 
 
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Section 7.07 . Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any 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 any action under this Agreement.
 
Section 7.08 . Successor Administrative Agent. (a) The Administrative Agent may resign at any time by giving 30 days’ prior written notice thereof to the Lenders, the Borrower and the Guarantor. Upon any such resignation, the Required Lenders shall have the right to appoint a successor to such Administrative Agent which shall be a Lender, subject to the Borrower’s approval (which shall not be unreasonably withheld). If no successor Administrative Agent shall have been so appointed by the Required Lenders and approved by the Borrower, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent gives notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a Lender, subject to the Borrower’s approval (which shall not be unreasonably withheld). Upon the acceptance of its appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent’s resignation hereunder as an Administrative Agent, the provisions of this Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent.
 
(b)  
If at any time the Administrative Agent shall have assigned its rights and obligations in respect of all of its Commitment hereunder, the Administrative Agent shall resign as the Administrative Agent in accordance with the procedures set forth in subsection (a) of this Section 7.08 .
 
Section 7.09 . Other Agents. The Agents, other than the Administrative Agent, shall not have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all of the Lenders as such. Without limiting the foregoing, none of the Agents shall have any fiduciary relationship with any Lender.
 
 
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ARTICLE 8   
CHANGE IN CIRCUMSTANCES
 
 
Section 8.01 . Market Disruption. (a) If a Market Disruption Event occurs in relation to a Group of Loans for any Interest Period, then the rate of interest on each Lender’s Loan included in that Group for the Interest Period shall be the rate per annum which is the sum of:
 
(i)    the Applicable Margin;
 
(ii)  
the rate notified to the Administrative Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding that Loan from whatever source it may reasonably select; and
 
(iii)    the Mandatory Cost, if any, applicable to that Loan.
 
In this Agreement “ Market Disruption Event ” means:
 
 
(i)
at or about noon on the Quotation Day for the relevant Interest Period the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Administrative Agent to determine LIBOR or, if applicable, EURIBOR for the relevant currency and Interest Period; or
 
 
(ii)
before close of business in London on the Quotation Day for the relevant Interest Period, the Administrative Agent receives notifications from Lenders (whose Loans exceed 50% of the related Borrowing) that the cost to them of obtaining matching deposits in the Relevant Interbank Market would be in excess of LIBOR or, if applicable, EURIBOR.
 
(b)  
If a Market Disruption Event occurs, the Administrative Agent shall notify the Borrower prior to the first day of the relevant Interest Period or, in the case of any Loan denominated in Sterling, promptly. If the Administrative Agent or the Borrower so requires, the Administrative Agent and the Borrower shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of interest. Any alternative basis agreed pursuant to this clause (b) shall, with the prior consent of all the Lenders and the Borrower, be binding on all parties to this Agreement.
 
Section 8.02 . Increased Cost. (a) Subject to Section 8.02(c) , the Borrower shall, within three Business Days of a demand by the Administrative Agent, pay for the account of a Lender the amount of any Increased Costs incurred by that Lender as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation applicable or (ii) compliance with any law or regulation applicable to such Lender made, in each case with respect to clauses (i) and (ii) above, after the date of this Agreement (or, in the case of any Lender that becomes a party to this Agreement after the date hereof, by assignment or otherwise, after the date of such Lender’s becoming party hereto).
 
 
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In this Agreement “ Increased Costs ” means:
 
 
(i)
a reduction in the rate of return on such Lender’s (or its parent holding company’s) overall capital;
 
 
(ii)
an additional or increased cost to such Lender; or
 
 
(iii)
a reduction of any amount due and payable to such Lender under this Agreement,
 
which in the case of clauses (i), (ii) or (iii) of this definition is incurred or suffered by a Lender to the extent that it is attributable to such Lender having entered into a Commitment or funding or performing its obligations hereunder.
 
(b)  
A Lender intending to make a claim pursuant to this Section shall notify the Borrower and the Administrative Agent of the event giving rise to the claim. Each such Lender shall, as soon as practicable after a demand by the Administrative Agent, provide a certificate confirming the amount of its Increased Costs incurred by it. Notwithstanding subsection (a) of this Section 8.02 , the Borrower shall only be obligated to compensate any Lender for any amount arising or accruing during (i) any time or period commencing not more than 90 days prior to the date on which such Lender notifies the Administrative Agent and the Borrower that it proposes to demand such compensation and identifies to the Administrative Agent and the Borrower the statute, regulation or other basis upon which the claimed compensation is or will be based and (ii) any time or period during which, because of the retroactive application of such statute, regulation or other such basis, such Lender did not know that such amount would arise or accrue.
 
(c)    Section 8.02(a) does not apply to the extent any Increased Cost is:
 
(i)  
attributable to any taxes, whether or not such taxes are excluded from the definition of “Taxes” for the purpose of Section 8.04 ;
 
(ii)  
compensated for by the payment of the Mandatory Cost; or
 
(iii)  
attributable to the willful breach by the relevant Lender or its affiliates of any law or regulation.
 
Section 8.03 . Illegality. If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain any Loan:
 
 
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(a)  
that Lender shall promptly notify the Administrative Agent upon becoming aware of that event;
 
(b)  
unless a substitute lender or lenders has been designated by the Borrower pursuant to Section 8.06 by the last day (the “ Final Permitted Date ”) of any applicable grace period permitted by law, the Commitment of that Lender will be cancelled on the Final Permitted Date; and
 
(c)  
unless a substitute lender or lenders has been designated by the Borrower pursuant to Section 8.06 as of the Final Permitted Date, the Borrower shall repay each Lender’s Loan made by such Lender, which repayment shall be made on the last day of the Interest Period for each such Loan occurring after the Administrative Agent has notified the Borrower or, if earlier, the date specified by the Lender in the notice delivered to the Administrative Agent (being no earlier than the Final Permitted Date).
 
Section 8.04 . Taxes.  (a) For the purposes of this Section, the following terms have the following meanings:
 
“ Taxes ” means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, including any surcharges, penalties, or interest imposed by any governmental authority, with respect to any payment by any Obligor pursuant to this Agreement, excluding in the case of the Administrative Agent and each Lender, (a) taxes, duties, levies, imposts, deductions, charges or withholdings imposed on or measured by net income, profits (including taxes in the nature of branch profit taxes) or overall gross receipts and franchise or similar taxes imposed by a jurisdiction under the laws of which such Lender or the Administrative Agent (as the case may be) is organized or resident or in which its principal executive office is located or in which its Applicable Lending Office is located or with which the Administrative Agent or such Lender has any other connection (other than a connection that is deemed to arise solely by reason of both (A) the transactions contemplated by this Agreement and (B) an Obligor being organized in, maintaining an office in, conducting business in, or having a connection with, such jurisdiction) and (b) any tax, duty, levy, impost, deduction, charge or withholding, that is imposed on amounts payable to the Administrative Agent or a Lender under a law that is in effect at the time the Administrative Agent or such Lender becomes a party to this Agreement, except to the extent that such Person’s predecessor or assignor was entitled, immediately prior to the change of the Administrative Agent or the assignment, to receive additional amounts from an Obligor with respect to such tax pursuant to this Section.
 
“ Other Taxes ” means any present or future stamp or documentary taxes and any other excise or property taxes, or similar charges or levies, including any surcharges, penalties or interest, which arise from any payment made pursuant to this Agreement or from the execution, delivery, registration or enforcement of this Agreement.
 
 
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(b)  
All payments by any Obligor to or for the account of any Lender or the Administrative Agent hereunder shall be made without deduction for any Taxes or Other Taxes; provided that, if any Obligor shall be required by law to deduct any Taxes or Other Taxes from any such payment, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) such Lender or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Obligor shall make such deductions, (iii) such Obligor shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law and (iv) such Obligor shall furnish to the Administrative Agent, at its address specified in or pursuant to Section 10.01 , the original or a certified copy of a receipt evidencing payment thereof.
 
(c)  
The Obligors agree to indemnify each Lender and the Administrative Agent for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted (whether or not correctly) by any jurisdiction on amounts payable under this Section) paid by such Lender or the Administrative Agent (as the case may be) and any penalties, charges, surcharges and interest arising therefrom or with respect thereto, provided , however , that no Obligor shall be required to indemnify any Lender or the Administrative Agent under this Section 8.04 for any liability arising as a result of such Lender’s or Administrative Agent’s willful misconduct or gross negligence. This indemnification shall be paid within 30 days after such Lender or the Administrative Agent (as the case may be) makes demand therefor.
 
(d)  
If any Obligor is required to pay additional amounts or indemnification payments to or for the account of any Lender pursuant to this Section, then such Lender will, at such Obligor’s request, change the jurisdiction of its Applicable Lending Office, or take any other action reasonably requested by such Obligor, if in the judgment of such Lender, such change or action (i) will eliminate or reduce any such additional payment which may thereafter accrue and (ii) is not otherwise deemed by such Lender to be materially disadvantageous to it. Upon the reasonable request of any Obligor, and at such Obligor’s expense, each Lender shall use reasonable efforts to cooperate with such Obligor with a view to obtaining a refund of any Taxes which were not correctly or legally imposed and for which such Obligor has indemnified such Lender under this Section 8.04 if such cooperation would not, in the good faith judgment of such Lender, be materially disadvantageous to such Lender; provided that nothing in this Section 8.04(d) shall be construed to require any Lender to institute any administrative proceeding (other than the filing of a claim for any such refund) or judicial proceeding to obtain any such refund if such proceeding would, in the judgment of such Lender, be disadvantageous or materially adverse to such Lender.
 
(e)  
If a Lender determines, in its reasonable discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by an Obligor or with respect to which an Obligor has paid additional amounts pursuant to this Section, it shall pay over such refund to such Obligor (but only to the extent of indemnity payments made, or additional amounts paid, by such Obligor under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Lender and without interest (other than any interest paid by the relevant governmental authority with respect to such refund); provided that such Obligor, upon the request of the Lender, agrees to repay the amount paid over to such Obligor (plus any penalties, surcharges or interest imposed by the relevant governmental authority) to the Lender in the event the Lender is required to repay such refund to such governmental authority.
 
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(f)  
Each Lender, before it signs and delivers this Agreement in the case of each Lender listed on the signature pages hereof and before it becomes a Lender in the case of each other Lender, and from time to time thereafter if requested in writing by any Obligor (but only so long as such Lender remains lawfully able to do so), shall provide the relevant Obligor and the Administrative Agent any form or certificate required under law in order that any payment by any Obligor under this Agreement to such Lender may be made without deduction or withholding for or on account of any Taxes (or to allow any such deduction or withholding to be at a reduced rate), provided that such Lender is legally entitled to complete, execute and deliver such form or certificate and, except in the case of any Taxes imposed by Spain as of the date hereof, (i) such completion, execution and submission is not materially disadvantageous to such Lender and (ii) the relevant Obligor has requested that such Lender deliver such form or certificate with respect to such jurisdiction. To the extent it can lawfully do so at such time, each such Lender shall deliver appropriate revisions to or replacements of the above referenced forms or certificates to the relevant Obligor and the Administrative Agent on or before the earlier of (i) the date on which such forms expire or otherwise become obsolete and (ii) 30 days after the occurrence of an event which would require a change in the most recently delivered form or certificate.
 
(g)  
For any period with respect to which a Lender has failed to provide the relevant Obligor or the Administrative Agent with the appropriate form referred to in Section 8.04(f) when it is required to do so, such Lender shall not be entitled to additional amounts or indemnification under Section 8.04(b) or (c) with respect to any Taxes imposed as a result of such failure; provided that if a Lender, that is otherwise exempt from or subject to a reduced rate of withholding tax, becomes subject to Taxes because of its failure to deliver a form required hereunder, the relevant Obligor shall take such steps as such Lender shall reasonably request, and at the expense of such Lender, to assist such Lender to recover such Taxes.
 
 
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(h)  
Value Added Tax . All fees or expense reimbursements set out, or expressed to be payable under this Agreement to any Agent or Lender which (in whole or in part) constitute consideration for VAT purposes shall be deemed to be exclusive of VAT, and accordingly if any VAT is chargeable with respect to any fees or expense reimbursements payable by an Obligor to any Agent or Lender under this Agreement, such Obligor shall pay to such Agent or Lender (in addition to and at the same time as paying such fees or expense reimbursements) an amount equal to the amount of such VAT (and such Agent or Lender shall promptly provide an appropriate VAT invoice to such Obligor).
 
(i)  
Except as expressly set forth above, nothing in this Section 8.04 shall be construed to (i) entitle any Obligor or any other Persons to any information determined by any Lender or the Administrative Agent, in its sole discretion, to be confidential or proprietary information of such Lender or the Administrative Agent, to any tax or financial information of any Lender or the Administrative Agent or to inspect or review any books and records of any Lender or the Administrative Agent, or (ii) interfere with the rights of any Lender or the Administrative Agent to conduct its fiscal or tax affairs in such manner as it deems fit.
 
Section 8.05 . Mitigation by the Lenders. (a) Each Lender shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Section 8.03 , Section 8.02 or paragraph 3 of Schedule III, including (but not limited to) transferring its rights and obligations under this Agreement to another affiliate or changing the jurisdiction of its Applicable Lending Office.
 
(b)  
Section 8.05(a) above does not in any way limit the obligations of any Obligor hereunder.
 
(c)  
The Borrower shall indemnify each Lender for all costs and expenses reasonably incurred by such Lender as a result of steps taken by it under this Section 8.05 .
 
(d)  
A Lender is not obliged to take any steps under Section 8.05(a) if, in the opinion of such Lender (acting reasonably), to do so might be prejudicial to it.
 
Section 8.06 . Substitution of Lender. If (i) any Lender has delivered a notice pursuant to Section 8.03(a) or (ii) any Lender has demanded compensation under Section 8.02 or Section 8.04 , the Borrower shall have the right, with the assistance of the Administrative Agent, to designate a substitute lender or lenders (which may be one or more of the Lenders) mutually satisfactory to the Borrower and the Administrative Agent (which consent shall not be unreasonably withheld or delayed) to purchase (and, if such right is exercised, such Lender shall sell and assign) for cash, pursuant to an Assignment and Assumption Agreement substantially in the form of Exhibit F hereto, the outstanding Loans of such Lender and assume the Commitment of such Lender, without recourse to or warranty by, or expense to, such Lender, for a purchase price equal to the principal amount of all of such Lender’s outstanding Loans plus any accrued but unpaid interest thereon and the accrued but unpaid commitment fees in respect of such Lender’s Commitment hereunder plus such amount, if any, as would be payable pursuant to Section 2.12(d) if the outstanding Loans of such Lender were prepaid in their entirety on the date of consummation of such assignment and all amounts then payable pursuant to Section 8.02 and Section 8.04 .
 
 
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     ARTICLE 9   
GUARANTEE
 
Section 9.01 . The Guarantee. (a)   The Guarantor hereby unconditionally and irrevocably guarantees to the Lenders, and to each of them, the due and punctual payment of all present and future indebtedness evidenced by or arising out of this Agreement, including, but not limited to, the due and punctual payment of principal of and interest on the Loans and the due and punctual payment of all other sums now or hereafter owed by the Borrower under this Agreement as and when the same shall become due and payable, whether at maturity, by declaration or otherwise, according to the terms hereof. In case of failure by the Borrower punctually to pay the indebtedness guaranteed hereby, the Guarantor unconditionally agrees to cause such payment to be made punctually as and when the same shall become due and payable, whether at maturity or by declaration or otherwise, and as if such payment were made by the Borrower.
 
(b)  
The obligations of the Guarantor under this Agreement are not secured by any collateral. For the avoidance of doubt, the obligations of the Guarantor under this Agreement are not secured by, and the Lenders do not have any recourse to, any accounts receivable, bank accounts or other deposits on which remuneration is paid (by any Lender or another Person) that generates income of which a qualifying shareholder of the Borrower or a Person related to the qualifying shareholder is the direct or indirect recipient, as stipulated in note 20 of the Decree of the German Federal Ministry of Finance dated 15 July 2004 (IV A 2 - S 2742a - 20/04). There are no provisions within this Agreement or any other agreements between the Lenders and the Borrower, pursuant to which the Loans can be cancelled, if a qualifying shareholder of the Borrower, or a Person related to a qualifying shareholder or any other Person claims back deposits or other capital commitments from the Lenders or any other Person.
 
Section 9.02 . Guarantee Unconditional. The obligations of the Guarantor under this Article 9 shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by:
 
(a)  
any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Borrower under this Agreement by operation of law or otherwise;
 
 
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(b)  
any modification or amendment of or supplement to this Agreement;
 
(c)  
any modification, amendment, waiver, release or invalidity of any liability of any Person, for any obligation of the Borrower under this Agreement;
 
(d)  
any change in the corporate existence, structure or ownership of the Borrower or any other Person, including the merger of the Borrower into another entity, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Borrower or any other Person or any of their assets or any resulting release or discharge of any obligation of the Borrower or any other Person contained in this Agreement or the Acquisition Agreement;
 
(e)  
the existence of any claim, set-off or other rights which the Guarantor may have at any time against the Borrower, the Administrative Agent, any Lender or any other Person, whether or not arising in connection with this Agreement, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim;
 
(f)  
any invalidity or unenforceability relating to or against the Borrower for any reason of any provision or all of this Agreement or the Acquisition Agreement, or any provision of applicable law or regulation purporting to prohibit the payment by the Borrower or any other Person of the principal of or interest on any Loan or any other amount payable by it under this Agreement; or
 
(g)  
any other act or omission to act or delay of any kind by the Borrower, the Administrative Agent, any Lender or any other Person or any other circumstance whatsoever that might, but for the provisions of this paragraph, constitute a legal or equitable discharge of or defense to the obligations of the Guarantor under this Article 9 .
 
Section 9.03 . Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances. The obligations of the Guarantor under this Article 9 shall remain in full force and effect and shall survive the Final Maturity Date until the Commitments are terminated and the principal of and interest on the Loans and all other amounts payable by the Borrower under this Agreement shall have been paid in full. If at any time any payment of the principal of or interest on any Loan or any other amount payable by the Borrower under this Agreement is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, the Guarantor’s obligations under this Article 9 with respect to such payment shall be reinstated at such time as though such payment had become due but had not been made at such time.
 
 
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Section 9.04 . Waiver. The Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any right be exhausted or any action be taken by the Administrative Agent, any Lender or any other Person against the Borrower or any other Person.
 
Section 9.05 . Subrogation and Contribution. Upon making any payment hereunder, the Guarantor shall be subrogated to the rights of the Lenders against the Borrower with respect to such payment; provided that the Guarantor shall not enforce any right or demand or receive any payment by way of subrogation until all amounts of principal of and interest on the Loans to the Borrower and all other amounts payable by the Borrower under this Agreement have been paid in full.
 
Section 9.06 . Stay of Acceleration. If acceleration of the time for payment of any amount payable by the Borrower under this Agreement is stayed upon the insolvency, bankruptcy or reorganization of the Borrower, all such amounts otherwise subject to acceleration under the terms of this Agreement shall nonetheless be payable by the Guarantor hereunder forthwith on demand by the Administrative Agent made at the request of the Required Lenders.
 
 
ARTICLE 10   
MISCELLANEOUS
 
Section 10.01 . Notices. All notices, requests, instructions and other communications to any party hereunder shall be in writing (including bank wire, telex, facsimile transmission or similar writing) and shall be given to such party and, in the case of any such notice, request, instruction or other communication to the Borrower, with a copy to the Guarantor: (x) in the case of the Borrower, the Guarantor or the Administrative Agent, at its address, facsimile number or telex number (if any) set forth on the signature pages hereof, (y) in the case of any Lender, at its address, facsimile number or telex number (if any) set forth in its Administrative Questionnaire or (z) in the case of any party hereto, such other address, facsimile number or telex number as such party may hereafter specify for the purpose by notice to the Administrative Agent, the Borrower and the Guarantor. Each such notice, request or other communication shall be effective (i) if given by telex, when such telex is transmitted to the telex number specified in this Section and the appropriate answerback is received, (ii) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (iii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (iv) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Administrative Agent under Article 2 or Article 8 shall not be effective until received.
 
 
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Section 10.02 . No Waivers. No failure or delay by the Administrative Agent or any Lender in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
 
Section 10.03 . Expenses; Indemnification. (a)   The Borrower shall pay (i) all reasonable out-of-pocket expenses of the Agents, including reasonable fees and disbursements of special counsel (Davis Polk & Wardwell and Uría Menendez) for the Agents, in connection with the preparation of this Agreement, any waiver or consent hereunder or any amendment hereof or any Default or alleged Default hereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by the Agents or any Lender, including reasonable fees and disbursements of counsel (including the cost of staff counsel when used in lieu of separate special counsel), in connection with such Event of Default and collection and other enforcement proceedings resulting therefrom.  
 
(b)  
The Borrower shall indemnify each Lender and its directors, officers and employees for, and hold each Lender and its directors, officers and employees harmless from and against (i) any and all damages, losses and other liabilities of any kind, including, without limitation, judgments and costs of settlement, and (ii) any and all out-of-pocket costs and expenses of any kind, including, without limitation, reasonable fees and disbursements of counsel, including the cost of staff counsel where used in lieu of separate special counsel, and any other costs of defense, including, without limitation, costs of discovery and investigation, for such Lender and its officers and directors (all of which shall be paid or reimbursed by the Borrower monthly), suffered or incurred in connection with any investigative, administrative or judicial proceeding (whether or not such Lender shall be designated a party thereto) relating to or arising out of this Agreement or any actual or proposed use of proceeds of Loans hereunder; provided that such Lender and its directors, officers and employees shall have no right to be indemnified or held harmless hereunder for its own gross negligence or willful misconduct as finally determined by a court of competent jurisdiction. The Borrower shall indemnify and hold harmless each Agent, in its capacity as an Agent hereunder, to the same extent that the Borrower indemnifies and holds harmless each Lender pursuant to this Section.
 
Section 10.04 . Sharing of Set-offs. Each Lender agrees that if it shall, by exercising any right of set-off or counterclaim or otherwise receive payment of a proportion of the aggregate amount of principal and interest then due with respect to any Loan made by it which is greater than the proportion received by any other Lender in respect of the aggregate amount of principal and interest then due with respect to any Loan made by such other Lender, the Lender receiving such proportionately greater payment shall purchase such participations in the Loans made by the other Lenders, and such other adjustments shall be made, as may be required so that all such payments of principal and interest with respect to the Loans made by the Lenders shall be shared by the Lenders pro rata; provided that if at any time thereafter, the Lender that originally received such payment is required to repay (whether to the Borrower or to any other Person) all or any portion of such payment, each other Lender shall promptly (and in any event within five Business Days of its receipt of notification from such Lender requiring such repayment) repay to such Lender the portion of such payment previously received by it under this Section 10.04 , together with such amount (if any) as is equal to the appropriate portion of any interest (in respect of the period during which such other Lender held such amount) such Lender shall have been obligated to pay when repaying such amount as aforesaid, in exchange for such participation in the Loans of such other Lender as was previously purchased by such Lender. Nothing in this Section shall impair the right of any Lender to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of the Borrower other than its indebtedness under the Loans.
 
 
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Section 10.05 . Amendments and Waivers. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower, the Guarantor and the Required Lenders (and, if the rights or duties of any Agent are affected thereby, by such Agent). Notwithstanding the foregoing,  
 
(a)  
no such amendment or waiver shall,   (i) unless signed by each affected Lender,
 
(A)  
increase the Commitment of any Lender or subject any Lender to any additional obligation,
 
(B)  
reduce the principal of or rate of interest on any Loan or any fees hereunder, or
 
(C)  
postpone the date fixed for any payment of principal of or interest on any Loan or any fees hereunder or for any reduction or termination of any Commitment; or
 
                                        (ii)   unless signed by all Lenders,
 
(A)  
change the requisite approval of Lenders specified for any action under this Section or any other provision of this Agreement,
 
(B)  
release the Guarantor from its obligations under Article 9 hereof;
 
(C)  
amend or waive the provisions of this Section 10.05 ; or
 
 
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(iii)  
unless signed by the Required Term Lenders or the Required Revolving Credit Lenders, whichever Class is adversely affected,
 
(A)  
waive, either directly or by amendment or waiver of any other provision hereof, any applicable condition specified in Article 3 for a Borrowing of such Class, or
 
(B)  
by its terms affect the Lenders of one Class less favorably than the Lenders of another Class;
 
(b)  
Section 9.01(b) may be amended (i) pursuant to a document signed by the Borrower, the Guarantor and the Administrative Agent (without the consent of any Lender), in any manner not adverse to the Lenders, if the tax laws and regulations of Germany relating to thinly capitalized entities are changed after the date hereof or any formal or informal directive or interpretation is issued or changed thereunder after the date hereof or (ii) pursuant to a document signed by the Guarantor (without the consent of any other Person), to provide collateral for the obligations of the Guarantor under this Agreement; and
 
(c)  
if at any time after the Closing Date, (x) the Existing Credit Agreement is amended, amended and restated or replaced and as a result Section 5.03 or 6.01(f), (g), (h), (i), (j) or (k) of the Existing Credit Agreement is amended or Section 5.05, 5.06 or 9.06 of the Existing Credit Agreement is amended or eliminated or any definition related to such sections is amended (collectively, the “ Relevant Amendments ”) in such amended, amended and restated or replacement facility and (y) at the time the Relevant Amendments become effective, the lenders approving the Relevant Amendments under such amended, amended and restated or replacement facility who are also Lenders (the “ Relevant Lenders ”) constitute the Required Lenders, then the Relevant Amendments shall automatically be incorporated into this Agreement, and the Borrower, the Administrative Agent and the Relevant Lenders agree to execute any documentation necessary to evidence such incorporation. For the avoidance of doubt, this Agreement may only be amended once in reliance on this clause (c) , the first time that the Existing Credit Agreement is amended, amended and restated or replaced after the Closing Date.
 
The exercise by the Borrower of its right to decrease the Commitments pursuant to Section 2.09 shall not be deemed to require the consent of any party to this Agreement. The exercise by the Borrower of its option to increase the aggregate amount of the Commitments pursuant to Section 2.15 shall not require the consent of any Person except for the consent of such Persons required by Section 2.15 .
 
Section 10.06 . Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that neither the Borrower nor the Guarantor may assign or otherwise transfer any of its rights or obligations under this Agreement (other than in accordance with Section 5.04 ) without the prior written consent of all Lenders.
 
 
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(b)  
Any Lender may at any time grant to one or more banks or other institutions (each a “ Participant ”) participating interests in its Commitment or any or all of its Loans. In the event of any such grant by a Lender of a participating interest to a Participant, whether or not upon notice to the Borrower, the Guarantor and the Agents, such Lender shall remain responsible for the performance of its obligations hereunder, and the Borrower, the Guarantor and the Agents shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement ( i.e. , there shall be no contractual privity between a Participant and the Obligors). Any agreement pursuant to which any Lender may grant such a participating interest shall provide that such Lender shall retain the sole right and responsibility to enforce the obligations of the Borrower hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that such Lender will not agree to any modification, amendment or waiver of this Agreement described in clause (A) (only to the extent such modification, amendment or waiver would decrease the Commitment of such Lender), (B) or (C) of Section 10.05(a)(i) or to any modification, amendment or waiver that would have the effect of increasing the amount of a Participant’s participation in such Lender’s Commitment, in any such case without the consent of the Participant. The Borrower agrees that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Article 8 with respect to its participating interest, subject to subsection (e) below. An assignment or other transfer which is not permitted by subsection (c) or (d) below shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b) .
 
(c)  
Any Lender may at any time assign to one or more banks or other institutions (each an “ Assignee ”) all or a portion of its rights and obligations under this Agreement, and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit F hereto executed by such Assignee and such transferor Lender, with the subscribed consent of the Borrower (not to be unreasonably withheld or delayed) in consultation with the Administrative Agent and with the subscribed acknowledgment of the Administrative Agent; provided that if an Assignee is (i) any Person which controls, is controlled by, or is under common control with, or is otherwise substantially affiliated with such transferor Lender or (ii) another Lender, no such consent shall be required; and provided further that (i) each assignment shall be of a uniform, and not a varying percentage of all rights and obligations under and in respect of the Revolving Credit Facility or the Term Facility, as the case may be, (ii) unless otherwise agreed by the Borrower and the Administrative Agent, any assignment by a Term Lender of any of its Term Exposure shall not be less than €10,000,000 and (iii) any assignment by a Revolving Credit Lender of any of its Revolving Credit Exposure shall not be less than €10,000,000 or, in either case, if less, shall constitute an assignment of all of such Lender’s rights and obligations under this Agreement with respect to the Class of Loans and/or Commitments subject to such assignment. Upon execution and delivery of such instrument and payment by such Assignee to such transferor Lender of an amount equal to the purchase price agreed between such transferor Lender and such Assignee, such Assignee shall be a Lender party to this Agreement and shall have all the rights and obligations of a Lender with a Commitment as set forth in such instrument of assumption, and the transferor Lender shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection (c) , the Administrative Agent shall notify the other Agents of such assignment. In connection with any such assignment, the transferor Lender shall pay to the Administrative Agent an administrative fee of €2,500 for processing such assignment. Each Assignee shall, prior to the first date on which interest or fees are payable hereunder for its account, deliver to the relevant Obligor and the Administrative Agent certification as to exemption from deduction or withholding of any taxes of the country of residence of such Obligor in accordance with Section 8.04(f) .
 
 
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(d)  
Any Lender may at any time assign all or any portion of its rights under this Agreement to a Federal Reserve Bank. No such assignment shall release the transferor Lender from its obligations hereunder.
 
(e)  
No Assignee, Participant or other transferee of any Lender’s rights shall be entitled to receive any greater payment under Article 8 than such Lender would have been entitled to receive with respect to the rights transferred, unless such transfer is made with the Borrower’s prior written consent or by reason of the provisions of Article 8 requiring such Lender to designate a different Applicable Lending Office or take any other actions under certain circumstances.
 
Section 10.07 . Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. (a)   THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH OF THE BORROWER AND THE GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE BORROWER AND THE GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE BORROWER, THE GUARANTOR, THE AGENTS AND THE LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
 
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THIS SECTION 10.07(a) IS FOR THE BENEFIT OF EACH OF THE AGENTS AND EACH OF THE LENDERS AND SHALL NOT LIMIT THE RIGHT OF ANY AGENT OR LENDER TO BRING PROCEEDINGS AGAINST ANY OBLIGOR IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY OTHER COURT OF COMPETENT JURISDICTION OR CONCURRENTLY IN MORE THAN ONE JURISDICTION, AS PERMITTED BY APPLICABLE LAW. IN PARTICULAR, THE SUBMISSION BY THE BORROWER TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IS WITHOUT PREJUDICE TO, AND SHALL NOT AFFECT, THE RIGHT OF ANY AGENT OR LENDER TO BRING AN ACTION AGAINST THE BORROWER BEFORE THE COURTS OF MADRID (SPAIN) BY MEANS OF THE “ PROCESO DE EJECUCIÓN ” OR ANY OTHER PROCEDURE AVAILABLE.
 
(b)  
The Borrower hereby irrevocably appoints Corporation Service Company (the “ Process Agent ”), with an office at the date hereof at 80 State Street, 6th Floor, Albany, New York 12207-2543, as its agent and true and lawful attorney-in-fact in its name, place and stead to accept on behalf of the Borrower and its property and revenues service of copies of the summons and complaint and any other process which may be served in any suit, action or proceeding arising out of or relating to this Agreement and brought in the State of New York, and the Borrower agrees that the failure of the Process Agent to give any notice of any such service of process to the Borrower shall not impair or affect the validity of such services or, to the extent permitted by law, the enforcement of any judgment based thereon. As an alternative method of service, the Borrower also irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to the Borrower at its address specified in Section 10.01 hereof. Nothing in this Section 10.07(b) shall affect the right of the Administrative Agent or any Lender to serve legal process in any other manner permitted by law or affect the right of any Person to bring any action or proceeding against the Borrower or its property in the courts of other jurisdictions.
 
Section 10.08 . Notarization. If the Required Lenders at any time request that the Administrative Agent instruct each Obligor to raise this Agreement to public document status before a Spanish notary public, the Administrative Agent shall promptly send a notice (a “ Notarization Notice ”) to the Obligors and, unless each Obligor receives a notice from the Administrative Agent, acting at the direction of the Required Lenders, withdrawing such Notarization Notice by the tenth Business Day after delivery thereof (such date, the “ Notarization Notice Effective Date ”), then each Obligor hereby expressly agrees and undertakes (a) to appear, within fifteen days after the Notarization Notice Effective Date, before a Spanish notary public selected by the Borrower and (b) to raise this Agreement to public document status. All the costs arising from the notarization of this Agreement shall be borne by the Borrower. Each Lender hereby empowers the Administrative Agent to appear before a Spanish notary public for the purpose of raising this Agreement to the status of public document.
 
 
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Section 10.09 . Counterparts; Integration. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement constitute the entire agreement and understanding among the parties hereto and supersede any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.
 
Section 10.10 . Confidentiality. In addition to any confidentiality requirements under applicable law, each of the Agents and Lenders (each a “ Lender Party ” and, collectively, the “ Lender Parties ”) agrees that through and including the later of (x) the Final Maturity Date and (y) a date three years from the relevant Lender Party’s receipt of the relevant information, it will take normal and reasonable precautions so that
 
 
(i)
all information provided to it by the Borrower, the Guarantor, any Person on behalf of the Borrower or the Guarantor, or by any other Lender Party on behalf of the Borrower or the Guarantor, in connection with this Agreement or the transactions contemplated hereby will be held and treated by such Lender Party and its respective directors, affiliates, officers, agents and employees in confidence and
 
 
(ii)
neither it nor any of its respective directors, affiliates, officers, agents or employees shall, without the prior written consent of the Borrower or the Guarantor, as applicable, use any such information for any purpose or in any manner other than pursuant to the terms of and for the purposes contemplated by this Agreement.
 
Notwithstanding the immediately preceding sentence, any Lender Party may disclose any such information or portions thereof
 
(a)  
that is or becomes publicly available other than through a breach by such Lender Party of its obligations hereunder;
 
(b)  
that is also provided to such Lender Party by a Person other than the Borrower or the Guarantor not in violation, to the actual knowledge of such Lender Party, of any duty of confidentiality;
 
 
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(c)  
at the request of any bank regulatory authority or examiner;
 
(d)  
pursuant to subpoena or other court process;
 
(e)  
when required by applicable law;
 
(f)  
at the written request or the express direction of any other authorized government agency;
 
(g)  
to its independent auditors, counsel and other professional advisors in connection with their provision of professional services to such Lender Party;
 
(h)  
to any (i) Participant or (ii) prospective Participant or prospective Lender, if such Participant, prospective Participant or prospective Lender (which prospective Lender is promptly identified to the Borrower), prior to any such disclosure, agrees in writing to keep such information confidential to the same extent required of the Lender Parties hereunder; or
 
(i)  
to any affiliate of such Lender Party, solely to enable such affiliate to assess the creditworthiness of the Borrower or the Guarantor in connection with any transaction between such affiliate and the Borrower or the Guarantor or any of its Subsidiaries;
 
provided that any Lender Party’s failure to comply with the provisions of this Section 10.10 shall not affect the obligations of the Borrower or the Guarantor hereunder.
 
Section 10.11 . Severability. Any provision of this Agreement that is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction.
 
Section 10.12 . Collateral. Each of the Lenders represents to the Agents and each of the other Lenders that it in good faith is not relying upon any Margin Stock as collateral in the extension or maintenance of the credit provided for in this Agreement.
 
Section 10.13 . “Know Your Customer” Checks. (a) If:
 
(i)  
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
 
(ii)  
any change in the status of an Obligor after the date of this Agreement; or  
 
 
59
(iii)  
a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
 
obliges the Administrative Agent or any Lender (or, in the case of clause (iii) above, any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of the Administrative Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Administrative Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in clause (ii) above, on behalf of any prospective new Lender) in order for the Administrative Agent, such Lender or, in the case of the event described in clause (iii) above, any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in this Agreement.
 
(b)  
Each Lender shall promptly upon the request of the Administrative Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Administrative Agent (for itself) in order for the Administrative Agent to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in this Agreement.
 
(c)  
Any Obligor seeking to assign or transfer any of its rights or obligations under this Agreement pursuant to Section 10.06 , shall, by not less than 10 Business Days’ prior written notice to the Administrative Agent, notify the Administrative Agent (which shall promptly notify the Lenders) of its intention to request such assignment or transfer.
 
(d)  
Following the giving of any notice pursuant to paragraph (c) above, if the accession of such new Obligor obliges the Administrative Agent or any Lender to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Obligor seeking such assignment or transfer shall promptly upon the request of the Administrative Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Administrative Agent (for itself or on behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order for the Administrative Agent or such Lender or any prospective new Lender to carry out and be satisfied it has complied with the results of all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the accession of the relevant Person to this Agreement as a new Obligor.
 
Section 10.14 . Judgment Currency. (a)   If any sum due from an Obligor under this Agreement (a “ Sum ”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “ First Currency ”) in which that Sum is payable into another currency (the “ Second Currency ”) for the purpose of:
 
 
60
                                          (i)   making or filing a claim or proof against such Obligor or
 
(ii)  
obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
 
such Obligor shall as an independent obligation, within three Business Days of demand, indemnify each Lender Party to whom such Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
 
(b)  
Each Obligor waives any right it may have in any jurisdiction to pay any amount under this Agreement in a currency or currency unit other than that in which it is expressed to be payable.
 
 
 
61
 
 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
 
PRAXAIR EUROHOLDING, S.L.
By:
 
               Name:
 
Title:
   
   
 
Calle Orense 11
 
5 th Floor
 
E-28020 Madrid
 
Spain
 
Telecopy number: +34 91 555 4307
 
Attention: Legal Director


PRAXAIR, INC.
By:
 
 
Name:
 
Title:
   
 
39 Old Ridgebury Road
 
Danbury, CT 06810-5113
 
Telecopy number: (203) 837-2480
 
Attention: Treasurer


 

62
 
 
ABN AMRO BANK N.V., as Administrative Agent
   
By:
 
 
Name:
 
Title:
 
250 Bishopsgate
 
London EC2M 4AA
 
United Kingdom
   
 
For credit matters:
 
Attention: Simon Beedleston
 
Telephone number: +44 20 7678 6661
 
Telecopy number: +44 20 7678 6021
 
email: simon.beedleston@uk.abnamro.com
   
 
For administrative matters:
 
Attention: Vikki Mayell/Stuart Hutton
 
Telephone number: +44 20 7678 5148/9027
 
Telecopy number: +44 20 7678 6021
 
email: vikki.mayell@uk.abnamro.com

 
63
 
LENDERS:
 
ABN AMRO BANK N.V.
   
By:
 
 
Name:
 
Title:

 

 
64
 
CITIBANK INTERNATIONAL PLC
   
By:
 
 
Name:
 
Title:

 
 
65
 
 
BANCO SANTANDER CENTRAL
 
HISPANO S.A.
   
By:
 
 
Name:
 
Title:

 
 
66

 
BANK OF AMERICA, N.A. SUCURSAL EN
 
ESPAÑA
   
By:
 
 
Name:
 
Title:

 
67

 
BANK OF TOKYO-MITSUBISHI, LTD.
   
By:
 
 
Name:
 
Title:

 


68
 
DEUTSCHE BANK AG LONDON
   
By:
 
 
Name:
 
Title:

 
 
69
 
HSBC BANK PLC
   
By:
 
 
Name:
 
Title:


70
 
JPMORGAN CHASE BANK, N.A.
   
By:
 
 
Name:
 
Title:

71


 
SCOTIABANK EUROPE PLC.
   
By:
 
 
Name:
 
Title:
 

 
72
 
SOCIÉTÉ GÉNÉRALE
   
By:
 
 
Name:
 
Title:

 
73
 
SCHEDULE I
 

Lender
Revolving Credit Commitment
Term Commitment
     
ABN AMRO Bank N.V.
€16,666,666.68
€33,333,333.32
Citibank International PLC
€16,666,666.68
€33,333,333.32
Banco Santander Central Hispano S.A.
€14,583,333.33
€29,166,666.67
Bank of America, N.A. Sucursal en España
€14,583,333.33
€29,166,666.67
Bank of Tokyo-Mitsubishi, Ltd.
€14,583,333.33
€29,166,666.67
Deutsche Bank AG London
€14,583,333.33
€29,166,666.67
HSBC Bank PLC
€14,583,333.33
€29,166,666.67
JPMorgan Chase Bank, N.A.
€14,583,333.33
€29,166,666.67
ScotiaBank Europe PLC.
€14,583,333.33
€29,166,666.67
Société Générale
€14,583,333.33
€29,166,666.67
     
 
€   150,000,000
 
€   300,000,000
 

 

 
74
 
SCHEDULE II
 
PRICING
 
The “ Applicable Margin ” and “ Commitment Fee Rate ” for any day are the respective percentages set forth below in the applicable row and column corresponding to the Credit Rating that exists on such day; provided that if different Credit Ratings are assigned by S&P and by Moody’s, the Applicable Margin and the Commitment Fee Rate shall be (x) to the extent such Credit Ratings differ by two or more rating levels, the respective percentages set forth below in the applicable row and column corresponding to the Credit Rating one level above the lower of such Credit Ratings and (y) to the extent such Credit Ratings differ by one rating level, the respective percentages set forth below in the applicable row and column corresponding to the higher of such Credit Ratings.
 
Credit Rating
Applicable
Margin
Commitment
Fee Rate
S&P
Moody’s
A
A2
.20%
.06500%
A-
A3
.25%
.08125%
BBB+
Baa1
.275%
.09625%
BBB
Baa2
.35%
.12250%
BBB-
Baa3
.45%
.15750%
Less than BBB-
Less than Baa3
.55%
.19250%

“ Credit Rating ” means, as of any day, the credit ratings assigned to the senior unsecured long-term debt securities of the Guarantor without third-party credit enhancement and in effect at the close of business on such day. For the avoidance of doubt, any rating assigned to any other debt security of the Guarantor shall be disregarded for purposes of determining the Credit Rating.
 
“ Moody’s ” means Moody’s Investors Service, Inc.
 
“ S&P ” means Standard & Poor’s Ratings Group.
 

75

SCHEDULE III
 
MANDATORY COST
 
 
1.
The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank, in each case, in respect of the Loans.
 
 
2.
On the first day of each Interest Period (or as soon as possible thereafter) the Administrative Agent shall calculate, as a percentage rate, a rate (the “ Additional Cost Rate ”) for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Administrative Agent as a weighted average of the Lenders’ Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Group of Loans of all the Lenders) and will be expressed as a percentage rate per annum.
 
 
3.
The Additional Cost Rate for any Lender lending from an Applicable Lending Office in a member state of the European Community that adopts or has adopted the Euro as its lawful currency in accordance with legislation of the European Community relating Economic and Monetary Union will be the percentage notified by that Lender to the Administrative Agent. This percentage will be certified by that Lender in its notice to the Administrative Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender's participation in the relevant Group of Loans of all the Lenders made from such Applicable Lending Office) of complying with the minimum reserve requirements of the European Central Bank in respect of Loans made from such Applicable Lending Office.
 
 
4.
The Additional Cost Rate for any Lender lending from an Applicable Lending Office in the United Kingdom will be calculated by the Administrative Agent as follows:
 
(a)   in relation to a Revolving Credit Loan denominated in Sterling:
 
                                      AB + C(B-D) + E *0.01      % per annum
                                             100 - (A + C)
(b)   in relation to a Loan denominated in any currency other than Sterling:
 
    E * 0.01        % per annum.
                                       300
Where:
 
 
A
is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which such Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements.
 
 
B
is the percentage rate of interest (excluding the Applicable Margin and the Mandatory Cost and, if the Loan is an Unpaid Sum, the additional rate of interest specified in Section 2.06(c) ) payable for the relevant Interest Period on the Loan.
 
 
C
is the percentage (if any) of Eligible Liabilities which such Lender is required from time to time to maintain as interest bearing Special Deposits with the Bank of England.
 
 
D
is the percentage rate per annum payable by the Bank of England to the Administrative Agent on interest bearing Special Deposits.
 
 
E
is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Administrative Agent as being the average of the most recent rates of charge supplied by the Reference Banks to the Administrative Agent pursuant to paragraph 7 below and expressed in pounds per £1,000,000.
 
5.   For the purposes of this Schedule:
 
(a)   “ Eligible Liabilities ” and “ Special Deposits ” have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England;
 
(b)   “ Fees Rules ” means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits;
 
(c)   “ Fee Tariffs ” means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate); and
 
(d)   “ Tariff Base ” has the meaning given to it in, and will be calculated in accordance with, the Fees Rules.
 
 
6.
In application of the above formulae, A, B, C and D will be included in the formulae as percentages ( i.e. , 5% will be included in the formula as 5 and not as 0.05). A negative result obtained by subtracting D from B shall be taken as zero. The resulting figures shall be rounded to four decimal places.
 
 
7.
If requested by the Administrative Agent, each Reference Bank shall, as soon as practicable after publication by the Financial Services Authority, supply to the Administrative Agent, the rate of charge payable by that Reference Bank to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by that Reference Bank as being the average of the Fee Tariffs applicable to that Reference Bank for that financial year) and expressed in pounds per £1,000,000 of the Tariff Base of that Reference Bank.
 
 
8.
Each Lender shall supply any information required by the Administrative Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Lender shall supply the following information on or prior to the date on which it becomes a Lender:
 
(a)   the jurisdiction of its Applicable Lending Office; and
 
 
(b)
any other information that the Administrative Agent may reasonably require for such purpose.
 
Each Lender shall promptly notify the Administrative Agent of any change to the information provided by it pursuant to this paragraph.
 
 
9.
The percentages of each Lender for the purpose of A and C above and the rates of charge of each Reference Bank for the purpose of E above shall be determined by the Administrative Agent based upon the information supplied to it pursuant to paragraphs 7 and 8 above and on the assumption that, unless a Lender notifies the Administrative Agent to the contrary, each Lender's obligations in relation to cash ratio deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with an Applicable Lending Office in the same jurisdiction as its Applicable Lending Office.
 
 
10.
The Administrative Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender or Reference Bank pursuant to paragraphs 3, 7 and 8 above is true and correct in all respects.
 
 
11.
The Administrative Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender and each Reference Bank pursuant to paragraphs 3, 7 and 8 above.
 
 
12.
Any determination by the Administrative Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all parties to this Agreement.
 
 
13.
The Administrative Agent may from time to time, after consultation with the Guarantor and the Lenders, determine and notify to all parties to this Agreement any amendments which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all parties to this Agreement.
 

76

EXHIBIT A
 
NOTICE OF BORROWING
 
From:   Praxair Euroholding, S.L.
 
To:
ABN AMRO Bank N.V.,
 
as Administrative Agent
250 Bishopsgate
London EC2M 4AA
United Kingdom
 
Dated:
November 29, 2004
 
Dear Sirs:
 
1.
We refer to the Facility Agreement dated as of November 29, 2004 among Praxair Euroholding, S.L., Praxair, Inc., the Lenders party thereto, Citigroup Global Markets Inc., as Syndication Agent, and ABN AMRO Bank N.V., as Administrative Agent (as amended, supplemented or otherwise modified from time to time, the “ Facility Agreement ”). Terms defined in the Facility Agreement have the same meaning in this Notice of Borrowing unless given a different meaning in this Notice of Borrowing.
 
2.
We hereby give you notice pursuant to Section 2.02 of the Facility Agreement that we request a Borrowing on the following terms:
 
Proposed date of Borrowing:
 
[____] (or if that is not a Business Day, the next Business Day) (the “ Proposed Borrowing Date ”) 1  
 
Currency of Borrowing:
 
[Euro] [Dollars] [[Sterling] [Swiss Francs] [ specify any Optional Currency ]] 2  
 
Amount:
 
[_______] 3  
 
Interest Period:
 
[One] [Two] [Three] [Six] Months
 
Class of Loans Comprising Borrowing:
 
[Revolving Credit Loans] [Term Loans]
 

3.
We hereby confirm that each of the following statements contained in clauses (a), (b) and (c) below are true on the date hereof and shall be true on the Proposed Borrowing Date:
 
 
(a)
immediately after the Borrowing, the Base Currency Amount of the Class of Loans comprising the Borrowing will not exceed the aggregate amount of the applicable Class of Commitments;
 
 
(b)
immediately after the Borrowing, no Default shall have occurred and be continuing; and
 
 
(c)
the representations and warranties of each Obligor contained in the Facility Agreement [(except the representations and warranties set forth in Sections 4.04(c), 4.05 and 4.07 of the Facility Agreement)] 4   are true in all material respects.
 
4.
The proceeds of this Borrowing should be credited to [ specify account information ].
 
5.
This Notice of Borrowing is irrevocable.
 
                                                                                                                                  Very truly yours,
 
PRAXAIR EUROHOLDING, S.L.
   
By:
 
 
Name:
 
Title:


 

1 To be a date at least (x) three Business Days after the Business Day on which the Notice of Borrowing is received by the Administrative Agent and (y) in the case of each initial Borrowing denominated in an Optional Currency, five Business Days after the Business Day on which the Notice of Borrowing is received by the Administrative Agent.
2 To be selected only in respect of a Revolving Credit Loan.
3 To be an Approved Amount.
4 To be deleted from the first Notice of Borrowing.
 
77
 
EXHIBIT F
 
ASSIGNMENT AND ASSUMPTION AGREEMENT

AGREEMENT dated as of _________, ____ among [ASSIGNOR] (the “ Assignor ”), [and] [ASSIGNEE] (the “ Assignee ”), [and PRAXAIR EUROHOLDINGS, S.L. (the “ Borrower ”)]. 5  
 
W I T N E S S E T H:

WHEREAS, this Assignment and Assumption Agreement (the “ Agreement ”) relates to the Facility Agreement dated as of November 29, 2004 among Praxair Euroholding, S.L., Praxair, Inc., the Lenders party thereto, Citigroup Global Markets Inc., as Syndication Agent, and ABN AMRO Bank N.V., as Administrative Agent (as amended, the “ Facility Agreement ”);
 
WHEREAS, as provided under the Facility Agreement, the Assignor has a Commitment to make [Term][Revolving Credit] Loans to the Borrower in an aggregate principal amount at any time outstanding not to exceed €__________;
 
WHEREAS, [Term][Revolving Credit] Loans made to the Borrower by the Assignor under the Facility Agreement in the aggregate principal amount of €__________ are outstanding at the date hereof; and
 
WHEREAS, the Assignor proposes to assign to the Assignee all of the rights of the Assignor under the Facility Agreement in respect of a portion of its [Term][Revolving Credit] Commitment thereunder in an amount equal to €__________ (the “ Assigned Amount ”), together with a corresponding portion of its outstanding [Term][Revolving Credit] Loans, and the Assignee proposes to accept assignment of such rights and assume the corresponding obligations from the Assignor on such terms;
 
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows:
 
Section 1. Definitions. All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Facility Agreement.
 
Section 2. Assumption. The Assignor hereby assigns and sells to the Assignee all of the rights of the Assignor under the Facility Agreement to the extent of the Assigned Amount, and the Assignee hereby accepts such assignment from the Assignor and assumes all of the obligations of the Assignor under the Facility Agreement to the extent of the Assigned Amount, including the purchase from the Assignor of the corresponding portion of the principal amount of the [Term][Revolving Credit] Loans made by the Assignor outstanding at the date hereof. Upon the execution and delivery hereof by the Assignor, [and] the Assignee[, the Borrower and the Administrative Agent] and the payment of the amounts specified in Section 3 required to be paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed to the rights and be obligated to perform the obligations of a [Term][Revolving Credit] Lender under the Facility Agreement with a [Term][Revolving Credit] Commitment in an amount equal to the Assigned Amount, and (ii) the [Term][Revolving Credit] Commitment of the Assignor shall, as of the date hereof, be reduced by a like amount and the Assignor released from its obligations under the Facility Agreement to the extent such obligations have been assumed by the Assignee. The assignment provided for herein shall be without recourse to the Assignor.
 
Section 3. Payments. As consideration for the assignment and sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the date hereof in the currency in which the Loans referenced in Section 2 hereof are denominated an amount equal to €_________. It is understood that facility fees accrued to the date hereof are for the account of the Assignor and such fees accruing from and including the date hereof with respect to the Assigned Amount are for the account of the Assignee. Each of the Assignor and the Assignee hereby agrees that if it receives any amount under the Facility Agreement which is for the account of the other party hereto, it shall receive the same for the account of such other party to the extent of such other party’s interest therein and shall promptly pay the same to such other party.
 
[Section 4. Consent of the Borrower. This Agreement is conditioned upon the consent of the Borrower pursuant to Section 10.06(c) of the Facility Agreement. The execution of this Agreement by the Borrower is evidence of this consent.] 6  
 
Section 5. Non-reliance on Assignor. The Assignor makes no representation or warranty in connection with, and shall have no responsibility with respect to, the solvency, financial condition, or statements of any Obligor, or the validity and enforceability of the obligations of any Obligor in respect the Facility Agreement. The Assignee acknowledges that it has, independently and without reliance on the Assignor, any Co-Lead Arranger, any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and will continue to be responsible for making its own independent appraisal of the business, affairs and financial condition of each Obligor.
 
Section 6. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
 
Section 7. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
 
 
78

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written.
 
[ASSIGNOR]
   
By:
 
 
Name:
 
Title:


[ASSIGNEE]
   
By:
 
 
Name:
 
Title:


[PRAXAIR EUROHOLDINGS, S.L.] 7  
 
   
By:
 
 
Name:
 
Title:


Acknowledged this ____ day
of _______ by ABN AMRO Bank N.V.,
as Administrative Agent
   
By:
 
 
Name:
 
Title:


5 Delete this bracketed reference to the Borrower (and Section 4 and the Borrower’s signature block on the final page of this Agreement) if the Assignee is (i) any Person which controls, is controlled by, or is under common control with, or is otherwise substantially affiliated with the Assignor or (ii) another Lender.
 
6 See footnote 1 for a description of the circumstances when this Section 4 should be deleted.
 
7 See footnote 1 for a description of the circumstances when execution by the Borrower is not required and this signature block should be deleted.
 
 
79

RATIO OF EARNINGS TO FIXED CHARGES


Praxair, Inc. and Subsidiaries
EXHIBIT 12.01


(Dollar amounts in millions, except ratios)
 
 
 
 
Years Ended December 31,
 
   
2004
 
2003
 
2002
 
2001
 
2000
 
                       
Pre-tax income from continuing operations before
                     
   adjustment for minority interests in consolidated
                     
   subsidiaries or income or loss from equity
                     
   investees
 
$
948
 
$
771
 
$
717
 
$
576
 
$
483
 
      Capitalized interest
   
(7
)
 
(9
)
 
(9
)
 
(17
)
 
(24
)
      Amortization of capitalized interest
   
13
   
12
   
12
   
11
   
10
 
      Dividends from less than 50%-owned
                               
        companies carried at equity
   
11
   
19
   
9
   
5
   
3
 
Adjusted pre-tax income from continuing
                               
   operations before adjustment for minority
                               
   interests in consolidated subsidiaries or income
                               
   or loss from equity investees
 
$
965
 
$
793
 
$
729
 
$
575
 
$
472
 
                                 
Fixed charges:
                               
   Interest on long-term and short-term debt
 
$
155
 
$
151
 
$
206
 
$
224
 
$
224
 
   Capitalized interest
   
7
   
9
   
9
   
17
   
24
 
   Rental expenses representative
                               
      of an interest factor
   
29
   
31
   
32
   
37
   
34
 
   Preferred stock dividend requirements of
                               
      consolidated subsidiaries
   
1
   
-
   
1
   
2
   
4
 
Total fixed charges
   
192
    191    
248
   
280
   
286
 
   Less: preferred stock dividend requirements of
                               
      consolidated subsidiaries
   
(1
)
 
-
   
(1
)
 
(2
)
 
(4
)
Total fixed charges less preferred stock dividends
 
$
191
 
$
191
 
$
247
 
$
278
 
$
282
 
                                 
Pre-tax income from continuing operations before
                               
   adjustment for minority interests in consolidated
                               
   subsidiaries or income or loss from equity
                               
   investees plus fixed charges and preferred stock
                               
   dividend requirements of consolidated
                               
   subsidiaries
 
$
1,157
 
$
984
 
$
977
 
$
855
 
$
758
 
Less: preferred stock dividend requirements of
                               
   consolidated subsidiaries
   
(1
)
 
-
   
(1
)
 
(2
)
 
(4
)
   
$
1,156
 
$
984
 
$
976
 
$
853
 
$
754
 
                                 
RATIO OF EARNINGS TO FIXED CHARGES
                               
  AND PREFERRED STOCK DIVIDENDS
   
6.0
   
5.2
   
3.9
   
3.1
   
2.6
 
                                 
RATIO OF EARNINGS TO FIXED CHARGES
   
6.1
   
5.2
   
3.9
   
3.1
   
2.7
 
                                 

PRAXAIR'S 2004 ANNUAL REPORT TO SHAREHOLDERS

Praxair, Inc. and Subsidiaries
EXHIBIT 13.01

PRAXAIR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in millions, except per share data)

 
Year Ended December 31,
 
2004
 
2003
 
2002
 
               
Sales
 
$
6,594
 
$
5,613
 
$
5,128
 
Cost of sales, exclusive of depreciation and amortization
   
3,987
   
3,328
   
2,950
 
Selling, general and administrative
   
869
   
766
   
751
 
Depreciation and amortization
   
578
   
517
   
483
 
Research and development
   
77
   
75
   
69
 
Other income (expenses) - net
   
20
   
(5
)
 
48
 
Operating Profit
   
1,103
   
922
   
923
 
Interest expense - net
   
155
   
151
   
206
 
Income Before Taxes
   
948
   
771
   
717
 
Income taxes
   
232
   
174
   
158
 
     
716
   
597
   
559
 
Minority interests
   
(30
)
 
(24
)
 
(20
)
Income from equity investments
   
11
   
12
   
9
 
Income Before Cumulative Effect of Accounting Change
   
697
   
585
   
548
 
Cumulative effect of accounting change
   
-
   
-
   
(139
)
Net Income
 
$
697
 
$
585
 
$
409
 
                     
Per Share Data (Note 1)
                   
Basic earnings per share
                   
Income before cumulative effect of accounting change
 
$
2.14
 
$
1.79
 
$
1.68
 
Cumulative effect of accounting change
   
-
   
-
   
(0.42
)
Net income
 
$
2.14
 
$
1.79
 
$
1.26
 
Diluted earnings per share
                   
Income before cumulative effect of accounting change
 
$
2.10
 
$
1.77
 
$
1.66
 
Cumulative effect of accounting change
   
-
   
-
   
(0.42
)
Net income
 
$
2.10
 
$
1.77
 
$
1.24
 
Weighted Average Shares Outstanding (000’s) (Note 1)
                   
Basic shares outstanding
   
325,891
   
326,388
   
325,536
 
Diluted shares outstanding
   
331,403
   
330,991
   
329,489
 
 
The accompanying Notes on pages 43 to 63 are an integral part of these financial statements.

AR-25

PRAXAIR, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in millions, except per share data)
 
December 31,
 
2004
 
2003
 
           
Assets
             
Cash and cash equivalents
 
$
25
 
$
50
 
Accounts receivable
   
1,231
   
962
 
Inventories
   
328
   
302
 
Prepaid and other current assets
   
160
   
135
 
Total Current Assets
   
1,744
   
1,449
 
Property, plant and equipment - net
   
5,946
   
5,252
 
Equity investments
   
210
   
182
 
Goodwill
   
1,551
   
1,075
 
Other intangible assets
   
88
   
56
 
Other long-term assets
   
339
   
291
 
Total Assets
 
$
9,878
 
$
8,305
 
               
Liabilities and Equity
             
Accounts payable
 
$
502
 
$
413
 
Short-term debt
   
454
   
133
 
Current portion of long-term debt
   
195
   
22
 
Accrued taxes
   
129
   
104
 
Other current liabilities
   
595
   
445
 
Total Current Liabilities
   
1,875
   
1,117
 
Long-term debt
   
2,876
   
2,661
 
Other long-term liabilities
   
949
   
916
 
Deferred credits
   
345
   
328
 
Total Liabilities
   
6,045
   
5,022
 
               
Commitments and contingencies (Note 20)
             
               
Minority interests
   
225
   
195
 
Shareholders’ equity
             
Common stock $0.01 par value, authorized 2004 - 800,000,000
             
  shares and 2003 - 500,000,000 shares, issued 2004 -
             
  359,790,504 shares and 2003 - 354,951,262 shares
   
4
   
4
 
Additional paid-in capital
   
2,314
   
2,148
 
Retained earnings
   
3,529
   
3,027
 
Accumulated other comprehensive income (loss)
   
(1,180
)
 
(1,352
)
Less: Treasury stock, at cost (2004- 36,169,726 shares and
             
  2003-28,865,414 shares)
   
(1,059
)
 
(739
)
Total Shareholders' Equity
   
3,608
   
3,088
 
Total Liabilities and Equity
 
$
9,878
 
$
8,305
 



The accompanying Notes on pages 43 to 63 are an integral part of these financial statements.
 
 

AR-26

PRAXAIR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
Year Ended December 31,
 
2004
 
2003
 
2002
 
               
Increase (Decrease) in Cash and Cash Equivalents
         
               
Operations
             
Net income
 
$
697
 
$
585
 
$
409
 
Adjustments to reconcile net income to net cash
                   
provided by operating activities
                   
Accounting change
   
-
   
-
   
139
 
Depreciation and amortization
   
578
   
517
   
483
 
Deferred income taxes
   
89
   
33
   
37
 
Non-cash charges (benefits) and other
   
11
   
21
   
3
 
Working capital
                   
  Accounts receivable
   
(203
)
 
(96
)
 
6
 
  Inventories
   
(24
)
 
(22
)
 
4
 
  Prepaid and other current assets
   
6
   
(19
)
 
4
 
  Payables and accruals
   
153
   
78
   
(41
)
Long-term assets, liabilities and other
   
(64
)
 
40
   
(43
)
Net cash provided by operating activities
   
1,243
   
1,137
   
1,001
 
                     
Investing
                   
Capital expenditures (Note 5)
   
(668
)
 
(983
)
 
(498
)
Acquisitions (Note 3)
   
(929
)
 
(73
)
 
(113
)
Divestitures and asset sales
   
45
   
64
   
24
 
Net cash used for investing activities
   
(1,552
)
 
(992
)
 
(587
)
                     
Financing
                   
Short-term debt borrowings (repayments) - net
   
(113
)
 
(94
)
 
67
 
Long-term debt borrowings
   
924
   
1,432
   
1,116
 
Long-term debt repayments
   
(145
)
 
(1,295
)
 
(1,428
)
Minority interest transactions and other
   
(8
)
 
(5
)
 
27
 
Issuances of common stock
   
212
   
246
   
206
 
Purchases of common stock
   
(394
)
 
(271
)
 
(276
)
Cash dividends
   
(195
)
 
(149
)
 
(123
)
Net cash provided by (used for) financing activities
   
281
   
(136
)
 
(411
)
                     
Effect of exchange rate changes on cash and cash equivalents
   
3
   
2
   
(3
)
Change in cash and cash equivalents
   
(25
)
 
11
   
-
 
Cash and cash equivalents, beginning-of-year
   
50
   
39
   
39
 
Cash and cash equivalents, end-of-year
 
$
25
 
$
50
 
$
39
 
                     
Supplemental Data
                   
Taxes paid
 
$
154
 
$
109
 
$
65
 
Interest paid
 
$
156
 
$
168
 
$
210
 
Tax benefits from stock option exercises
 
$
28
 
$
24
 
$
23
 
Debt from consolidation of equity companies (Note 14)
 
$
-
 
$
9
 
$
-
 
 
  The accompanying Notes on pages 43 to 63 are an integral part of these financial statements.

AR-27

PRAXAIR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Dollar amounts in millions, except per share data, shares in thousands)
 
                         
Accumulated
     
         
Additional
             
Other
     
 
Common Stock
 
Paid-in
 
Treasury Stock
 
Retained
 
Comprehensive
     
Activity
Shares
 
Amounts
 
Capital
 
Shares
 
Amounts
 
Earnings
 
Income (Loss)
 
Total
 
Balance, December 31, 2001
 
170,141
 
$
2
 
$
1,795
   
7,998
   
$
(330
)
$
2,307
   
$
(1,297
)
$
2,477
 
                                             
Net income
                               
409
         
409
 
Translation adjustments
                                     
(284
)
 
(284
)
Derivative instruments, net of $2 million taxes
                                     
3
   
3
 
Minimum pension liability, net of $52 million taxes
                                     
(95
)
 
(95
)
Comprehensive income
                                           
33
 
Dividends on common stock ($0.38 per share, Note 1)
                               
(123
)
       
(123
)
Issuances of common stock
                                               
For the dividend reinvestment and stock purchase plan
 
46
                                       
-
 
For employee savings and incentive plans
 
3,763
         
170
   
(1,292
)
 
59
               
229
 
Purchases of common stock
                   
4,976
   
(276
)
             
(276
)
                                                                
Balance, December 31, 2002
 
173,950
 
$
2
 
$
1,965
   
11,682
   
$
(547
)
$
2,593
   
$
(1,673
)
$
2,340
 
                                                 
Net income
                               
585
         
585
 
Translation adjustments
                                     
313
   
313
 
Minimum pension liability, net of $5 million taxes
                                     
8
   
8
 
Comprehensive income
                                           
906
 
Dividends on common stock ($0.46 per share, Note 1)
                               
(149
)
       
(149
)
Issuances of common stock
                                               
For the dividend reinvestment and stock purchase plan
 
48
                                       
-
 
For employee savings and incentive plans
 
3,535
         
183
   
(1,681
)
 
79
               
262
 
Purchases of common stock
                   
4,614
   
(271
)
             
(271
)
Two-for-one stock split (Note 1)
 
177,418
   
2
         
14,250
         
(2
)
       
-
 
                                                           
Balance, December 31, 2003
 
354,951
 
$
4
 
$
2,148
   
28,865
   
$
(739
)
$
3,027
   
$
(1,352
)
$
3,088
 
                                                 
Net income
                               
697
         
697
 
Translation adjustments
                                     
230
   
230
 
Minimum pension liability, net of $31 million taxes
                                     
(58
)
 
(58
)
Comprehensive income
                                   
   
869
 
Dividends on common stock ($0.60 per share)
                               
(195
)
       
(195
)
Issuances of common stock
                                               
For the dividend reinvestment and stock purchase plan
 
106
         
4
                           
4
 
For employee savings and incentive plans
 
4,734
   
   
162
   
(2,758
)
 
75
               
237
 
Purchases of common stock
                   
10,063
   
(395
)
             
(395
)
                                                 
Balance, December 31, 2004
 
359,791
 
$
4
 
$
2,314
   
36,170
   
$
(1,059
)
$
3,529
   
$
(1,180
)
$
3,608
 
 
The accompanying Notes on pages 43 to 63 are an integral part of these financial statements.
 
AR-28
 
 
 

 
MANAGEMENT’S DISCUSSION AND ANALYSIS
 

OVERVIEW

Praxair is the largest industrial gases supplier in North and South America, is rapidly growing in Asia, and has strong, well-established businesses in Europe. The company’s primary products are oxygen, nitrogen, argon, carbon dioxide, helium, hydrogen, electronics gases and a wide range of specialty gases. Praxair Surface Technologies supplies high-performance coatings that protect metal parts from wear, corrosion and high heat. Praxair serves approximately 25 industries as diverse as healthcare and petroleum refining; computer-chip manufacturing and beverage carbonation; fiber-optics and steel making; and aerospace, chemicals and water treatment. In 2004, 93% of sales was generated in four regional segments (North America, Europe, South America, and Asia) primarily from the sale of industrial gases with the balance generated from the Surface Technologies segment.

Praxair manufactures and distributes its products through a network of hundreds of production plants, cylinder-filling stations and pipeline complexes in manufacturing enclaves. Major pipeline complexes are located in the United States, Brazil, Spain and Germany. This network is a competitive advantage, providing the foundation of reliability for product supply to our customer base.

Electricity, natural gas and diesel fuel are the largest cost elements in the production and distribution of industrial gases. Praxair minimizes the financial impact of variability in these costs through the management of customer contracts which typically have cost escalation and cost pass-through clauses.

Through a disciplined focus on profitable growth, Praxair delivered strong financial results in 2004. For the full year 2004, the company reported net income of $697 million, and diluted earnings per share of $2.10, a 19% increase from $585 million and $1.77 per share in 2003. Full-year sales were $6,594 million, 17% higher than 2003. Sales rose 13% excluding the impact of higher natural gas prices, which are passed through to hydrogen customers, and stronger currencies primarily in Europe, South America and Asia. Underlying sales grew 11% from higher volumes in all regional segments and higher overall pricing. Sales volumes increased strongly in the energy, metals, healthcare, manufacturing, chemicals and electronics markets.

CONSOLIDATED RESULTS

The following table provides summary data for 2004, 2003 and 2002:
 
(Millions of dollars)
             
Variance
 
Year Ended December 31,
 
2004
 
2003
 
2002
 
2004 vs. 2003
 
2003 vs. 2002
 
                       
Sales
 
$
6,594
 
$
5,613
 
$
5,128
   
17
%
 
9
%
Gross margin (a)
 
$
2,607
 
$
2,285
 
$
2,178
   
14
%
 
5
%
As a percent of sales
   
39.5
%
 
40.7
%
 
42.5
%
           
Selling, general and administrative
 
$
869
 
$
766
 
$
751
   
13
%
 
2
%
As a percent of sales
   
13.2
%
 
13.6
%
 
14.6
%
           
Depreciation and amortization
 
$
578
 
$
517
 
$
483
   
12
%
 
7
%
Other income (expenses) - net
 
$
20
  $
(5
)
$
48
             
Operating profit
 
$
1,103
 
$
922
 
$
923
   
20
%
 
0
%
Interest expense - net
 
$
155
 
$
151
 
$
206
   
3
%
 
-27
%
Effective tax rate
   
24.5
%
 
22.6
%
 
22.0
%
           
Income before cumulative
                               
effect of accounting change
 
$
697
 
$
585
 
$
548
   
19
%
 
7
%
Number of employees
   
27,020
   
25,438
   
25,010
   
6
%
 
2
%
 
(a)   Gross margin excludes depreciation and amortization expense.

AR-29
2004 Compared With 2003

Sales in 2004 increased $981 million, or 17%, versus 2003. Strong volume growth primarily in the energy, metals, healthcare, manufacturing, chemicals and electronics markets, increased sales by 9% as worldwide economic activity strengthened. Price increases were realized in all regional segments and increased overall sales by 2%. Currency movements primarily in Europe, South America and Asia favorably impacted sales growth by 3%. The increase in raw material costs tied to natural gas prices, which Praxair is contractually obligated to pass through to on-site hydrogen customers, increased sales by $40 million, or 1% with an insignificant impact on operating profit. The acquisitions of Home Care Supply, Inc. (HCS) in June 2004 and the German industrial gas businesses and assets (German Acquisition) in December 2004 increased sales by 2%.

Gross margin in 2004 improved $322 million, or 14%, versus 2003. Gross margin as a percentage of sales declined 120 basis points to 39.5% versus 2003. The reduction was due primarily to the start-up of two steam-methane reformers on the U.S. Gulf Coast, which operate at lower operating margins due to the pass-through of natural gas costs in sales.

Selling, general and administrative expenses in 2004 were $869 million, or 13.2% of sales, versus $766 million, or 13.6% of sales, for 2003. The $103 million increase was primarily due to general cost inflation, acquisitions and currency increases.

Depreciation and amortization expense in 2004 increased $61 million, or 12%, versus 2003. The increase was principally due to increased capital spending in 2003, acquisitions and currency increases in Europe and South America.

Other income (expenses) - net in 2004 increased by $25 million from a $20-million benefit in 2004 compared to a $5-million loss in 2003. The increase was due to a $13-million benefit resulting from the resolution of a matter related to the divestiture of a business in a prior year, a $7-million reduction in net -income hedge losses in 2004 versus 2003, and higher partnership income. See Note 6 to the consolidated financial statements for a summary of the major components of Other income (expenses) - net.

Operating profit in 2004 increased $181 million, or 20%, versus 2003. Strong sales volumes, continued productivity initiatives and moderate price increases across all segments were primarily responsible for 15% of operating profit growth in 2004. Currency appreciation, primarily in Europe and South America, was responsible for the remaining 5% growth.

Interest expense in 2004 increased $4 million, or 3%, versus 2003. The debt levels and interest rates remained comparable to those in 2003 through November 2004. Interest expense increased slightly in December due to an increase in debt to finance the German Acquisition.

The effective income tax rate for 2004 was 24.5%, versus 22.6% for 2003. The increase in the effective rate was due primarily to higher earnings contributions in countries with higher marginal tax rates. Income taxes include a benefit of $3 million in the second quarter of 2004 and $10 million in the second quarter of 2003 resulting from the resolution of various tax matters from prior years. For 2005, Praxair expects a full-year effective tax rate of approximately 26%, excluding the impact of the Jobs Creation Act (see Note 7 to the consolidated financial statements).

At December 31, 2004, minority interests consist of minority shareholders' investments in Europe (primarily Rivoira S.p.A. in Italy), Asia (primarily in China and India) and North America (primarily within Praxair Distribution). The increase in minority interest of $6 million in 2004 was due primarily to improved profitability of the entities located in Italy and China.

Praxair’s significant equity investments are in Italy, the United States and Spain. The company’s share of net income from corporate equity investments declined slightly to $11 million in 2004 primarily due to a $3 million asset impairment charge for an unconsolidated joint venture offset by improved profitability in other joint ventures.

Net income in 2004 increased $112 million, or 19%, versus 2003. The increase was due to improved operating profit which was partially offset by the higher effective tax rate.

The number of employees at December 31, 2004 was 27,020, reflecting an increase of 1,582 employees from December 31, 2003 due primarily to the June acquisition of HCS (+1,263) and the German Acquisition (+266) in December.

AR-30

2003 Compared With 2002

Sales in 2003 increased $485 million, or 9%, versus 2002. Realized price increases, principally in South America, North America and Europe, increased sales 3%. Overall, currency increased sales by 2%, largely due to the progressive strengthening of the euro versus the U.S. dollar throughout 2003. Sales increased 1% due to volume as all geographic segments reported year-over-year improvement. Strong volume growth in Asia and South America within the electronics, energy, metals and manufacturing markets offset sluggish but improving conditions in North America markets. Increased natural gas costs, which Praxair is contractually obligated to pass through to on-site hydrogen customers, increased sales by 2%, with an insignificant impact on operating profit. Acquisitions in healthcare, packaged gas and on-site markets worldwide increased sales by 1%.

Gross margin in 2003 improved $107 million, or 5%, versus 2002. Gross margin as a percent of sales declined 180 basis points to 40.7%, versus 2002. A 70 basis-point reduction in gross margin percentage was a result of increased natural gas cost pass-throughs, which had an insignificant impact on reported gross margin. Energy costs grew faster than the company’s ability to increase prices, primarily in the North American merchant market, further dampening gross margin as a percent of sales.

Selling, general and administrative expenses in 2003 were $766 million, or 13.6% of sales, versus $751 million or 14.6% of sales for 2002. The increase was principally the result of currency appreciation in Europe and acquisitions. Excluding those factors, underlying operational expenses were essentially flat as a result of continued focus on productivity initiatives.

Depreciation and amortization in 2003 increased $34 million, or 7%, versus 2002. The increase was due to an increase in capital expenditures of $22 million, $9 million in currency appreciation and $3 million in business acquisition activity.

Other income (expenses) - net in 2003 was a loss of $5 million in 2003 versus a $48 million gain in 2002. 2003 included $9 million of losses on net-income hedges (primarily in Europe and Brazil). 2002 included $17 million of net-income hedge gains (primarily in Brazil) and a $7-million gain from a favorable litigation settlement. See Note 6 to the consolidated financial statements for a summary of the major components of Other income (expenses) - net.

Operating profit in 2003 was $922 million, flat compared to 2002. Excluding the impacts of net-income hedges in both periods and the litigation settlement in 2002, underlying operating profit improved 4% primarily due to continued progress on productivity initiatives and currency appreciation of the euro which outpaced inflationary pressures on cost structures.

Interest expense in 2003 declined $55 million, or 27%, versus 2002. The reduction in interest expense is primarily due to the 2002 and 2003 refinancings of debt at lower interest rates.

The effective tax rate for 2003 was 22.6%, versus 22.0% for 2002, due to the lower earnings contribution from Brazil, which has a lower effective tax rate, and lower interest expense in the U.S., which is deductible at a 35% marginal rate. A benefit of $10 million was recorded in the second quarter of 2003 resulting from the resolution of various tax matters for previous years.

The increase in minority interest of $4 million in 2003 was due primarily to the consolidation of joint ventures in Asia and Europe (as a result of increased ownership in these joint ventures).

Praxair's share of net income from corporate equity investments increased $3 million in 2003 primarily due to improved profitability of its joint venture in Italy.

Income before accounting changes increased $37 million, or 7%, compared to 2002 primarily due to the reduction of interest expense.

The number of employees at December 31, 2003 was 25,438, reflecting an increase of 428 employees from December 31, 2002. This increase related primarily to new service initiatives in Brazil (+833), partially offset by restructuring actions primarily in Surface Technologies (-144) and the divestiture of operations in Poland (-170).

AR-31
Accounting Change

In the second quarter of 2002, Praxair completed the initial goodwill impairment tests required for the adoption of Statement of Financial Accounting Standards (SFAS) No. 142. These tests indicated an impairment of goodwill related to previous acquisitions. As a result, a $139-million non-cash transition charge to earnings was recorded as a cumulative effect of an accounting change, retroactive to January 1, 2002. For more information, see Note 2 to the consolidated financial statements.

Related Party Transactions

The company's related parties are primarily unconsolidated equity affiliates. The company did not engage in any material transactions involving related parties that included terms or other aspects that differ from those which would be negotiated with independent parties.

Costs Relating to the Protection of the Environment

Praxair's principal operations relate to the production and distribution of atmospheric and other industrial gases, which historically have not had a significant impact on the environment. However, worldwide costs relating to environmental protection may continue to grow due to increasingly stringent laws and regulations, and Praxair's ongoing commitment to rigorous internal standards. Environmental protection costs in 2004 included approximately $6 million in capital expenditures and $15 million of expenses, including $1 million for remediation projects. Environmental protection expenditures were approximately $4 million less in 2004 versus 2003. Praxair anticipates that future environmental protection expenditures will be similar to 2004, subject to any significant changes in existing laws and regulations. Based on historical results and current estimates, management does not believe that environmental expenditures will have a material adverse effect on the consolidated financial position or on the consolidated results of operations or cash flows in any given year.

Legal Proceedings

See Note 20 to the consolidated financial statements for information concerning legal proceedings.

 
SEGMENT DISCUSSION
 
The following summary of sales and operating profit by segment provides a basis for the discussion that follows:
 
(Millions of dollars)
             
Variance
 
Year Ended December 31,
 
2004
 
2003
 
2002
 
2004 vs. 2003
 
2003 vs. 2002
 
                       
Sales
                     
North America
 
$
4,191
 
$
3,627
 
$
3,351
   
16
%
 
8
%
Europe
   
847
   
699
   
589
   
21
%
 
19
%
South America
   
866
   
708
   
632
   
22
%
 
12
%
Asia
   
487
   
389
   
324
   
25
%
 
20
%
Surface Technologies
   
447
   
400
   
394
   
12
%
 
2
%
Eliminations
   
(244
)
 
(210
)
 
(162
)
           
   
$
6,594
 
$
5,613
 
$
5,128
   
17
%
 
9
%
                                 
Operating Profit
                               
North America
 
$
623
 
$
548
 
$
557
   
14
%
 
-2
%
Europe
   
214
   
170
   
139
   
26
%
 
22
%
South America
   
152
   
114
   
134
   
33
%
 
-15
%
Asia
   
80
   
64
   
51
   
25
%
 
25
%
Surface Technologies
   
34
   
26
   
35
   
31
%
 
-26
%
All Other
   
-
   
-
   
7
             
   
$
1,103
 
$
922
 
$
923
   
20
%
 
0
%
 

 
AR-32
North America

The North America operating segment includes Praxair's industrial and packaged gases operations in the U.S., Canada and Mexico. Praxair's U.S. and Canadian packaged gases operations within the North American industrial gases business are collectively referred to as Praxair Distribution. North America also includes several product lines servicing the electronics and healthcare markets.

On June 14, 2004, Praxair acquired 100% of the outstanding common shares of HCS for a purchase price of $245 million. HCS was the largest privately-held home-respiratory and medical equipment provider in the United States with 59 locations in 13 states. See Note 3 to the consolidated financial statements for additional information related to the acquisition.

Sales for 2004 increased $564 million, or 16%, versus 2003. Higher demand in the energy, manufacturing, metals and chemicals marketplaces led to strong volume growth of 9%. Acquisitions contributed 3% to sales growth, driven primarily by the HCS acquisition. Overall price increases of 3% were primarily driven by price attainment in our Canadian and U.S. packaged-gas business, on-site customers and in Mexico. The increase in raw material costs tied to natural gas prices, which Praxair is contractually obligated to pass through to on-site hydrogen customers, increased sales by $40 million, or 1%, with minimal impact on operating profit.

Operating profit in 2004 increased $75 million, or 14%, versus 2003. Stronger sales to the manufacturing, metals, chemicals and electronics markets was the primary driver to operating- profit growth. Total productivity and pricing actions largely offset underlying inflationary pressures. Acquisitions and currency favorably impacted operating profit by 2%. Operating profit as a percentage of sales decreased 20 basis points to 14.9%. This decline is solely due to the HCS acquisition and the start-up of two steam-methane reformers in the third quarter, both of which operate at lower operating margins. Excluding the effect of the acquisition and the new hydrogen business, operating profit as a percentage of sales was higher than 2003 levels by 30 basis points.

Sales for 2003 increased $276 million, or 8%, versus 2002. The effect of escalating natural gas costs for hydrogen customers increased sales 3% with an insignificant impact on operating profit. Overall price increases of 3% were primarily realized in Praxair’s U.S. and Canadian on-site, merchant and packaged-gas business units and in Mexico. Acquisitions by healthcare and packaged-gas business units increased sales by 1%. Sales volumes continued to improve in the chemical, energy, manufacturing and metals end markets as manufacturing activity improved resulting in an increase in sales of 1%.

Operating profit for 2003 decreased $9 million, or 2%, versus 2002. Excluding electricity costs, realized price increases and continued focus on productivity and purchasing initiatives offset underlying inflationary pressures on Praxair’s cost structures. Electricity costs, on average, increased by 15% in the United States, which outpaced realized price increases primarily in our merchant markets. In addition, tough market conditions prevailed in the first half of 2003 in electronics markets, marginally decreasing operating profit versus 2002.

Including the HCS acquisition, Praxair now estimates that the Medicare Prescription Drug Improvement and Modernization Act of 2003 may reduce annual sales of certain healthcare products by approximately $15 million to $20 million but expects to offset the revenue reduction through cost management and organic sales volume growth.

Europe

Praxair's European industrial gases business is primarily in Italy, Spain, Germany, Benelux, and France. On December 2, 2004, Praxair acquired industrial gas assets and related businesses in Germany from Air Liquide S.A. for a purchase price of $667 million. The acquired assets and businesses consist of industrial gas plants and pipeline assets in the Rhine/Ruhr and Saar areas, bulk distribution and packaged-gas businesses. The businesses serve large customers in the refining, chemical and steel industries along the pipeline systems, plus about 40,000 smaller customers in bulk, medical, specialty and packaged gases. See Note 3 to the consolidated financial statements for additional information related to the acquisition.

AR-33
Sales for 2004 increased $148 million, or 21%, versus 2003. The favorable impact of the stronger euro increased sales by 10%. Acquisitions accounted for approximately 6% of the sales growth, driven by the German Acquisition and the full-year impact of the 2003 consolidation of Indugas, a former joint venture. Excluding the acquisitions and the impact of currency, sales increased 4% due to improved volumes. Liquid and packaged-gas volumes in Spain, Italy, and Western Europe remained at healthy levels as the metals, healthcare and electronics markets continue to grow at robust levels.

Operating profit for 2004 increased $44 million, or 26%, versus 2003. The improvement in operating profit was principally due to the continued favorable impact of a stronger euro and increased sales, each of which generated half of the increase. Cost reductions related to productivity programs primarily offset inflation on existing cost structures.

Sales for 2003 increased $110 million, or 19%, versus 2002. The favorable impact of the stronger euro increased sales by 19%. Sales volumes and realized price increases each favorably impacted sales by 2%, offsetting the net decrease in sales resulting from the Poland divestiture and the Indugas consolidation. Market-share penetration in the manufacturing, healthcare and metals markets principally drove the sales volume gains.

Operating profit for 2003 increased $31 million, or 22%, versus 2002. The favorable impact of the euro generated 17% of this increase. Underlying operating profit grew 9% as cost reduction programs, the Indugas consolidation, and operating leverage on the sales volume growth significantly outpaced the net impact of pricing and inflation on cost structures. The divestiture of the Poland operations adversely impacted operating profit by 4%.

 
South America

Praxair's South American industrial gases operations are conducted by its subsidiary, White Martins Gases Industriais Ltda. (White Martins), which is the largest industrial gases company in Brazil. White Martins also has operations in Argentina, Bolivia, Chile, Colombia, Paraguay, Peru, Uruguay and Venezuela.

Sales for 2004 increased $158 million, or 22%, versus 2003. The sales improvement was driven by sales volume increases of 9% and realized price increases of 9% to on-site, liquid and packaged-gases customers. Currency improvements increased sales by 4%. Continued strong volume increases in the metals, manufacturing and healthcare markets principally drove the sales volume growth.

Operating profit increased $38 million, or 33%, versus 2003. The increase in operating profit was principally due to the increase in sales and the favorable impact of currency fluctuations, which grew operating profit by 21% and 12%, respectively. Continued cost savings initiatives and pricing offset inflationary impacts on cost structures.

Sales for 2003 increased $76 million, or 12%, versus 2002. The effects of currency adversely impacted reported sales by 7% due principally to devaluation of the Brazilian real which stabilized in the second half of 2003 at approximately 2.9 per U.S. dollar. Strong pricing initiatives resulted in an increase in sales of 9%. Sales volumes were strong, increasing sales by 9% due to strong sales to metal manufacturers supplying export markets, healthcare and chemical customers.

Operating profit for 2003 decreased $20 million, or 15%, versus 2002. 2003 operating profit included $2 million of net income hedge losses and a $5-million expense related to the settlement of legal matters. 2002 operating profit included $20 million of net income hedge gains. Excluding these impacts, underlying operating profit increased 6%. Continued focus on productivity initiatives and pricing actions mostly offset the unfavorable impact of inflation. Severance costs decreased operating profit by 4% as South American management continued to implement productivity improvements. Increased sales volumes improved operating profit by 14% demonstrating favorable operating leverage.


Asia

The Asia segment includes Praxair's industrial gases operations primarily in China, India, Korea and Thailand, with smaller operations in Japan, Malaysia and Taiwan.

Sales for 2004 increased $98 million, or 25%, versus 2003. Strong volume growth, primarily in the electronics, metals and chemicals markets, increased sales by 18%. Realized price increases were 3% for the year and favorable currency movement improved sales by 2%. The 2003 consolidation of a former joint venture in China increased sales by 2%. Management continues to focus investment in China due to continuing growth opportunities. New projects coming on-stream in 2005 and 2006 will primarily serve the semiconductor, steel, chemical and refining industries.

AR-34
Operating profit for 2004 increased $16 million, or 25%, versus 2003. The improvement in operating profit is primarily a result of the strong sales volumes, which increased operating profit by 25%. The 2003 consolidation of the former joint venture added 4% growth for the year. Cost reduction initiatives largely offset the negative impact inflation had on the underlying cost structure.

Sales for 2003 increased $65 million, or 20%, versus 2002. Strong volume growth in Chinese metals and electronics markets, Korean electronics markets, Indian metals markets, and Thai food markets increased sales by 14%. Praxair increased its ownership and began consolidating joint-venture companies in China, increasing sales by $10 million, or 3%. The effects of favorable currency rates, primarily in India, Thailand and Korea, favorably impacted sales by 3%.

Operating profit for 2003 increased $13 million, or 25%, versus 2002. The consolidation of the joint venture increased operating profit by 6%. Operating profit grew 29% from increased sales volumes as favorable operating leverage was realized on plant infrastructure investments. Productivity initiatives partially mitigated the impacts of cost inflation.

 
Surface Technologies

Praxair's worldwide Surface Technologies business operates primarily in the U.S. and Europe, with smaller operations in Asia and Brazil.

Sales for 2004 increased $47 million, or 12%, versus 2003. The favorable impact of currency increased sales by $22 million, or 6%, compared to the prior year. Volume increased 6% primarily as a result of higher volumes of high-end coating sales for OEM aircraft engine parts and other industrial coatings. The aviation-repair business continues to be soft, reflecting the weak financial condition of the commercial airline industry.
 
Operating profit for 2004 increased $8 million, or 31%, versus 2003. The increase in operating profit was driven by benefits from increased sales volumes primarily of industrial coatings and the benefits of prior-year cost-reduction initiatives.

Sales for 2003 increased $6 million, or 2%, versus 2002 as favorable currency impacts outpaced declining sales volumes. The lower volumes reflect market weakness in the global coatings and aviation services business units.

Operating profit for 2003 decreased $9 million, or 26%, versus 2002 as weakening volumes outpaced cost reduction initiatives. In 2003, $2 million of severance expense was incurred to reduce cost structures in reaction to difficult market conditions in global coatings and aviation services.


All Other

Operating income in 2002 of $7 million represents a net gain related to the settlement of litigation with Airgas, Inc.


Currency

Praxair’s results of foreign operations are generally translated to the company’s reporting currency, the U.S. dollar, from the functional currencies used in the countries in which the company operates. In general, Praxair uses the local currency as its operation’s functional currency with the exception of hyperinflationary countries where the U.S. dollar is used as the functional currency. There is inherent variability and unpredictability in relationship of these functional currencies to the U.S. dollar and such currency movements may materially impact Praxair’s results of operations in any given period.

To help understand the reported results, the following is a summary of the significant currencies underlying Praxair’s consolidated results and the exchange rates used to translate the financial statements (rates of exchange expressed in units of local currency per U.S. dollar):

 
 
Percent of
                     
 
2004
 
Income Statement
 
Balance Sheet
 
 
Consolidated
 
Average Year-to-Date December 31,
 
December 31,
 
Currency
Sales (a)
 
2004
 
2003
 
2002
 
2004
 
2003
 
European euro
 
15
%
 
0.81
   
0.89
   
1.07
   
0.73
   
0.81
 
Brazilian real
 
11
%
 
2.92
   
3.06
   
2.92
   
2.65
   
2.89
 
Canadian dollar
 
9
%
 
1.31
   
1.41
   
1.57
   
1.21
   
1.33
 
Mexican peso
 
4
%
 
11.30
   
10.74
   
9.58
   
11.13
   
11.30
 
Venezuelan bolivar
 
<1
%
 
1,883
   
1,609
   
1,162
   
1,920
   
1,600
 
Argentinean peso
 
<1
%
 
2.94
   
2.95
   
3.16
   
2.98
   
2.93
 

a)  
Certain Surface Technologies segment sales are included in European and Brazilian sales.
 
 
AR-35
 

LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL DATA

 
(Millions of dollars)
             
Year Ended December 31,
 
2004
 
2003
 
2002
 
Net Cash Provided by (Used for)
             
               
Operating Activities
             
Net income plus depreciation and
                   
amortization and accounting change
 
$
1,275
 
$
1,102
 
$
1,031
 
Working capital
   
(68
)
 
(58
)
 
(27
)
Other-net
   
36
   
93
   
(3
)
Total provided by operating activities
 
$
1,243
 
$
1,137
 
$
1,001
 
                     
Investing Activities
                   
Capital expenditures
  $
(668
)
$
(983
)
$
(498
)
Acquisitions
   
(929
)
 
(73
)
 
(113
)
Divestitures and asset sales
   
45
   
64
   
24
 
Total used for investing
  $
(1,552
)
$
(992
)
$
(587
)
                     
Financing Activities
                   
Debt increases (reductions)
 
$
666
 
$
43
   
$
(245
)
Minority transactions and other
   
(8
)
 
(5
)
 
27
 
Issuances (purchases) of stock
   
(182
)
 
(25
)
 
(70
)
Cash dividends
   
(195
)
 
(149
)
 
(123
)
Total provided by (used for) financing
 
$
281
  $
(136
)
$
(411
)
                     
Other Financial Data (a)
                   
                     
Debt-to-capital ratio
   
47.9
%
 
46.2
%
 
52.3
%
After-tax return on capital
   
12.5
%
 
12.8
%
 
13.4
%

 
(a)
Non-GAAP measure. See the Appendix on page 68 for definitions and reconciliation to reported amounts.


Cash Flow from Operations  

 

Cash flow from operations increased $106 million to $1,243 million in 2004 from $1,137 million in 2003. The growth is a result of the strong cash flow generated from the improved profits on higher sales, partially offset by increased cash used for worldwide pension contributions of approximately $119 million, an increase of $85 million over 2003 contribution levels.

Cash flow from operations increased $136 million to $1,137 million in 2003 from $1,001 million in 2002. The improvement is due to increased earnings, an increase in Non-cash (benefits) charges and other and from a reduction in cash payments related to the 2000 and 2001 restructuring and repositioning charges.

Investing  

Net cash used for investing of $1,552 million in 2004 increased $560 million, or 56%, versus 2003 due primarily to the two significant 2004 acquisitions, partially offset by a reduction in capital expenditures. Capital expenditures in 2004 totaled $668 million, a decrease of $315 million from 2003, which included the purchase of leased assets for $339 million.

Net cash used for investing in 2003 totaled $992 million, an increase of $405 million from 2002. The increase is primarily related to the purchase of leased assets for $339 in June 2003 in response to favorable financing conditions (see Note 5 to the consolidated financial statements) and increased capital expenditures for two new steam-methane reformers to supply North American hydrogen customers.

Acquisition expenditures in 2004 were $929 million, an increase of $856 million from 2003. The 2004 expenditures relate primarily to two acquisitions. In December 2004, Praxair acquired German industrial gas assets and related businesses from Air Liquide, S.A. (with annual sales in 2003 of approximately $199 million) for $667 million. In June 2004, Praxair acquired 100% of the outstanding common shares of HCS for a purchase price of $245 million. HCS was the largest privately held home respiratory and medical equipment provider in the United States with annual sales in 2003 of approximately $169 million. Acquisition expenditures for 2003 totaled $73 million, a decrease of $40 million from 2002. The decrease in 2003 was due to the smaller number of and amounts paid for acquisitions related to the North American healthcare and electronics businesses.

AR-36
 
Proceeds from divestitures and asset sales in 2004 were $45 million, a decrease of $19 million from 2003. Divestitures and asset sales in 2004 include the third-quarter sale of assets in Europe for approximately $20 million related to a customer contract termination. Divestitures and asset sales in 2003 totaled $64 million, an increase of $40 million from 2002. The increase was due primarily to the 2003 sale of Praxair’s Polish business for approximately $50 million.

On a worldwide basis, capital expenditures for 2005 are expected to be in the range of $700 million to $750 million, with the largest concentration of investment in the energy sector in North America, which includes hydrogen, enhanced oil and gas recovery and the company’s liquefied natural gas business in Brazil. At December 31, 2004, $381 million of capital expenditures had been approved and committed. Acquisition expenditures will depend on the availability of opportunities at attractive prices.


Financing  


Praxair's financing strategy is to secure long-term committed funding at attractive interest rates by issuing U.S. public notes and debentures and commercial paper backed by a standby long-term bank credit agreement. Its international operations are funded through a combination of local borrowing and inter-company funding to minimize the total cost of funds and to manage and centralize currency exchange exposures. Praxair manages its exposure to interest-rate changes through the use of financial derivatives (see Note 15 to the consolidated financial statements and the section entitled "Market Risks and Sensitivity Analyses").

At December 31, 2004, Praxair's total debt outstanding was $3,525 million, $709 million higher than $2,816 million at December 31, 2003. The December 31, 2004 debt balance comprises $2,331 million in public notes, $285 million in commercial paper, and $909 million representing primarily bank borrowings from around the world. At December 31, 2004, Praxair was in compliance with its borrowing covenants and Praxair’s global effective borrowing rate was approximately 5%.

Cash provided by financing activities increased $417 million to $281 million in 2004 compared to cash used for financing activities of $136 million in 2003. The increase in cash provided by financing activities can be attributed to an increase in net proceeds from debt issuances of $623 million, most of which was borrowed for the German Acquisition (see Europe discussion). The aforementioned increase was partially offset by an increase in cash used to repurchase common stock of $157 million, net of issuances and an increase in cash dividends year-over-year of $46 million. Cash dividends in 2004 were $0.60 per share compared to $0.46 per share in 2003, an increase of 30%.

On November 29, 2004, the company entered into a €450 million, five-year borrowing facility with a syndicate of international banks. As of December 31, 2004, the amount outstanding against this facility was €450 million, or $613 million. The proceeds were used to finance the German Acquisition referenced in Note 3 to the consolidated financial statements. Such borrowings are classified as long-term because of the company’s intent to refinance this debt on a long-term basis and the availability of such financing under the terms of this agreement. During December 2004, Praxair terminated and replaced its $1-billion credit agreement with a five-year $1-billion senior unsecured credit facility with a syndicate of banks that expires in 2009. No borrowings were outstanding under either credit agreement at December 31, 2004 or 2003 . Associated fees were not significant in each of the past three years.

During 2003, Praxair repaid $300 million of 6.75% notes and $75 million of 6.625% notes that were due on March 1, 2003 and March 15, 2003, respectively. On April 15, 2003, Praxair repaid $250 million of 6.15% notes that were due. The repayments were funded through the issuance of commercial paper. On May 27, 2003 and June 2, 2003, respectively, Praxair issued $350 million of 3.95% notes due 2013 and $300 million of 2.75% notes due 2008, respectively. The proceeds of these debt issuances were used to refinance commercial paper and purchase $339 million of previously leased assets.

AR-37
 
Other Financial Data

The following discussion includes non-GAAP measures that may not be comparable to similar definitions used by other companies. Praxair believes that its debt-to-capital ratio is appropriate for measuring its financial leverage. The company believes that its after-tax return-on-invested-capital ratio is an appropriate measure for judging performance as it reflects the approximate after-tax profit earned as a percentage of investments by all parties in the business (debt, minority interest, preferred stock, and shareholders’ equity). See the Appendix on page 68 for definitions and reconciliation of these two non-GAAP measures to reported amounts.

Praxair’s debt-to-capital ratio increased 170 basis points to 47.9% at December 31, 2004 over 2003. The fluctuation is attributed to an increase in total debt due to increased 2004 borrowings used to finance the German Acquisition and is partially offset by increases in shareholders’ equity due to 2004 net income and the favorable impact of currency translation on equity.

After-tax return on capital decreased 30 basis points to 12.5% at December 31, 2004 compared to 2003 due to increased average capital balances resulting from the aforementioned increase in borrowings due to acquisitions which reduced the after-tax return on capital by 0.6% in 2004, partially offset by increased operating profits versus 2003.

Off-Balance Sheet Arrangements and Contractual Obligations

The following table sets forth Praxair's material contractual obligations and other commercial commitments as of December 31, 2004:
 
(Millions of dollars)
 
Contractual Obligations
 
Other Commercial Commitments
 
   
Debt and
 
Obligations
                     
Due or
 
Capitalized
 
Under
 
Unconditional
                 
Expiring by
 
Lease
 
Operating
 
Purchase
     
Construction
 
Guarantees
     
December 31,
 
Maturities
 
Leases
 
Obligations
 
Total
 
Commitments
 
and Other
 
Total
 
                               
2005
 
$
649
 
$
67
 
$
117
 
$
833
 
$
231
 
$
43
 
$
274
 
2006
   
287
   
55
   
70
   
412
   
136
   
1
   
137
 
2007
   
525
   
41
   
41
   
607
   
14
   
2
   
16
 
2008
   
557
   
28
   
33
   
618
   
-
   
-
   
-
 
2009
   
618
   
19
   
32
   
669
   
-
   
-
   
-
 
Thereafter
   
889
   
78
   
117
   
1,084
   
-
   
14
   
14
 
   
$
3,525
 
$
288
 
$
410
 
$
4,223
 
$
381
 
$
60
 
$
441
 
                                             


Debt and capitalized lease maturities of $3,525 million exclude interest thereon, are more fully described in Note 14 to the consolidated financial statements and are included on the company’s balance sheet as long- and short-term liabilities. German Acquisition debt of $613 million is included in 2009 maturities.

Obligations under operating leases of $288 million represent non-cancelable contractual obligations primarily for manufacturing and distribution equipment and office space. See Note 5 to the consolidated financial statements for further details.

Unconditional purchase obligations of $410 million represent contractual commitments under various long- and short-term take-or-pay arrangements with suppliers. These obligations are primarily minimum purchase commitments for electricity, natural gas and feedstock used to produce atmospheric gases, carbon dioxide and hydrogen. During 2004, payments under these contracts totaled $479 million, including $227 million for electricity and $192 million for natural gas. A significant portion of these obligations are passed on to customers through similar take-or-pay contractual arrangements. Purchase obligations that are not passed along to customers do not represent a significant risk to Praxair. In addition, Praxair enters into contracts to purchase products and services that do not have minimum purchase provisions.

Construction commitments of $381 million represent outstanding commitments to customers or suppliers to complete authorized construction projects as of December 31, 2004. A significant portion of Praxair’s capital spending is related to the construction of new production facilities to satisfy customer commitments which may take a year or more to complete.

Guarantees and other of $60 million include $6 million related to required minimum pension contributions and $54 million related to Praxair’s contingent obligations under guarantees of certain debt of unconsolidated affiliates. Unconsolidated equity investees had total debt of approximately $193 million at December 31, 2004, which was non-recourse to Praxair with the exception of the guaranteed portions described above. Praxair has no financing arrangements with closely-held related parties.

AR-38
See Note 20 to the consolidated financial statements for more information concerning commitments and contingencies. In addition, see Note 9 to the consolidated financial statements for a summary of long-term liabilities which consist primarily of pension and other post-retirement benefit costs (OPEB).


Pension Benefits

The non-cash minimum pension liability recorded at December 31, 2004 was increased by $89 million to $241 million at December 31, 2004 ($157 million after-tax) from $152 million at December 31, 2003 ($99 million after-tax). The increase in the pension liability did not affect net income as the offsetting, after-tax charge was made to Accumulated other comprehensive income within Shareholders’ equity.

Pension contributions were $119 million in 2004 ($34 million in 2003). Estimates of 2005 contributions are in the range of $80 million to $85 million, of which $6 million is required. As of February 21, 2005, $59 million of contributions were made to Praxair’s U.S. Pension Plans.

Praxair assumes an expected return on plan assets for 2005 in the U.S. of 8.5%. In 2005, consolidated pension expense is expected to be approximately $45 million versus $37 million in 2004 and $26 million in 2003.


Insurance

Praxair purchases insurance to limit a variety of risks, including those related to workers’ compensation, liability (general, products, professional and vehicles) and all-risk property. Currently, the company self-retains the first $5 million per occurrence for workers’ compensation and general liability and between $1 million and $5 million per occurrence for its properties. To mitigate its aggregate loss potential above this retention, the company purchases insurance coverage from highly rated insurance companies at what it believes are reasonable coverage levels. The aggregate retained liability of $43 million and $37 million as of December 31, 2004 and 2003, respectively, is estimated using statistical analyses and is based upon historical experience, actuarial assumptions and professional judgment. These estimates are subject to the effects of trends in loss severity and frequency and are subject to a significant degree of inherent variability.
 

CRITICAL ACCOUNTING POLICIES

The policies discussed below are considered by management to be critical to understanding Praxair's financial statements and accompanying Notes prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). Their application places significant importance on management's judgment as a result of the need to make estimates of matters that are inherently uncertain. Praxair's financial position, results of operations and cash flows could be materially affected if actual results differ from estimates made. These policies are determined by management and have been reviewed by Praxair's Audit Committee.

Depreciable Lives of Property, Plant and Equipment

Praxair's net property, plant and equipment at December 31, 2004 was $5,946 million, representing 60% of the company's consolidated total assets. Depreciation expense for the year ended December 31, 2004 was $565 million, or 10% of total operating costs. Management judgment is required in the determination of the estimated depreciable lives that are used to calculate the annual depreciation expense and accumulated depreciation.

Property, plant and equipment are recorded at cost and depreciated over the assets' estimated useful lives on a straight-line basis for financial-reporting purposes. The estimated useful life represents the projected period of time that the asset will be productively employed by the company and is determined by management based on many factors, including historical experience with similar assets, technological life cycles, geographic locations and contractual supply relationships with on-site customers. Circumstances and events relating to these assets, such as on-site contract modifications, are monitored to ensure that changes in asset lives or impairments (see "Asset Impairments" below) are identified and prospective depreciation expense or impairment expense is adjusted accordingly. Praxair's largest asset values relate to cryogenic air-separation production plants with average depreciable lives of 15 years.

Based upon the assets as of December 31, 2004, if depreciable lives of machinery and equipment, on average, were increased or decreased by one year, annual depreciation expense would be decreased by approximately $25 million or increased by approximately $28 million, respectively.

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Pension Benefits

Pension benefits represent financial obligations that will be ultimately settled in the future with employees who meet eligibility requirements. Because of the uncertainties involved in estimating the timing and amount of future payments, significant estimates are required to calculate pension expense and liabilities related to the company's plans. The company utilizes the services of several independent actuaries, whose models are used to facilitate these calculations.

Several key assumptions are used in actuarial models to calculate pension expense and liability amounts recorded in the financial statements. Management believes the three most significant variables in the models are the expected long-term rate of return on plan assets, the discount rate, and the expected rate of compensation increase. The actuarial models also use assumptions for various other factors including employee turnover, retirement age, and mortality. Praxair management believes the assumptions used in the actuarial calculations are reasonable and are within accepted practices in each of the respective geographic locations in which we operate.

The weighted-average expected long-term rates of return on pension plan assets were 8.5% for U.S. plans and 7.75% for international plans at December 31, 2004. These rates are determined annually by management based on a weighted average of current and historical market trends, historical portfolio performance and the portfolio mix of investments. A 0.50% change in these expected long-term rates of return, with all other variables held constant, would change Praxair's pension expense by approximately $5 million.

The weighted-average discount rates for pension plan liabilities were 5.85% for U.S. plans and 5.50% for international plans at December 31, 2004. These rates are used to calculate the present value of plan liabilities and are determined annually by management based on market yields for high-quality fixed income investments representing the approximate duration of the pension liabilities on the measurement date. A 0.50% change in these discount rates, with all other variables held constant, would change Praxair's pension expense by approximately $10 million and would impact the projected benefit obligation (PBO) by approximately $98 million.

The weighted-average expected rate of compensation increase for Praxair's U.S. and international plans was 3.0% at December 31, 2004. The estimated annual compensation increase is determined by management every year and is based on historical trends and market indices. A 0.50% change in the expected rate of compensation increase, with all other variables held constant, would change Praxair's pension expense by approximately $5 million and would impact the PBO by approximately $21 million. A change in this assumption is usually consistent with a change in the discount rate assumption, and the earnings impacts generally offset one another.


Asset Impairment

Goodwill

At December 31, 2004, the company had goodwill of $1,551 million, which represents the aggregate of excess purchase price for acquired businesses over the fair value of the net assets acquired. The company performs a goodwill impairment test annually or more frequently if events or circumstances indicate that an impairment loss may have been incurred. The impairment test requires that the company estimate and compare the fair value of its reporting units to their carrying value. As of December 31, 2004, goodwill was assigned to eight reporting units in amounts ranging from $1 million to $939 million. Fair value is determined through the use of projected future cash flows, multiples of earnings and sales and other factors.

Such analysis requires the use of certain future market assumptions and discount factors, which are subjective in nature. Estimated values can be affected by many factors beyond the company's control such as business and economic trends, government regulation, and technological changes. Management believes that the assumptions used to determine fair value are appropriate and reasonable. However, changes in circumstances or conditions affecting these assumptions could have a significant impact on the fair value determination, which could then result in a material impairment charge to the company’s results of operations.

See Notes 2 and 12 to the consolidated financial statements for information concerning the initial adoption of SFAS No. 142, “Goodwill and Other Intangible Assets” and disclosures concerning the carrying value of goodwill.

Property, Plant and Equipment

Property, plant and equipment is tested for impairment whenever events or changes in circumstances indicate that the carrying amount of an individual asset or asset group may not be recoverable. To test recoverability, the company compares management’s
 
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best estimate of the future cash flows expected to be generated from the asset or asset group to compare against the carrying amount of the asset or asset group. Should these undiscounted future cash flows be less than the carrying amount of the asset or asset group, an impairment charge reducing the carrying amount to fair value is required. Fair value is determined based on the most appropriate valuation technique, including discounted cash flows. This analysis requires management to make various subjective estimates and assumptions, including the amount of projected future cash flows related to the potentially impaired asset or asset group, the useful life over which cash flows will occur and the asset’s residual value, if any.

Income Taxes

At December 31, 2004, Praxair had deferred tax assets of $647 million (net of valuation allowances of $112 million), and deferred tax liabilities of $879 million. Income tax expense was $232 million for the year ended December 31, 2004.

In the preparation of consolidated financial statements, Praxair estimates income taxes based on diverse legislative and regulatory structures that exist in various jurisdictions where the company conducts business. Deferred income tax assets and liabilities represent tax benefits or obligations that arise from temporary differences due to differing treatment of certain items for accounting and income tax purposes. Praxair evaluates deferred tax assets each period to ensure that estimated future taxable income will be sufficient in character (e.g. capital gain versus ordinary income treatment), amount and timing to result in their recovery. A valuation allowance is established when management determines that it is more likely than not that a deferred tax asset will not be realized to reduce the assets to their realizable value. Considerable judgments are required in establishing deferred tax valuation allowances and in assessing probable exposures related to tax matters. Praxair’s tax returns are subject to audit and local taxing authorities could challenge the company’s tax positions. The company's practice is to review tax-filing positions by jurisdiction and to record provisions for probable tax assessments, including interest and penalties, if applicable. Praxair believes it records and/or discloses such potential tax liabilities as appropriate and has reasonably estimated its income tax liabilities and recoverable tax assets.

NEW ACCOUNTING STANDARDS

See Notes 1 and 2 to the consolidated financial statements for information concerning new accounting standards and for information regarding the 2002 accounting change, respectively.


MARKET RISKS AND SENSITIVITY ANALYSES

Praxair is exposed to market risks relating to fluctuations in interest rates and currency exchange rates. The objective of financial risk management at Praxair is to minimize the negative impact of interest rate and foreign exchange rate fluctuations on the company's earnings, cash flows and equity.

To manage these risks, Praxair uses various derivative financial instruments, including interest-rate swaps, currency swaps, forward contracts and commodity contracts. Praxair only uses commonly traded and non-leveraged instruments. These contracts are entered into primarily with major banking institutions thereby minimizing the risk of credit loss. Also, see Notes 1 and 15 to the consolidated financial statements for a more complete description of Praxair's accounting policies and use of such instruments.

The following discussion presents the sensitivity of the market value, earnings and cash flows of Praxair's financial instruments to hypothetical changes in interest and exchange rates assuming these changes occurred at December 31, 2004. The range of changes chosen for these discussions reflect Praxair's view of changes which are reasonably possible over a one-year period. Market values represent the present values of projected future cash flows based on interest rate and exchange rate assumptions.


Interest Rate and Debt Sensitivity Analysis

At December 31, 2004, Praxair had debt totaling $3,525 million ($2,816 million at December 31, 2003). There were no interest-rate swap agreements outstanding at December 31, 2004 and 2003, respectively. Interest-rate swaps are entered into as hedges of underlying financial instruments to effectively change the characteristics of the interest rate without actually changing the underlying financial instrument. For fixed-rate instruments, interest-rate changes affect the fair market value but do not impact earnings or cash flows. Conversely, for floating-rate instruments, interest-rate changes generally do not affect the fair market value but impact future earnings and cash flows, assuming other factors are held constant.

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At December 31, 2004, Praxair had fixed-rate debt of $2,458 million and floating-rate debt of $1,067 million, representing 70% and 30%, respectively, of total debt. At December 31, 2003, Praxair had fixed-rate debt of $2,465 million and floating-rate debt of $351 million, representing 88% and 12%, respectively, of total debt. Holding other variables constant (such as foreign exchange rates, swaps and debt levels), a one-percentage-point decrease in interest rates would increase the unrealized fair market value of the fixed-rate debt by approximately $97 million ($119 million in 2003). At December 31, 2004 and 2003, the after-tax earnings and cash flows impact for the subsequent year resulting from a one-percentage-point increase in interest rates would be approximately $7 and $2 million, respectively, holding other variables constant.


Exchange Rate Sensitivity Analysis

Praxair’s exchange-rate exposures result primarily from its investments and ongoing operations in South America (primarily Brazil, Argentina and Venezuela), Europe (primarily Spain, Italy and Germany), Canada, Mexico, Asia (primarily China, India, Korea and Thailand) and other business transactions such as the procurement of equipment from foreign sources. Among other techniques, Praxair utilizes foreign exchange forward contracts to hedge these exposures. At December 31, 2004, Praxair had $679 million notional amount ($512 million at December 31, 2003) of foreign exchange contracts all of which ($502 million in 2003) are to hedge recorded balance-sheet exposures or firm commitments. At December 31, 2004, Praxair had no net income hedges outstanding ($10 million notional at December 31, 2003).

Holding other variables constant, if there were a 10% adverse change in foreign-currency exchange rates for the portfolio, the fair market value of foreign-currency contracts outstanding at December 31, 2004 would decrease by approximately $35 million ($38 million at December 31, 2003), all of which at December 31, 2004 would be offset by an equal but offsetting gain or loss on the foreign-currency fluctuation of the underlying exposure being hedged ($37 million at December 31, 2003). The remaining $1 million at December 31, 2003 would have impacted earnings.

OUTLOOK

For the full year of 2005, Praxair expects sales and operating-profit growth in the range of 11% to 15% from 2004. The company expects diluted earnings per share to be in the range of $2.33 to $2.45, reflecting growth of 11% to 17%. This guidance assumes a higher effective tax rate of 26% for 2005, excluding the impact of the American Jobs Creation Act of 2004 (see Note 7 to the consolidated financial statements). This growth level includes the absorption of integration costs associated with the two fiscal 2004 acquisitions, higher interest expense and the higher tax rate. This guidance excludes the impact of the adoption of SFAS No. 123R, which will require the company to expense stock options beginning no later than the third quarter of 2005. The company estimates that the adoption of this standard’s provisions will reduce reported diluted earnings per share by about $0.02 per quarter.

Full-year capital expenditures are expected to be in the range of $700 million to $750 million.

Praxair provides quarterly updates on operating results, material trends that may affect financial performance, and financial earnings guidance via earnings releases and investor teleconferences. In addition, Praxair issues press releases whenever significant events occur which may affect financial performance. These materials are available on our website: www.praxair.com.

FORWARD-LOOKING STATEMENTS

The forward-looking statements contained in this document concerning demand for products and services, the expected macroeconomic environment, sales, margins and earnings growth rates, projected capital and acquisition spending, the impact of required changes in accounting, the impact of accounting and other estimates, and other financial goals involve risks and uncertainties, and are subject to change based on various factors. These risk factors include the impact of changes in worldwide and national economies, the performance of stock markets, the cost and availability of electric power, natural gas and other materials, and the ability to achieve price increases to offset such cost increases, inflation in wages and other compensation, development of operational efficiencies, changes in foreign currencies, changes in interest rates, the continued timely development and acceptance of new products and processes, the impact of competitive products and pricing, and the impact of tax, accounting and other legislation, litigation, government regulation in the jurisdictions in which the company operates and the effectiveness and speed of integrating new acquisitions into the business.
 
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NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 

Operations - Praxair, Inc. (Praxair or company) is one of the largest industrial gases companies worldwide, the largest in North and South America. Praxair produces, sells and distributes atmospheric, process and specialty gases, and high-performance surface coatings to a diverse group of industries including aerospace, chemicals, electronics, energy, food and beverage, healthcare, manufacturing and metals.
 
Principles of Consolidation - The consolidated financial statements include the accounts of all significant subsidiaries where control exists and, in limited situations, variable-interest entities where the company is the primary beneficiary. Equity investments generally consist of 20% to 50% owned operations where the company exercises significant influence. Operations less than 20% owned, where the company does not exercise significant influence, are generally carried at cost. Pre-tax income from equity investments that are partnerships or limited-liability corporations (LLC) is included in Other income (expenses) - net with related taxes included in Income taxes and remaining equity earnings are reported as Income from equity investments, net of income taxes. Partnership and LLC net assets are reported as Equity investments in the balance sheet. Significant inter-company transactions are eliminated and any significant related-party transactions have been disclosed.

Use of Estimates - The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and to disclose contingent assets and liabilities at the date of the financial statements during the reporting period. While actual results could differ, management believes such estimates to be reasonable.

Revenue Recognition - Revenue is recognized when: a firm sales agreement exists; product is shipped or services are provided to customers; and collectibility of the fixed or determinable sales price is reasonably assured. A small portion of the company’s revenues relate to long-term construction contracts and are recognized using the percentage-of-completion method. Under this method, revenues from sales of major equipment, such as large air separation facilities, are recognized primarily based on cost incurred to date compared with total estimated cost. Changes to total estimated cost and anticipated losses, if any, are recognized in the period determined. For contracts that contain multiple products and/or services, amounts assigned to each component are based on its objectively determined fair value, such as the sales price for the component when it is sold separately or competitor prices for similar components. Sales returns and allowances are not a normal practice in the industry and are de minimis.

Amounts billed for shipping and handling fees are recorded as sales, generally on FOB destination terms, and costs incurred for shipping and handling are recorded as cost of sales.

Cash Equivalents - Cash equivalents are considered to be highly liquid securities with original maturities of three months or less.

Inventories - Inventories are stated at the lower of cost or market. Cost is determined using the last-in, first-out (LIFO) method for certain U.S. operations and the average-cost method for most other operations.

Property, Plant and Equipment - Net - Property, plant and equipment are carried at cost, net of accumulated depreciation. The company capitalizes interest as part of the cost of constructing major facilities (see Note 6 ). Depreciation is calculated on the straight-line method based on the estimated useful lives of the assets, which range from 3 to 40 years (see Note 10). Praxair uses accelerated depreciation methods for tax purposes where appropriate.

The company performs a test for impairment whenever circumstances and events indicate that the carrying amount of an individual asset or grouping of assets may not be recoverable. Should projected undiscounted cash flows be less than the carrying amount of the asset, an impairment charge reducing the carrying amount to fair value is required. Fair value is determined based on the most appropriate valuation technique, including discounted cash flows.
 
Foreign Currency Translation - For international subsidiaries where the local currency is the functional currency, translation gains and losses are reported as part of the Accumulated other comprehensive income (loss) component of Shareholders’ equity as a cumulative translation adjustment (see Note 9). For international subsidiaries operating in hyperinflationary economies, the U.S. dollar is the functional currency and translation gains and losses are included in income.

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Financial Instruments - Praxair enters into various derivative financial instruments to manage its exposure to fluctuating interest and currency exchange-rates and energy costs. Such instruments primarily include interest-rate swap agreements; currency swap, forward contracts; and commodity-swap agreements. These instruments are not entered into for trading purposes. Praxair only uses commonly traded and non-leveraged instruments. There are two types of derivatives the company enters into: hedges of fair-value exposures and hedges of cash-flow exposures. Fair-value exposures relate to recognized assets or liabilities, and firm commitments; while cash-flow exposures relate to the variability of future cash flows associated with recognized assets or liabilities, or forecasted transactions.

When a derivative is executed and hedge accounting is appropriate, it is designated as either a fair-value hedge or a cash-flow hedge. Currently, Praxair designates all interest-rate and commodity-swap agreements as hedges; however, currency contracts are generally not designated as hedges for accounting purposes. All derivatives are linked to an appropriate underlying exposure. On an ongoing basis, the company assesses the hedge effectiveness of all derivatives designated as hedges to determine if they continue to be highly effective in offsetting changes in fair values or cash flows of the underlying hedged items. If it is determined that the hedge is not highly effective, then hedge accounting will be discontinued prospectively.

Changes in the fair value of derivatives designated as fair-value hedges are recognized in earnings as an offset to the change in the fair values of the exposures being hedged. The changes in fair value of derivatives that are designated as cash-flow hedges are deferred in Accumulated other comprehensive income (loss) and are recognized in earnings as the underlying hedged transaction occurs. Any ineffectiveness is recognized in earnings immediately. Derivatives that are entered into for risk-management purposes and are not designated as hedges (primarily related to projected net income and currency derivatives other than for firm commitments) are recorded at their fair market values and recognized in current earnings.

Praxair records hedging activity related to debt instruments in Interest expense and hedging related to lease obligations and commodity contracts in Operating profit. The company recognizes the changes in the fair value associated with currency contracts as follows: hedges of balance-sheet exposures, firm commitments and anticipated future net income are recognized in Other income (expense) - net and generally offset the underlying hedged items; hedges of net investments in foreign subsidiaries are recognized in the cumulative translation adjustment component of Accumulated other comprehensive income (loss) on the consolidated balance sheet to offset translation gains and losses associated with the hedged net investment.

Praxair uses the following methods and assumptions to estimate the fair value of each class of financial instrument. The fair value of interest-rate swaps and currency-exchange contracts is estimated based on market prices obtained from independent dealer or market quotes. The fair value of long-term debt is estimated based on the quoted market prices for the same or similar issues. Due to their nature, the carrying value of cash, short-term investments and short-term debt, receivables and payables approximates fair value.

Goodwill - When a business is acquired, the excess of the purchase price over the fair value of the assets and liabilities acquired is recorded as goodwill (see Note 12). Goodwill is reviewed annually in April and when circumstances or other events indicate that impairment may have occurred. The impairment test requires that the company estimate and compare the fair value of its reporting units to their carrying value. Fair value is determined through the use of projected future cash flows, multiples of earnings and sales and other factors.

Other Intangible Assets - Patents are recorded at historical cost and are amortized over their remaining useful lives. License/use agreements, non-compete agreements and other intangibles are amortized over the estimated period of benefit. The determination of the estimated period of benefit will be dependent upon the use and underlying characteristics of the intangible asset. Praxair evaluates the recoverability of its intangible assets subject to amortization when facts and circumstances indicate that the carrying value of the asset may not be recoverable. If the carrying value is not recoverable, impairment is measured as the amount by which the carrying value exceeds its estimated fair value. Fair value is generally estimated based on either appraised value or other valuation techniques.
 
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Income Taxes - Deferred income taxes are recorded for the temporary differences between the financial statement and tax bases of assets and liabilities using currently enacted tax rates. Valuation allowances are established against deferred tax assets whenever circumstances indicate that it is more likely than not that such assets will not be realized in future periods. The provision for income taxes includes probable exposures for tax matters.

Pension and Other Retirement Programs - Most Praxair employees worldwide are covered by various pension plans. The cost of pension benefits under these plans is determined using the "projected-unit-credit" actuarial cost method. Funding of pension plans varies and is in accordance with local laws and practices.

Praxair accrues the cost of retiree life and health insurance benefits during the employees' service period when such benefits are earned.

Post-employment Benefits - Praxair recognizes the estimated cost of future benefits provided to former and inactive employees after employment but before retirement on the accrual basis.

Stock Split   - On October 28, 2003, Praxair’s board of directors declared a two-for-one split of the company’s common stock. The stock split was effected in the form of a stock dividend of one additional share for each share owned by stockholders of record on December 5, 2003, and each share held in treasury as of the record date. Information pertaining to shares, earnings per share and dividends per share has been restated in the accompanying financial statements.

Stock-based Compensation - Praxair accounts for incentive plans and stock options using the provisions of Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees." Pro forma information required by SFAS 123, "Accounting for Stock-Based Compensation," as amended by SFAS 148, requires Praxair to disclose pro forma net income and pro forma earnings per share amounts as if compensation expense was recognized based on fair values for options granted after 1994. Pro forma net income and the related basic and diluted earnings per share amounts would be as follows:
 
(Dollar amounts in millions, except per share data)
             
Year Ended December 31,
 
2004
 
2003
 
2002
 
               
Net Income
             
As reported
 
$
697
 
$
585
 
$
409
 
Less: total stock-based employee
                   
compensation expense determined under fair value
                   
based method for all awards, net of related tax effects
   
(27
)
 
(27
)
 
(25
)
Pro forma net income
 
$
670
 
$
558
 
$
384
 
                     
Basic Earnings Per Share
                   
As reported
 
$
2.14
 
$
1.79
 
$
1.26
 
Pro forma
 
$
2.06
 
$
1.71
 
$
1.18
 
Diluted Earnings Per Share
                   
As reported
 
$
2.10
 
$
1.77
 
$
1.24
 
Pro forma
 
$
2.02
 
$
1.69
 
$
1.17
 

The weighted average fair value of options granted during 2004 was $10.67 ($9.24 in 2003 and $10.69 in 2002). These values, which were used as a basis for the pro forma disclosures, were estimated using the Black-Scholes Options-Pricing Model with the following weighted-average assumptions used for grants in 2004, 2003, and 2002:

Year Ended December 31,
 
2004
 
2003
 
2002
 
               
Dividend yield
   
1.4
%
 
1.3
%
 
1.2
%
Volatility
   
32.5
%
 
36.5
%
 
35.8
%
Risk-free interest rate
   
3.0
%
 
2.9
%
 
4.5
%
Expected term - years
   
5
   
6
   
6
 

These pro forma disclosures may not be representative of the effects for future years as options vest over several years and additional awards generally are made each year. Refer to the discussion below addressing the issuance of SFAS No. 123R.

Recently Issued Accounting Standards

In December 2003, the Financial Accounting Standards Board (FASB) issued a revision to SFAS No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits”, which requires new annual disclosures about the types of plan assets, investment strategy, measurement date, plan obligations and cash flows as well as the components of the net periodic benefit cost recognized in interim periods. This statement became effective December 31, 2003 for Praxair except for the requirements to disclose future benefit payments and international plan asset information, which became effective December 31, 2004. Accordingly, Praxair has expanded its pension disclosures (see Note 19).

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During 2004, the Emerging Issues Task Force (EITF) reached a consensus on Issue 04-10, “Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds.” The issue addresses how an entity should evaluate the aggregation criteria for operating segments in SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.” The task force reached a consensus that operating segments must always have similar economic characteristics and meet a majority of the remaining five aggregation criteria specified in SFAS No. 131. The task force also agreed to postpone the effective date of the consensus to coincide with the effective date of an anticipated FASB staff position that will address the meaning of similar economic characteristics. The company will continue to monitor future developments but does not anticipate any significant impact on the determination of its reportable segments.

In May 2004, the FASB issued FASB Staff Position (FSP) 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003,” which superseded FSP 106-1 of the same name and provides guidance on how to account for the impact of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 on postretirement health care plans. The act established a prescription drug benefit under Medicare, known as “Medicare Part D,” and a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. In late January 2005, the Center for Medicare and Medicaid Services released the regulations for implementing the act. Based on these regulations, the company believes the benefits provided to certain participants will be at least actuarially equivalent to Medicare Part D and, accordingly, the company will be entitled to a subsidy. This subsidy is not reflected in any of the amounts shown in these financial statements and the overall impact of the expected subsidy has yet to be determined but is not expected to be material to Praxair’s results of operations or financial position.

In December 2004, the FASB issued a revision to SFAS No. 123, “Accounting for Stock-Based Compensation,” entitled SFAS No. 123 (revised 2004), “Share-Based Payment.” This statement, among other things, requires companies to expense the value of employee stock options and similar awards and becomes effective for interim and annual periods beginning after June 15, 2005, and applies to all outstanding and unvested share-based payment awards at the company’s adoption date. Praxair plans to adopt the provisions of this statement for its interim period beginning July 1, 2005 and the company has yet to select its transition method. This statement’s provisions are expected to reduce diluted earnings per share by about $0.02 per quarter once adopted. The company does not anticipate making significant changes for 2005 to its compensation strategy. See Note 18 for information related to incentive plans and stock options.

In December 2004, the FASB issued two FSPs to address accounting issues resulting from the enactment of the American Jobs Creation Act of 2004 (Jobs Creation Act), which occurred on October 22, 2004. The first, FSP 109-1, “Application of FASB Statement No. 109, “Accounting for Income Taxes,” to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004,” was issued to address whether a deduction for qualified production activities income should be accounted for as a deduction under SFAS No. 109 or as a tax rate reduction. This FSP is not expected to have a material impact on the company’s financial position or results of operations. The second, FSP 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004,” addresses whether an enterprise should be allowed additional time beyond the 2004 financial reporting period to evaluate the impact of the Jobs Creation Act and plans for unremitted foreign earnings repatriation. The FSP provides an entity with additional time to evaluate the effect of the Jobs Creation Act, which is an exception to the provisions of SFAS No. 109 that require an entity to adjust its deferred tax assets and liabilities for the effects of a change in tax laws or rates in the period that includes the enactment date. See Note 7 where the company addresses the impact of the act to the company.
 
Reclassifications - Certain prior years' amounts have been reclassified to conform to the current year's presentation.

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NOTE 2. ACCOUNTING CHANGE

Praxair adopted SFAS No. 142, "Goodwill and Other Intangible Assets," effective January 1, 2002. Under the provisions of the standard, companies no longer amortize goodwill or indefinite-lived intangible assets (see Notes 12 and 13). The provisions required the company to perform an initial assessment of whether there is an indication that the carrying value of goodwill is impaired. During the second quarter of 2002, Praxair completed the initial impairment test and concluded that certain of its goodwill was impaired, resulting in a non-cash after-tax charge of $139 million or $0.42 per share on a diluted basis. The charge includes the $144 million goodwill write-down, a $2 million charge for goodwill held on an equity investment, which was recorded as a write-down of the investment, and is also net of a $7 million tax benefit. The charge was recorded as a cumulative effect of an accounting change, retroactive to January 1, 2002.

The following is a summary of the impairment charge by business segment, net of a $7 million tax benefit:
 
(Millions of dollars)
     
Segment
Reporting Unit
Charge
 
       
South America
Southern Cone, Andean Region
$
80
 
Europe (a)
Poland, Israel
 
20
 
Asia
India
 
17
 
Surface Technologies
Aviation Services
 
22
 
   
$
139
 
         

a)  
Includes $2 million related to a non-consolidated equity investment.

This assessment must be conducted at least annually at the reporting-unit level, and any such impairment must be recorded as a charge to operating earnings. The annual impairment tests for 2004, 2003 and 2002 were performed and no additional impairments were indicated.


NOTE 3. ACQUISITIONS

The results of operations of the following acquired businesses have been included in Praxair’s consolidated statements of income since their respective dates of acquisition.

German Acquisition

On December 2, 2004, Praxair acquired certain industrial gas assets and related businesses in Germany from Air Liquide S.A. for a purchase price of €497 million plus acquisition and other costs of €7 million (or $667 million). The acquisition resulted in approximately $255 million of goodwill. Intangible assets acquired of approximately $28 million consist of covenants not to compete, land rights and other intangible assets which are being amortized over a weighted-average life of 10 years. The purchase was funded largely by a €450 million, five-year revolving credit arrangement which Praxair entered into with a syndicate of international banks in November 2004 (see Note 14). The assets and businesses acquired consist of industrial gas plants and pipeline assets in the Rhine/Ruhr and Saar areas, and bulk distribution and packaged gas businesses. The businesses serve large customers in the refining, chemical and steel industries along the pipeline systems, plus about 40,000 smaller customers in bulk, medical, specialty and packaged gases and generated approximately €177 million (or $199 million) of revenues in 2003. The acquisition significantly strengthened Praxair’s operations in the Germany and Benelux regions.
 
Home Care Supply (HCS)

On June 15, 2004, Praxair acquired 100% of the outstanding common shares of Home Care Supply, Inc. (HCS) for a purchase price of $245 million. The acquisition resulted in approximately $175 million of goodwill. Intangible assets acquired of approximately $12 million consist of customer relationships and covenants not to compete which are being amortized over a weighted-average life of 3 years. Headquartered in Beaumont, Texas, HCS was the largest privately held home respiratory and medical equipment provider in the United States with 59 locations in 13 states, which generated 2003 revenues of $169 million. The acquisition expanded Praxair’s home healthcare presence from the mid-Atlantic to Texas, provides an excellent platform for sustained growth and will further accelerate Praxair’s hospital-to-home strategy.

 
Other acquisitions in 2004, 2003 and 2002 were not significant.

The allocations of the excess purchase price are based upon preliminary estimates and assumptions. Accordingly, the allocations are subject to revision when the company receives final information, including appraisals and other analyses.

AR-47

NOTE 4. SEGMENT INFORMATION

The company’s operations are organized into five reportable segments, four of which have been determined on a geographic basis of segmentation: North America, Europe, South America and Asia. In addition, Praxair operates its worldwide surface technologies business through its wholly owned subsidiary, Praxair Surface Technologies, Inc., which represents the fifth reportable segment. The All Other category comprises unallocated corporate items.

Praxair’s operations consist of two major product lines, industrial gases and surface technologies. The industrial gases product line centers on the manufacturing and distribution of atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene). Many of these products are co-products of the same manufacturing process. Praxair manufactures and distributes nearly all of its products and manages its customer relationships on a regional basis. Praxair’s industrial gases are distributed to various end markets within a regional segment through one of three basic distribution methods: on-site or tonnage; merchant liquid; and packaged or cylinder gases. The distribution methods are generally integrated in order to best meet the customer’s needs and very few of its products can be economically transported outside of a region. Therefore, the distribution economics are specific to the various geographies in which the company operates and is consistent with how management assesses performance.

Praxair evaluates the performance of its reportable segments based primarily on operating profit, excluding inter-company royalties and special charges. Sales are determined based on the country in which the legal subsidiary is domiciled. Corporate and globally managed expenses, and research and development costs relating to Praxair's global industrial gases business, are allocated to operating segments based on sales. Long-lived assets include property, plant and equipment, other intangible assets and goodwill.

The table below presents information about reported segments for the years ended December 31, 2004, 2003, and 2002:
 
(Millions of dollars)
 
2004
 
2003
 
2002
 
               
Sales
                   
North America
 
$
4,191
 
$
3,627
 
$
3,351
 
Europe
   
847
   
699
   
589
 
South America
   
866
   
708
   
632
 
Asia
   
487
   
389
   
324
 
Surface Technologies
   
447
   
400
   
394
 
Eliminations
   
(244
)
 
(210
)
 
(162
)
   
$
6,594
 
$
5,613
 
$
5,128
 
Operating Profit
                   
North America
 
$
623
 
$
548
 
$
557
 
Europe
   
214
   
170
   
139
 
South America
   
152
   
114
   
134
 
Asia
   
80
   
64
   
51
 
Surface Technologies
   
34
   
26
   
35
 
All Other
   
-
   
-
   
7
 
   
$
1,103
 
$
922
 
$
923
 
Total Assets (a)
                   
North America
 
$
5,210
 
$
4,638
 
$
4,366
 
Europe
   
1,866
   
1,145
   
852
 
South America
   
1,405
   
1,275
   
1,016
 
Asia
   
847
   
707
   
653
 
Surface Technologies
   
550
   
540
   
514
 
   
$
9,878
 
$
8,305
 
$
7,401
 
                     
Depreciation and Amortization
                   
North America
 
$
344
 
$
313
 
$
296
 
Europe
   
72
   
59
   
49
 
South America
   
70
   
60
   
61
 
Asia
   
55
   
50
   
43
 
Surface Technologies
   
37
   
35
   
34
 
   
$
578
 
$
517
 
$
483
 
Capital Expenditures and Acquisitions
                   
North America (Notes 3 and 5)
 
$
573
 
$
763
 
$
359
 
Europe (Note 3)
   
756
   
115
   
69
 
South America
   
96
   
88
   
98
 
Asia
   
153
   
56
   
59
 
Surface Technologies
   
19
   
34
   
26
 
   
$
1,597
 
$
1,056
 
$
611
 
Sales by Major Country
                   
United States
 
$
3,367
 
$
2,834
 
$
2,709
 
Brazil
   
700
   
557
   
487
 
Other — foreign
   
2,527
   
2,222
   
1,932
 
   
$
6,594
 
$
5,613
 
$
5,128
 
Long-lived Assets by Major Country
                   
United States
 
$
3,454
 
$
3,260
 
$
3,020
 
Brazil
   
813
   
765
   
592
 
Germany (Note 3)
   
746
   
68
   
59
 
Other — foreign
   
2,572
   
2,290
   
2,030
 
   
$
7,585
 
$
6,383
 
$
5,701
 

a)  
Includes equity investments as of December 31 as follows:
 
(Millions of dollars)
 
2004
 
2003
 
2002
 
               
North America
 
$
52
 
$
53
 
$
70
 
Europe
   
132
   
110
   
92
 
Surface Technologies
   
-
   
1
   
(2
)
Asia
   
26
   
18
   
24
 
   
$
210
 
$
182
 
$
184
 


AR-48
 
NOTE 5. LEASES

Operating leases, primarily involving manufacturing and distribution equipment and office space, represent non-cancelable commitments extending for more than one year which require future minimum payments totaling $288 million at December 31, 2004 as follows: 2005, $67 million; 2006, $55 million; 2007, $41 million; 2008, $28 million; 2009, $19 million; and $78 million thereafter. The present value of these future lease payments under operating leases is approximately $248 million. Included in the future minimum payments are $15 million of lease commitments to Praxair's former parent company, principally for office space. Total lease and rental expenses under operating leases were $88 million in 2004, $93 million in 2003, and $96 million in 2002.

During June 2003, Praxair terminated leases for U.S. liquid storage equipment and distribution equipment, and for production facilities along the U.S. Gulf Coast and purchased the underlying equipment for a total of $339 million. The equipment leases originated in 1998 and 1999 in sale-leaseback transactions. On June 30, 2003, Praxair purchased the equipment for $230 million and reduced the carrying value of the equipment by deferred gains of $152 million from the original sale-leaseback transactions. The U.S. Gulf Coast leases were initiated by CBI Industries, Inc. (CBI) and were subsequently assumed by Praxair in its acquisition of CBI in 1996. On June 27, 2003, Praxair terminated the leases and purchased the production facility assets for approximately $109 million.

 
NOTE 6. SUPPLEMENTARY INCOME STATEMENT INFORMATION
 
(Millions of dollars)
             
Year Ended December 31,
 
2004
 
2003
 
2002
 
               
Selling, General and Administrative
             
Selling
 
$
424
 
$
375
 
$
356
 
General and administrative
   
445
   
391
   
395
 
   
$
869
 
$
766
 
$
751
 
Depreciation and Amortization
                   
Depreciation
 
$
565
 
$
510
 
$
478
 
Amortization of other intangibles
   
13
   
7
   
5
 
   
$
578
 
$
517
 
$
483
 
Other Income (Expenses) - Net
                   
Investment income
 
$
2
  $
-
 
$
9
 
Net income hedges (Note 15)
   
(2
)
 
(9
)
 
17
 
Other currency
   
(1
)
 
(4
)
 
1
 
Partnership income
   
15
   
10
   
9
 
Severance expense
   
(10
)
 
(12
)
 
(3
)
Resolution of prior divestiture matter
   
13
   
-
   
-
 
Other - net
   
3
   
10
   
15
 
   
$
20
  $
(5
)
$
48
 
Interest Expense
                   
Interest incurred on debt
 
$
167
 
$
165
 
$
202
 
Bond call premium
   
-
   
-
   
15
 
Interest capitalized
   
(7
)
 
(9
)
 
(9
)
Amortization of swap termination costs (Note 15)
   
(5
)
 
(5
)
 
(2
)
   
$
155
 
$
151
 
$
206
 
                     
Minority Interests
                   
Minority interests
 
$
(30
)
$
(24
)
$
(19
)
Preferred stock dividends
   
-
   
-
   
(1
)
    $
(30
)
$
(24
)
$
(20
)
 
 
AR-49
NOTE 7. PROVISION FOR INCOME TAXES

Pre-tax income applicable to U.S. and foreign operations is as follows:
 
(Millions of dollars)
             
Year Ended December 31,
 
2004
 
2003
 
2002
 
               
United States
 
$
281
 
$
213
 
$
233
 
Foreign
   
667
   
558
   
484
 
Total income before income taxes
 
$
948
 
$
771
 
$
717
 
                     

The following is an analysis of the provision for income taxes:
 
(Millions of dollars)
             
Year Ended December 31,
 
2004
 
2003
 
2002
 
               
Current tax expense
             
U.S. federal
 
$
41
 
$
39
 
$
25
 
State and local
   
4
   
1
   
5
 
Foreign
   
98
   
101
   
91
 
     
143
   
141
   
121
 
Deferred tax expense (benefit)
                   
U.S. federal
   
41
   
(9
)
 
50
 
Foreign
   
48
   
42
   
(13
)
     
89
   
33
   
37
 
Total income taxes
 
$
232
 
$
174
 
$
158
 
 
An analysis of the difference between the provision for income taxes and the amount computed by applying the U.S. statutory income tax rate to pre-tax income follows:
 
(Dollar amounts in millions)
     
Year Ended December 31,
 
2004
 
2003
 
2002
 
                           
U.S. statutory income tax rate
 
$
332
   
35.0
%
$
270
   
35.0
%
$
251
 
35.0
%
State and local taxes
   
6
   
0.6
%
 
1
   
0.1
%
 
3
 
0.4
%
U.S. tax credits and deductions (a)
   
(13
)
 
-1.3
%
 
(23
)
 
-3.0
%
 
(4
)
-0.6
%
Foreign tax rate differentials (b)
   
(87
)
 
-9.2
%
 
(53
)
 
-6.8
%
 
(92
)
-12.8
%
Tax audit settlements (c)
   
(3
)
 
-0.3
%
 
(10
)
 
-1.3
%
 
-
 
0.0
%
Other — net
   
(3
)
 
-0.3
%
 
(11
)
 
-1.4
%
 
-
 
0.0
%
Provision for income taxes
 
$
232
   
24.5
%
$
174
   
22.6
%
$
158
 
22.0
%
                                     

 
(a)
U.S. tax credits and deductions relate to research and experimentation tax credits, capital loss deductions and donations of certain intellectual property.
 
(b)
Foreign tax rate differentials include various tax incentives in Spain. The company also operates in various jurisdictions in Asia and South America that currently offer tax holidays.
 
(c)
The tax audit settlements represent non-recurring benefits resulting from the settlement of various tax matters in the U.S.

During 2002, the company recognized $15 million of tax benefits related to foreign net operating losses.

During 2004, the taxing authority in Mexico decreased its top marginal tax-rate, resulting in an income-tax benefit of $2 million. During 2003, the taxing authority in Italy decreased its top marginal rate. During 2002, taxing authorities in Belgium, Canada, France and Italy decreased their top marginal tax rates. The effects of the tax-rate changes in 2003 and 2002 were immaterial.

A provision has not been made for additional U.S. federal or foreign taxes at December 31, 2004 on $1.7 billion of undistributed earnings of foreign subsidiaries because Praxair has planned to reinvest these funds indefinitely. These earnings could become subject to additional tax if they are remitted as dividends, loaned to Praxair, or upon sale of the subsidiary's stock. On October 22, 2004, the President signed the American Jobs Creation Act of 2004 (Jobs Creation Act). The Jobs Creation Act creates a temporary incentive for U.S. corporations to repatriate accumulated income earned abroad by providing an 85-percent dividends-received deduction for certain dividends from controlled foreign corporations. The deduction is subject to a number of limitations and, as of today, uncertainty remains as to how to interpret numerous provisions in the Jobs Creation Act. However, based on analysis to date, it is reasonably possible that the company may repatriate up to $1.1 billion, with the respective tax liability ranging up to $90 million. Praxair expects to finalize its assessment during the second or third quarter of 2005, at which time any impact will be recognized.

The company’s U.S. federal tax returns have been audited through 1999 and the company is currently undergoing an audit for its 2000, 2001 and 2002 tax years.

AR-50

NOTE 8. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income for the period by the weighted average number of Praxair common shares outstanding. Diluted earnings per share is computed by dividing net income for the period by the weighted average number of Praxair common shares outstanding and dilutive common stock equivalents, as follows:
 
 
 
2004
 
2003
 
2002
 
               
Numerator (Millions of Dollars)
                   
Income before cumulative effect
                   
of accounting change
 
$
697
 
$
585
 
$
548
 
Cumulative effect of accounting change
   
-
   
-
   
(139
)
Net income
 
$
697
 
$
585
 
$
409
 
                     
Denominator (Thousands of Shares)
                   
Weighted average shares outstanding
   
324,706
   
325,198
   
324,311
 
Shares earned and issuable under
                   
compensation plans
   
1,185
   
1,190
   
1,225
 
                     
Weighted average shares used
                   
in basic earnings per share
   
325,891
   
326,388
   
325,536
 
Effect of dilutive securities
                   
Convertible debt
   
205
   
269
   
55
 
Employee stock options
   
5,307
   
4,334
   
3,898
 
                     
Weighted average shares
                   
used in diluted earnings per share
   
331,403
   
330,991
   
329,489
 
                     
Basic Earnings Per Common Share
                   
Income before cumulative effect
                   
of accounting change
 
$
2.14
 
$
1.79
 
$
1.68
 
Net income
 
$
2.14
 
$
1.79
 
$
1.26
 
                     
Diluted Earnings Per Common Share
                   
Income before cumulative effect
                   
of accounting change
 
$
2.10
 
$
1.77
 
$
1.66
 
Net income
 
$
2.10
 
$
1.77
 
$
1.24
 


Stock options for 40,000 and 2,420,200 shares were not included in the computation of diluted earnings per share for the years ended December 31, 2004 and 2002, respectively, because the exercise prices were greater than the average market price of the common stock. In 2003, no stock options were excluded from the computation.
 
 
NOTE 9. SUPPLEMENTARY BALANCE SHEET INFORMATION

 
(Millions of dollars)
         
December 31,
 
2004
 
2003
 
           
Accounts Receivable
             
Trade
 
$
1,229
 
$
975
 
Other
   
65
   
44
 
     
1,294
   
1,019
 
Less: allowance for doubtful accounts (a)
   
(63
)
 
(57
)
   
$
1,231
 
$
962
 
Inventories (b)
             
Raw materials and supplies
 
$
87
 
$
83
 
Work in process
   
37
   
33
 
Finished goods
   
204
   
186
 
   
$
328
 
$
302
 
Prepaid and Other Current Assets
             
Deferred income taxes (Note 11)
 
$
85
 
$
66
 
Pension assets (Note 19)
   
-
   
7
 
Prepaid
   
34
   
45
 
Other
   
41
   
17
 
   
$
160
 
$
135
 
Other Long-term Assets
             
Pension assets (Note 19)
 
$
72
 
$
60
 
Insurance contracts (c)
   
70
   
73
 
Long-term notes receivable
   
47
   
41
 
Deposits
   
33
   
27
 
Investments carried at cost
   
13
   
12
 
Deferred charges
   
12
   
12
 
Other
   
92
   
66
 
   
$
339
 
$
291
 
Other Current Liabilities
             
Accrued expenses
 
$
200
 
$
130
 
Payrolls
   
101
   
76
 
Pension and postretirement costs (Note 19)
   
114
   
87
 
Interest payable
   
31
   
30
 
Employee benefit accrual
   
26
   
29
 
Severance
   
12
   
18
 
Insurance reserves
   
9
   
7
 
Other
   
102
   
68
 
   
$
595
 
$
445
 
               
Other Long-term Liabilities
             
Pension and postretirement costs (Note 19)
 
$
467
 
$
491
 
Insurance reserves
   
34
   
30
 
Other
   
448
   
395
 
   
$
949
 
$
916
 
Deferred Credits
             
Deferred income taxes (Note 11)
 
$
317
 
$
299
 
Other
   
28
   
29
 
   
$
345
 
$
328
 
               
 
 
AR-51
 
           
           
(Millions of dollars)
         
December 31,
 
2004
 
2003
 
           
Accumulated Other Comprehensive Income (Loss)
         
           
Cumulative translation adjustment
             
North America
   
$
(142
)
 
$
(165
)
South America (d)
   
(955
)
 
(1,041
)
Europe
   
91
   
7
 
Asia
   
(41
)
 
(61
)
Surface Technologies
   
25
   
8
 
     
(1,022
)
 
(1,252
)
Derivatives - net of taxes (e)
   
(1
)
 
(1
)
Minimum pension liability (net of $84 million and $53
             
million taxes in 2004 and 2003, respectively)
   
(157
)
 
(99
)
    $
(1,180
)
$
(1,352
)
               

 
a)  
Provisions to the allowance for doubtful accounts were $24 million, $26 million and $40 million in 2004, 2003, and 2002, respectively.

b)  
Approximately 19% of total inventories were valued using the LIFO method at December 31, 2004 and 2003. If inventories had been valued at current costs, they would have been approximately $24 million and $25 million higher than reported at December 31, 2004 and 2003, respectively.

c)  
Consists primarily of insurance contracts to be utilized for a non-qualified pension and OPEB obligations (see Note 19).

d)  
Consists primarily of currency translation adjustments in Brazil and Argentina.

e)  
The derivatives component of accumulated other comprehensive income (loss) relates to the adoption of SFAS 133.


 
NOTE 10. PROPERTY, PLANT AND EQUIPMENT - NET

Significant classes of property, plant and equipment are as follows:
 
(Millions of dollars)
         
December 31,
 
2004
 
2003
 
           
Machinery and equipment
 
$
10,674
 
$
9,504
 
Buildings
   
718
   
643
 
Construction in progress and other
   
403
   
421
 
Land and land improvements
   
239
   
227
 
     
12,034
   
10,795
 
Less: accumulated depreciation
   
(6,088
)
 
(5,543
)
   
$
5,946
 
$
5,252
 
               

Machinery and equipment includes production plants, tanks, cylinders, transportation equipment and other assets that have useful lives of 3 to 30 years. Buildings have useful lives of 25 to 40 years and land improvements have useful lives of up to 20 years.


NOTE 11. DEFERRED INCOME TAXES

Net deferred tax liabilities are comprised of the following:
 
(Millions of dollars)
         
December 31,
 
2004
 
2003
 
           
Deferred Tax Liabilities
         
Fixed assets
 
$
832
 
$
765
 
State and local
   
12
   
12
 
Other
   
35
   
25
 
Total deferred tax liabilities
   
879
   
802
 
               
Deferred Tax Assets
             
Carryforwards
   
298
   
234
 
Benefit plans and related
   
127
   
157
 
Alternative minimum tax and other credits
   
96
   
92
 
Minimum pension liability
   
84
   
53
 
Research and development
   
58
   
28
 
Inventory
   
12
   
14
 
Other
   
84
   
90
 
     
759
   
668
 
Less: Valuation allowances
   
(112
)
 
(99
)
Total deferred tax assets
   
647
   
569
 
Net deferred tax liabilities
 
$
232
 
$
233
 
               
Recorded as:
             
Current deferred tax assets (Note 9)
 
$
85
 
$
66
 
Long-term deferred tax liabilities (Note 9)
   
317
   
299
 
Net deferred tax liabilities
 
$
232
 
$
233
 
 
The valuation allowances increased $13 million in 2004 primarily relating to the effects of foreign currency translation in Brazil. At December 31, 2004, Praxair has $298 million of deferred tax assets relating to net operating loss and other tax credit carryforwards (primarily foreign). Approximately $119 million expires principally through 2018. The remaining carryforwards, relating mainly to Brazil, will never expire but are subject to annual usage limitations. A valuation allowance of $112 million has been established related to these carryforwards. Praxair evaluates deferred tax assets quarterly to ensure that estimated future taxable income will be sufficient in character (e.g. capital gain versus ordinary income treatment), amount and timing to result in their recovery. After considering the positive and negative evidence, a valuation allowance is established when management determines that it is more likely than not that a deferred tax asset will not be realized to reduce the assets to their realizable value. Considerable judgments are required in establishing deferred tax valuation allowances, which are evaluated quarterly.


AR-52
NOTE 12. GOODWILL

Praxair adopted SFAS No. 142, “Goodwill and Other Intangible Assets,” effective January 1, 2002 (see Note 2). The standard required the company to perform an initial assessment of whether there was an indication that the carrying value of goodwill was impaired and to conduct a new test at least annually at the reporting unit level. The annual impairment tests for 2003 and 2004 were performed during the second quarter of each year and no impairments were indicated.

Changes in the carrying amount of goodwill for the years ended December 31, 2004 and 2003 were as follows:
 
   
North
 
South
         
  Surface
     
(Millions of dollars)
 
America
 
America
 
Europe
 
Asia
 
Technologies
 
Total
 
                           
Balance, December 31, 2002
 
$
759
 
$
99
 
$
39
 
$
20
 
$
68
 
$
985
 
Acquisitions
   
26
   
-
   
17
   
5
   
-
   
48
 
Purchase adjustments (a)
   
(13
)
 
(2
)
 
-
   
-
   
-
   
(15
)
Foreign currency translation
   
12
   
27
   
10
   
1
   
7
   
57
 
Balance, December 31, 2003
   
784
   
124
   
66
   
26
   
75
   
1,075
 
Acquisitions
   
180
   
-
   
255
   
1
   
-
   
436
 
Purchase adjustments
   
(1
)
 
-
   
(1
)
 
-
   
-
   
(2
)
Foreign currency translation
   
11
   
14
   
11
   
1
   
5
   
42
 
Balance, December 31, 2004
 
$
974
 
$
138
 
$
331
 
$
28
 
$
80
 
$
1,551
 
                                       
 
a)  
2003 purchase adjustments in North America pertain to the resolution of tax matters for previous years related to deferred income tax allowances on capital loss carryforwards from the 1996 CBI acquisition. The adjustment to goodwill was offset by a corresponding adjustment to deferred income taxes included in deferred credits.
 
 

NOTE 13. OTHER INTANGIBLE ASSETS

The following is a summary of Praxair's intangible assets subject to amortization at December 31, 2004 and 2003:
 
(Millions of dollars)
 
2004
 
2003
 
           
Gross carrying amount
             
License/use agreements
 
$
70
 
$
41
 
Non-compete agreements
   
36
   
31
 
Patents and other
   
17
   
17
 
 
   
123
   
89
 
Less: accumulated amortization
             
License/use agreements
   
(18
)
 
(10
)
Non-compete agreements
   
(13
)
 
(20
)
Patents and other
   
(4
)
 
(3
)
 
   
(35
)
 
(33
)
   
$
88
 
$
56
 
               

Additions to intangible assets in 2004 primarily include those acquired in connection with the acquisition of HCS in June 2004 and the German Acquisition in December 2004 of $12 million and $28 million, respectively (see Note 3).

There are no expected residual values related to these intangible assets. Amortization expense for the years ended December 31, 2004, 2003, and 2002 was $13 million, $7 million and $5 million, respectively. The remaining weighted-average amortization period for intangible assets is approximately 12 years. Total estimated annual amortization expense is as follows: 2005, $14 million; 2006, $11 million; 2007, $10 million; 2008, $7 million; 2009, $7 million; and $39 million thereafter.

AR-53

NOTE 14. DEBT

The following is a summary of Praxair's outstanding debt at December 31, 2004 and 2003:
 
(Millions of dollars)
 
2004
 
2003
 
           
Short-term
         
Commercial paper and U.S. borrowings
 
$
296
 
$
4
 
Canadian borrowings
   
83
   
75
 
South American borrowings
   
39
   
44
 
Asian borrowings
   
29
   
5
 
Other international borrowings
   
7
   
5
 
Total short-term debt
   
454
   
133
 
               
Long-term
             
U.S. Borrowings
             
6.85% Notes due 2005
   
150
   
150
 
6.90% Notes due 2006
   
250
   
250
 
4.75% Notes due 2007 (a)
   
249
   
249
 
6.625% Notes due 2007
   
250
   
250
 
6.50% Notes due 2008
   
250
   
250
 
2.75% Notes due 2008 (a)
   
299
   
299
 
6.375% Notes due 2012 (a, b)
   
534
   
539
 
3.95% Notes due 2013 (a)
   
349
   
349
 
Commercial paper and U.S. borrowings
   
-
   
218
 
Other borrowings
   
23
   
42
 
               
European borrowings (Note 3)
   
613
   
-
 
South American borrowings
   
48
   
33
 
Asian borrowings
   
39
   
41
 
Other international borrowings
   
5
   
6
 
Obligations under capital lease
   
12
   
7
 
     
3,071
   
2,683
 
Less: current portion of long-term debt
   
(195
)
 
(22
)
Total long-term debt
   
2,876
   
2,661
 
Total debt
 
$
3,525
 
$
2,816
 
               
a)  
Amounts are net of unamortized discounts.
b)  
December 31, 2004 and 2003 include a $35 million and $40 million fair value increase, respectively, related to SFAS 133 hedge accounting (see Note 15).

On November 29, 2004, the company entered into a €450 million, five-year borrowing facility with a syndicate of international banks. As of December 31, 2004, the amount outstanding against this facility was €450 million, or $613 million. The proceeds were used to acquire the German assets referenced in Note 3. Such borrowings are classified as long-term because of the company’s intent to refinance this debt on a long-term basis and the availability of such financing under the terms of this agreement. The weighted-average interest rate on this facility at December 31, 2004 is 2.48%.

During 2003, Praxair repaid $300 million of 6.75% notes and $75 million of 6.625% notes that were due on March 1, 2003 and March 15, 2003, respectively. On April 15, 2003, Praxair repaid $250 million of 6.15% notes that were due. The repayments were funded through the issuance of commercial paper. On May 27, 2003 and June 2, 2003, respectively, Praxair issued $350 million of 3.95% notes due 2013 and $300 million of 2.75% notes due 2008. The proceeds of these debt issuances were used to refinance commercial paper and purchase $339 million of previously leased assets. Also during 2003, $9 million of long-term debt was assumed through the consolidation of an equity investment in China.

During December 2004, Praxair terminated and replaced its $1 billion credit agreement with a five-year $1 billion senior unsecured credit facility with a syndicate of banks that expires in 2009. At December 31, 2003, Praxair classified $234 million commercial paper and certain other short-term debt as long-term because of the company’s intent to refinance the debt on a long-term basis and the availability of such financing under the terms of its previous $1 billion credit agreement. At December 31, 2004, such borrowings have been classified as current liabilities because of the company’s intent to repay such borrowings within one year. No borrowings were outstanding under either credit agreement at December 31, 2004 or 2003. Associated fees were not significant in each of the past three years.

At December 31, 2004 and 2003, the weighted-average interest rate on commercial paper and U.S. bank borrowings was 1.5% and 1.2%, respectively.

Praxair's major bank credit and long-term debt agreements contain various covenants which may, among other things, restrict the ability of Praxair to merge with another entity, incur or guarantee debt, sell or transfer certain assets, create liens against assets, enter into sale and leaseback agreements, or pay dividends and make other distributions beyond certain limits. These agreements also require Praxair to meet leverage ratios as defined in the agreements.

AR-54
Excluding the European credit facility, scheduled maturities on long-term debt are: 2005, $195 million; 2006, $287 million; 2007, $525 million; 2008, $557 million; 2009, $5 million and $889 million thereafter. At December 31, 2004, $77 million of Praxair's assets (principally international fixed assets) were pledged as collateral for long-term debt including the current portion of long-term debt.

At December 31, 2004, the estimated fair value of Praxair's long-term debt portfolio was $3,176 million versus a carrying value of $3,071 million. At December 31, 2003, the estimated fair value of Praxair's long-term debt portfolio was $2,957 million versus a carrying value of $2,683 million. These differences are attributable to interest rate changes subsequent to when the debt was issued.


NOTE 15. FINANCIAL INSTRUMENTS

The following table is a summary of the notional amount of currency derivatives outstanding at December 31, 2004 and 2003 (all maturities within one year):
 
(Millions of dollars)
 
2004
 
2003
 
           
Currency contracts
             
Balance sheet items
 
$
679
 
$
501
 
Firm commitments
   
-
   
1
 
Anticipated net income
   
-
   
10
 
   
$
679
 
$
512
 
               

At December 31, 2004, the fair value of all derivative contracts has been recorded in the consolidated balance sheet as $11 million in current assets ($4 million in current assets and $2 million in current liabilities at December 31, 2003). There were no interest-rate derivatives outstanding at December 31, 2004 or 2003.  


Interest Rate Swaps

During 2002, Praxair entered into and terminated $500 million notional amount of interest-rate swap agreements that effectively converted fixed-rate interest to variable-rate interest on the $500 million 6.375% notes that mature in April 2012. The termination resulted in a cash gain of $47 million, which Praxair recognized in earnings and was equally offset with a charge to earnings for the changes in fair value of the underlying debt instrument. The fair value increase to the $500 million 6.375% notes of $47 million is being recognized in earnings as a reduction to interest expense over the remaining original term of the underlying debt, or about ten years. The $47 million cash payment received upon termination of the swap is shown in minority transactions and other in the financing section in the 2002 consolidated statement of cash flows. For the year ended December 31, 2004, $5 million was recognized in earnings as a reduction to interest expense ($5 million and $2 million during the years ended December 31, 2003 and 2002, respectively) and $35 million remains unrecognized at December 31, 2004 ($40 million at December 31, 2003) (see Note 14).


Currency Contracts

Praxair enters into currency-exchange forward contracts to manage its exposure to fluctuations in foreign-currency exchange rates. Hedges of balance sheet items are related to recorded balance-sheet exposures, including inter-company transactions. Hedges of firm commitments are for purchases of equipment related to in-progress construction projects. Additionally, at December 31, 2004, there is $7 million of notional value of currency-exchange contracts that effectively offset each other (none at December 31, 2003).

There are no net-income hedges outstanding at December 31, 2004. The net-income hedges outstanding at December 31, 2003 were related to anticipated 2004 net income in Canada. The amounts recorded in Other income (expenses) - net as a result of net-income hedging contracts includes a loss of $2 million in 2004, a loss of $9 million in 2003, and a gain of $17 million in December 31, 2002 (see Note 6).

Counterparties to currency-exchange forward contracts are primarily major banking institutions with credit ratings of investment grade or better and no collateral is required. There are no significant risk concentrations. Management believes the risk of incurring losses on derivative contracts related to credit risk is remote and any losses would be immaterial.
 
AR-55

NOTE 16. SHAREHOLDERS' EQUITY

At December 31, 2004, there were 800,000,000 shares of common stock authorized (par value $0.01 per share) of which 359,790,504 shares were issued and 323,620,778 were outstanding.

In 2004, the board of directors of Praxair declared a dividend of one purchase right (a "Right") for each share of Praxair's common stock held of record at the close of business on April 30, 2004; and that dividend was paid on May 3, 2004. On May 3, 2004, all prior Rights then outstanding expired. In addition, one Right is deemed to be delivered with and attached to each share of Praxair's common stock issued after April 30, 2004 and before the redemption or expiration of the Rights. Each Right entitles its registered holder, when exercised under certain circumstances, to purchase for $150.00 (subject to adjustment and referred to as the "Exercise Price") certain securities or assets of Praxair or a surviving entity. The Rights will expire on May 2, 2009, unless exchanged or redeemed prior to that date or unless extended by action of Praxair’s stockholders prior to that date. The redemption price is $0.001 per Right.

The Rights may not be exercised until at least 10 days after a person or group acquires 20 percent or more of Praxair's common stock, or commences a tender offer that, if consummated, would result in 20 percent or more ownership of Praxair's common stock. Separate Rights certificates will not be issued and the Rights will not be traded separately from the stock until such time. At no time will a Right confer any voting power to its holder.

Should an acquirer become the beneficial owner of 20 percent or more of Praxair's common stock (other than as approved by Praxair's board of directors) and under certain additional circumstances, Praxair Right-holders (other than the acquirer) would have the right to buy common stock in Praxair, or in the surviving entity if Praxair is acquired, having a value of two times the Exercise Price then in effect. Alternatively, Praxair’s board of directors may elect to exchange all of the Rights (other than the acquirer's Rights which will have become void) at an exchange ratio of one share of Praxair common stock (and/or other securities, cash or other assets having equal value) per Right (subject to adjustment). Also, under certain circumstances, each Right may entitle the holder to purchase one one-hundredth share of preferred stock or such amount of preferred stock may be substituted for each share of common stock issuable upon the exercise or exchange of a Right.

Praxair's board of directors may redeem the Rights by a majority vote at any time prior to the 10th day following public announcement that a person or group has acquired 20 percent of Praxair's common stock. In addition, under circumstances of a “qualifying offer” as defined in the agreement by which the Rights were issued (the Stockholder Protection Rights Agreement as approved by Praxair’s shareholders at the April 27, 2004 Annual Meeting of Shareholders) the Rights may be redeemed upon the vote, at a special meeting, in favor of such redemption by shareholders representing a majority of the shares then outstanding.


NOTE 17. PREFERRED STOCK

At December 31, 2004 and 2003, there were 25,000,000 shares of preferred stock (par value $0.01 per share) authorized, of which no shares were issued and outstanding. No dividends may be paid on Praxair common stock unless preferred stock dividends have been paid, and the preferred stock has limited voting rights. Dividends on preferred stock are included in minority interests on the consolidated statement of income.

In September 2002, the company redeemed all 200,000 outstanding shares of its Series B 6.75% cumulative preferred stock at $100 per share, or $20 million. This is shown in the financing section of the consolidated statement of cash flows in the caption minority transactions and other.

AR-56

NOTE 18. INCENTIVE PLANS AND STOCK OPTIONS

As of March 1, 2001, the 1996 Praxair, Inc. Performance Incentive Plan (the 1996 Plan) was terminated, and at December 31, 2001, the 1992 Praxair Long-Term Incentive Plan (the 1992 Plan) expired. Stock option and other incentive compensation awards granted by the company through December 31, 2001 were made under these plans. Both plans provided for granting nonqualified or incentive stock options, stock grants, performance awards, and other stock-related incentives for key employees. The exercise price for incentive stock options was equal to the closing price of Praxair's common stock on the date of the grant. Options that were granted under both plans became exercisable only after one or more years and the option term could be no more than ten years.

On February 28, 2001, the board of directors of the company adopted the 2002 Praxair, Inc. Long-Term Incentive Plan (the 2002 Plan), which became effective on January 1, 2002. The shareholders approved the Plan at Praxair's annual meeting in April 2001. Under the 2002 Plan, the initial number of shares available for option or stock grants was limited to a total of 15,800,000 shares. In April 2004, the shareholders approved an increase to the number of shares available for option or stock grants under the 2002 plan to 31,600,000 shares. As of December 31, 2004, 21,398,942 shares were available for option or stock grants under this plan. The 2002 Plan provides for the granting of only nonqualified and incentive stock options, stock grants and performance awards and further provides that the aggregate number of shares granted as restricted stock or pursuant to performance awards may not exceed 20% of the total shares available under the Plan. The 2002 Plan also provides calendar year per-participant limits on grants of options, restricted stock and performance awards. Exercise prices for options granted under the 2002 Plan may not be less than the closing market price of the company's common stock on the date of grant and granted options may not be repriced or exchanged without shareholder approval. Options granted under the 2002 Plan become exercisable after a minimum of one year and have a maximum duration of ten years. Both officer and non-officer employees are eligible for awards under the 2002 Plan.
 
The following table summarizes the changes in outstanding shares under option and performance share equivalents for 2004, 2003, and 2002 (options are expressed in thousands):
 
       
Weighted Average
 
Activity
 
Options
 
Exercise Price
 
           
Outstanding at December 31, 2001
   
31,004
 
$
20.51
 
Granted
   
2,648
 
$
28.38
 
Exercised
   
(7,626
)
$
17.47
 
Cancelled or expired
   
(236
)
$
23.86
 
Outstanding at December 31, 2002
   
25,790
 
$
22.18
 
               
Granted
   
3,967
 
$
26.46
 
Exercised
   
(7,052
)
$
20.16
 
Cancelled or expired
   
(251
)
$
26.08
 
Outstanding at December 31, 2003
   
22,454
 
$
23.52
 
               
Granted
   
3,945
 
$
36.67
 
Exercised
   
(4,757
)
$
21.75
 
Cancelled or expired
   
(109
)
$
26.18
 
Outstanding at December 31, 2004
   
21,533
 
$
26.29
 
               
Exercisable at
             
December 31, 2002
   
17,240
 
$
20.78
 
December 31, 2003
   
13,985
 
$
22.10
 
December 31, 2004
   
14,205
 
$
23.29
 
 
 
The following table summarizes information about options outstanding and exercisable at December 31, 2004 (options are expressed in thousands; averages are calculated on a weighted basis; life in years):

   
Outstanding
 
Exercisable
 
   
Average
 
Number
 
Average
 
Number
 
Average
 
Range of
 
Remaining
 
of
 
Exercise
 
of
 
Exercise
 
Exercise Prices
 
Life
 
Options
 
Price
 
Options
 
Price
 
$10.38 - $21.97
   
4.1
   
3,536
 
$
19.06
   
3,536
 
$
19.06
 
$22.01 - $25.56
   
5.1
   
5,944
 
$
22.45
   
5,941
 
$
22.45
 
$26.06 - $30.00
   
7.3
   
8,144
 
$
27.28
   
4,728
 
$
27.53
 
$36.58 - $44.27
   
9.2
   
3,909
 
$
36.67
   
-
 
 
-
 
$10.38 - $44.27
   
6.5
   
21,533
 
$
26.29
   
14,205
 
$
23.29
 
                                 

 

AR-57

NOTE 19. RETIREMENT PROGRAMS

Pensions - Praxair has two main U.S. retirement programs which are non-contributory defined benefit plans: the Praxair Pension Plan (formerly, the Retirement Program Plan for Employees of Praxair, Inc. and Participating Subsidiary Companies) and the CBI Pension Plan. The latter program primarily benefits former employees of CBI Industries, Inc. which Praxair acquired in 1996. Effective July 1, 2002, the Praxair Retirement Program was amended to give participating employees a one-time choice to remain covered by the old formula or to elect coverage under a new formula. The old formula is based predominantly on years of service, age and compensation levels prior to retirement, while the new formula provides for an annual contribution to an individual account which grows with interest each year at a predetermined rate. Also, this new formula applies to all new employees hired into businesses adopting this plan. U.S. pension plan assets are comprised of a diversified mix of investments, including domestic and international corporate equities, government securities and corporate debt securities. Pension coverage for employees of certain of Praxair's international subsidiaries generally is provided by those companies through separate plans. Obligations under such plans are primarily provided for through diversified investment portfolios, with some smaller plans provided for under insurance policies or by book reserves.

Praxair's U.S. packaged gases business has a defined contribution plan. Company contributions to this plan are calculated as a percentage of salary based on age plus service. Praxair's U.S. healthcare business sponsors a defined contribution plan which provides for a matching contribution as well as a company contribution that is not dependent on employee contributions. In both plans, U.S. employees may supplement the company contributions up to the maximum allowable by IRS regulations. Certain international subsidiaries of the company also sponsor defined contribution plans where contributions are determined under various formulas. The cost for these defined contribution plans was $9 million in 2004, $8 million in 2003 and $7 million in 2002 (not included in the tables that follow).

U.S. employees other than those in the packaged gases and healthcare businesses are eligible to participate in a defined contribution savings plan. Employees may contribute up to 40% of their compensation, subject to the maximum allowable by IRS regulations. Company contributions to this plan are calculated on a graduated scale based on employee contributions to the plan. The cost for this plan was $12 million both in 2004 and 2003, and $11 million in 2002 (the cost is not included in the tables that follow).

Postretirement Benefits Other Than Pensions (OPEB) - Praxair provides health care and life insurance benefits to certain eligible retired employees. These benefits are provided through various insurance companies and health care providers. Praxair is also obligated to make payments for a portion of postretirement benefits related to retirees of Praxair's former parent. Additionally, as part of the CBI acquisition in 1996, Praxair assumed responsibility for health care and life insurance benefit obligations for CBI's retired employees. All postretirement health care programs have cost caps that limit the company's exposure to future cost increases. In addition, as part of the election made for July 1, 2002, all current employees were given the choice of maintaining coverage in retirement under the current plan, or to move to a plan whereby coverage would be provided, but with no Praxair subsidy whatsoever. Also, all new employees hired into a business adopting these plans will not receive a company subsidy. Praxair does not currently fund its postretirement benefits obligations. Praxair retiree plans may be changed or terminated by Praxair at any time for any reason with no liability to current or future retirees.

Praxair uses a measurement date of December 31 for the majority of its pension and other postretirement benefit plans.
 

AR-58

Pension and Postretirement Benefit Costs

The components of net pension and OPEB costs for 2004, 2003 and 2002 are shown below:
 
(Millions of dollars)
 
Pensions
 
OPEB
 
Year Ended December 31,
 
2004
 
2003
 
2002
 
2004
 
2003
 
2002
 
Net Benefit Cost
                                     
Service cost
 
$
33
 
$
30
 
$
30
 
$
6
 
$
6
 
$
4
 
Interest cost
   
85
   
79
   
73
   
16
   
18
   
16
 
Expected return on assets
   
(91
)
 
(82
)
 
(86
)
 
-
   
-
   
-
 
Net amortization and deferral
   
10
   
(1
)
 
(2
)
 
(3
)
 
(5
)
 
(3
)
Net periodic benefit cost
 
$
37
 
$
26
 
$
15
 
$
19
 
$
19
 
$
17
 

The changes in projected benefit obligation (PBO) and plan assets and the funded status reconciliation as of December 31, 2004 and 2003 for Praxair’s significant pension and OPEB programs are shown below:
 
   
Pensions
         
(Millions of dollars)
 
2004
 
2003
 
OPEB
 
Year Ended December 31,
 
U.S.
 
INTL
 
U.S.
 
INTL
 
2004
 
2003
 
                           
Change in Benefit Obligation (PBO)
                                     
Benefit obligation, January 1
 
$
994
 
$
318
 
$
901
 
$
246
 
$
265
 
$
254
 
Service cost
   
23
   
11
   
21
   
8
   
6
   
5
 
Interest cost
   
63
   
22
   
61
   
17
   
16
   
17
 
Participant contributions
   
-
   
1
   
-
   
-
   
8
   
7
 
Actuarial loss (gain)
   
83
   
23
   
54
   
23
   
7
   
2
 
Benefits paid
   
(45
)
 
(17
)
 
(43
)
 
(15
)
 
(29
)
 
(26
)
Curtailment / settlement (gains)
   
-
   
(1
)
 
-
   
(1
)
 
-
   
-
 
Currency translation
   
-
   
30
   
-
   
40
   
3
   
6
 
Benefit obligation, December 31
 
$
1,118
 
$
387
 
$
994
 
$
318
 
$
276
 
$
265
 
                                       
Change in Plan Assets
                                     
Fair value of plan assets, January 1
 
$
644
 
$
319
 
$
518
 
$
230
  $  
-
  $  
-
 
Actual return on plan assets
   
66
   
24
   
138
   
58
   
-
   
-
 
Company contributions
   
110
   
9
   
25
   
9
   
-
   
-
 
Benefits paid (funded plans only)
   
(39
)
 
(17
)
 
(37
)
 
(14
)
 
-
   
-
 
Currency translation
   
-
   
31
   
-
   
36
   
-
   
-
 
Fair value of plan assets, December 31
 
$
781
 
$
366
 
$
644
 
$
319
  $  
-
  $
-
 
                                       
Funded Status Reconciliation
                                     
Funded status, December 31
$
(337
)
$
(21
)
$
(350
)
$
1
  $
(276
)
$
(265
)
Unrecognized (gains) losses-net
   
293
   
40
   
220
   
11
   
35
   
28
 
Unrecognized prior service cost
   
(5
)
 
3
   
(5
)
 
4
   
-
   
(4
)
Unrecognized transition amount
   
-
   
1
   
-
   
1
   
-
   
-
 
Net amount recognized, December 31
   
$
(49
)
$
23
   
$
(135
)
$
17
   
$
(241
)
 
$
(241
)
                                       
Amounts in the Balance Sheet
                                     
Prepaid benefit cost
 
$
-
 
$
72
 
$
-
 
$
67
 
$
-
 
$
-
 
Accrued benefit liability
   
(272
)
 
(68
)
 
(282
)
 
(55
)
 
(241
)
 
(241
)
Intangible assets
   
-
   
1
   
-
   
-
   
-
   
-
 
Accumulated other comprehensive income (loss)
   
223
   
18
   
147
   
5
   
-
   
-
 
Net amount recognized, December 31
  $
(49
)
$
23
  $
(135
)
$
17
  $
(241
)
  $
(241
)
                                       
Pension Plans with an Accumulated Benefit
                                     
Obligation in Excess of Plan Assets
                                     
Projected benefit obligation
 
$
1,118
 
$
246
 
$
994
 
$
200
   
N/A
   
N/A
 
Accumulated benefit obligation (ABO)
 
$
1,053
 
$
223
 
$
927
 
$
180
   
N/A
   
N/A
 
Fair value of plan assets
 
$
781
 
$
142
 
$
644
 
$
117
   
N/A
   
N/A
 
                                       
Other Information
                                     
Increase/(decrease) in minimum liability
                                     
included in other comprehensive income
 
$
76
 
$
13
  $
(16
)
$
3
 
$  
-
 
$  
-
 
Accumulated benefit obligation (ABO)
 
$
1,053
 
$
352
 
$
927
 
$
284
   
N/A
   
N/A
 
 
 
AR-59
 
 
 
Pensions
         
 
U.S.
 
INTL
 
OPEB
 
 
2004
 
2003
 
2004
 
2003
 
2004
 
2003
 
Weighted average assumptions used
                                 
to determine benefit obligations at December 31,
                                 
Discount rate
5.85
%
 
6.25
%
 
5.50
%
 
6.00
%
 
5.85
%
 
6.25
%
Rate of increase in compensation levels
3.00
%
 
3.25
%
 
3.00
%
 
3.25
%
 
N/A
   
N/A
 
                                   
                                   
Weighted average assumptions used to determine net
                                 
periodic benefit cost for years ended December 31,
                                 
Discount rate
6.25
%
 
6.75
%
 
6.00
%
 
6.25
%
 
6.25
%
 
6.75
%
Rate of increase in compensation levels
3.25
%
 
3.75
%
 
3.25
%
 
3.25
%
 
N/A
   
N/A
 
Expected long-term rate of return on plan assets (a)
8.50
%
 
8.50
%
 
7.75
%
 
8.00
%
 
N/A
   
N/A
 
 
(a)
For 2005, the expected long-term rate of return on plan assets will be 8.5% for the U.S. plans. Expected weighted average returns for international plans will vary. These rates are determined annually by management based on a weighted average of current and historical market trends, historical performance and the portfolio mix of investments.

 
   
OPEB
 
Assumed health care cost trend rates at December 31,
 
2005
 
2004
 
Health care cost trend assumed
   
9.00
%
 
10.00
%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
   
5.00
%
 
5.00
%
Year that the rate reaches the ultimate trend rate
   
2008
   
2008
 

These health care cost trend rate assumptions have an impact on the amounts reported. However, cost caps limit the impact on the net OPEB benefit cost in the U.S. To illustrate the effect, a one-percentage point change in assumed health care cost trend rates would have the following effects:
 
   
One-Percentage Point
 
(Millions of dollars)
 
Increase
 
Decrease
 
           
Effect on the total of service and interest
             
cost components of net OPEB benefit cost
 
$
1
  $
(1
)
Effect on OPEB benefit obligation
 
$
3
  $
(3
)

 

Pension Plan Assets

Praxair’s U.S. and international pension plans’ weighted-average asset allocations at December 31, 2004 and 2003, and the target allocation for 2005, by asset category are as follows:
 
    U.S.    INTL   
Asset Category
 
Target
 
2004
 
2003
 
Target
 
2004
 
2003
 
Equity securities (a)
   
60%-80
%
 
66
%
 
69
%
 
44
%
 
44
%
 
61
%
Debt securities
   
20%-40
%
 
33
%
 
31
%
 
54
%
 
54
%
 
37
%
Real estate
   
0
%
 
0
%
 
0
%
 
1
%
 
1
%
 
1
%
Other (b)
   
0
%
 
1
%
 
0
%
 
1
%
 
1
%
 
1
%



(a)  
Equity securities do not include any Praxair common stock.
(b)  
Primarily consists of cash equivalents and short-term investments.
 
 
AR-60

 
The investments of the U.S. pension plan are managed to meet the future expected benefit liabilities of the plan over the long term by investing in diversified portfolios consistent with prudent diversification and historical and expected capital market returns. When Praxair became an independent publicly traded company in 1992, its former parent retained all liabilities for its term-vested and retired employees. Praxair’s plan received assets and retained pension liabilities for its own active employee base. Therefore, the liabilities under the Praxair U.S. pension plan mature at a later date compared to pension funds of other similar companies. Investment strategies are reviewed by the board of  d irectors and investment performance is tracked against appropriate benchmarks.

The international pension plans are managed individually based on diversified investment portfolios, with different target asset allocations that vary for each plan.

Contributions

Pension contributions were $119 million in 2004 and $34 million in 2003. Estimates of 2005 contributions are in the range of $80 million to $85 million, of which $6 million is required. As of February 21, 2005, contributions of $59 million were paid to Praxair’s U.S. Pension Plans.

Estimated Future Benefit Payments

The following table presents estimated future benefit payments, net of participant contributions:
 
(Millions of dollars)
 
Pensions
   
Year Ended December 31,
 
U.S.
 
INTL
 
OPEB  
 
               
  2005  
$
49
 
$
20
 
$
24
 
  2006  
$
52
 
$
18
 
$
24
 
  2007  
$
55
 
$
19
 
$
24
 
  2008  
$
59
 
$
17
 
$
24
 
  2009  
$
62
 
$
18
 
$
24
 
2010 - 2014
 
$
383
 
$
96
 
$
117
 



NOTE 20. COMMITMENTS AND CONTINGENCIES

The company accrues liabilities for contingencies when management believes that a loss is probable and the amounts can be reasonably estimated. In the event any losses are sustained in excess of these accruals, they will be charged to income at that time. Commitments represent obligations such as those for future purchases of goods or services that are not yet recorded on the company’s balance sheet as liabilities. The company records liabilities for commitments when incurred (e.g. when the goods or services are received).

Praxair is subject to various lawsuits and government investigations arising out of the normal course of business. These actions are based upon alleged environmental, tax and antitrust claims, among others. While Praxair may incur a loss in connection with some of these actions, management does not anticipate that they will have a material adverse effect on the company’s consolidated financial position, results of operations or cash flows in any given year.

Among such matters are claims brought by welders alleging that exposure to manganese contained in welding fumes caused neurological injury. Praxair has never manufactured welding consumables. Such products were manufactured prior to 1985 by a predecessor company of Praxair. As of December 31, 2004, Praxair was a co-defendant with many other companies in 725 lawsuits alleging personal injury caused by manganese contained in welding fumes. The cases were pending in state and federal courts in Iowa, Illinois, Mississippi, Missouri, Texas, Louisiana, Georgia, West Virginia, Ohio, Arkansas, Indiana, Utah, Pennsylvania, Minnesota, Alabama, Massachusetts and Virginia.
 
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There were a total of 10,159 individual claimants in these cases. Two cases are class actions which have not been certified. All of the cases filed in or removed to federal courts have been (or are in the process of being) transferred by the Judicial Panel for Multidistrict Litigation to the U.S. District Court for the Northern District of Ohio for coordinated pretrial proceedings. The plaintiffs seek unspecified compensatory and, in most instances, punitive damages. In the past, Praxair has either been dismissed from the cases with no payment or has settled a few cases for nominal amounts. Praxair believes that it has meritorious defenses to these cases and intends to defend itself vigorously.

The following table sets forth Praxair's material commitments and contractual obligations as of December 31, 2004 excluding debt, leases, OPEB and long-term pension obligations (see Notes 5, 14, and 19):
 
(Millions of dollars)
 
 
 
 
 
 
 
Expiring through
 
Unconditional Purchase
 
Construction
 
Guarantees
 
December 31,
 
Obligations
 
Commitments
 
and Other
 
               
               
2005
 
$
117
 
$
231
 
$
43
 
2006
   
70
   
136
   
1
 
2007
   
41
   
14
   
2
 
2008
   
33
   
-
   
-
 
2009
   
32
   
-
   
-
 
Thereafter
   
117
   
-
   
14
 
   
$
410
 
$
381
 
$
60
 
                     

Unconditional purchase obligations of $410 million represent contractual commitments under various long- and short-term, take-or-pay arrangements with suppliers and are not included on Praxair’s balance sheet. These obligations are primarily minimum purchase commitments for electricity, natural gas and feedstock used to produce atmospheric gases, carbon dioxide and hydrogen. During 2004, payments under these contracts totaled $479 million, including $227 million for electricity and $192 million for natural gas. A significant portion of these risks is passed on to customers through similar take-or-pay contractual arrangements. Purchase obligations which are not passed along to customers do not represent a significant risk to Praxair. In addition, Praxair enters into contracts to purchase products and services that do not have minimum purchase provisions.

Construction commitments of $381 million represent outstanding commitments to customers or suppliers to complete authorized construction projects as of December 31, 2004. A significant portion of Praxair’s capital spending is related to the construction of new production facilities to satisfy customer commitments which may take a year or more to complete.

Guarantees and other of $60 million include $6 million related to required minimum pension contributions and $54 million related to Praxair’s contingent obligations under guarantees of certain debt of unconsolidated affiliates. Unconsolidated equity investees had total debt of approximately $193 million at December 31, 2004, which was non-recourse to Praxair with the exception of the guaranteed portions described above. Praxair has no financing arrangements with closely-held related parties.

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NOTE 21. QUARTERLY DATA (UNAUDITED)

 
(Dollar amounts in millions, except per share data)
             
2004
 
1Q
 
2Q
 
3Q
 
4Q
 
YEAR
 
                       
Sales
 
$
1,531
 
$
1,603
 
$
1,674
 
$
1,786
 
$
6,594
 
Cost of sales
 
$
908
 
$
966
 
$
1,019
 
$
1,094
 
$
3,987
 
Depreciation and amortization
 
$
139
 
$
140
 
$
145
 
$
154
 
$
578
 
Operating profit
 
$
260
 
$
274
 
$
280
 
$
289
 
$
1,103
 
Net income
 
$
164
 
$
175
 
$
177
 
$
181
 
$
697
 
                                 
Basic Per Share Data
                               
Net income
 
$
0.50
 
$
0.54
 
$
0.54
 
$
0.56
 
$
2.14
 
Weighted average shares (000’s)
   
326,394
   
325,786
   
326,447
   
324,936
   
325,891
 
                                 
Diluted Per Share Data
                               
Net income
 
$
0.49
 
$
0.53
 
$
0.53
 
$
0.55
 
$
2.10
 
Weighted average shares (000’s)
   
331,573
   
330,897
   
331,919
   
330,851
   
331,403
 
                                 
                                 
                                 
2003
   
1Q
   
2Q
 
 
3Q
   
4Q
   
YEAR
 
                                 
Sales
 
$
1,337
 
$
1,401
 
$
1,414
 
$
1,461
 
$
5,613
 
Cost of sales
 
$
804
 
$
833
 
$
832
 
$
859
 
$
3,328
 
Depreciation and amortization
 
$
122
 
$
127
 
$
133
 
$
135
 
$
517
 
Operating profit
 
$
215
 
$
223
 
$
240
 
$
244
 
$
922
 
Net income
 
$
130
 
$
150
 
$
150
 
$
155
 
$
585
 
                                 
Basic Per Share Data (a)
                               
Net income
 
$
0.40
 
$
0.46
 
$
0.46
 
$
0.47
 
$
1.79
 
Weighted average shares (000’s)
   
325,762
   
326,688
   
326,430
   
326,672
   
326,388
 
                                 
Diluted Per Share Data (a)
                               
Net income
 
$
0.39
 
$
0.45
 
$
0.45
 
$
0.47
 
$
1.77
 
Weighted average shares (000’s)
   
329,270
   
330,850
   
330,990
   
331,966
   
330,991
 


a)  
Earnings per share and weighted average shares outstanding have been adjusted, where applicable, to reflect the December 15, 2003 two-for-one stock split which was effected as a stock dividend (see Note 1).

 
AR-63
 
MANAGEMENT’S STATEMENT OF RESPONSIBILITY FOR FINANCIAL STATEMENTS

Praxair's consolidated financial statements are prepared by management, which is responsible for their fairness, integrity and objectivity. The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America applied on a consistent basis except for accounting changes as disclosed and include amounts that are estimates and judgments. All historical financial information in this annual report is consistent with the accompanying financial statements.

Praxair maintains accounting systems, including internal accounting controls, monitored by a staff of internal auditors, that are designed to provide reasonable assurance of the reliability of financial records and the protection of assets. The concept of reasonable assurance is based on recognition that the cost of a system should not exceed the related benefits. The effectiveness of those systems depends primarily upon the careful selection of financial and other managers, clear delegation of authority and assignment of accountability, inculcation of high business ethics and conflict-of-interest standards, policies and procedures for coordinating the management of corporate resources, and the leadership and commitment of top management.   In compliance with Section 404 of the Sarbanes-Oxley Act of 2002, effective in 2004 Praxair assessed its internal control over financial reporting and issued a report (see below).

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has completed an integrated audit of Praxair’s 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2004 and audits of its 2003 and 2002 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) as stated in their report appearing on page 65.

The Audit Committee of the Board of Directors, which consists solely of non-employee directors, is responsible for overseeing the functioning of the accounting system and related controls and the preparation of annual financial statements. The Audit Committee periodically meets with management, internal auditors and the independent accountants to review and evaluate their accounting, auditing and financial reporting activities and responsibilities, including management’s assessment of internal control over financial reporting. The independent registered public accounting firm and internal auditors have full and free access to the Audit Committee and meet with the committee, with and without management present.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Praxair’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of management, including the company’s principal executive officer and principal financial officer, the company conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (often referred to as COSO). Based on this evaluation, management concluded that the company’s internal control over financial reporting was effective as of December 31, 2004.

Praxair’s evaluation did not include the internal control over financial reporting relating to two acquisitions in 2004: the purchase of certain industrial gas assets and related businesses in Germany (German Acquisition) and the purchase of Home Care Supply, Inc. (HCS), a U.S. home-healthcare business. Total sales and assets for the German Acquisition represent 0.3% and 7.4% and for HCS represent 1.4% and 2.6%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2004 (see Note 3 to the consolidated financial statements on page 47).

Management’s assessment of the effectiveness of the company’s internal control over financial reporting as of December 31, 2004 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report appearing on page 65.


 
 
/s/ Dennis H. Reilley      
DENNIS H. REILLEY
Chairman, President and Chief Executive Officer
 
 
/s/ Patrick M. Clark    
PATRICK M. CLARK
Vice President and Controller
 
 
/s/ James S. Sawyer    
JAMES S. SAWYER
Senior Vice President and Chief Financial Officer
 
 
 
Danbury, Connecticut
February 21, 2005  


AR-64

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Praxair, Inc.:

We have completed an integrated audit of Praxair, Inc.’s 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2004 and audits of its 2003 and 2002 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated Financial Statements

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, shareholders’ equity and cash flows present fairly, in all material respects, the financial position of Praxair, Inc. and its subsidiaries at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Internal Control Over Financial Reporting

Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing on page 64 of the 2004 Annual Report to Shareholders, that the company maintained effective internal control over financial reporting as of December 31, 2004 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control - Integrated Framework issued by the COSO. The company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
 
AR-65
 
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded certain industrial gas assets and related businesses in Germany (German Acquisition) and Home Care Supply, Inc. from its assessment of internal control over financial reporting as of December 31, 2004 because they were acquired by the company in purchase business combinations during 2004. We have also excluded the German Acquisition and Home Care Supply, Inc. from our audit of internal control over financial reporting. Total sales and assets for the German Acquisition represent 0.3% and 7.4% and for Home Care Supply, Inc. represent 1.4% and 2.6%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2004.


/s/ PricewaterhouseCoopers LLP 
PricewaterhouseCoopers LLP
Stamford, Connecticut
February 21, 2005  

AR-66

FIVE-YEAR FINANCIAL SUMMARY
(Dollar amounts in millions, except per share data)
 
Year Ended December 31,
 
2004
 
2003
 
2002
 
2001(a)
 
2000(a)
 
From the Income Statement
                               
Sales
 
$
6,594
 
$
5,613
 
$
5,128
 
$
5,158
 
$
5,043
 
Cost of sales
   
3,987
   
3,328
   
2,950
   
3,060
   
3,075
 
Selling, general and administrative
   
869
   
766
   
751
   
699
   
683
 
Depreciation and amortization
   
578
   
517
   
483
   
499
   
471
 
Research and development
   
77
   
75
   
69
   
66
   
65
 
Other income (expenses) - net
   
20
   
(5
)
 
48
   
(34
)
 
(42
)
    Operating profit
   
1,103
   
922
   
923
   
800
   
707
 
Interest expense
   
155
   
151
   
206
   
224
   
224
 
    Income before taxes
   
948
   
771
   
717
   
576
   
483
 
Income taxes
   
232
   
174
   
158
   
135
   
103
 
     
716
   
597
   
559
   
441
   
380
 
Minority interests
   
(30
)
 
(24
)
 
(20
)
 
(18
)
 
(27
)
Income from equity investments
   
11
   
12
   
9
   
9
   
10
 
    Income before cumulative effect of accounting changes
   
697
   
585
   
548
   
432
   
363
 
Cumulative effect of accounting changes(b)
   
-
   
-
   
(139
)
 
(2
)
 
-
 
Net income
   
697
   
585
   
409
   
430
   
363
 
Add back goodwill amortization, net of tax
   
-
   
-
   
-
   
33
   
29
 
Net income excluding goodwill amortization (c)
 
$
697
 
$
585
 
$
409
 
$
463
 
$
392
 
                                 
Per Share Data(d)
                               
Basic earnings per share:
                               
Income before cumulative effect of accounting changes
 
$
2.14
 
$
1.79
 
$
1.68
 
$
1.34
 
$
1.14
 
                                 
Net income
 
$
2.14
 
$
1.79
 
$
1.26
 
$
1.33
 
$
1.14
 
Add back goodwill amortization, net of tax
   
-
   
-
   
-
   
0.10
   
0.09
 
Net income excluding goodwill amortization (c)
 
$
2.14
 
$
1.79
 
$
1.26
 
$
1.43
 
$
1.23
 
Diluted earnings per share:
                               
Income before cumulative effect of accounting changes
 
$
2.10
 
$
1.77
 
$
1.66
 
$
1.32
 
$
1.13
 
                                 
Net income
 
$
2.10
 
$
1.77
 
$
1.24
 
$
1.31
 
$
1.13
 
Add back goodwill amortization, net of tax
   
-
   
-
   
-
   
0.10
   
0.09
 
Net income excluding goodwill amortization (c)
 
$
2.10
 
$
1.77
 
$
1.24
 
$
1.41
 
$
1.22
 
                                 
Cash dividends per share
 
$
0.60
 
$
0.46
 
$
0.38
 
$
0.34
 
$
0.31
 
                                 
Weighted Average Shares Outstanding (000's) (d)
                               
Basic shares outstanding
   
325,891
   
326,388
   
325,536
   
323,020
   
318,246
 
Diluted shares outstanding
   
331,403
   
330,991
   
329,489
   
327,014
   
322,185
 
                                 
Other Information and Ratios
                               
Total debt
 
$
3,525
 
$
2,816
 
$
2,748
 
$
2,989
 
$
3,141
 
Capital expenditures and acquisitions (e)
 
$
1,597
 
$
1,056
 
$
611
 
$
808
 
$
994
 
Cash flow from operations
 
$
1,243
 
$
1,137
 
$
1,001
 
$
1,020
 
$
899
 
Cash flow from operations-to-debt ratio
   
35.3
%
 
40.4
%
 
36.4
%
 
34.1
%
 
28.6
%
Total assets at year end
 
$
9,878
 
$
8,305
 
$
7,401
 
$
7,715
 
$
7,762
 
Return on equity (f)
   
20.8
%
 
21.6
%
 
22.8
%
 
21.6
%
 
21.9
%
After-tax return on capital (f)
   
12.5
%
 
12.8
%
 
13.4
%
 
12.7
%
 
12.5
%
Debt-to-capital ratio (f)
   
47.9
%
 
46.2
%
 
52.3
%
 
53.1
%
 
55.5
%
Shares outstanding at year-end (000's) (d)
   
323,621
   
326,086
   
324,536
   
324,286
   
318,758
 
Number of employees
   
27,020
   
25,438
   
25,010
   
24,271
   
23,430
 


(a)  
In 2001, operating profit includes a $70 million pre-tax charge ($57 million after tax, or $0.17 per diluted share) related to restructuring and other actions (shown $7 million in cost of sales; $5 million in selling, general and administrative expenses; and $58 million in other income (expense) - net). In 2000, operating profit includes a $159 million pre-tax charge and income from equity investments includes a $2 million charge ($117 million after tax, or $0.36 per diluted share) related to repositioning and special charges (shown $47 million in cost of sales; $21 million in selling, general and administrative expenses; and $91 million in other income (expenses) - net). These items are collectively referred to as special items.

(b)  
2002 and 2001 net income include the cumulative effect of accounting changes relating to the implementation of new accounting standards for goodwill impairment and derivatives, respectively.

(c)  
Adjusted net income excludes amortization of goodwill prior to 2002 (see Note 2 to the consolidated financial statements).

(d)  
Per share data, weighted average and total shares outstanding have been adjusted, where applicable, to reflect the December 15, 2003 two-for-one stock split which was effected as a stock dividend (see Note 1 to the consolidated financial statements).

(e)  
Capital expenditures and acquisitions for 2004 include the acquisition of HCS in June for $245 million and the German Acquisition in December for $667 million (see Note 3 to the consolidated financial statements). Capital expenditures and acquisitions for 2003 include the purchase of previously leased assets for $339 million (see Note 5 to the consolidated financial statements).

(f)  
Non-GAAP measure. See the Appendix on page 68 for definitions and reconciliation to reported amounts.


AR-67

APPENDIX

The company presents the following non-GAAP financial measures on the inside front cover and page 36-38 and 67 of this annual report:
 
(Dollar amounts in millions, except per share data)
             
Year ending December 31,
 
2004
 
2003
 
2002
 
2001
 
2000
 
                       
After-tax return on capital
   
12.5
%
 
12.8
%
 
13.4
%
 
12.7
%
 
12.5
%
Return on equity
   
20.8
%
 
21.6
%
 
22.8
%
 
21.6
%
 
21.9
%
Debt-to-capital
   
47.9
%
 
46.2
%
 
52.3
%
 
53.1
%
 
55.5
%



After-Tax Return on Capital

After-tax return on capital is defined as after-tax operating profit plus income from equity investments, divided by average capital, and excluding special items. Capital is comprised of total debt, minority interests, shareholders’ equity and preferred stock. Praxair’s definition of after-tax return on capital may not be comparable to similar definitions used by other companies. The company believes that its after-tax return on invested capital is an appropriate measure for judging performance as it reflects the approximate after-tax profit earned as a percentage of investments by all parties in the business (debt, minority interest, preferred stock, and shareholders’ equity).
 
(Dollar amounts in millions)
                     
Year ending December 31,
 
2004
 
2003
 
2002
 
2001
 
2000
 
                       
Adjusted operating profit (a)
 
$
1,103
 
$
922
 
$
923
 
$
908
 
$
899
 
Less: reported taxes
   
(232
)
 
(174
)
 
(158
)
 
(135
)
 
(103
)
Less: tax benefit on interest expense (b)
   
(39
)
 
(36
)
 
(46
)
 
(50
)
 
(50
)
Less: tax benefit on goodwill amortization
   
-
   
-
   
-
   
(5
)
 
(4
)
Less: tax benefit on special items
   
-
   
-
   
-
   
(13
)
 
(44
)
Add back: equity income
   
11
   
12
   
9
   
9
   
10
 
Add back: special items - equity income
   
-
   
-
   
-
   
-
   
2
 
Net operating profit after tax (NOPAT)
 
$
843
 
$
724
 
$
728
 
$
714
 
$
710
 
                                 
Beginning capital
 
$
6,099
 
$
5,252
 
$
5,627
 
$
5,656
 
$
5,719
 
Ending capital (c)
 
$
7,358
 
$
6,099
 
$
5,252
 
$
5,627
 
$
5,656
 
Average capital
 
$
6,729
 
$
5,676
 
$
5,440
 
$
5,642
 
$
5,688
 
                                 
After-tax return on capital (c,d)
   
12.5
%
 
12.8
%
 
13.4
%
 
12.7
%
 
12.5
%
                                 


(a)  
Reported operating profit for 2001 of $800 million has been adjusted to $908 million from the add-back of $38 million of goodwill amortization and $70 million of special items relating to restructuring and repositioning charges. Reported operating profit for 2000 of $707 million has been adjusted to $899 million from the add-back of $33 million of goodwill amortization and $159 million of special items relating to restructuring and repositioning charges. See footnote (a) under the Five Year Financial Summary on page 67 for further details about the special items.
(b)  
Tax benefit on interest expense is computed using the effective rate adjusted for non-recurring income tax benefits and charges. The effective rates used were as follows: 2004, 25%; 2003, 24%; 2002, 22%; 2001, 22%; and 2000, 22%.
(c)  
2003 ending capital includes the impact of the purchase of previously leased assets for $339 million (see Note 5 to the consolidated financial statements). Consequently, after-tax return on capital was reduced by 0.4% for 2003 and 0.8% thereafter
(d)  
After-tax return on capital was reduced by 0.6% in 2004 due to the German Acquisition in December (see Note 3 to the consolidated financial statements).

Return on Equity

Return on equity is defined as income before accounting changes, excluding special items and goodwill amortization, divided by average shareholders’ equity. Praxair’s definition of return on equity may not be comparable to similar definitions used by other companies. The company believes that its return on equity is an appropriate measure for judging performance for shareholders.
 
(Dollar amounts in millions)
                     
Year ending December 31,
 
2004
 
2003
 
2002
 
2001
 
2000
 
                       
Adjusted income before
   
   
   
             
accounting change (a)
 
$
697
 
$
585
 
$
548
 
$
522
 
$
509
 
Beginning shareholders’ equity
 
$
3,088
 
$
2,340
 
$
2,477
 
$
2,357
 
$
2,290
 
Ending shareholders’ equity
 
$
3,608
 
$
3,088
 
$
2,340
 
$
2,477
 
$
2,357
 
Average shareholders’ equity
 
$
3,348
 
$
2,714
 
$
2,409
 
$
2,417
 
$
2,324
 
                                 
Return on equity
   
20.8
%
 
21.6
%
 
22.8
%
 
21.6
%
 
21.9
%
                                 

(a)  
Reported income before accounting changes for 2001 of $432 million has been adjusted to $522 million from the add-back of $33 million of goodwill amortization and $57 million of special items relating to restructuring and repositioning charges, net of their related tax impact. Reported income before accounting changes for 2000 of $363 million has been adjusted to $509 million from the add-back of $29 million of goodwill amortization and $117 million of special items relating to restructuring and repositioning charges, net of their related tax impact. See footnote (a) under the Five Year Financial Summary on page 67 for further details about the special items.


Debt-to-Capital

Debt-to-capital is defined as debt divided by total capital. Total capital consists of debt, minority interests, preferred stock and shareholders’ equity. Praxair’s definition of debt-to-capital may not be comparable to similar definitions used by other companies. The company believes that debt-to-capital is appropriate for measuring its financial leverage.
 
(Dollar amounts in millions)
                     
Year ending December 31,
 
2004
 
2003
 
2002
 
2001
 
2000
 
                       
Total capital
                               
Debt
 
$
3,525
 
$
2,816
 
$
2,748
 
$
2,989
 
$
3,141
 
Minority interests
   
225
   
195
   
164
   
141
   
138
 
Preferred stock
   
-
   
-
   
-
   
20
   
20
 
Shareholders' equity
   
3,608
   
3,088
   
2,340
   
2,477
   
2,357
 
   
$
7,358
 
$
6,099
 
$
5,252
 
$
5,627
 
$
5,656
 
                                 
Debt-to-capital ratio
   
47.9
%
 
46.2
%
 
52.3
%
 
53.1
%
 
55.5
%
                                 
 
 
AR-68

INVESTOR INFORMATION

Elizabeth T. Hirsch, Director, Investor Relations
Praxair, Inc.
39 Old Ridgebury Road
Danbury, Connecticut 06810-5113
e-mail: investor_relations@praxair.com
(203) 837-2210

Investor Information at   www.praxair.com/investors
Contact information
Stock information
Business trends
Presentations
Annual reports
Quarterly earnings
Earnings Guidance
SEC filings
Governance
Sustainability Report
FAQs
Five-year financial summary
Financial news

Common Stock Listing (symbol: PX)
New York Stock Exchange

Other Stock Exchanges Trading Praxair Stock

Cincinnati
Midwest
Pacific

Number of Shareholders
There were 22,617 registered shareholders of record as of December 31, 2004.

Dividend Policy
Dividends on Praxair's common stock are usually declared and paid quarterly. Praxair’s objective is to continue quarterly dividends and consider annual dividend increases in conjunction with continued growth in earnings per share.

Dividend reinvestment plan
Praxair provides investors a convenient, low-cost program that allows purchases of Praxair stock without commissions and automatically reinvests dividends by purchasing additional shares of stock. Contact Shareholder Relations at Registrar and Transfer Company for full details at the address above.

Stock Transfer Agent and Stock Record Keeping
Registrar and Transfer Company is Praxair's stock transfer agent and registrar, and maintains shareholder records. For information about account records, stock certificates, change of address and dividend payments, contact:
1-800-368-5948
e-mail address for investor inquiries: info@rtco.com
website address: http://www.rtco.com

Address shareholder inquiries to:
Shareholder Relations Department
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016

Annual shareholders meeting
The 2005 annual meeting of shareholders of Praxair, Inc. will be held at 9:30 a.m. on Tuesday, April 26, 2005 at the Sheraton Danbury, 18 Old Ridgebury Road, Danbury, Connecticut.

NYSE quarterly stock price and dividend information
Stock prices and dividends have been restated to reflect the December 15, 2003 two-for-one stock split (see Note 1 to the consolidated financial statements).

 
                   
Market Price
 
Trading High
 
Trading Low
 
Close
 
Dividend Per Share
 
                   
2004
                 
First Quarter
 
$
38.76
 
$
34.52
 
$
37.12
 
$
0.15
 
Second Quarter
 
$
40.14
 
$
34.80
 
$
39.91
 
$
0.15
 
Third Quarter
 
$
43.03
 
$
37.59
 
$
42.74
 
$
0.15
 
Fourth Quarter
 
$
46.25
 
$
40.73
 
$
44.15
 
$
0.15
 
                           
2003
                         
First Quarter
 
$
30.07
 
$
25.02
 
$
28.18
 
$
0.1075
 
Second Quarter
 
$
31.95
 
$
27.95
 
$
30.05
 
$
0.1075
 
Third Quarter
 
$
32.90
 
$
29.34
 
$
30.98
 
$
0.1075
 
Fourth Quarter
 
$
38.26
 
$
31.15
 
$
38.20
 
$
0.1350
 
                           
2002
                         
First Quarter
 
$
30.56
 
$
23.98
 
$
29.90
 
$
0.095
 
Second Quarter
 
$
30.20
 
$
25.75
 
$
28.49
 
$
0.095
 
Third Quarter
 
$
29.30
 
$
22.28
 
$
25.56
 
$
0.095
 
Fourth Quarter
 
$
29.75
 
$
24.59
 
$
28.89
 
$
0.095
 
                           



AR-69




 

SUBSIDIARIES OF PRAXAIR, INC .

Praxair, Inc. and Subsidiaries
EXHIBIT 21.01
 
Place of Incorporation
   
640733 British Columbia Ltd.
British Columbia
Accent Cay Holdings Inc.
B.V.I.
Agas Servizi S.r.l.
Italy
American Home Oxygen and Hospital Equipment, Inc.
Florida
Amko Service Company
Ohio
Antwerpse Chemische Bedrijven (LCB) N.V.
Belgium
Argim Limited
Israel
Asian Surface Technologies Pte. Ltd.
Singapore
Asistir Ltda.
Colombia
AST Services, LLC
Delaware
Beijing Praxair Huashi Carbon Dioxide Co., Ltd.
China
Caring Medical Supply Corp.
Pennsylvania
Carolina Home Health, Inc.
South Carolina
CBI Investments, Inc.
Delaware
Chanceller Servicos de Lavanderia Industrial Ltda.
Brazil
Coatec Gesellschaft Fur Oberflachenveredelung
 
   mbH & Co. KG
Germany
Consultora Rynuter S.A.
Uruguay
Craig Home Care, Inc.
Texas
Cryo Teruel S.A.
Spain
CSF Technology, LLC
Delaware
D’Angelo S.p.A.
Italy
Dayvault’s Home Medical, Inc.
North Carolina
Doctors Choice Home Medical Equipment of Largo, Inc.
Florida
Domolife S.r.l.
Italy
Dryce Italia S.r.l.
Italy
Eubask, S. L.
Spain
Fred E. McGilberry and Associates, Inc.
Texas
Gases Ensenada S.A.
Argentina
GNL Gemini Comercializacao e Logistica de Gas Ltda.
Brazil
Grenslandgas GmbH
Germany
Grupo Praxair S. de R.L. de C.V.
Mexico
Guangdong Praxair Shaogang Co., Ltd.
China
HCS Holdings, Inc.
Delaware
Helium Centre Pte Ltd.
Singapore
Hielo Seco Ltda.
Bolivia
Home Care Medical, Inc.
Florida
Home Care Supply, Inc.
Delaware
Home Care Supply, LLC
Texas
Home Hospital Services, Inc.
Texas
Indugas Holding B.V.
Netherlands
Indugas Invest B.V.
Netherlands
Indugas N.V.
Belgium
 
 
SUBSIDIARIES OF PRAXAIR, INC. (Continued)

 
Place of Incorporation
   
Indugas Netherland B.V.
Netherlands
Industria Paraguaya de Gases
Paraguay
Ingemedical Ltda.
Colombia
Innovative Membrane Systems, Inc.
Delaware
Integrar Comercio e Servicos Industriais Ltda.
Brazil
International Cryogenic Equipment Corporation
Delaware
Jalopy Shoppe, Inc.
Texas
Julio Pastafiglia & Cia. S.A.
Argentina
Kelvin Finance Company Limited
Ireland
Korea Liquid Carbonic Company, Ltd.
Korea
Kosmoid Finance
Ireland
Kosmoid Finance (UK) Limited
United Kingdom
Kunshan Praxair Co., Ltd.
China
L. Clausen & CIA. SRL
Uruguay
Liquid Carbonic Corporation
Delaware
Liquid Carbonic del Paraguay S.A.
Paraguay
Liquid Carbonic LNG International, Inc.
Delaware
Liquid Carbonic of Oklahoma, Inc.
Oklahoma
Liquido Carbonico Colombiana S.A.
Colombia
Liquid Quimica S.A.
Brazil
Magaldi Life S.r.l.
Italy
Malaysian Industrial Gas Company Sdn. Bhd.
Malaysia
Maxima Air Separation Center Limited
Israel
Maxima Medical Ltd.
Israel
McGaughey-Cresswell-Mann, Inc.
Texas
Medical Gases S.R.L.
Argentina
Medical Center Pharmacy of Boston, Inc.
Massachusetts
Medi-Rents, Inc.
Massachusetts
Medi-Rents of Maine, Inc.
Maine
Medi-Rents Business Trust
Massachusetts
MetFabCity Inc.
Delaware
M-R Medical, Inc.
Texas
Neotex Solucoes Ambientais Ltda.
Brazil
Newbridge Surgical Supplies, Inc.
New York
Nitraco N.V.
Belgium
Nitropet, S.A. de C.V.
Mexico
Nupharm, Inc.
Texas
O2 Investments, Inc.
Texas
O3 Investments, Inc.
Virginia
Old Danford S.A.
Uruguay
Oxigenos Camatagua, C.A.
Venezuela
Oxigenos de Colombia Ltda.
Colombia
Oxigenos del Valle de Mexico, S.A. de C.V.
Mexico
Oximesa S.L.
Spain
Oxirent
Argentina
Oxysaar Huttensauerstoff GmbH
Germany
Parkgas B.V.B.A.
Belgium
Praxair (Beijing) Semiconductor Gases Co., Ltd.
China
Praxair (China) Investment Co., Ltd.
China

SUBSIDIARIES OF PRAXAIR, INC. (Continued)

 
Place of Incorporation
   
Praxair (Huizhou) Industrial Gases Limited
China
Praxair (Nanjing) Carbon Dioxide Co. Ltd.
China
Praxair (Shanghai) Co., Ltd.
China
Praxair (Shanghai) Semiconductor Gases Co., Ltd.
China
Praxair (Thailand) Company, Ltd.
Thailand
Praxair (Wuhan), Inc.
China
Praxair (Yueyang) Co., Ltd.
China
Praxair Alberta Ltd.
Canada
Praxair Alberta Partnership
Canada
Praxair Asia Management Consulting (Shanghai)
 
Company Limited
China
Praxair Asia, Inc.
Delaware
Praxair Argentina S.A.
Argentina
Praxair B.V.
Netherlands
Praxair Bolivia, Ltda.
Bolivia
Praxair Canada Inc.
Canada
Praxair Carbondioxide Private Limited
India
Praxair Chemax Semiconductor Materials Co.
Taiwan
Praxair Chile Ltda.
Chile
Praxair CMP Products, Inc.
New Hampshire
Praxair e Companhia - Comercio e Servicos
Portugal
Praxair Costa Rica, S.A.
Costa Rica
Praxair Deer Park Cogen, Inc.
Delaware
Praxair Deutschland GmbH & Co. KG
Germany
Praxair Distribution, Inc.
Delaware
Praxair Distribution Southeast, LLC
Delaware
Praxair do Brasil Ltda.
Brazil
Praxair E-Services Private Limited
India
Praxair Energy Resources, Inc.
Delaware
Praxair Energy Services, Inc.
Delaware
Praxair España, S.L.
Spain
Praxair Euroholding, S.L.
Spain
Praxair Free Trade Zone Costa Rica, Ltd.
Costa Rica
Praxair Gases Alberta Ltd.
Canada
Praxair G.m.b.H.
Germany
Praxair Healthcare Services, Inc.
Delaware
Praxair Healthcare Services of Indiana, LLC
Delaware
Praxair Holding Company
Canada
Praxair Holding Latinoamerica, S.L.
Spain
Praxair Holding N.V.
Belgium
Praxair Holdings International, Inc.
Delaware
Praxair Hungary Kft
Hungary
Praxair Hydrogen Supply, Inc.
Delaware
Praxair Iberica, S.A.
Spain
Praxair India Private Limited
India
Praxair Industriegase GmbH & Co. KG
Germany
Praxair Industriegase Verwaltungs GmbH
Germany
Praxair Investments B.V.
Netherlands
Praxair K.K.
Japan

SUBSIDIARIES OF PRAXAIR, INC. (Continued)

 
Place of Incorporation
   
Praxair Korea Company Limited
South Korea
Praxair Latin America Holdings LLC
Delaware
Praxair Luxembourg Finance S.a.r.l.
Luxembourg
Praxair Management Services, Inc.
Delaware
Praxair Meishan (Nanjing)Co., Ltd.
China
Praxair Mexico, S.A. de C.V.
Mexico
Praxair Maritime Company
Canada
Praxair MRC S.A.S.
France
Praxair N.V.
Belgium
Praxair Pacific Limited
Mauritius
Praxair Partnership
Delaware
Praxair PC Partnership
Canada
Praxair Polska, SP. Z O.O
Poland
Praxair Paraguay S.R.L.
Paraguay
Praxair Peru S.R.L.
Peru
Praxair Plainfield, Inc.
Delaware
Praxair Portugal Gases S.A.
Portugal
Praxair Produccion Espana, S.L.
Spain
Praxair Production N.V.
Belgium
Praxair Puerto Rico B.V.
Netherlands
Praxair Puerto Rico, LLC
Delaware
Praxair S.A.S.
France
Praxair S.r.l.
Italy
Praxair S. T. Technology, Inc.
Delaware
Praxair Sante S.A.S.
France
Praxair Services (UK) Limited
United Kingdom
Praxair Services Canada Inc.
Canada
Praxair Services G.m.b.H.
Germany
Praxair Services, Inc.
Texas
Praxair Shanghai Meishan Inc.
China
Praxair Sixon (Anhui) Industrial Gases Co., Ltd.
China
Praxair Soldadura S.L.
Spain
Praxair Sudamerica, S.L.
Spain
Praxair Surface Holdings SARL
France
Praxair Surface Technologies do Brazil Ltda.
Brazil
Praxair Surface Technologies Co., Ltd.
Korea
Praxair Surface Technologies Espana S.A.
Spain
Praxair Surface Technologies (Europe) S.A.
Switzerland
Praxair Surface Technologies G.m.b.H.
Germany
Praxair Surface Technologies, Inc.
Delaware
Praxair Surface Technologies K.K.
Japan
Praxair Surface Technologies Ltd.
United Kingdom
Praxair Surface Technologies Mexico, S.A. de C.V.
Mexico
Praxair Surface Technologies Pte. Ltd.
Singapore
Praxair Surface Technologies S.A.S.
France
Praxair Surface Technologies S.p.A.
Italy
Praxair Taiwan Co., Ltd.
Taiwan
Praxair Technology, Inc.
Delaware
Praxair Technology Solutions, Inc.
Delaware

SUBSIDIARIES OF PRAXAIR, INC. (Continued)

 
Place of Incorporation
   
Praxair Uruguay Ltda.
Uruguay
Praxair Venezuela, S.C.A.
Venezuela
Praxair-Ozone, Inc.
Delaware
Praxair.com GmbH
Switzerland
Praxair & M.I. Services France S.a.r.l.
France
Praxair & M.I. Services, S.r.l.
Italy
Production Praxair Canada Inc.
Canada
Productos Especiales Quimicos, S.A.
Mexico
Quality Health Systems, Inc.
New York
Rapidox Gases Industriais Ltda.
Brazil
Ravenna Servizi Industriali S.C.p.A.
Italy
RBG Comercio de Metais Ltda.
Brazil
Rhee Beheer B.V.
Netherlands
Risorse S.p.A.
Italy
Rivoira S.p.A.
Italy
Sauerstoff und Stickstoffrohrleitungs
Germany
SGX Services Inc.
Canada
Shanghai Chemical Industry Park Industrial
 
    Gases Co., Ltd.
China
Shanghai Praxair-Yidian, Inc.
China
Smeding B.V.
Netherlands
Soudobeam S.A.
Belgium
Suncoast Medical Oxygen, Inc.
Florida
TAFA Incorporated
Delaware
The Infusion Network of Louisiana, Inc.
Louisiana
Tianjin Praxair Inc.
China
Topaz Consultora S.A.
Uruguay
Tradewinds Insurance Limited
Bermuda
Treffers Precision, Inc.
Arizona
Tri-Parish Rental, Inc.
Louisiana
Unigas Co., Ltd.
B.V.I.
Voets B.V.
Netherlands
Waldron and Kern, Inc.
Texas
Wall Chemicals, Inc.
Illinois
Welco-CGI Gas Technologies, LLC
Delaware
Weld Consult S.A.
Belgium
Wescott Enterprises, Inc.
South Carolina
Westair Cryogenics Company
Delaware
Westair Cryogenics Holding Company
Delaware
Westair Gas and Equipment, L.P.
Texas
White Martins e White Martins Comercio e Servicos
Portugal
White Martins de Camacari S.A.
Bahia
White Martins e Companhia Comercio e Servicos
Portugal
White Martins Gases Industriais do Nordeste S.A.
Brazil
White Martins Gases Industriais do Norte S.A.
Brazil
White Martins Gases Industriais Ltda.
Brazil
White Martins Investimentos Ltda.
Brazil
White Martins Participacoes Ltda.
Brazil


CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
Praxair, Inc. and Subsidiaries
EXHIBIT 23.01




We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 33-48480, 33-93444, 333-304, 333-18141, 333-40003, 333-57386 and 333-102020) and in the Registration Statements on Form S-8 (No. 33-48479, 33-48478, 33-87274, 33-92868, 33-18111, 333-18113, 333-33801, 333-64608, 333-81248, 333-97191, 333-115191 and 333-115192) of Praxair, Inc.   of our report dated February 21, 2005 relating to the financial statements, management's assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K.

/s/ PricewaterhouseCoopers LLP  
PricewaterhouseCoopers LLP
Stamford, Connecticut
March 1, 2005

RULE 13 a -14( a ) CERTIFICATIONS

Praxair, Inc. and Subsidiaries
Exhibit 31.01

I, Dennis H. Reilley, certify that:

1.  
I have reviewed this annual report on Form 10-K of Praxair, Inc.;
 
2.  
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.  
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.  
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
 
(a)  
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b)  
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c)  
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d)  
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.  
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent function):
 
(a)  
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b)  
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 

 
Date:  
  March 2 , 2005  
By: /s/ Dennis H. Reilley
       
     
Dennis H. Reilley
     
Chairman, President and
     
Chief Executive Officer
     
(principal executive officer)

RULE 13 a -14( a ) CERTIFICATIONS

Praxair, Inc. and Subsidiaries
Exhibit 31.02


I, James S. Sawyer, certify that:
 
1.  
I have reviewed this annual report on Form 10-K of Praxair, Inc.;
 
2.  
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.  
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
 
4.  
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
 
(a)  
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b)  
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c)  
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d)  
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.  
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent function):
 
(a)  
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b)  
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
 

 
Date:  
  March 2 , 2005  
By:  /s/ James S. Sawyer
       
     
James S. Sawyer
     
Senior Vice President and
     
Chief Financial Officer
     
(principal financial officer)

SECTION 1350 CERTIFICATION

Praxair, Inc. and Subsidiaries
EXHIBIT 32.01




Pursuant to 18 U.S.C. § 1350, the undersigned officer of Praxair, Inc. (the “Company”), hereby certifies that the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.




Date:  
  March 2 , 2005  
By: /s/ Dennis H. Reilley
       
     
Dennis H. Reilley
     
Chairman, President and
     
Chief Executive Officer
     
(principal executive officer)


The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

SECTION 1350 CERTIFICATION

Praxair, Inc. and Subsidiaries
EXHIBIT 32.02




Pursuant to 18 U.S.C. § 1350, the undersigned officer of Praxair, Inc. (the “Company”), hereby certifies that the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.




Date:  
  March 2 , 2005  
By: /s/ James S. Sawyer
       
     
James S. Sawyer
     
Senior Vice President and
     
Chief Financial Officer
     
(principal financial officer)



The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.