EXECUTION COPY
 
 
$150,000,000
SECOND AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of August 11, 2010
among
CONSUMERS ENERGY COMPANY,
as the Company,
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as the Banks,
UNION BANK, N.A.,
as Agent and an LC Issuer,
BARCLAYS CAPITAL, DEUTSCHE BANK SECURITIES INC,
AND THE ROYAL BANK OF SCOTLAND PLC,
as Co-Syndication Agents,
and
BNP PARIBAS,
as Documentation Agent
 
UNION BANK, N.A.,
as Sole Lead Arranger and Sole Bookrunner
 
 

 

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

 

TABLE OF CONTENTS

                      Page  
 
            ARTICLE I DEFINITIONS     1  
1.1
  Definitions     1  
1.2
  Interpretation     14  
1.3
  Accounting Terms     14  
 
            ARTICLE II THE ADVANCES     14  
2.1
  Commitment     14  
2.2
  Repayment     15  
2.3
  Ratable Loans     15  
2.4
  Types of Advances     15  
2.5
  Fees and Changes in Commitments     15  
2.6
  Minimum Amount of Advances     15  
2.7
  Optional Principal Payments     15  
2.8
  Method of Selecting Types and Interest Periods for New Advances     16  
2.9
  Conversion and Continuation of Outstanding Advances     16  
2.10
  Interest Rates, Interest Payment Dates     17  
2.11
  Rate after Maturity     17  
2.12
  Method of Payment; Sharing Set-Offs     17  
2.13
  Bonds; Record-keeping; Telephonic Notices     18  
2.14
  Lending Installations     19  
2.15
  Non-Receipt of Funds by the Agent     19  
 
            ARTICLE III LETTER OF CREDIT FACILITY     19  
3.1
  Issuance     19  
3.2
  Participations     20  
3.3
  Notice     20  
3.4
  LC Fees     20  
3.5
  Administration; Reimbursement by Banks     20  
3.6
  Reimbursement by Company     21  
3.7
  Obligations Absolute     21  
3.8
  Actions of LC Issuers     22  
3.9
  Indemnification     22  
3.10
  Banks’ Indemnification     23  
3.11
  Rights as a Bank     23  
 
            ARTICLE IV CHANGE IN CIRCUMSTANCES     23  
4.1
  Yield Protection     23  
4.2
  Replacement of Banks     24  
4.3
  Availability of Eurodollar Rate Loans     25  
4.4
  Funding Indemnification     25  
4.5
  Taxes     26  
4.6
  Bank Certificates, Survival of Indemnity     27  
4.7
  Defaulting Banks     28  

-i-

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

 

                      Page  
 
            ARTICLE V REPRESENTATIONS AND WARRANTIES     29  
5.1
  Incorporation and Good Standing     29  
5.2
  Corporate Power and Authority: No Conflicts     29  
5.3
  Governmental Approvals     29  
5.4
  Legally Enforceable Agreements     30  
5.5
  Financial Statements     30  
5.6
  Litigation     30  
5.7
  Margin Stock     30  
5.8
  ERISA     31  
5.9
  Insurance     31  
5.10
  Taxes     31  
5.11
  Investment Company Act     31  
5.12
  Bonds     31  
5.13
  Disclosure     31  
5.14
  OFAC     31  
5.15
  Delivery of Documents     31  
 
            ARTICLE VI AFFIRMATIVE COVENANTS     31  
6.1
  Payment of Taxes, Etc.     31  
6.2
  Maintenance of Insurance     32  
6.3
  Preservation of Corporate Existence, Etc.     32  
6.4
  Compliance with Laws, Etc.     32  
6.5
  Visitation Rights     32  
6.6
  Keeping of Books     32  
6.7
  Reporting Requirements     32  
6.8
  Use of Proceeds     34  
6.9
  Maintenance of Properties, Etc.     34  
6.10
  Bonds     34  
 
            ARTICLE VII NEGATIVE COVENANTS     34  
7.1
  Liens     35  
7.2
  Sale of Assets     36  
7.3
  Mergers, Etc.     36  
7.4
  Compliance with ERISA     36  
7.5
  Change in Nature of Business     36  
7.6
  Off-Balance Sheet Liabilities     36  
7.7
  Transactions with Affiliates     36  
 
            ARTICLE VIII FINANCIAL COVENANT     37  
 
            ARTICLE IX EVENTS OF DEFAULT     37  
9.1
  Events of Default     37  
9.2
  Remedies     38  
 
            ARTICLE X WAIVERS, AMENDMENTS AND REMEDIES     39  
10.1
  Amendments     40  
10.2
  Preservation of Rights     40  

-ii-

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

 

                      Page  
 
            ARTICLE XI CONDITIONS PRECEDENT     41  
11.1
  Effectiveness of this Agreement     41  
11.2
  Each Credit Extension     41  
 
            ARTICLE XII GENERAL PROVISIONS     42  
12.1
  Successors and Assigns     42  
12.2
  Survival of Representations     44  
12.3
  Governmental Regulation     44  
12.4
  Taxes     44  
12.5
  Choice of Law     44  
12.6
  Headings     44  
12.7
  Entire Agreement     44  
12.8
  Expenses; Indemnification     45  
12.9
  Severability of Provisions     45  
12.10
  Setoff     45  
12.11
  Ratable Payments     46  
12.12
  Nonliability     46  
12.13
  Other Agents     46  
12.14
  USA Patriot Act     46  
12.15
  Electronic Delivery     47  
12.16
  Amendment and Restatement     48  
12.17
  Confidentiality     48  
 
            ARTICLE XIII THE AGENT     49  
13.1
  Appointment     49  
13.2
  Powers     49  
13.3
  General Immunity     49  
13.4
  No Responsibility for Recitals, Etc.     49  
13.5
  Action on Instructions of Banks     49  
13.6
  Employment of Agents and Counsel     50  
13.7
  Reliance on Documents; Counsel     50  
13.8
  Agent’s Reimbursement and Indemnification     50  
13.9
  Rights as a Bank     50  
13.10
  Bank Credit Decision     50  
13.11
  Successor Agent     51  
13.12
  Agent and Arranger Fees     51  
 
            ARTICLE XIV NOTICES     52  
14.1
  Giving Notice     52  
14.2
  Change of Address     52  
 
            ARTICLE XV COUNTERPARTS     52  

-iii-

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

 

SCHEDULES

     
Schedule 1
  Pricing Schedule
Schedule 2
  Commitment Schedule

EXHIBITS

     
Exhibit A
  Required Opinions from James E. Brunner, Esq., General Counsel of the Company
Exhibit B
  Form of Compliance Certificate
Exhibit C
  Form of Assignment and Assumption Agreement
Exhibit D
  Terms of Subordination (Junior Subordinated Debt)
Exhibit E
  Terms of Subordination (Guaranty of Hybrid Equity Securities/Hybrid Preferred
Securities)

-iv-

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

 

SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
     This SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of
August 11, 2010, is among CONSUMERS ENERGY COMPANY, a Michigan corporation (the
“Company”), the financial institutions listed on the signature pages hereof
(together with their respective successors and assigns, the “Banks”) and UNION
BANK, N.A. (formerly Union Bank of California, N.A.), as Agent.
WITNESSETH:
     WHEREAS, the Company, the Banks and the Agent are parties to the Existing
Credit Agreement (as defined herein) pursuant to which, among other things, the
Banks agreed to enter, subject to the terms and conditions set forth therein,
into a credit facility in an aggregate amount of $150,000,000;
     WHEREAS, the parties hereto have agreed to amend and restate the Existing
Credit Agreement pursuant to the terms and conditions of this Agreement; and
     WHEREAS, the amendment and restatement of the Existing Credit Agreement
pursuant to this Agreement shall have the effect of a substitution of terms of
the Existing Credit Agreement, but will not have the effect of causing a
novation, refinancing or other repayment of the “Obligations” of the Company
under and as defined in the Existing Credit Agreement (hereinafter, the
“Original Obligations”), which Original Obligations shall remain repayable
pursuant to the terms of this Agreement (it being understood and agreed that no
“Loans” or “Reimbursement Obligations” under and as defined in the Existing
Credit Agreement remain outstanding as of the Amendment Effective Date);
     NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
     1.1 Definitions. As used in this Agreement:
     “Accounting Changes” — see Section 1.3.
     “Administrative Questionnaire” means an administrative questionnaire,
substantially in the form supplied by the Agent, completed by a Bank and
furnished to the Agent in connection with this Agreement.
     “Advance” means a group of Loans made by the Banks hereunder of the same
Type, made, converted or continued on the same day and, in the case of
Eurodollar Rate Loans, having the same Interest Period.
     “Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling (including all directors and officers of such Person),
controlled by, or under direct or indirect common control with such Person. A
Person shall be deemed to control another entity if

-1-

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

 

such Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such entity, whether through the
ownership of voting securities, by contract or otherwise.
     “Agent” means Union Bank, in its capacity as administrative agent for the
Banks pursuant to Article XIII, and not in its individual capacity as a Bank,
and any successor Agent appointed pursuant to Article XIII.
     “Aggregate Commitment” means the aggregate amount of the Commitments of all
Banks.
     “Aggregate Outstanding Credit Exposure” means, at any time, the aggregate
of the Outstanding Credit Exposure of all the Banks.
     “Agreement” means this Amended and Restated Revolving Credit Agreement, as
amended from time to time.
     “Alternate Base Rate” means, for any day, a rate per annum equal to the
highest of (i) the Reference Rate for such day, (ii) the sum of the Federal
Funds Effective Rate for such day plus 0.50% per annum and (iii) except during a
period when the Eurodollar Rate is unavailable pursuant to Section 4.3, the sum
of the Eurodollar Rate as quoted (for an Interest Period of one month) plus
1.00%.
     “Amendment Effective Date” means August 11, 2010.
     “Applicable Margin” means, with respect to Advances of any Type at any
time, the percentage rate per annum which is applicable at such time with
respect to Advances of such Type as set forth in Schedule 1.
     “Arranger” means Union Bank.
     “Assignment Agreement” — see Section 12.1(e).
     “Available Aggregate Commitment” means, at any time, the Available
Commitment then in effect minus the Aggregate Outstanding Credit Exposure at
such time.
     “Available Commitment” means, at any time, the lesser of (i) the Aggregate
Commitment and (ii) the face amount of the Bonds.
     “Banks” — see the preamble.
     “Base Eurodollar Rate” means, with respect to a Eurodollar Advance for the
relevant Interest Period, the per annum interest rate determined by the offered
rate per annum at which deposits in U.S. dollars, for a period equal or
comparable to such Interest Period, appears on page 3750 (or any successor page)
of the Dow Jones Market Service as of 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period, or in the event such offered
rate is not available from the Dow Jones Market Service page, the average rate
offered on deposits in U.S. dollars, for a period equal or comparable to such
Interest Period, to the Agent by

-2-

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

 

prime banks in the London interbank market at approximately 11:00 a.m. (London
time), two Business Days prior to the first day of such Interest Period, and in
an amount substantially equal to the amount of Union Bank’s relevant Eurodollar
Rate Loan for such Interest Period (or, in the event that Union Bank is not a
Bank hereunder, in the amount of $5,000,000).
     “Bond Delivery Agreement” means that certain Bond Delivery Agreement, dated
as of the Original Closing Date, between the Company and the Agent, as the same
may be amended, restated, supplemented or otherwise modified from time to time.
     “Bonds” means the series of interest-bearing First Mortgage Bonds created
under the Supplemental Indenture and issued in favor of the Agent.
     “Borrowing Date” means a date on which a Credit Extension is made
hereunder.
     “Borrowing Notice” — see Section 2.8.
     “Business Day” means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in New York, New York and Los Angeles, California
for the conduct of substantially all of their commercial lending activities,
interbank wire transfers can be made on the Fedwire system and dealings in
United States dollars are carried on in the London interbank market and (ii) for
all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in New York, New York and Los Angeles, California for the
conduct of substantially all of their commercial lending activities and
interbank wire transfers can be made on the Fedwire system.
     “Capital Lease” means any lease which has been or would be capitalized on
the books of the lessee in accordance with GAAP.
     “CMS” means CMS Energy Corporation, a Michigan corporation.
     “Code” means the Internal Revenue Code of 1986, as amended from time to
time.
     “Collateral Shortfall Amount” — see Section 9.2.
     “Commitment” means, for each Bank, the obligation of such Bank to make
Loans to, and participate in Facility LCs issued upon the application of, the
Company in an aggregate amount not exceeding the amount set forth on Schedule 2
or as set forth in any Assignment Agreement that has become effective pursuant
to Section 12.1, as such amount may be modified from time to time.
     “Commitment Fee” — see Section 2.5.
     “Commitment Fee Rate” means, at any time, the percentage rate per annum at
which Commitment Fees are accruing on the Unused Commitment as set forth in
Schedule 1.
     “Company” — see the preamble.
     “Consolidated Subsidiary” means any Subsidiary the accounts of which are or
are

-3-

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

 

required to be consolidated with the accounts of the Company in accordance with
GAAP.
     “Credit Documents” means this Agreement, the Facility LC Applications (if
any), the Supplemental Indenture, the Bond Delivery Agreement, the Proposal
Letter and the Bonds.
     “Credit Extension” means the making of an Advance or the issuance of a
Facility LC hereunder.
     “Debt” means, with respect to any Person, and without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all indebtedness of such
Person for the deferred purchase price of property or services (other than trade
accounts payable arising in the ordinary course of business which are not
overdue), (c) liabilities for accumulated funding deficiencies (prior to the
effectiveness of the applicable provisions of the Pension Protection Act of 2006
with respect to a Plan) and liabilities for failure to make a payment required
to satisfy the minimum funding standard within the meaning of Section 412 of the
Code or Section 302 of ERISA (on and after the effectiveness of the applicable
provisions of the Pension Protection Act of 2006 with respect to a Plan),
(d) all liabilities arising in connection with any withdrawal liability under
ERISA to any Multiemployer Plan, (e) all obligations of such Person arising
under acceptance facilities, (f) all obligations of such Person as lessee under
Capital Leases, (g) all obligations of such Person arising under any interest
rate swap, “cap”, “collar” or other hedging agreement; provided that for
purposes of the calculation of Debt for this clause (g) only, the actual amount
of Debt of such Person shall be determined on a net basis to the extent such
agreements permit such amounts to be calculated on a net basis, and (h) all
guaranties, endorsements (other than for collection in the ordinary course of
business) and other contingent obligations of such Person to assure a creditor
against loss (whether by the purchase of goods or services, the provision of
funds for payment, the supply of funds to invest in any Person or otherwise) in
respect of indebtedness or obligations of any other Person of the kinds referred
to in clauses (a) through (g) above.
     “Declining Bank” — see Section 12.15(a).
     “Default” means an event which but for the giving of notice or lapse of
time, or both, would constitute an Event of Default.
     “Defaulting Bank” means any Bank, as reasonably determined by the Agent,
that has (a) failed to fund any portion of its Loans or participations in
Facility LC (and any Modifications thereof) within three (3) Business Days of
the date required to be funded by it hereunder, unless the subject of a good
faith dispute, (b) notified the Company, the Agent, the LC Issuer or any Bank in
writing that it does not intend to comply with any of its funding obligations
under this Agreement or has made a public statement to the effect that it does
not intend to comply with its funding obligations under this Agreement or
generally under other agreements in which it commits to extend credit,
(c) failed, within three (3) Business Days after request by the Agent, to
confirm that it will comply with the terms of this Agreement relating to its
obligations to fund prospective Loans and participations in then outstanding
Facility LC (provided that if such Bank shall subsequently provide such
confirmation it shall no longer be a Defaulting Bank), (d) otherwise failed to
pay over to the Agent or any other Bank any other amount required to be paid by
it hereunder within three Business (3) Days of the date when due, unless the
subject of a good

-4-

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

 

faith dispute, or (e) become the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee, administrator, assignee
for the benefit of creditors or similar Person charged with reorganization or
liquidation of its business or custodian, appointed for it, or has taken any
action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment or has a parent company that
has become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee, administrator, assignee for the benefit of
creditors or similar Person charged with reorganization or liquidation of its
business or custodian appointed for it, or has taken any action in furtherance
of, or indicating its consent to, approval of or acquiescence in any such
proceeding or appointment; provided, that (i) if a Bank would be a “Defaulting
Bank” solely by reason of events relating to a parent company of such Bank or
solely because a governmental authority has been appointed as receiver,
conservator, trustee or custodian for such Bank, in each case as described in
clause (e) above, the Agent may, in its discretion, determine that such Bank is
not a “Defaulting Bank” if and for so long as the Agent is satisfied that such
Bank will continue to perform its funding obligations hereunder, (ii) subject to
Section 4.7(e), the Agent, the Company and the LC Issuers, by joint notice to
the Banks, may declare that a Defaulting Bank is no longer a “Defaulting Bank”
if the Agent, the Company and the LC Issuers each determines, in its sole
respective discretion, that the circumstances that resulted in such Bank
becoming a “Defaulting Bank” no longer apply, and (iii) a Bank shall not be a
Defaulting Bank solely by virtue of the ownership or acquisition of voting stock
or any other equity interest in such Bank or a parent company thereof by a
governmental authority or an instrumentality thereof.
     “Designated Officer” means the Chief Financial Officer, the Treasurer, an
Assistant Treasurer, any Vice President in charge of financial or accounting
matters or the principal accounting officer of the Company.
     “Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any governmental agency or authority relating in
any way to the environment, preservation or reclamation of natural resources,
the management, release or threatened release of any Hazardous Substance or to
health and safety matters.
     “Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Substance,
(c) exposure to any Hazardous Substance, (d) the release or threatened release
of any Hazardous Substance into the environment or (e) any contract, agreement
or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
     “ERISA Affiliate” means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Company or is under common control (within
the meaning of Section 414(c) of the Code) with

-5-

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

 

the Company.
     “Eurodollar Advance” means an Advance consisting of Eurodollar Rate Loans.
     “Eurodollar Rate” means, with respect to a Eurodollar Advance for the
relevant Interest Period, an interest rate per annum equal to the sum of (i) the
quotient obtained by dividing (a) the Base Eurodollar Rate applicable to such
Interest Period by (b) one minus the Reserve Requirement (expressed as a
decimal) applicable to such Interest Period, plus (ii) the Applicable Margin.
     “Eurodollar Rate Loan” means a Loan which bears interest by reference to
the Eurodollar Rate.
     “Event of Default” means an event described in Article IX.
     “Excluded Taxes” means, in the case of each Bank, LC Issuer or applicable
Lending Installation and the Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it, by (i) the jurisdiction under the laws of which
such Bank, such LC Issuer or the Agent is incorporated or organized or (ii) the
jurisdiction in which the Agent’s, such LC Issuer’s or such Bank’s principal
executive office or such Bank’s or such LC Issuer’s applicable Lending
Installation is located.
     “Existing Credit Agreement” means that certain Amended and Restated
Revolving Credit Agreement dated as of August 18, 2009, among the Company, the
financial institutions named as banks therein, Union Bank, as the agent,
Barclays Bank PLC, Deutsche Bank Securities, Inc. and The Royal Bank of Scotland
plc, as co-syndication agents and BNP Paribas, as documentation agent, as
amended, restated, supplemented or otherwise modified prior to the date hereof.
     “Facility LC” — see Section 3.1.
     “Facility LC Application” — see Section 3.3.
     “Facility LC Collateral Account” means a special, interest-bearing account
maintained (pursuant to arrangements satisfactory to the Agent) at the Agent’s
office at the address specified pursuant to Article XIV, which account shall be
in the name of the Company but under the sole dominium and control of the Agent,
for the benefit of the Banks.
     “Federal Funds Effective Rate” means, for any day, an interest rate per
annum 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 for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 11:00 a.m. (Los
Angeles, California time) on such day on such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by the Agent in
its sole discretion.
     “First Mortgage Bonds” means bonds issued by the Company pursuant to the
Indenture.

-6-

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

 

     “Fitch” means Fitch Inc. or any successor thereto.
     “Floating Rate” means, with respect to a Floating Rate Advance, an interest
rate per annum equal to (i) the Alternate Base Rate plus (ii) the Applicable
Margin, changing when and as the Alternate Base Rate or the Applicable Margin
changes.
     “Floating Rate Advance” means an Advance consisting of Floating Rate Loans.
     “Floating Rate Loan” means a Loan which bears interest at the Floating
Rate.
     “FRB” means the Board of Governors of the Federal Reserve System or any
successor thereto.
     “GAAP” means generally accepted accounting principles in the United States
of America as in effect on the Amendment Effective Date, applied on a basis
consistent with those used in the preparation of the financial statements
referred to in Section 5.5 (except, for purposes of the financial statements
required to be delivered pursuant to Sections 6.7(b) and (c), for changes
concurred in by the Company’s independent public accountants).
     “Hazardous Substance” means any waste, substance or material identified as
hazardous, dangerous or toxic by any office, agency, department, commission,
board, bureau or instrumentality of the United States or of the State or
locality in which the same is located having or exercising jurisdiction over
such waste, substance or material.
     “Hybrid Equity Securities” means securities issued by the Company or a
Hybrid Equity Securities Subsidiary that (i) are classified as possessing a
minimum of at least two of the following: (x) “intermediate equity content” by
S&P; (y) “Basket C equity credit” by Moody’s; and (z) “50% equity credit” by
Fitch and (ii) require no repayment, prepayment, mandatory redemption or
mandatory repurchase prior to the date that is at least 91 days after the later
of the termination of the Commitments and the repayment in full of all
Obligations.
     “Hybrid Equity Securities Subsidiary” means any Delaware business trust (or
similar entity) (i) all of the common equity interest of which is owned (either
directly or indirectly through one or more wholly-owned Subsidiaries of the
Company) at all times by the Company or a wholly-owned direct or indirect
Subsidiary of the Company, (ii) that has been formed for the purpose of issuing
Hybrid Equity Securities and (iii) substantially all of the assets of which
consist at all times solely of Junior Subordinated Debt issued by the Company or
a wholly-owned direct or indirect Subsidiary of the Company (as the case may be)
and payments made from time to time on such Junior Subordinated Debt.
     “Hybrid Preferred Securities” means any preferred securities issued by a
Hybrid Preferred Securities Subsidiary, where such preferred securities have the
following characteristics:
     (i) such Hybrid Preferred Securities Subsidiary lends substantially all of
the proceeds from the issuance of such preferred securities to the Company or a
wholly-owned direct or indirect Subsidiary of the Company in exchange for Junior
Subordinated Debt issued by the Company or such wholly-owned direct or indirect
Subsidiary,

-7-

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

 

respectively;
     (ii) such preferred securities contain terms providing for the deferral of
interest payments corresponding to provisions providing for the deferral of
interest payments on such Junior Subordinated Debt; and
     (iii) the Company or a wholly-owned direct or indirect Subsidiary of the
Company (as the case may be) makes periodic interest payments on such Junior
Subordinated Debt, which interest payments are in turn used by the Hybrid
Preferred Securities Subsidiary to make corresponding payments to the holders of
the preferred securities.
     “Hybrid Preferred Securities Subsidiary” means any Delaware business trust
(or similar entity) (i) all of the common equity interest of which is owned
(either directly or indirectly through one or more wholly-owned Subsidiaries of
the Company) at all times by the Company or a wholly-owned direct or indirect
Subsidiary of the Company, (ii) that has been formed for the purpose of issuing
Hybrid Preferred Securities and (iii) substantially all of the assets of which
consist at all times solely of Junior Subordinated Debt issued by the Company or
a wholly-owned direct or indirect Subsidiary of the Company (as the case may be)
and payments made from time to time on such Junior Subordinated Debt.
     “Indenture” means the Indenture, dated as of September 1, 1945, as
supplemented and amended from time to time, from the Company to The Bank of New
York Mellon, as successor trustee.
     “Interest Period” means, with respect to a Eurodollar Advance, a period of
one, two, three or six months, or such shorter period agreed to by the Company
and the Banks, commencing on a Business Day selected by the Company pursuant to
this Agreement. Such Interest Period shall end on the day which corresponds
numerically to such date one, two, three or six months thereafter (or such
shorter period agreed to by the Company and the Banks); provided that if there
is no such numerically corresponding day in such next, second, third or sixth
succeeding month (or such shorter period, as applicable), such Interest Period
shall end on the last Business Day of such next, second, third or sixth
succeeding month (or such shorter period, as applicable). If an Interest Period
would otherwise end on a day which is not a Business Day, such Interest Period
shall end on the next succeeding Business Day; provided that if said next
succeeding Business Day falls in a new calendar month, such Interest Period
shall end on the immediately preceding Business Day. The Company may not select
any Interest Period that ends after the scheduled Termination Date.
     “Junior Subordinated Debt” means any unsecured Debt of the Company or a
Subsidiary of the Company that is (i) issued in exchange for the proceeds of
Hybrid Equity Securities or Hybrid Preferred Securities and (ii) subordinated to
the rights of the Banks hereunder and under the other Credit Documents pursuant
to terms of subordination substantially similar to those set forth in Exhibit D,
or pursuant to other terms and conditions satisfactory to the Majority Banks.
     “LC Fee” — see Section 3.4.
     “LC Issuer” means Union Bank (or any subsidiary or affiliate of Union Bank
designated

-8-

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

 

by Union Bank) in its capacity as an issuer of Facility LCs hereunder, and any
other Bank designated by the Company that (i) agrees to be an issuer of Facility
LCs hereunder (which agreement may include a maximum limit on the aggregate face
amount of all Facility LCs to be issued by such Bank hereunder, and such Bank
and the Company shall provide notice of such limitation to the Administrative
Agent) and (ii) is approved by the Agent (such approval not to be unreasonably
withheld or delayed).
     “LC Obligations” means, at any time, the sum, without duplication, of
(i) the aggregate undrawn stated amount under all Facility LCs outstanding at
such time plus (ii) the aggregate unpaid amount at such time of all
Reimbursement Obligations.
     “LC Payment Date” — see Section 3.5.
     “Lending Installation” means any office, branch, subsidiary or Affiliate of
a Bank.
     “Lien” means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.
     “Loan” — see Section 2.1.
     “Majority Banks” means, as of any date of determination, Banks in the
aggregate having more than 50% of the Aggregate Commitment as of such date or,
if the Aggregate Commitment has been terminated, Banks in the aggregate holding
more than 50% of the aggregate unpaid principal amount of the Aggregate
Outstanding Credit Exposure as of such date.
     “Material Adverse Change” means any event, development or circumstance that
has had or could reasonably be expected to have a material adverse effect on
(a) the financial condition or results of operations of the Company and its
Consolidated Subsidiaries, taken as a whole, (b) the Company’s ability to
perform its obligations under any Credit Document or (c) the validity or
enforceability of any Credit Document or the rights or remedies of the Agent or
the Banks thereunder.
     “Modify” and “Modification” — see Section 3.1.
     “Moody’s” means Moody’s Investors Service, Inc. or any successor thereto.
     “Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA.
     “Net Proceeds” means, with respect to any sale or issuance of securities or
incurrence of Debt by any Person, the excess of (i) the gross cash proceeds
received by or on behalf of such Person in respect of such sale, issuance or
incurrence (as the case may be) over (ii) customary underwriting commissions,
auditing and legal fees, printing costs, rating agency fees and other customary
and reasonable fees and expenses incurred by such Person in connection
therewith.
     “Net Worth” means, with respect to any Person, the excess of such Person’s
total assets over its total liabilities, total assets and total liabilities each
to be determined in accordance with

-9-

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

 

GAAP consistently applied, excluding from the determination of total assets
(i) goodwill, organizational expenses, research and development expenses,
trademarks, trade names, copyrights, patents, patent applications, licenses and
rights in any thereof, and other similar intangibles, (ii) cash held in a
sinking or other analogous fund established for the purpose of redemption,
retirement or prepayment of capital stock or Debt, and (iii) any item not
included in clause (i) or (ii) above, that is treated as an intangible asset in
conformity with GAAP.
     “Obligations” means all unpaid principal of and accrued and unpaid interest
on the Loans, all Reimbursement Obligations, all accrued and unpaid fees and all
other obligations of the Company to the Banks or to any Bank, any LC Issuer or
the Agent arising under the Credit Documents.
     “Off-Balance Sheet Liability” of a Person means (i) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (ii) any liability under any sale and leaseback
transaction which is not a Capital Lease, (iii) any liability under any
so-called “synthetic lease” transaction entered into by such Person, or (iv) any
obligation arising with respect to any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the balance sheet of such Person, but excluding from this clause
(iv) Operating Leases.
     “Operating Lease” of a Person means any lease of Property (other than a
Capital Lease) by such Person as lessee.

    “Original Closing Date” means September 11, 2008.

     “Original Credit Agreement” means that certain Revolving Credit Agreement
dated as of September 11, 2008, among the Company, the financial institutions
named as banks therein, Union Bank, as the agent and as LC issuer, Barclays Bank
PLC, The Royal Bank of Scotland plc and UBS Loan Finance LLC, as co-syndication
agents and Deutsche Bank Trust Company Americas, as documentation agent, as
amended, restated, supplemented or otherwise modified prior to the date hereof.
     “Original Obligations” — see preamble.
     “Other Taxes” — see Section 4.5(b).
     “Outstanding Credit Exposure” means, as to any Bank at any time, the sum of
(i) the aggregate principal amount of its Loans outstanding at such time, plus
(ii) an amount equal to its Pro Rata Share of the LC Obligations at such time.
     “Payment Date” means the second Business Day of each calendar quarter
occurring after the Amendment Effective Date.
     “PBGC” means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
     “Person” means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture,

-10-

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

 

governmental authority or other entity of whatever nature.
     “Plan” means any employee benefit plan (other than a Multiemployer Plan)
maintained for employees of the Company or any ERISA Affiliate and covered by
Title IV of ERISA.
     “Plan Termination Event” means (a) a Reportable Event described in
Section 4043 of ERISA and the regulations issued thereunder (other than a
Reportable Event not subject to the provision for 30-day notice to the PBGC
under such regulations), (b) the withdrawal of the Company or any ERISA
Affiliate from a Plan during a plan year in which it was a “substantial
employer” as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice
of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (d) the institution of proceedings
to terminate a Plan by the PBGC or to appoint a trustee to administer any Plan.
     “Property” of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
     “Proposal Letter” — see Section 13.12.
     “Pro Rata Share” means, with respect to a Bank, a portion equal to (i) a
fraction the numerator of which is such Bank’s Commitment and the denominator of
which is the Aggregate Commitment and (ii) after the Commitments of all of the
Banks have terminated, a fraction the numerator of which is the Outstanding
Credit Exposure for such Bank, and the denominator of which is the Aggregate
Outstanding Credit Exposure at such time; provided, that in the case of
Section 4.7(c)(i), when a Defaulting Bank shall exist the Commitment or
Outstanding Credit Exposure, as applicable, of such Defaulting Bank shall be
disregarded when calculating such Bank’s “Pro Rata Share”.
     “Reference Rate” means the variable rate of interest per annum announced
publicly by Union Bank in its San Francisco, California office from time to time
as its “reference rate”. Such “reference rate” is set by Union Bank as a general
reference rate of interest, taking into account such factors as Union Bank may
deem appropriate, it being understood that many of Union Bank’s commercial or
other loans are priced in relation to such rate, that it is not necessarily the
lowest or best rate actually charged to any customer and that Union Bank may
make various commercial or other loans at rates of interest having no
relationship to such rate. For purposes of this Agreement, each change in the
Reference Rate shall be effective as of the opening of business on the date
announced as the effective date of any change in such “reference rate”.
     “Regulation D” means Regulation D of the FRB from time to time in effect
and shall include any successor or other regulation or official interpretation
of the FRB relating to reserve requirements applicable to member banks of the
Federal Reserve System.
     “Regulation U” means Regulation U of the FRB from time to time in effect
and shall include any successor or other regulation or official interpretation
of the FRB relating to the extension of credit by banks, non-banks and
non-broker-dealers for the purpose of purchasing or carrying margin stocks.

-11-

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

 

     “Reimbursement Obligations” means, at any time, the aggregate of all
obligations of the Company then outstanding under Article III to reimburse the
applicable LC Issuer for amounts paid by such LC Issuer in respect of any one or
more drawings under Facility LCs issued by such LC Issuer.
     “Reportable Event” has the meaning assigned to that term in Title IV of
ERISA.
     “Reserve Requirement” means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
     “S&P” means Standard and Poor’s Rating Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.
     “SEC” means the Securities and Exchange Commission or any governmental
authority which may be substituted therefor.
     “Securitized Bonds” means nonrecourse bonds or similar asset-backed
securities issued by a special-purpose Subsidiary of the Company which are
payable solely from specialized charges authorized by the utility commission of
the relevant state in connection with the recovery of (x) stranded regulatory
costs, (y) stranded clean air and pension costs and (z) other “Qualified Costs”
(as defined in M.C.L. §460.10h(g)) authorized to be securitized by the Michigan
Public Service Commission.
     “Senior Debt” means the First Mortgage Bonds.
     “Single Employer Plan” means a Plan maintained by the Company or any ERISA
Affiliate for employees of the Company or any ERISA Affiliate.
     “Subsidiary” means, as to any Person, any corporation or other entity of
which at least a majority of the securities or other ownership interests having
ordinary voting power (absolutely or contingently) for the election of directors
or other Persons performing similar functions are at the time owned directly or
indirectly by such Person. Unless otherwise specified, all references herein to
a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries
of the Company.
     “Supplemental Indenture” means that certain Supplemental Indenture, dated
as of the Original Closing Date, between the Company and The Bank of New York
Mellon, as successor trustee, as the same may be amended, restated, supplemented
or otherwise modified from time to time.
     “Taxes” means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities with respect to
the foregoing, but excluding Excluded Taxes and Other Taxes.
     “Termination Date” means the earlier of (i) August 9, 2013 and (ii) the
date on which the Commitments are terminated.

-12-

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

 

     “Total Consolidated Capitalization” means, at any date of determination,
without duplication, the sum of (a) Total Consolidated Debt plus all amounts
excluded from Total Consolidated Debt pursuant to clauses (ii), (iii), (iv),
(vi) and (vii) of the proviso to the definition of such term (but only, in the
case of securities of the type described in clause (iii) or (iv) of such
proviso, to the extent such securities have been deemed to be equity pursuant to
Financial Accounting Standards Board Statement No. 150), (b) equity of the
common stockholders of the Company, (c) equity of the preference stockholders of
the Company and (d) equity of the preferred stockholders of the Company, in each
case determined at such date.
     “Total Consolidated Debt” means, at any date of determination, the
aggregate Debt of the Company and its Consolidated Subsidiaries; provided that
Total Consolidated Debt shall exclude, without duplication, (i) the principal
amount of any Securitized Bonds, (ii) any Junior Subordinated Debt owned by any
Hybrid Equity Securities Subsidiary or Hybrid Preferred Securities Subsidiary,
(iii) Hybrid Equity Securities or Hybrid Preferred Securities outstanding as of
December 31, 2002 (including any guaranty by the Company of payments with
respect to such Hybrid Equity Securities or Hybrid Preferred Securities,
provided that such guaranty is subordinated to the rights of the Banks hereunder
and under the other Credit Documents pursuant to terms of subordination
substantially similar to those set forth in Exhibit E, or pursuant to other
terms and conditions satisfactory to the Majority Banks), (iv) such percentage
of the Net Proceeds from any issuance of hybrid debt/equity securities (other
than Junior Subordinated Debt, Hybrid Equity Securities and Hybrid Preferred
Securities) by the Company or any Consolidated Subsidiary as shall be agreed to
be deemed equity by the Agent and the Company prior to the issuance thereof
(which determination shall be based on, among other things, the treatment (if
any) given to such securities by the applicable rating agencies), (v) if all or
any portion of the disposition of the Company’s Palisades Nuclear Plant is
required to be accounted for as a financing under GAAP rather than as a sale,
the amount of liabilities reflected on the Company’s consolidated balance sheet
as the result of such disposition, (vi) obligations of the Company and its
Consolidated Subsidiaries of the type described in Section 1.3, (vii) Debt of
any Affiliate of the Company that is (1) consolidated on the financial
statements of the Company solely as a result of the effect and application of
Financial Accounting Standards Board No. 46 and of Accounting Research Bulletin
No. 51, Consolidated Financial Statements, as modified by Statement of Financial
Accounting Standards No. 94, and (2) non-recourse to the Company or any of its
Affiliates (other than the primary obligor of such Debt and any of its
Subsidiaries), (viii) Debt of the Company and its Affiliates that is
re-categorized as such from certain lease obligations pursuant to Emerging
Issues Task Force (“EITF”) Issue 01-8, any subsequent EITF Issue or
recommendation or other interpretation, bulletin or other similar document by
the Financial Accounting Standards Board on or related to such re-categorization
and (ix) any non-cash obligations resulting from the adoption of Financial
Accounting Standards Board Statement No. 158 and any proposed amendment thereto,
to the extent such obligations are required to be treated as debt.
     “Type” — see Section 2.4.
     “Union Bank” means Union Bank, N.A., in its individual capacity, and its
successors and assigns.
     “Unused Commitment” means, at any time, the Aggregate Commitment then in
effect

-13-

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

 

minus the Aggregate Outstanding Credit Exposure at such time.
     “USA Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. No. 107-56, 115 Stat. 272 (2001), as amended.
     1.2 Interpretation.
     (a) The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
     (b) The words “include,” “includes” and “including” shall be deemed to be
followed by the phrase “without limitation.”
     (c) Unless otherwise specified, each reference to an Article, Section,
Exhibit and Schedule means an Article or Section of or an Exhibit or Schedule to
this Agreement.
     1.3 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. If any changes in generally accepted
accounting principles are hereafter required or permitted and are adopted by the
Company or any of its Subsidiaries, or the Company or any of its Subsidiaries
shall change its application of generally accepted accounting principles with
respect to any Off-Balance Sheet Liabilities (including the application of
Financial Accounting Standards Board Interpretation Nos. 45 and 46 and Financial
Accounting Standards Board Statement No. 150), in each case with the agreement
of its independent certified public accountants, and such changes result in a
change in the method of calculation of any of the financial covenants, tests,
restrictions or standards herein or in the related definitions or terms used
therein (“Accounting Changes”), the parties hereto agree, at the Company’s
request, to enter into negotiations, in good faith, in order to amend such
provisions in a credit neutral manner so as to reflect equitably such changes
with the desired result that the criteria for evaluating the Company’s and its
Subsidiaries’ financial condition shall be the same after such changes as if
such changes had not been made; provided that, until such provisions are amended
in a manner reasonably satisfactory to the Majority Banks, no Accounting Change
shall be given effect in such calculations. In the event such amendment is
entered into, all references in this Agreement to GAAP shall mean generally
accepted accounting principles as of the date of such amendment. Notwithstanding
any other provision contained herein, all terms of an accounting or financial
nature used herein shall be construed, and all computations of amounts and
ratios referred to herein shall be made, without giving effect to any election
under Accounting Standards Codification 825-10-25 (previously referred to as
Statement of Financial Accounting Standards 159) (or any other Accounting
Standards Codification or Financial Accounting Standard having a similar result
or effect) to value any Indebtedness or other liabilities of the Company or any
Subsidiary at “fair value”, as defined therein.
ARTICLE II
THE ADVANCES
     2.1 Commitment. From and including the Amendment Effective Date and prior
to the Termination Date, each Bank severally agrees, on the terms and conditions
set forth in this Agreement, (a) to make loans to the Company from time to time
(the “Loans”), and (b) to

-14-

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

 

participate in Facility LCs issued upon the request of the Company from time to
time; provided that, after giving effect to the making of each such Loan and the
issuance of each such Facility LC, such Bank’s Outstanding Credit Exposure shall
not exceed its Commitment. In no event may the Aggregate Outstanding Credit
Exposure exceed the Available Commitment. Subject to the terms and conditions of
this Agreement, the Company may borrow, repay and reborrow at any time prior to
the Termination Date. The Commitments shall expire on the Termination Date.
     2.2 Repayment. The Aggregate Outstanding Credit Exposure and all other
unpaid obligations of the Company hereunder shall be paid in full on the
Termination Date.
     2.3 Ratable Loans. Each Advance shall consist of Loans made by the several
Banks ratably according to their Pro Rata Shares.
     2.4 Types of Advances. The Advances may be Floating Rate Advances or
Eurodollar Advances (each a “Type” of Advance), or a combination thereof, as
selected by the Company in accordance with Sections 2.8 and 2.9.
     2.5 Fees and Changes in Commitments.
     (a) The Company agrees to pay to the Agent for the account of each Bank
according to its Pro Rata Share a commitment fee (the “Commitment Fee”) at the
Commitment Fee Rate on the daily Unused Commitment from the Amendment Effective
Date to but not including the date on which this Agreement is terminated in full
and all of the Obligations hereunder have been paid in full. The Commitment Fee
shall be payable quarterly in arrears on each Payment Date (for the quarter then
most recently ended), on the date of any reduction of the Aggregate Commitment
pursuant to clause (b) below and on the Termination Date (for the period then
ended for which such fee has not previously been paid) and shall be calculated
for actual days elapsed on the basis of a 360 day year.
     (b) The Company may permanently reduce the Aggregate Commitment in whole,
or in part ratably among the Banks in the minimum amount of $10,000,000 (and in
multiples of $1,000,000 if in excess thereof), upon at least five (5) Business
Days’ prior written notice to the Agent, which notice shall specify the amount
of any such reduction; provided that the Aggregate Commitment may not be reduced
below the Aggregate Outstanding Credit Exposure. All accrued Commitment Fees
shall be payable on the effective date of any termination of the obligation of
the Banks to make Credit Extensions hereunder.
     2.6 Minimum Amount of Advances. Each Advance shall be in the minimum amount
of $10,000,000 (and in integral multiples of $1,000,000 if in excess thereof);
provided that any Floating Rate Advance may be in the amount of the Available
Aggregate Commitment (rounded down, if necessary, to an integral multiple of
$1,000,000).
     2.7 Optional Principal Payments. The Company may from time to time prepay,
without penalty or premium, all outstanding Floating Rate Advances or, in a
minimum aggregate amount of $10,000,000 or a higher integral multiple of
$1,000,000, any portion of the outstanding Floating Rate Advances upon one
(1) Business Day’s prior written notice to the Agent. The Company may from time
to time pay, subject to the payment of any funding indemnification amounts
required by Section 4.4 but without penalty or premium, all outstanding

-15-

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

 

Eurodollar Advances or, in a minimum aggregate amount of $10,000,000 or a higher
integral multiple of $1,000,000, any portion of any outstanding Eurodollar
Advance upon three (3) Business Days’ prior written notice to the Agent;
provided that if, after giving effect to any such prepayment, the principal
amount of any Eurodollar Advance is less than $10,000,000, such Eurodollar
Advance shall automatically convert into a Floating Rate Advance.
     2.8 Method of Selecting Types and Interest Periods for New Advances. The
Company shall select the Type of Advance and, in the case of each Eurodollar
Advance, the Interest Period applicable thereto from time to time. The Company
shall give the Agent irrevocable notice (a “Borrowing Notice”) not later than
10:00 a.m. (Los Angeles, California time) on the Borrowing Date of each Floating
Rate Advance and not later than 10:00 a.m. (Los Angeles, California time) three
(3) Business Days before the Borrowing Date for each Eurodollar Advance,
specifying:
     (i) the Borrowing Date, which shall be a Business Day;
     (ii) the aggregate amount of such Advance;
     (iii) the Type of Advance selected; and
     (iv) in the case of each Eurodollar Advance, the initial Interest Period
applicable thereto.
Promptly after receipt thereof, the Agent will notify each Bank of the contents
of each Borrowing Notice. Not later than 12:00 noon (Los Angeles, California
time) on each Borrowing Date, each Bank shall make available its Loan in funds
immediately available in Los Angeles, California to the Agent at its address
specified pursuant to Section 14.1. To the extent funds are received from the
Banks, the Agent will make such funds available to the Company at the Agent’s
aforesaid address. No Bank’s obligation to make any Loan shall be affected by
any other Bank’s failure to make any Loan.
     2.9 Conversion and Continuation of Outstanding Advances. Floating Rate
Advances shall continue as Floating Rate Advances unless and until such Floating
Rate Advances are converted into Eurodollar Advances pursuant to this
Section 2.9 or are repaid in accordance with Section 2.2 or 2.7. Each Eurodollar
Advance shall continue as a Eurodollar Advance until the end of the then
applicable Interest Period therefor, at which time such Eurodollar Advance shall
be automatically converted into a Floating Rate Advance unless (x) such
Eurodollar Advance is or was repaid in accordance with Section 2.2 or 2.7 or
(y) the Company shall have given the Agent a Conversion/Continuation Notice (as
defined below) requesting that, at the end of such Interest Period, such
Eurodollar Advance continue as a Eurodollar Advance for the same or another
Interest Period. Subject to the terms of Section 2.6, the Company may elect from
time to time to convert all or any part of a Floating Rate Advance into a
Eurodollar Advance. The Company shall give the Agent irrevocable notice (a
“Conversion/Continuation Notice”) of each conversion of a Floating Rate Advance
into a Eurodollar Advance or continuation of a Eurodollar Advance not later than
10:00 a.m. (Los Angeles, California time) at least three Business Days prior to
the date of the requested conversion or continuation, specifying:
     (i) the requested date, which shall be a Business Day, of such conversion
or

-16-

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

 

continuation;
     (ii) the aggregate amount and Type of the Advance which is to be converted
or continued; and
     (iii) the amount of the Advance which is to be converted into or continued
as a Eurodollar Advance and the duration of the Interest Period applicable
thereto;
provided that no Advance may be continued as, or converted into, a Eurodollar
Advance if (x) such continuation or conversion would violate any provision of
this Agreement or (y) a Default or Event of Default exists.
     2.10 Interest Rates, Interest Payment Dates. (a) Subject to Section 2.11,
each Advance shall bear interest as follows:
     (i) at any time such Advance is a Floating Rate Advance, at a rate per
annum equal to the Floating Rate from time to time in effect; and
     (ii) at any time such Advance is a Eurodollar Advance, at a rate per annum
equal to the Eurodollar Rate for each applicable Interest Period.
Changes in the rate of interest on that portion or any Advance maintained as a
Floating Rate Advance will take effect simultaneously with each change in the
Floating Rate.
     (b) Interest accrued on each Floating Rate Advance shall be payable on each
Payment Date and on the Termination Date. Interest accrued on each Eurodollar
Advance shall be payable on the last day of its applicable Interest Period, on
any date on which such Eurodollar Advance is prepaid and on the Termination
Date. Interest accrued on each Eurodollar Advance having an Interest Period
longer than three months shall also be payable on the last day of each
three-month interval during such Interest Period. Interest on Eurodollar
Advances, interest on Floating Rate Advances based on the Federal Funds
Effective Rate and the LC Fee shall be calculated for actual days elapsed on the
basis of a 360-day year. Interest on Floating Rate Advances based on the
Reference Rate shall be calculated for actual days elapsed on the basis of a
365- or 366-day year, as appropriate. Interest on each Advance shall accrue from
and including the date such Advance is made to but excluding the date payment
thereof is received in accordance with Section 2.12. If any payment of principal
of or interest on an Advance shall become due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day (unless, in
the case of a Eurodollar Advance, such next succeeding Business Day falls in a
new calendar month, in which case such payment shall be due on the immediately
preceding Business Day) and, in the case of a principal payment, such extension
of time shall be included in computing interest in connection with such payment.
     2.11 Rate after Maturity. Any Advance not paid by the Company at maturity,
whether by acceleration or otherwise, shall bear interest until paid in full at
a rate per annum equal to the higher of (i) the rate otherwise applicable
thereto plus 2.00% or (ii) the Floating Rate plus 2.00%.
     2.12 Method of Payment; Sharing Set-Offs. (a) All payments of principal,
interest and

-17-

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

 

fees hereunder shall be made in immediately available funds to the Agent at its
address specified on its signature page to this Agreement (or at any other
Lending Installation of the Agent specified in writing by the Agent to the
Company), without setoff or counterclaim, not later than 10:00 a.m. (Los
Angeles, California time) on the date when due and shall (except in the case of
Reimbursement Obligations for which the applicable LC Issuer has not been fully
indemnified by the Banks, or as otherwise specifically required hereunder) be
applied ratably by the Agent among the Banks. Funds received after such time
shall be deemed received on the following Business Day unless the Agent shall
have received from, or on behalf of, the Company a Federal Reserve reference
number with respect to such payment before 1:00 p.m. (Los Angeles, California
time) on the date of such payment. Each payment delivered to the Agent for the
account of any Bank shall be delivered promptly by the Agent in the same type of
funds received by the Agent to such Bank at the address specified for such Bank
in its Administrative Questionnaire or at any Lending Installation specified in
a notice received by the Agent from such Bank. The Agent is hereby authorized to
charge the account of the Company maintained with Union Bank, if any, for each
payment of principal, interest, Reimbursement Obligations and fees as such
payment becomes due hereunder. Each reference to the Agent in this Section 2.12
shall also be deemed to refer, and shall apply equally, to each LC Issuer, in
the case of payments required to be made by the Company to such LC Issuer
pursuant to Section 3.6.
          (b) If any Bank shall fail to make any payment required to be made by
it pursuant to Section 2.8, Section 2.15, Section 3.5 or Section 13.8, then the
Agent may, in its discretion and notwithstanding any contrary provision hereof,
apply any amounts thereafter received by the Agent for the account of such Bank
and for the benefit of the Agent or the LC Issuer to satisfy such Bank’s
obligations under such Sections until all such unsatisfied obligations are fully
paid.
     2.13 Bonds; Record-keeping; Telephonic Notices.
     (a) Pursuant to the terms of the Existing Credit Agreement, the obligation
of the Company to repay the Obligations are evidenced by one or more Bonds.
     (b) Each Bank shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Company to such Bank
resulting from each Loan made by such Bank from time to time, including the
amounts of principal and interest payable and paid to such Bank from time to
time hereunder.
     (c) The Agent shall also maintain accounts in which it will record (i) the
amount of each Loan made hereunder, the Type thereof and, if applicable, the
Interest Period with respect thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Company to each
Bank hereunder, (iii) the original stated amount of each Facility LC and the
amount of LC Obligations outstanding at any time, and (iv) the amount of any sum
received by the Agent hereunder from the Company and each Bank’s share thereof.
     (d) The entries maintained in the accounts maintained pursuant to clauses
(b) and (c) above shall be prima facie evidence of the existence and amounts of
the Obligations therein recorded; provided that the failure of the Agent or any
Bank to maintain such accounts or any error therein shall not in any manner
affect the obligation of the Company to repay the

-18-

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

 

Obligations in accordance with their terms.
     (e) The Company hereby authorizes the Banks and the Agent to make Advances
based on telephonic notices made by any person or persons the Agent or any Bank
in good faith believes to be acting on behalf of the Company. The Company agrees
to deliver promptly to the Agent a written confirmation of each telephonic
notice signed by a Designated Officer. If the written confirmation differs in
any material respect from the action taken by the Agent and the Banks, the
records of the Agent and the Banks shall govern absent manifest error.
     2.14 Lending Installations. Subject to the provisions of Section 4.6, each
Bank may book its Loans and its participation in any LC Obligations and each LC
Issuer may book the Facility LCs issued by it at any Lending Installation
selected by such Bank or such LC Issuer, as the case may be, and may change its
Lending Installation from time to time. All terms of this Agreement shall apply
to any such Lending Installation and the Loans shall be deemed held by the
applicable Bank for the benefit of such Lending Installation. Each Bank may, by
written or facsimile notice to the Company, designate a Lending Installation
through which Loans will be made by it or Facility LCs will be issued by it and
for whose account payments on the Loans or payments with respect to Facility LCs
are to be made.
     2.15 Non-Receipt of Funds by the Agent. Unless a Bank or the Company, as
the case may be, notifies the Agent prior to the time on the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Bank, the
proceeds of a Loan or (ii) in the case of the Company, a payment of principal,
interest or fees to the Agent for the account of the Banks, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Bank or the Company, as the case may be, has not in fact made such payment
to the Agent, the recipient of such payment shall, on demand by the Agent, repay
to the Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such amount was so
made available by the Agent until the date the Agent recovers such amount at a
rate per annum equal to (i) in the case of payment by a Bank, the Federal Funds
Rate for such day or (ii) in the case of payment by the Company, the interest
rate applicable to the relevant Loan.
ARTICLE III
LETTER OF CREDIT FACILITY
     3.1 Issuance. Each LC Issuer hereby agrees, on the terms and conditions set
forth in this Agreement, to issue standby and commercial letters of credit
denominated in U.S. dollars (each, a “Facility LC”) and to renew, extend,
increase, decrease or otherwise modify each Facility LC (“Modify,” and each such
action a “Modification”), from time to time from and including the date hereof
and prior to the Termination Date upon the request of the Company; provided,
however, that in no event shall (i) immediately after each such Facility LC is
issued or Modified, the Aggregate Outstanding Credit Exposure exceed the
Available Commitment, and (ii) a Facility LC (x) be issued later than 30 days
prior to the scheduled Termination Date, (y) have an expiry date later than the
fifth Business Day (or, in the case of a commercial Facility LC, the 30th day)
prior to the scheduled Termination Date or (z) provide for time drafts.

-19-

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

 

     3.2 Participations. Upon the issuance or Modification by an LC Issuer of a
Facility LC in accordance with this Article III, such LC Issuer shall be deemed,
without further action by any party hereto, to have unconditionally and
irrevocably sold to each Bank, and each Bank shall be deemed, without further
action by any party hereto, to have unconditionally and irrevocably purchased
from such LC Issuer, a participation in such Facility LC (and each Modification
thereof) and the related LC Obligations in proportion to its Pro Rata Share.
     3.3 Notice. Subject to Section 3.1, the Company shall give the Agent and
the applicable LC Issuer notice prior to 10:00 a.m. (Los Angeles, California
time) at least three (3) Business Days prior to the proposed date of issuance or
Modification of each Facility LC, specifying the beneficiary, the proposed date
of issuance (or Modification) and the expiry date of such Facility LC, and
describing the proposed terms of such Facility LC and the nature of the
transactions proposed to be supported thereby. Upon receipt of such notice, the
Agent shall promptly notify each Bank, of the contents thereof and of the amount
of such Bank’s participation in such proposed Facility LC. Each Bank, shall
within two (2) Business Days following the date on which it receives such notice
from the Agent, notify the Agent whether such Bank consents to the issuance or
Modification of such Facility LC (which consent shall be in the sole and
absolute discretion of such Bank), it being understood and agreed that unless
and until each Bank consents in writing to such issuance or Modification, such
Facility LC will not be issued or Modified by the applicable LC Issuer. The
issuance or Modification by an LC Issuer of any Facility LC shall, in addition
to the conditions precedent set forth in Article XI (the satisfaction of which
such LC Issuer shall have no duty to ascertain), be subject to the conditions
precedent that such Facility LC shall be satisfactory to such LC Issuer and that
the Company shall have executed and delivered such application agreement and/or
such other instruments and agreements relating to such Facility LC as such LC
Issuer shall have reasonably requested (each, a “Facility LC Application”). In
the event of any conflict between the terms of this Agreement and the terms of
any Facility LC Application, the terms of this Agreement shall control.
     3.4 LC Fees. The Company shall pay to the Agent, for the account of the
Banks ratably in accordance with their respective Pro Rata Shares, a letter of
credit fee (the “LC Fee”) at a per annum rate equal to the Applicable Margin for
Eurodollar Rate Loans in effect from time to time on the daily undrawn stated
amount of each Facility LC, such fee to be payable in arrears on each Payment
Date and the Termination Date (and, if applicable, thereafter on demand). The
Company shall also pay to each LC Issuer for its own account (a) a fronting fee
for each Facility LC at the time and in the amount separately agreed by the
Company and such LC Issuer, and (b) documentary and processing charges in
connection with the issuance or Modification of and draws under Facility LCs in
accordance with such LC Issuer’s standard schedule for such charges as in effect
from time to time.
     3.5 Administration; Reimbursement by Banks. Upon receipt from the
beneficiary of any Facility LC of any demand for payment under such Facility LC,
the applicable LC Issuer shall notify the Agent and the Agent shall promptly
notify the Company and each other Bank as to the amount to be paid by such LC
Issuer as a result of such demand and the proposed payment date (the “LC Payment
Date”). The responsibility of an LC Issuer to the Company and each Bank shall be
only to determine that the documents (including each demand for payment)
delivered under each Facility LC issued by such LC Issuer in connection with
such presentment shall be in conformity in all material respects with such
Facility LC. Each LC Issuer shall

-20-

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

 

endeavor to exercise the same care in the issuance and administration of the
Facility LCs as it does with respect to letters of credit in which no
participations are granted, it being understood that in the absence of any gross
negligence or willful misconduct by such LC Issuer, each Bank shall be
unconditionally and irrevocably liable without regard to the occurrence of any
Default or any condition precedent whatsoever, to reimburse such LC Issuer on
demand for (i) such Bank’s Pro Rata Share of the amount of each payment made by
such LC Issuer under each Facility LC issued by it to the extent such amount is
not reimbursed by the Company pursuant to Section 3.6 below, plus (ii) interest
on the foregoing amount to be reimbursed by such Bank, for each day from the
date of such LC Issuer’s demand for such reimbursement (or, if such demand is
made after 10:00 a.m. (Los Angeles, California time) on such date, from the next
succeeding Business Day) to the date on which such Bank pays the amount to be
reimbursed by it, at a rate of interest per annum equal to the Federal Funds
Effective Rate for the first three days and, thereafter, at a rate of interest
equal to the rate applicable to Floating Rate Advances.
     3.6 Reimbursement by Company. The Company shall be irrevocably and
unconditionally obligated to reimburse the applicable LC Issuer on the
applicable LC Payment Date for any amounts to be paid by such LC Issuer upon any
drawing under any Facility LC issued by it, without presentment, demand, protest
or other formalities of any kind; provided that neither the Company nor any Bank
shall hereby be precluded from asserting any claim for direct (but not
consequential) damages suffered by the Company or such Bank to the extent, but
only to the extent, caused by (i) the willful misconduct or gross negligence of
such LC Issuer in determining whether a request presented under any Facility LC
issued by it complied with the terms of such Facility LC or (ii) such LC
Issuer’s failure to pay under any Facility LC issued by it after the
presentation to it of a request strictly complying with the terms and conditions
of such Facility LC. All such amounts paid by the applicable LC Issuer and
remaining unpaid by the Company shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to (x) the rate applicable to Floating
Rate Advances for such day if such day falls on or before the applicable LC
Payment Date and (y) the sum of 1.00% plus the rate applicable to Floating Rate
Advances for such day if such day falls after such LC Payment Date. The
applicable LC Issuer will pay to each Bank ratably in accordance with its Pro
Rata Share all amounts received by such LC Issuer from the Company for
application in payment, in whole or in part, of the Reimbursement Obligation in
respect of any Facility LC issued by such LC Issuer, but only to the extent such
Bank has made payment to such LC Issuer in respect of such Facility LC pursuant
to Section 3.5. Subject to the terms and conditions of this Agreement (including
the submission of a Borrowing Notice in compliance with Section 2.8 and the
satisfaction of the applicable conditions precedent set forth in Article XI),
the Company may request an Advance hereunder for the purpose of satisfying any
Reimbursement Obligation.
     3.7 Obligations Absolute. The Company’s obligations under this Article III
shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which the Company
may have or have had against any LC Issuer, any Bank or any beneficiary of a
Facility LC. The Company further agrees with the LC Issuers and the Banks that
the LC Issuers and the Banks shall not be responsible for, and the Company’s
Reimbursement Obligation in respect of any Facility LC shall not be affected by,
among other things, the validity or genuineness of documents or of any
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, fraudulent or forged, or any dispute between or among
the Company, any of its Affiliates, the beneficiary of

-21-

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

 

any Facility LC or any financing institution or other party to whom any Facility
LC may be transferred or any claims or defenses whatsoever of the Company or of
any of its Affiliates against the beneficiary of any Facility LC or any such
transferee. No LC Issuer shall be liable for any error, omission, interruption
or delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Facility LC. The Company agrees that any
action taken or omitted by any LC Issuer or any Bank under or in connection with
a Facility LC and the related drafts and documents, if done without gross
negligence or willful misconduct, shall be binding upon the Company and shall
not put any LC Issuer or any Bank under any liability to the Company. Nothing in
this Section 3.7 is intended to limit the right of the Company to make a claim
against any LC Issuer for damages as contemplated by the proviso to the first
sentence of Section 3.6.
     3.8 Actions of LC Issuers. Each LC Issuer shall be entitled to rely, and
shall be fully protected in relying, upon any Facility LC, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by such LC Issuer.
Each LC Issuer shall be fully justified in failing or refusing to take any
action under this Agreement unless it shall first have received such advice or
concurrence of the Majority Banks as it reasonably deems appropriate or it shall
first be indemnified to its reasonable satisfaction by the Banks against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Notwithstanding any other provision of this
Article III, each LC Issuer shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement in accordance with a request of
the Majority Banks, and such request and any action taken or failure to act
pursuant thereto shall be binding upon the Banks and any future holders of a
participation in any Facility LC.
     3.9 Indemnification. The Company hereby agrees to indemnify and hold
harmless each Bank, each LC Issuer and the Agent, and their respective
directors, officers, agents and employees from and against any and all claims
and damages, losses, liabilities, reasonable costs or expenses which such Bank,
such LC Issuer or the Agent may incur (or which may be claimed against such
Bank, such LC Issuer or the Agent by any Person whatsoever) by reason of or in
connection with the issuance, execution and delivery or transfer of or payment
or failure to pay under any Facility LC or any actual or proposed use of any
Facility LC, including any claims, damages, losses, liabilities, costs or
expenses which any LC Issuer may incur by reason of or in connection with (i)
the failure of any other Bank to fulfill or comply with its obligations to such
LC Issuer hereunder (but nothing herein contained shall affect any rights the
Company may have against any Defaulting Bank) or (ii) by reason of or on account
of such LC Issuer issuing any Facility LC which specifies that the term
“Beneficiary” included therein includes any successor by operation of law of the
named Beneficiary, but which Facility LC does not require that any drawing by
any such successor Beneficiary be accompanied by a copy of a legal document,
satisfactory to such LC Issuer, evidencing the appointment of such successor
Beneficiary; provided that the Company shall not be required to indemnify any
Bank, any LC Issuer or the Agent for any claims, damages, losses, liabilities,
costs or expenses to the extent, but only to the extent, caused by (x) the
willful misconduct or gross negligence of any LC Issuer in determining whether a
request presented under any Facility LC issued by it complied with the terms of
such

-22-

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

 

Facility LC or (y) any LC Issuer’s failure to pay under any Facility LC issued
by it after the presentation to it of a request strictly complying with the
terms and conditions of such Facility LC. Nothing in this Section 3.9 is
intended to limit the obligations of the Company under any other provision of
this Agreement.
     3.10 Banks’ Indemnification. Each Bank shall, ratably in accordance with
its Pro Rata Share, indemnify each LC Issuer (in such LC Issuer’s capacity as an
LC Issuer), its Affiliates and their respective directors, officers, agents and
employees (to the extent not reimbursed by the Company) against any cost,
expense (including reasonable counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from such indemnitees’ gross
negligence or willful misconduct or such LC Issuer’s failure to pay under any
Facility LC issued by it after the presentation to it of a request strictly
complying with the terms and conditions of the Facility LC) that such
indemnitees may suffer or incur in connection with this Article III or any
action taken or omitted by such indemnitees hereunder (in such LC Issuer’s
capacity as an LC Issuer).
     3.11 Rights as a Bank. In its capacity as a Bank, each LC Issuer shall have
the same rights and obligations as any other Bank.
ARTICLE IV
CHANGE IN CIRCUMSTANCES
     4.1 Yield Protection.
     (a) If any change in law or any governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law), or any
interpretation thereof by any agency or authority having jurisdiction over any
Bank or any LC Issuer,
     (i) subjects any Bank, any LC Issuer or any applicable Lending Installation
to any increased tax, duty, charge or withholding on or from payments due from
the Company (excluding taxation measured by or attributable to the overall net
income of such Bank, such LC Issuer or such applicable Lending Installation,
whether overall or in any geographic area), or changes the rate of taxation of
payments to any Bank or any LC Issuer in respect of its Credit Extensions
(including any participations in Facility LCs) or other amounts due it
hereunder, or
     (ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by any Bank, any LC
Issuer or any applicable Lending Installation (including any reserve costs under
Regulation D with respect to Eurocurrency liabilities (as defined in
Regulation D)), or
     (iii) imposes any other condition the result of which is to increase the
cost to any Bank, any LC Issuer or any applicable Lending Installation of
making, funding or maintaining Credit Extensions (including any participations
in Facility LCs), or reduces any amount receivable by any Bank, any LC Issuer or
any applicable Lending Installation in connection with Credit Extensions
(including any participations in Facility LCs) or requires any Bank, any LC
Issuer or any applicable Lending Installation to make any

-23-

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

 

payment calculated by reference to its Outstanding Credit Exposure or interest
received by it, by an amount deemed material by such Bank or such LC Issuer, or
     (iv) affects the amount of capital required or expected to be maintained by
any Bank, any LC Issuer or any applicable Lending Installation or any
corporation controlling any Bank or any LC Issuer and such Bank or such LC
Issuer, as applicable, determines the amount of capital required is increased by
or based upon the existence of this Agreement or its obligation to make Credit
Extensions (including any participations in Facility LCs) hereunder or of
commitments of this type,
then, upon presentation by such Bank or such LC Issuer to the Company of a
certificate (as referred to in the immediately succeeding sentence of this
Section 4.1) setting forth the basis for such determination and the additional
amounts reasonably determined by such Bank or such LC Issuer for the period of
up to ninety (90) days prior to the date on which such certificate is delivered
to the Company and the Agent, to be sufficient to compensate such Bank or such
LC Issuer, as applicable, in light of such circumstances, the Company shall
within thirty (30) days of such delivery of such certificate pay to the Agent
for the account of such Bank or such LC Issuer, as applicable, the specified
amounts set forth on such certificate. The affected Bank or LC Issuer, as
applicable, shall deliver to the Company and the Agent a certificate setting
forth the basis of the claim and specifying in reasonable detail the calculation
of such increased expense, which certificate shall be prima facie evidence as to
such increase and such amounts. An affected Bank or LC Issuer, as applicable,
may deliver more than one certificate to the Company during the term of this
Agreement. In making the determinations contemplated by the above-referenced
certificate, any Bank and any LC Issuer may make such reasonable estimates,
assumptions, allocations and the like that such Bank or such LC Issuer, as
applicable, in good faith determines to be appropriate, and such Bank’s or such
LC Issuer’s selection thereof in accordance with this Section 4.1 shall be
conclusive and binding on the Company, absent manifest error.
     (b) No Bank or LC Issuer shall be entitled to demand compensation or be
compensated hereunder to the extent that such compensation relates to any period
of time more than ninety (90) days prior to the date upon which such Bank or
such LC Issuer, as applicable, first notified the Company of the occurrence of
the event entitling such Bank or such LC Issuer, as applicable, to such
compensation (unless, and to the extent, that any such compensation so demanded
shall relate to the retroactive application of any event so notified to the
Company). For purposes of this Agreement, the Dodd-Frank Wall Street Reform and
Consumer Protection Act and all requests, rules, guidelines or directives in
connection therewith are deemed to have gone into effect and adopted thirty (30)
days after the date of this Agreement.
     4.2 Replacement of Banks.
     (a) If any Bank shall make a demand for payment under Section 4.1, then
within thirty (30) days after such demand, the Company may, with the approval of
the Agent and each LC Issuer which has issued a Facility LC which is then
outstanding or in respect of which there is any unreimbursed Reimbursement
Obligation (which approvals shall not be unreasonably withheld) and provided
that no Default or Event of Default shall then have occurred and be continuing,
demand, at the Company’s sole cost and expense, that such Bank assign to one or

-24-

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

 

more financial institutions designated by the Company and approved by the Agent
all (but not less than all) of such Bank’s Commitment and Outstanding Credit
Exposure within the period ending on the later of such 30th day and the last day
of the longest of the then current Interest Periods or maturity dates for such
Outstanding Credit Exposure. Any such assignment shall be consummated on terms
satisfactory to the assigning Bank; provided that such Bank’s consent to such
assignment shall not be unreasonably withheld.
     (b) If the Company shall elect to replace a Bank pursuant to clause (a)
above, the Company shall prepay the Outstanding Credit Exposure of such Bank,
and the financial institution or institutions selected by the Company shall
replace such Bank as a Bank hereunder pursuant to an instrument satisfactory to
the Company, the Agent and the Bank being replaced by making Credit Extensions
to the Company in the amount of the Outstanding Credit Exposure of such
assigning Bank and assuming all the same rights and responsibilities hereunder
as such assigning Bank and having the same Commitment as such assigning Bank.
     (c) If any Bank becomes a Defaulting Bank, then the Company may, at its
sole expense and effort, upon notice to such Bank and the Agent, require such
Bank to assign and delegate, without recourse (in accordance with and subject to
the restrictions contained in Section 12.1), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Bank, if such Bank accepts such
assignment); provided that (i) to the extent required pursuant to
Section 12.1(c), the Company shall have received the necessary consents from the
Agent and the LC Issuer, if any, and (ii) such Bank shall have received payment
of an amount equal to its Outstanding Credit Exposure, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder, from the assignee
(to the extent of such Outstanding Credit Exposure and accrued interest and
fees) or the Company (in the case of all other amounts). A Bank shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Bank or otherwise, the circumstances entitling the
Company to require such assignment and delegation cease to apply.
     4.3 Availability of Eurodollar Rate Loans. If:
     (a) any Bank determines that maintenance of a Eurodollar Rate Loan at a
suitable Lending Installation would violate any applicable law, rule, regulation
or directive, whether or not having the force of law, or
     (b) the Majority Banks determine that (i) deposits of a type and maturity
appropriate to match fund Eurodollar Rate Loans are not available or (ii) the
Base Eurodollar Rate does not accurately reflect the cost of making or
maintaining a Eurodollar Rate Loan,
then the Agent shall suspend the availability of Eurodollar Rate Loans and, in
the case of clause (a), require any outstanding Eurodollar Rate Loans to be
converted to Floating Rate Loans on such date as is required by the applicable
law, rule, regulation or directive.
     4.4 Funding Indemnification. If any payment of a Eurodollar Rate Loan
occurs on a date which is not the last day of an applicable Interest Period,
whether because of prepayment or otherwise, or a Eurodollar Rate Loan is not
made on the date specified by the Company for any reason other than default by
the Banks, the Company will indemnify each Bank for any loss or

-25-

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

 

cost (but not lost profits) incurred by it resulting therefrom, including any
loss or cost in liquidating or employing deposits acquired to fund or maintain
such Eurodollar Rate Loan; provided that the Company shall not be liable for any
of the foregoing to the extent they arise because of acceleration by any Bank.
     4.5 Taxes.
     (a) All payments by the Company to or for the account of any Bank, any LC
Issuer or the Agent hereunder or under any Bond or Facility LC Application shall
be made free and clear of and without deduction for any and all Taxes. If the
Company shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to any Bank, any LC Issuer or the Agent, (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 4.5) such Bank, such LC Issuer or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Company shall make such deductions, (iii) the
Company shall pay the full amount deducted to the relevant authority in
accordance with applicable law and (iv) the Company shall furnish to the Agent
the original copy of a receipt evidencing payment thereof within thirty
(30) days after such payment is made.
     (b) In addition, the Company hereby agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any Bond or
Facility LC Application or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Bond or Facility LC Application (“Other
Taxes”).
     (c) The Company hereby agrees to indemnify the Agent, each LC Issuer and
each Bank for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed on amounts payable under this Section 4.5) paid by the
Agent, such LC Issuer or such Bank and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto. Payments due
under this indemnification shall be made within thirty (30) days of the date the
Agent, such LC Issuer or such Bank makes demand therefor pursuant to
Section 4.6.
     (d) Each Bank that is not incorporated under the laws of the United States
of America or a state thereof (each a “Non-U.S. Bank”) agrees that it will, not
more than ten (10) Business Days after the Amendment Effective Date, or, if
later, not more than ten (10) Business Days after becoming a Bank hereunder,
(i) deliver to each of the Company and the Agent two duly completed copies of
United States Internal Revenue Service Form W-8BEN or W-8ECI, certifying in
either case that such Bank is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes, and
(ii) deliver to each of the Company and the Agent a United States Internal
Revenue Form W-8 or W-9, as the case may be, and certify that it is entitled to
an exemption from United States backup withholding tax. Each Non-U.S. Bank
further undertakes to deliver to each of the Company and the Agent (x) renewals
or additional copies of such form (or any successor form) on or before the date
that such form expires or becomes obsolete, and (y) after the occurrence of any
event requiring a change in the most recent forms so delivered by it, such
additional forms or amendments thereto as may be reasonably requested by the
Company or the Agent. All forms or amendments described in the preceding
sentence shall certify that such Bank is entitled to

-26-

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

 

receive payments under this Agreement without deduction or withholding of any
United States federal income taxes, unless an event (including any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Bank from duly completing and delivering any such
form or amendment with respect to it and such Bank advises the Company and the
Agent that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax.
     (e) For any period during which a Non-U.S. Bank has failed to provide the
Company with an appropriate form pursuant to clause (d), above (unless such
failure is due to a change in treaty, law or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
occurring subsequent to the date on which a form originally was required to be
provided), such Non-U.S. Bank shall not be entitled to indemnification under
this Section 4.5 with respect to Taxes imposed by the United States; provided
that, should a Non-U.S. Bank which is otherwise exempt from or subject to a
reduced rate of withholding tax become subject to Taxes because of its failure
to deliver a form required under clause (d) above, the Company shall take such
steps as such Non-U.S. Bank shall reasonably request to assist such Non-U.S.
Bank to recover such Taxes.
     (f) Any Bank that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Bond
pursuant to the law of any relevant jurisdiction or any treaty shall deliver to
the Company (with a copy to the Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or at
a reduced rate.
     (g) If the U.S. Internal Revenue Service or any other governmental
authority of the United States or any other country or any political subdivision
thereof asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Bank (because the appropriate form was
not delivered or properly completed, because such Bank failed to notify the
Agent of a change in circumstances which rendered its exemption from withholding
ineffective), such Bank shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax, withholding therefor, or otherwise,
including penalties and interest, and including taxes imposed by any
jurisdiction on amounts payable to the Agent under this clause (g), together
with all costs and expenses related thereto (including attorneys fees and time
charges of attorneys for the Agent, which attorneys may be employees of the
Agent). The obligations of the Banks under this clause (g) shall survive the
payment of the Obligations and termination of this Agreement.
     4.6 Bank Certificates, Survival of Indemnity. To the extent reasonably
possible, each Bank shall designate an alternate Lending Installation with
respect to Eurodollar Rate Loans to reduce any liability of the Company to such
Bank under Section 4.1 or to avoid the unavailability of Eurodollar Rate Loans
under Section 4.3, so long as such designation is not disadvantageous to such
Bank. A certificate of such Bank as to the amount due under Section 4.1, 4.4 or
4.5 shall be final, conclusive and binding on the Company in the absence of
manifest error. Determination of amounts payable under such Sections in
connection with a Eurodollar Rate Loan shall be calculated as though each Bank
funded each Eurodollar Rate Loan through the

-27-

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

 

purchase of a deposit of the type and maturity corresponding to the deposit used
as a reference in determining the Base Eurodollar Rate applicable to such Loan
whether in fact that is the case or not. Unless otherwise provided herein, the
amount specified in any certificate shall be payable on demand after receipt by
the Company of such certificate. The obligations of the Company under
Sections 4.1, 4.4 and 4.5 shall survive payment of the Obligations and
termination of this Agreement; provided that no Bank shall be entitled to
compensation to the extent that such compensation relates to any period of time
more than ninety (90) days after the termination of this Agreement.
     4.7 Defaulting Banks.
     Notwithstanding any provision of this Agreement to the contrary, if any
Bank becomes a Defaulting Bank, then the following provisions shall apply for so
long as such Bank is a Defaulting Bank:
     (a) such Defaulting Bank is no longer entitled to the Commitment Fee
payable by the Company pursuant to Section 2.5(a);
     (b) the Commitment and Outstanding Credit Exposure of such Defaulting Bank
shall not be included in determining whether the Majority Banks have taken or
may take any action hereunder (including any consent to any amendment or waiver
pursuant to Section 10.1, other than those which require the consent of all
Banks or of each affected Bank);
     (c) if any LC Obligations exist at the time a Bank becomes a Defaulting
Bank then:
     (i) all or any part of such LC Obligation shall be reallocated among the
non-Defaulting Banks in accordance with their respective Pro Rata Share but only
to the extent (x) the sum of all non-Defaulting Banks’ Outstanding Credit
Exposure does not exceed the total of all non-Defaulting Banks’ Commitments,
(y) no Bank’s Outstanding Credit Exposure shall exceed its Commitment and
(z) the conditions set forth in Section 11.2 are satisfied at such time;
     (ii) if the reallocation described in subclause (i) above cannot, or can
only partially, be effected, the Company shall within one (1) Business Day
following notice by the Agent, cash collateralize such Defaulting Bank’s Pro
Rata Share of the LC Obligations (after giving effect to any partial
reallocation pursuant to subclause (i) above) in accordance with the procedures
set forth in Section 9.2 for so long as such LC Obligation is outstanding;
     (iii) if the Company cash collateralizes any portion of such Defaulting
Bank’s Pro Rata Share of the LC Obligations pursuant this clause (c), the
Company shall not be required to pay any fees to such Defaulting Bank pursuant
to Section 3.4 with respect to such Defaulting Bank’s Pro Rata Share of the LC
Obligations during the period such Defaulting Bank’s Pro Rata Share of the LC
Obligations is cash collateralized;
     (iv) if the non-Defaulting Banks’ Pro Rata Share of the LC Obligations is
reallocated pursuant to this clause (c), then the fees payable to the Banks
pursuant to Section 2.5(a) and Section 3.4 shall be adjusted in accordance with
such non-Defaulting

-28-

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

 

Banks’ Pro Rata Shares; or
     (v) if any Defaulting Bank’s Pro Rata Share of the LC Obligations is
neither reallocated nor cash collateralized pursuant to this clause (c), then,
without prejudice to any rights or remedies of any LC Issuer or any Bank
hereunder, all fees that otherwise would have been payable to such Defaulting
Bank (solely with respect to the portion of such Defaulting Bank’s Commitment
that was utilized by such LC Obligations) and LC Fees payable under Section 3.4
with respect to such Defaulting Bank’s Pro Rata Share of the LC Obligations
shall be payable to the applicable LC Issuer until such Defaulting Bank’s Pro
Rata Share of the LC Obligation is cash collateralized and/or reallocated; and
     (d) so long as any Bank is a Defaulting Bank, no LC Issuer shall be
required to issue or Modify any Facility LC, unless it is satisfied that the
related exposure will be 100% covered by the Commitments of the non-Defaulting
Banks and/or cash collateral will be provided by the Company in accordance with
clause (c) above, and participating interests in any such newly issued or
Modified Facility LC shall be allocated among non-Defaulting Banks in a manner
consistent with clause(c)(i) above (and Defaulting Banks shall not participate
therein).
     (e) In the event that the Agent, the Company, and each LC Issuer each
agrees that a Defaulting Bank has adequately remedied all matters that caused
such Bank to be a Defaulting Bank, then the Banks’ Pro Rata Shares of the LC
Obligations shall be readjusted to reflect the inclusion of such Bank’s
Commitment and on such date such Bank shall purchase at par such of the Loans of
the other Banks as the Agent shall determine may be necessary in order for such
Bank to hold such Loans in accordance with its Pro Rata Share of the Aggregate
Commitment; provided, that if the Company cash collateralized any portion of
such Defaulting Bank’s Pro Rata Share of the LC Obligations pursuant to
Section 4.7(c), such cash shall be returned to the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
     The Company hereby represents and warrants that:
     5.1 Incorporation and Good Standing. The Company is duly incorporated,
validly existing and in good standing under the laws of the State of Michigan.
     5.2 Corporate Power and Authority: No Conflicts. The execution, delivery
and performance by the Company of the Credit Documents are within the Company’s
corporate powers, have been duly authorized by all necessary corporate action
and do not (i) violate the Company’s charter, bylaws or any applicable law, or
(ii) breach or result in an event of default under any indenture or material
agreement, and do not result in or require the creation of any Lien upon or with
respect to any of its properties (except the Lien of the Indenture securing the
Bonds and any Lien in favor of the Agent on the Facility LC Collateral Account
or any funds therein).
     5.3 Governmental Approvals. No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for the due

-29-

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

 

execution, delivery and performance by the Company of any Credit Document,
except for the authorization to issue, sell or guarantee secured and/or
unsecured short-term debt granted by the Federal Energy Regulatory Commission,
which authorization has been obtained and is in full force and effect.
     5.4 Legally Enforceable Agreements. Each Credit Document constitutes a
legal, valid and binding obligation of the Company, enforceable in accordance
with its terms, subject to (a) the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and (b) the application of general principles of
equity (regardless of whether considered in a proceeding in equity or at law).
     5.5 Financial Statements. (a) The audited balance sheet of the Company and
its Consolidated Subsidiaries as at December 31, 2009, and the related
statements of income and cash flows of the Company and its Consolidated
Subsidiaries for the fiscal year then ended, as set forth in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2009 (copies
of which have been furnished to each Bank), fairly present the financial
condition of the Company and its Consolidated Subsidiaries as at such date and
the results of operations of the Company and its Consolidated Subsidiaries for
the fiscal year ended on such date, all in accordance with GAAP.
          (b) The unaudited balance sheet of the Company and its Consolidated
Subsidiaries as at June 30, 2010, and the related unaudited statements of income
and cash flows of the Company and its Consolidated Subsidiaries for the
six-month period then ended, as set forth in the Company’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2010 (copies of which have been
furnished to each Bank), fairly present (subject to year-end audit adjustments)
the financial condition of the Company and its Consolidated Subsidiaries as at
such date and the results of operations of the Company and its Consolidated
Subsidiaries for the six-month period ended on such date, all in accordance with
GAAP, and since December 31, 2009, there has been no Material Adverse Change.
     5.6 Litigation. Except (i) to the extent described in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2009 and Quarterly Report on
Form 10-Q for the quarter ended June 30, 2010, in each case as filed with the
SEC, and (ii) such other similar actions, suits and proceedings predicated on
the occurrence of the same events giving rise to any actions, suits and
proceedings described in the reports referred to in the foregoing clause (i)
(all matters described in clauses (i) and (ii) above, the “Disclosed Matters”),
there is no pending or threatened action, suit, investigation or proceeding
against the Company or any of its Consolidated Subsidiaries before any court,
governmental agency or arbitrator, which, if adversely determined, might
reasonably be expected to result in a Material Adverse Change. As of the
Amendment Effective Date, (a) there is no litigation challenging the validity or
the enforceability of any of the Credit Documents and (b) there have been no
adverse developments with respect to the Disclosed Matters that have resulted,
or could reasonably be expected to result, in a Material Adverse Change.
     5.7 Margin Stock. The Company is not engaged in the business of extending
credit for the purpose of buying or carrying margin stock (within the meaning of
Regulation U), and no proceeds of any Credit Extension will be used to buy or
carry any margin stock or to extend

-30-

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

 

credit to others for the purpose of buying or carrying any margin stock.
     5.8 ERISA. No Plan Termination Event has occurred or is reasonably expected
to occur with respect to any Plan. Neither the Company nor any ERISA Affiliate
is an employer under or has any liability with respect to a Multiemployer Plan.
     5.9 Insurance. All insurance required by Section 6.2 is in full force and
effect.
     5.10 Taxes. The Company and its Subsidiaries have filed all tax returns
(Federal, state and local) required to be filed and paid all taxes shown thereon
to be due, including interest and penalties, or, to the extent the Company or
any of its Subsidiaries is contesting in good faith an assertion of liability
based on such returns, has provided adequate reserves for payment thereof in
accordance with GAAP.
     5.11 Investment Company Act. The Company is not an investment company
(within the meaning of the Investment Company Act of 1940, as amended).
     5.12 Bonds. The issuance to the Agent of Bonds pursuant to the terms of the
Original Credit Agreement as evidence of the Obligations (i) did not violate any
provision of the Indenture or any other agreement or instrument, or any law or
regulation, or judicial or regulatory order, judgment or decree, to which the
Company or any of its Subsidiaries is a party or by which any of the foregoing
is bound and (ii) does provide the Banks, as beneficial holders of the Bonds
through the Agent, the benefit of the Lien of the Indenture equally and ratably
with the holders of other First Mortgage Bonds.
     5.13 Disclosure. The Company has not withheld any fact from the Agent or
the Banks in regard to the occurrence of a Material Adverse Change; and all
financial information delivered by the Company to the Agent and the Banks on and
after the date of this Agreement is true and correct in all material respects as
at the dates and for the periods indicated therein.
     5.14 OFAC. Neither the Company nor any Subsidiary or Affiliate of the
Company is named on the United States Department of the Treasury’s Specially
Designated Nationals or Blocked Persons list available through
http://www.treas.gov/offices/eotffc/ofac/sdn/t11sdn.pdf or as otherwise
published from time.
     5.15 Delivery of Documents. On or prior to the Amendment Effective Date,
the Company delivered, or caused to be delivered, true, accurate and complete
copies of the Bond, the Supplemental Indenture and the Bond Delivery Agreement,
each as in effect as of the Amendment Effective Date.
ARTICLE VI
AFFIRMATIVE COVENANTS
     So long as any Obligations shall remain unpaid, any Facility LC shall
remain outstanding or any Bank shall have any Commitment under this Agreement,
the Company shall:
     6.1 Payment of Taxes, Etc. Pay and discharge, before the same shall become

-31-

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

 

delinquent, (a) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property, and (b) all lawful claims which, if
unpaid, might by law become a Lien upon its property; provided that the Company
shall not be required to pay or discharge any such tax, assessment, charge or
claim (i) which is being contested by it in good faith and by proper procedures
or (ii) the non-payment of which will not result in a Material Adverse Change.
     6.2 Maintenance of Insurance. Maintain insurance in such amounts and
covering such risks with respect to its business and properties as is usually
carried by companies engaged in similar businesses and owning similar
properties, either with reputable insurance companies or, in whole or in part,
by establishing reserves or one or more insurance funds, either alone or with
other corporations or associations.
     6.3 Preservation of Corporate Existence, Etc. (a) Preserve and maintain its
corporate existence, rights and franchises, and (b) qualify and remain qualified
as a foreign corporation in each jurisdiction in which such qualification is
necessary in view of its business and operations or the ownership of its
properties; provided that the Company shall not be required to preserve any such
right or franchise under clause (a) above or to remain so qualified under clause
(b) above unless the failure to do so would reasonably be expected to result in
a Material Adverse Change.
     6.4 Compliance with Laws, Etc. Comply with the requirements of all
applicable laws, rules, regulations and orders of any governmental authority,
the non-compliance of which would reasonably be expected to result in a Material
Adverse Change.
     6.5 Visitation Rights. At any reasonable time and from time to time, permit
the Agent, any of the Banks or any agents or representatives thereof to examine
and make copies of and abstracts from its records and books of account, visit
its properties and discuss its affairs, finances and accounts with any of its
officers.
     6.6 Keeping of Books. Keep, and cause each Consolidated Subsidiary to keep,
adequate records and books of account, in which full and correct entries shall
be made of all of its financial transactions and its assets and business so as
to permit the Company and its Consolidated Subsidiaries to present financial
statements in accordance with GAAP.
     6.7 Reporting Requirements. Furnish to the Agent, with sufficient copies
for each of the Banks:
     (a) as soon as practicable and in any event within five (5) Business Days
after becoming aware of the occurrence of any Default or Event of Default, a
statement of a Designated Officer as to the nature thereof, and as soon as
practicable and in any event within five (5) Business Days thereafter, a
statement of a Designated Officer as to the action which the Company has taken,
is taking or proposes to take with respect thereto;
     (b) as soon as available and in any event within sixty (60) 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
at the end of such quarter, and the related consolidated statements of income,
cash flows and common stockholder’s equity of the Company and its Consolidated
Subsidiaries as at the end of and for the period commencing at the

-32-

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

 

end of the previous fiscal year and ending with the end of such quarter, setting
forth in each case in comparative form the corresponding figures for the
corresponding date or period of the preceding fiscal year, or statements
providing substantially similar information (which requirement shall be deemed
satisfied by the delivery of the Company’s quarterly report on Form 10-Q for
such quarter), all in reasonable detail and duly certified (subject to the
absence of footnotes and to year-end audit adjustments) by a Designated Officer
as having been prepared in accordance with GAAP, together with (i) a certificate
of a Designated Officer stating that such officer has no knowledge (having made
due inquiry with respect thereto) that a Default or Event of Default has
occurred and is continuing, or, if a Default or Event of Default has occurred
and is continuing, a statement as to the nature thereof and the actions which
the Company has taken, is taking or proposes to take with respect thereto, and
(ii) a certificate of a Designated Officer, in substantially the form of
Exhibit B hereto, setting forth the Company’s computation of the financial ratio
specified in Article VIII as of the end of the immediately preceding fiscal
quarter or year, as the case may be, of the Company;
     (c) as soon as available and in any event within 120 days after the end of
each fiscal year of the Company, a copy of the Company’s Annual Report on Form
10-K (or any successor form) for such year, including therein the consolidated
balance sheet of the Company and its Consolidated Subsidiaries as at the end of
such year and the consolidated statements of income, cash flows and common
stockholder’s equity of the Company and its Consolidated Subsidiaries as at the
end of and for such year, or statements providing substantially similar
information, in each case certified by independent public accountants of
recognized national standing selected by the Company (and not objected to by the
Majority Banks), together with (i) a certificate of such accounting firm
addressed to the Banks stating that, in the course of its examination of the
consolidated financial statements of the Company and its Consolidated
Subsidiaries, which examination was conducted by such accounting firm in
accordance with GAAP, (A) such accounting firm has obtained no knowledge that an
Event of Default, insofar as such Event of Default related to accounting or
financial matters, has occurred and is continuing, or if, in the opinion of such
accounting firm, such an Event of Default has occurred and is continuing, a
statement as to the nature thereof, and (B) such accounting firm has examined a
certificate of a Designated Officer, in substantially the form of Exhibit B
setting forth the computations made by the Company in determining, as of the end
of such fiscal year, the ratio specified in Article VIII, which certificate
shall be attached to the certificate of such accounting firm, and such
accounting firm confirms that such computations accurately reflect such ratios,
and (ii) a certificate of a Designated Officer stating that such officer has no
knowledge (having made due inquiry with respect thereto) that a Default or Event
of Default has occurred and is continuing, or, if a Default or Event of Default
has occurred and is continuing, a statement as to the nature thereof and the
actions which the Company has taken, is taking or proposes to take with respect
thereto;
     (d) promptly after the sending or filing thereof, copies of all proxy
statements which the Company sends to its stockholders, copies of all regular,
periodic and special reports (other than those which relate solely to employee
benefit plans) which the Company files with the SEC and notice of the sending or
filing of (and, upon the request of the Agent or any Bank, a copy of) any final
prospectus filed with the SEC;
     (e) as soon as possible and in any event (i) within thirty (30) days after
the Company or any ERISA Affiliate knows or has reason to know that any Plan
Termination Event described

-33-

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

 

in clause (a) of the definition of Plan Termination Event with respect to any
Plan has occurred and (ii) within ten (10) days after the Company or any ERISA
Affiliate knows or has reason to know that any other Plan Termination Event with
respect to any Plan has occurred, a statement of the Chief Financial Officer of
the Company describing such Plan Termination Event and the action, if any, which
the Company or such ERISA Affiliate, as the case may be, proposes to take with
respect thereto;
     (f) promptly upon becoming aware thereof, notice of any upgrading or
downgrading of the rating of the Senior Debt by Moody’s or S&P;
     (g) as soon as possible and in any event within five (5) days after the
occurrence of any default under any agreement to which the Company or any of its
Subsidiaries is a party, which default would reasonably be expected to result in
a Material Adverse Change, and which is continuing on the date of such
certificate, a certificate of the president or chief financial officer of the
Company setting forth the details of such default and the action which the
Company or any such Subsidiary proposes to take with respect thereto; and
     (h) promptly, such other information respecting the business, properties or
financial condition of the Company as the Agent or any Bank through the Agent
may from time to time reasonably request.
     6.8 Use of Proceeds. The Company will use the proceeds of the Credit
Extensions for general corporate purposes and working capital. The Company will
not, nor will it permit any Subsidiary to, use any of the proceeds of the Credit
Extensions to purchase or carry any “margin stock” (as defined in Regulation U).
     6.9 Maintenance of Properties, Etc. The Company shall, and shall cause each
of its Subsidiaries to, maintain in all material respects all of its respective
owned and leased Property in good and safe condition and repair to the same
degree as other companies engaged in similar businesses and owning similar
properties, and not permit, commit or suffer any waste or abandonment of any
such Property, and from time to time make or cause to be made all material
repairs, renewals and replacements thereof, including any capital improvements
which may be required; provided that such Property may be altered or renovated
in the ordinary course of the Company’s or its Subsidiaries’ business; and
provided, further, that the foregoing shall not restrict the sale of any asset
of the Company or any Subsidiary to the extent not prohibited by Section 7.2.
     6.10 Bonds. The Company shall, until the date on which the Commitments and
Facility LCs have terminated and all Obligations have been paid in full, cause
the face amount of all Bonds to at all times be equal to or greater than the
greater of (a) the Aggregate Commitment and (b) the Aggregate Outstanding Credit
Exposure.
ARTICLE VII
NEGATIVE COVENANTS
     So long as any Obligations shall remain unpaid, any Facility LC shall
remain outstanding or any Bank shall have any Commitment under this Agreement,
the Company shall not:

-34-

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

 

     7.1 Liens. Create, incur, assume or suffer to exist any Lien upon or with
respect to any of its properties, now owned or hereafter acquired, except:
     (a) Liens created pursuant to the Indenture securing the First Mortgage
Bonds and any Lien in favor of the Agent on the Facility LC Collateral Account
or any funds therein;
     (b) Liens securing pollution control bonds, or bonds issued to refund or
refinance pollution control bonds (including Liens securing obligations
(contingent or otherwise) of the Company under letter of credit agreements or
other reimbursement or similar credit enhancement agreements with respect to
pollution control bonds); provided that the aggregate face amount of any such
bonds so issued shall not exceed the aggregate face amount of such pollution
control bonds, as the case may be, so refunded or refinanced;
     (c) Liens in (and only in) assets acquired to secure Debt incurred to
finance the acquisition of such assets;
     (d) Statutory and common law banker’s Liens on bank deposits;
     (e) Liens in respect of accounts receivable sold, transferred or assigned
by the Company;
     (f) Liens for taxes, assessments or other governmental charges or levies
not at the time delinquent or thereafter payable without penalty or being
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its books;
     (g) Liens of carriers, warehousemen, mechanics, materialmen and landlords
incurred in the ordinary course of business for sums not overdue or being
contested in good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on its books;
     (h) Liens incurred in the ordinary course of business in connection with
workers’ compensation, unemployment insurance or other forms of governmental
insurance or benefits, or to secure performance of tenders, statutory
obligations, leases and contracts (other than for borrowed money) entered into
in the ordinary course of business or to secure obligations on surety or appeal
bonds;
     (i) Judgment Liens in existence less than thirty (30) days after the entry
thereof or with respect to which execution has been stayed or the payment of
which is covered (subject to a customary deductible) by insurance;
     (j) Zoning restrictions, easements, licenses, covenants, reservations,
utility company rights, restrictions on the use of real property or minor
irregularities of title incident thereto which do not in the aggregate
materially detract from the value of the property or assets of the Company or
materially impair the operation of its business;
     (k) Liens arising in connection with the financing of the Company’s fuel
resources, including nuclear fuel;

-35-

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

 

     (l) Liens arising pursuant to M.C.L. 324.20138; provided that the aggregate
amount of all obligations secured by such Liens (excluding any such Liens of
which the Company has no knowledge or which are permitted by clause (f) above)
shall not exceed $20,000,000;
     (m) Liens arising in connection with Securitized Bonds;
     (n) Liens on natural gas, oil and mineral, or on stock in trade, material
or supplies manufactured or acquired for the purpose of sale and or resale in
the usual course of business or consumable in the operation of any of the
properties of the Company; provided that such Liens secure obligations not
exceeding $500,000,000 in aggregate principal amount; and
     (o) Other Liens securing obligations in an aggregate amount not in excess
of $500,000,000.
     7.2 Sale of Assets. Sell, lease, assign, transfer or otherwise dispose of
25% or more of its assets calculated with reference to total assets as reflected
on the Company’s consolidated balance sheet as at December 31, 2009, during the
term of this Agreement.
     7.3 Mergers, Etc. Merge with or into or consolidate with or into any other
Person, except that the Company may merge with any other Person; provided that,
in each case, immediately after giving effect thereto, (a) no event shall occur
and be continuing which constitutes a Default or Event of Default, (b) the
Company is the surviving corporation, (c) the Company shall not be liable with
respect to any Debt or allow its Property to be subject to any Lien which it
could not become liable with respect to or allow its Property to become subject
to under this Agreement on the date of such transaction and (d) the Company’s
Net Worth shall be equal to or greater than its Net Worth immediately prior to
such merger.
     7.4 Compliance with ERISA. Permit to exist any occurrence of any Reportable
Event, or any other event or condition which presents a material (in the
reasonable opinion of the Majority Banks) risk of a termination by the PBGC of
any Plan, which termination will result in any material (in the reasonable
opinion of the Majority Banks) liability of the Company or such ERISA Affiliate
to the PBGC.
     7.5 Change in Nature of Business. Make any material change in the nature of
its business as carried on as of the Amendment Effective Date.
     7.6 Off-Balance Sheet Liabilities. Create, incur, assume or suffer to
exist, or permit any Subsidiary to create, incur, assume or suffer to exist,
Off-Balance Sheet Liabilities (exclusive of obligations arising in connection
with the Purchase Agreement among the Company, Consumers Receivables Funding II,
LLC, Falcon Asset Securitization Corporation and JPMorgan Chase Bank, N.A.,
dated as of May 22, 2003, as amended, restated or otherwise modified from time
to time and any similar agreement entered into in replacement thereof) in the
aggregate in excess of $250,000,000 at any time.
     7.7 Transactions with Affiliates. Enter into, or permit any Subsidiary to
enter into, any transaction with any of its Affiliates (other than the Company
or any Subsidiary) unless such transaction is on terms no less favorable to the
Company or such Subsidiary than if the transaction had been negotiated in good
faith on an arm’s-length basis with a non-Affiliate;

-36-

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

 

provided that the foregoing shall not prohibit (a) the payment by the Company or
any Subsidiary of dividends or other distributions on, or redemptions of, its
capital stock, (b) the purchase, acquisition or retirement by the Company or any
Subsidiary of the Company’s capital stock or (c) intercompany loans and advances
not otherwise prohibited by this Agreement.
ARTICLE VIII
FINANCIAL COVENANT
     So long as any of the Obligations shall remain unpaid, any Facility LC
shall remain outstanding or any Bank shall have any Commitment under this
Agreement, the Company shall at all times maintain a ratio of Total Consolidated
Debt to Total Consolidated Capitalization of not greater than 0.70 to 1.0.
ARTICLE IX
EVENTS OF DEFAULT
     9.1 Events of Default. The occurrence of any of the following events shall
constitute an “Event of Default”:
     (a) The Company shall fail to pay (i) any principal of any Advance when due
and payable, or (ii) any Reimbursement Obligation within one (1) day after the
same becomes due, or (iii) any interest on any Advance or any fee or other
Obligation payable hereunder within five (5) days after such interest or fee or
other Obligation becomes due and payable;
     (b) Any representation or warranty made by the Company (or any of its
officers) in this Agreement or any other Credit Document or in any certificate,
document, report, financial or other written statement furnished at any time
pursuant to any Credit Document shall prove to have been incorrect in any
material respect on or as of the date made or deemed made;
     (c) (i) The Company shall fail to perform or observe any term, covenant or
agreement contained in Section 6.3(a) (solely with respect to the Company),
Section 6.10, Article VII or Article VIII; or (ii) the Company shall fail to
perform or observe any other term, covenant or agreement on its part to be
performed or observed in this Agreement or in any other Credit Document and such
failure under this clause (ii) shall continue for thirty (30) consecutive days
after the earlier of (x) a Designated Officer obtaining knowledge of such breach
and (y) written notice thereof by means of facsimile, regular mail or written
notice delivered in person (or telephonic notice thereof confirmed in writing)
having been given to the Company by the Agent or the Majority Banks;
     (d) The Company shall: (i) fail to pay any Debt (other than the payment
obligations described in clause (a) above) in excess of $50,000,000, or any
interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the instrument or
agreement relating to such Debt; or (ii) fail to perform or observe any term,
covenant or condition on its part to be performed or observed under any
agreement or instrument relating to any such Debt, when required to be performed
or observed, if the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration of, the maturity of such Debt, unless
the obligee under or holder of such Debt shall have waived in writing such

-37-

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

 

circumstance, or such circumstance has been cured, so that such circumstance is
no longer continuing; or (iii) any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), in each case in accordance with the terms of such agreement or
instrument, prior to the stated maturity thereof; or (iv) generally not, or
shall admit in writing its inability to, pay its debts as such debts become due;
     (e) The Company: (i) shall make an assignment for the benefit of creditors,
or petition or apply to any tribunal for the appointment of a custodian,
receiver or trustee for it or a substantial part of its assets; or (ii) shall
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (iii) shall have had any
such petition or application filed or any such proceeding shall have been
commenced, against it, in which an adjudication or appointment is made or order
for relief is entered, or which petition, application or proceeding remains
undismissed for a period of thirty (30) consecutive days or more; or (iv) by any
act or omission shall indicate its consent to, approval of or acquiescence in
any such petition, application or proceeding or order for relief or the
appointment of a custodian, receiver or trustee for all or any substantial part
of its property; or (v) shall suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of thirty (30) days or more;
or (vi) shall take any corporate action to authorize any of the actions set
forth above in this clause (e);
     (f) One or more judgments, decrees or orders for the payment of money in
excess of $50,000,000 in the aggregate shall be rendered against the Company and
either (i) enforcement proceedings shall have been commenced by any creditor
upon any such judgment or order or (ii) there shall be any period of more than
thirty (30) consecutive days during which a stay of enforcement of such judgment
or order, by reason of a pending appeal or otherwise, shall not be in effect;
     (g) Any Plan Termination Event with respect to a Plan shall have occurred,
and thirty (30) days after notice thereof shall have been given to the Company
by the Agent, (i) such Plan Termination Event (if correctable) shall not have
been corrected and (ii) the then present value of such Plan’s vested benefits
exceeds the then current value of the assets accumulated in such Plan by more
than the amount of $25,000,000 (or in the case of a Plan Termination Event
involving the withdrawal of a “substantial employer” (as defined in
Section 4001(A)(2) of ERISA), the withdrawing employer’s proportionate share of
such excess shall exceed such amount); or
     (h) (i) Any Bond shall cease to be in full force and effect or (ii) the
Company shall deny that it has any liability or obligation under any Bond or
purport to revoke, terminate, rescind or redeem any Bond (other than in
accordance with the terms of the Bonds and the Indenture).
     9.2 Remedies.
     (a) If any Event of Default shall occur and be continuing, the Agent shall
upon the request, or may with the consent, of the Majority Banks, by notice to
the Company, (i) declare the Commitments and the obligations and powers of the
LC Issuers to issue Facility LCs to be terminated or suspended, whereupon the
same shall forthwith terminate, and/or (ii) declare the

-38-

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

 

Obligations to be forthwith due and payable, whereupon the Aggregate Outstanding
Credit Exposure and all other Obligations shall become and be forthwith due and
payable, and/or (iii) in addition to the continuing right to demand payment of
all amounts payable under this Agreement, make demand on the Company to pay, and
the Company will, forthwith upon such demand and without any further notice or
act, pay to the Agent the Collateral Shortfall Amount (as defined below), which
funds shall be deposited in the Facility LC Collateral Account, in each case
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Company; provided that in the case of an
Event of Default referred to in Section 9.1(e), the Commitments shall
automatically terminate, the obligations and powers of the LC Issuers to issue
Facility LCs shall automatically terminate and the Obligations shall
automatically become due and payable without notice, presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by the Company, and the Company will be and become thereby
unconditionally obligated, without any further notice, act or demand, to pay to
the Agent an amount in immediately available funds, which funds shall be held in
the Facility LC Collateral Account, equal to the difference of (x) the amount of
LC Obligations at such time, less (y) the amount on deposit in the Facility LC
Collateral Account at such time which is free and clear of all rights and claims
of third parties and has not been applied against the Obligations (such
difference, the “Collateral Shortfall Amount”).
     (b) If at any time while any Event of Default is continuing, the Agent
determines that the Collateral Shortfall Amount at such time is greater than
zero, the Agent may make demand on the Company to pay, and the Company will,
forthwith upon such demand and without any further notice or act, pay to the
Agent the Collateral Shortfall Amount, which funds shall be deposited in the
Facility LC Collateral Account.
     (c) The Agent may, at any time or from time to time after funds are
deposited in the Facility LC Collateral Account, apply such funds to the payment
of the Obligations and any other amounts as shall from time to time have become
due and payable by the Company to the Banks or the LC Issuers under the Credit
Documents. The Company hereby pledges, assigns and grants to the Agent, on
behalf of and for the ratable benefit of the Banks and the LC Issuers, a
security interest in all of the Company’s right, title and interest in and to
all funds which may from time to time be on deposit in the Facility LC
Collateral Account to secure the prompt and complete payment and performance of
the Obligations. The Agent will invest any funds on deposit from time to time in
the Facility LC Collateral Account in certificates of deposit of Union Bank
having a maturity not exceeding thirty (30) days.
     (d) At any time while any Event of Default is continuing, neither the
Company nor any Person claiming on behalf of or through the Company shall have
any right to withdraw any of the funds held in the Facility LC Collateral
Account. After all of the Obligations have been indefeasibly paid in full, all
Facility LCs have expired or been terminated and the Aggregate Commitment has
been terminated, any funds remaining in the Facility LC Collateral Account shall
be returned by the Agent to the Company or paid to whomever may be legally
entitled thereto at such time.
ARTICLE X
WAIVERS, AMENDMENTS AND REMEDIES

-39-

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

 

     10.1 Amendments. Subject to the provisions of this Article X, the Majority
Banks (or the Agent with the consent in writing of the Majority Banks) and the
Company may enter into written agreements supplemental hereto for the purpose of
adding or modifying any provisions to the Credit Documents (other than the
Proposal Letter, which may be amended or otherwise modified solely with the
consent of the parties thereto) or changing in any manner the rights of the
Banks or the Company hereunder or waiving any Event of Default hereunder;
provided that no such supplemental agreement shall, without the consent of all
of the Banks:
     (a) Extend the maturity of any Loan or reduce the principal amount thereof,
or extend the expiry date of any Facility LC to a date after the scheduled
Termination Date, or reduce the rate or extend the time of payment of interest
thereon or fees thereon or Reimbursement Obligations related thereto.
     (b) Modify the percentage specified in the definition of Majority Banks.
     (c) Extend the Termination Date or increase the amount of the Commitment of
any Bank hereunder or the commitment to issue Facility LCs, or permit the
Company to assign its rights under this Agreement.
     (d) Amend Section 3.1, Section 6.10, this Section 10.1 or Section 12.11.
     (e) Make any change in an express right in this Agreement of a single Bank
to give its consent, make a request or give a notice.
     (f) Authorize the Agent to vote in favor of the release of all or
substantially all of the collateral securing the Bonds.
     (g) Release all or any substantial portion of the Bonds.
     (h) Amend any provisions hereunder relating to the pro rata treatment of
the Banks.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent, and no amendment of any
provision relating to any LC Issuer shall be effective without the written
consent of such LC Issuer. Notwithstanding the foregoing, no amendment to
Section 4.7 shall be effective unless the same shall be in writing and signed by
the Agent, the LC Issuer, if applicable, and the Majority Banks.
     10.2 Preservation of Rights. No delay or omission of the Banks, the LC
Issuers or the Agent to exercise any right under the Credit Documents shall
impair such right or be construed to be a waiver of any Default or Event of
Default or an acquiescence therein, and the making of a Credit Extension
notwithstanding the existence of a Default or Event of Default or the inability
of the Company to satisfy the conditions precedent to such Credit Extension
shall not constitute any waiver or acquiescence. Any single or partial exercise
of any such right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Credit Documents whatsoever shall be
valid unless in writing signed by the Banks required pursuant to Section 10.1,
and then only to the extent in such writing specifically set forth. All remedies
contained in the Credit Documents or by law afforded shall be cumulative and all
shall be available to the Agent, the LC Issuers and

-40-

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

 

the Banks until the Obligations have been paid in full.
ARTICLE XI
CONDITIONS PRECEDENT
     11.1 Effectiveness of this Agreement. This Agreement shall not become
effective unless the Company has furnished to the Agent with sufficient copies
for the Banks:
     (a) Counterparts of this Agreement executed by the Company and the Banks.
     (b) Copies of the Restated Articles of Incorporation of the Company,
together with all amendments, certified by the Secretary or an Assistant
Secretary of the Company, and a certificate of good standing, certified by the
appropriate governmental officer in its jurisdiction of incorporation.
     (c) Copies, certified by the Secretary or an Assistant Secretary of the
Company, of its by-laws and of its Board of Directors’ resolutions (and
resolutions of other bodies, if any are deemed necessary by counsel for any
Bank) authorizing the execution of the Credit Documents.
     (d) An incumbency certificate, executed by the Secretary or an Assistant
Secretary of the Company, which shall identify by name and title and bear the
original or facsimile signature of the officers of the Company authorized to
sign the Credit Documents and the officers or other employees authorized to make
borrowings hereunder, upon which certificate the Banks shall be entitled to rely
until informed of any change in writing by the Company.
     (e) A certificate, signed by a Designated Officer of the Company, stating
that on the Amendment Effective Date (i) no Default or Event of Default has
occurred and is continuing and (ii) each representation or warranty contained in
Article V is true and correct.
     (f) A favorable opinion of James E. Brunner, Esq., General Counsel of the
Company, as to the matters set forth in Exhibit A and as to such other matters
as the Agent may reasonably request. Such opinion shall be addressed to the
Agent, the LC Issuers and the Banks and shall be satisfactory in form and
substance to the Agent.
     (g) Evidence, in form and substance satisfactory to the Agent, that the
Company has obtained all governmental approvals, if any, necessary for it to
enter into the Credit Documents.
     (h) Such other documents as any Bank or its counsel may have reasonably
requested. It shall be a further condition precedent to the effectiveness of
this Agreement that the Company shall have paid (i) to the Agent for the ratable
account of the Banks then parties to the Existing Credit Agreement, all accrued
and unpaid “Commitment Fees” and other “Obligations” (as such terms are defined
in the Existing Credit Agreement immediately prior to the Amendment Effective
Date) to but not including the Amendment Effective Date and all other expenses
required to be paid on the Amendment Effective Date and (ii) to the Agent and
the Arranger the fees required to be paid to them pursuant to the Proposal
Letter.
     11.2 Each Credit Extension. The Banks shall not be required to make any
Credit Extension if on the applicable Borrowing Date, (i) any Default or Event
of Default exists or

-41-

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

 

would result from such Credit Extension, (ii) any representation or warranty
contained in Article V is not true and correct as of such Borrowing Date,
(iii) after giving effect to such Credit Extension the Aggregate Outstanding
Credit Exposure would exceed the face amount of all Bonds or (iv) all legal
matters incident to the making of such Credit Extension are not satisfactory to
the Banks and their counsel; provided that, on any date following the Amendment
Effective Date on which the ratings of the Senior Debt from Moody’s and S&P are
Baa2 or higher and BBB or higher, respectively, the Company shall not be
required to make the representation and warranty (x) regarding no Material
Adverse Change set forth in Section 5.5 or (y) set forth in the first sentence
of Section 5.6. Each Borrowing Notice and each request for issuance of a
Facility LC shall constitute a representation and warranty by the Company that
the conditions contained in clauses (i), (ii) and (iii) above will be satisfied
on the relevant Borrowing Date. For the avoidance of doubt, the conversion or
continuation of an Advance shall not be considered the making of a Credit
Extension.
ARTICLE XII
GENERAL PROVISIONS
     12.1 Successors and Assigns. (a) The terms and provisions of the Credit
Documents shall be binding upon and inure to the benefit of the Company and the
Banks and their respective successors and assigns, except that the Company shall
not have the right to assign its rights under the Credit Documents. Any Bank may
sell participations in all or a portion of its rights and obligations under this
Agreement pursuant to clause (b) below and any Bank may assign all or any part
of its rights and obligations under this Agreement pursuant to clause (c) below.
     (b) Any Bank may sell participations to one or more banks or other entities
(other than the Company and its Affiliates) (each a “Participant”) in all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and its Outstanding Credit Exposure); provided that
(i) such Bank’s obligations under this Agreement (including its Commitment to
the Company hereunder) shall remain unchanged, (ii) such Bank shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Bank shall remain the holder of the Outstanding Credit
Exposure of such Bank for all purposes of this Agreement and (iv) the Company
shall continue to deal solely and directly with such Bank in connection with
such Bank’s rights and obligations under this Agreement. Each Bank shall retain
the sole right to approve, without the consent of any Participant, any
amendment, modification or waiver of any provision of the Credit Documents other
than any amendment, modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest which would require consent
of all of the Banks pursuant to the terms of Section 10.1 or of any other Credit
Document. The Company agrees that each Participant shall be deemed to have the
right of setoff provided in Section 12.10 in respect of its participating
interest in amounts owing under the Credit Documents to the same extent as if
the amount of its participating interest were owing directly to it as a Bank
under the Credit Documents; provided that each Bank shall retain the right of
setoff provided in Section 12.10 with respect to the amount of participating
interests sold to each Participant. The Banks agree to share with each
Participant, and each Participant, by exercising the right of setoff provided in
Section 12.10, agrees to share with each Bank, any amount received pursuant to
the exercise of its right of setoff, such amounts to be shared in accordance
with Section 12.11 as if each Participant were a Bank. The Company further
agrees that each Participant shall be entitled to

-42-

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

 

the benefits of Sections 4.1, 4.3, 4.4 and 4.5 to the same extent as if it were
a Bank and had acquired its interest by assignment pursuant to Section 12.1(c);
provided that (i) a Participant shall not be entitled to receive any greater
payment under Section 4.1, 4.3, 4.4 or 4.5 than the Bank that sold the
participating interest to such Participant would have received had it retained
such interest for its own account, unless the sale of such interest to such
Participant is made with the prior written consent of the Company, and (ii) any
Participant not incorporated under the laws of the United States of America or
any State thereof agrees to comply with the provisions of Section 4.5 to the
same extent as if it were a Bank.
     (c) Any Bank may, in the ordinary course of its business and in accordance
with applicable law, at any time assign to one or more financial institutions or
other Persons (other than the Company and its Affiliates) all or any part of its
rights and obligations under this Agreement; provided that (i) unless such
assignment is to another Bank, an Affiliate of such assigning Bank, or any
direct or indirect contractual counterparty in any swap agreement relating to
the Loans to the extent required in connection with the settlement of such
Bank’s obligations pursuant thereto, such Bank has received the prior written
consent of the Agent, the Company (so long as no Event of Default exists) and
each LC Issuer, which consents of the Agent, the Company and the LC Issuers
shall not be unreasonably withheld or delayed, and (ii) the minimum principal
amount of any such assignment (other than assignments to a Federal Reserve Bank,
to another Bank, to an Affiliate of such assigning Bank or any direct or
indirect contractual counterparty in any swap agreement relating to the Loans to
the extent required in connection with the settlement of such Bank’s obligations
pursuant thereto) shall be $5,000,000 (or such lesser amount consented to by the
Agent and, so long as no Event of Default shall be continuing, the Company,
which consents shall not be unreasonably withheld or delayed); provided that
after giving effect to such assignment the assigning Bank shall have a
Commitment of not less than $5,000,000 (unless otherwise consented to by the
Agent and, so long as no Event of Default shall be continuing, the Company),
unless such assignment constitutes an assignment of all of the assigning Bank’s
Commitment, Loans and other rights and obligations hereunder to a single
assignee. Notwithstanding the foregoing sentence, (x) any Bank may at any time,
without the consent of the Company, any LC Issuer or the Agent, pledge or assign
a security interest in all or any portion of its rights under this Agreement to
secure obligations of such Bank, including, without limitation, any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such assignment shall release the transferor Bank from its obligations hereunder
or substitute any such pledgee or assignee for such Bank as a party hereto; and
(y) no assignment by a Bank to any Affiliate of such Bank shall release such
Bank from its obligations hereunder unless (I) the Agent and, so long as no
Event of Default exists, the Company have approved such assignment or (II) the
creditworthiness of such Affiliate (as determined in accordance with customary
standards of the banking industry) is no less than that of the assigning Bank.
     (d) Any Bank may, in connection with any sale or participation or proposed
sale or participation pursuant to this Section 12.1, disclose to the purchaser
or participant or proposed purchaser or participant any information relating to
the Company furnished to such Bank by or on behalf of the Company; provided that
prior to any such disclosure of non-public information, the purchaser or
participant or proposed purchaser or participant (which purchaser or participant
is not an Affiliate of a Bank) shall agree to preserve the confidentiality of
any confidential information (except any such disclosure as may be required by
law or regulatory process)

-43-

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

 

relating to the Company received by it from such Bank.
     (e) Assignments under this Section 12.1 shall be made pursuant to an
agreement (an “Assignment Agreement”) substantially in the form of Exhibit C
hereto or in such other form as may be agreed to by the parties thereto and
shall not be effective until a $3,500 fee has been paid to the Agent by the
assignee, which fee shall cover the cost of processing such assignment; provided
that such fee shall not be incurred in the event of an assignment by any Bank of
all or a portion of its rights under this Agreement to (i) a Federal Reserve
Bank, (ii) a Bank or an Affiliate of the assigning Bank or (iii) any direct or
indirect contractual counterparty in any swap agreement relating to the Loans to
the extent required in connection with the settlement of such Bank’s obligations
pursuant thereto.
     12.2 Survival of Representations. All representations and warranties of the
Company contained in this Agreement shall survive the making of the Credit
Extensions herein contemplated.
     12.3 Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no LC Issuer or Bank shall be obligated to extend
credit to the Company in violation of any limitation or prohibition provided by
any applicable statute or regulation.
     12.4 Taxes. Any taxes (excluding income taxes) payable or ruled payable by
any Federal or State authority in respect of the execution of the Credit
Documents shall be paid by the Company, together with interest and penalties, if
any.
     12.5 Choice of Law. THE CREDIT DOCUMENTS SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF NEW YORK, BUT OTHERWISE WITHOUT REGARD TO THE LAW OF
CONFLICTS) OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT
SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY CREDIT DOCUMENT AND THE COMPANY HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT. EACH OF THE COMPANY, THE AGENT, THE LC ISSUERS AND
THE BANKS HEREBY WAIVES ANY RIGHT TO A JURY TRIAL IN ANY ACTION OR ARISING
HEREUNDER OR UNDER ANY CREDIT DOCUMENT.
     12.6 Headings. Section headings in the Credit Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Credit Documents.
     12.7 Entire Agreement. The Credit Documents embody the entire agreement and
understanding between the Company, the LC Issuers, the Agent and the Banks and
supersede all prior agreements and understandings between the Company, the LC
Issuers, the Agent and the Banks relating to the subject matter thereof.

-44-

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

 

     12.8 Expenses; Indemnification. The Company shall reimburse the Agent and
the Arranger for (a) any reasonable costs, internal charges and out-of-pocket
expenses (including reasonable attorneys’ fees, time charges and expenses of
counsel for the Agent) paid or incurred by the Agent or the Arranger in
connection with the preparation, review, execution, delivery, syndication,
distribution (including via the internet), administration, amendment and
modification of the Credit Documents and (b) any reasonable costs, internal
charges and out-of-pocket expenses (including reasonable attorneys’ fees, time
charges and expenses of counsel) paid or incurred by the Agent or the Arranger
on its own behalf or on behalf of any LC Issuer or any Bank and, on or after the
date upon which an Event of Default specified in Section 9.1(a) or 9.1(e) has
occurred and is continuing, each Bank, in connection with the collection and
enforcement of the Credit Documents. The Company further agrees to indemnify the
Agent, the Arranger, each LC Issuer, each Bank and their respective Affiliates,
and the directors, officers, employees and agents of the foregoing (all of the
foregoing, the “Indemnified Persons), against all losses, claims, damages,
penalties, judgments, liabilities and reasonable expenses (including all
reasonable expenses of litigation or preparation therefor whether or not an
Indemnified Person is a party thereto), regardless of whether such matter is
initiated by a third party or by the Company or any of its Affiliates or
equityholders, which any of them may pay or incur arising out of or relating to
this Agreement, the other Credit Documents, the transactions contemplated
hereby, the direct or indirect application or proposed application of the
proceeds of any Credit Extension hereunder, any actual or alleged presence or
release of any Hazardous Substance on or from any property owned or operated by
the Company or any Subsidiary or any Environmental Liability related in any way
to the Company or any Subsidiary; provided that the Company shall not be liable
to any Indemnified Person for any of the foregoing to the extent they arise from
the gross negligence or willful misconduct of such Indemnified Person. Without
limiting the foregoing, the Company shall pay any civil penalty or fine assessed
by the Office of Foreign Assets Control against any Indemnified Person, and all
reasonable costs and expenses (including reasonable fees and expenses of counsel
to such Indemnified Person) incurred in connection with defense thereof, as a
result of any breach or inaccuracy of the representation made in Section 5.14.
The obligations of the Company under this Section shall survive the termination
of this Agreement.
     12.9 Severability of Provisions. Any provision in any Credit Document that
is held to be inoperative, unenforceable or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability or validity of that provision in any other jurisdiction, and to
this end the provisions of all Credit Documents are declared to be severable.
     12.10 Setoff. In addition to, and without limitation of, any rights of the
Banks under applicable law, if the Company becomes insolvent, however evidenced,
or any Default or Event of Default occurs, any indebtedness from any Bank or any
of its Affiliates to the Company (including all account balances, whether
provisional or final and whether or not collected or available) may be, upon
prior notice to the Agent, offset and applied toward the payment of the
Obligations owing to such Bank or such Affiliate, whether or not the
Obligations, or any part hereof, shall then be due. The Company agrees that any
purchaser or participant under Section 12.1 may, to the fullest extent permitted
by law and in accordance with this Agreement, exercise all its rights of payment
with respect to such purchase or participation as if it were the direct creditor
of the Company in the amount of such purchase or participation.

-45-

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

 

     12.11 Ratable Payments. If any Bank, whether by setoff or otherwise, has
payment made to it upon its Outstanding Credit Exposure in a greater proportion
than that received by any other Bank, such Bank agrees, promptly upon demand, to
purchase a portion of the Aggregate Outstanding Credit Exposure held by the
other Banks so that after such purchase each Bank will hold its Pro Rata Share
of the Aggregate Outstanding Credit Exposure. If any Bank, whether in connection
with setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Bank agrees, promptly upon demand, to take such action
necessary such that all Banks share in the benefits of such collateral ratably
in proportion to their respective Pro Rata Share of the Aggregate Outstanding
Credit Exposure. In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made.
     12.12 Nonliability. The relationship between the Company, on the one hand,
and the Banks, the Arranger, the LC Issuers and the Agent, on the other hand,
shall be solely that of borrower and lender. None of the Agent, the Arranger,
any LC Issuer or any Bank shall have any fiduciary responsibilities to the
Company. None of the Agent, the Arranger, any LC Issuer or any Bank undertakes
any responsibility to the Company to review or inform the Company of any matter
in connection with any phase of the Company’s business or operations. The
Company shall rely entirely upon its own judgment with respect to its business,
and any review, inspection, supervision or information supplied to the Company
by the Banks is for the protection of the Banks and neither the Company nor any
third party is entitled to rely thereon. The Company agrees that none of the
Agent, the Arranger, any LC Issuer or any Bank shall have liability to the
Company (whether sounding in tort, contract or otherwise) for losses suffered by
the Company in connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by the Credit
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined in a final non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. None of the
Agent, the Arranger, any LC Issuer or any Bank shall have any liability with
respect to, and the Company hereby waives, releases and agrees not to sue for,
any special, indirect, consequential or punitive damages suffered by the Company
in connection with, arising out of, or in any way related to the Credit
Documents or the transactions contemplated thereby.
     12.13 Other Agents. The Banks identified on the signature pages of this
Agreement or otherwise herein, or in any amendment hereof or other document
related hereto, as being a “Co-Syndication Agent” or the “Documentation Agent”
(the “Other Agents”) shall have no rights, powers, obligations, liabilities,
responsibilities or duties under this Agreement other than those applicable to
all Banks as such. Without limiting the foregoing, the Other Agents shall not
have or be deemed to have any fiduciary relationship with any Bank. Each Bank
acknowledges that it has not relied, and will not rely, on the Other Agents in
deciding to enter into this Agreement or in taking or refraining from taking any
action hereunder or pursuant hereto. Nothing contained in this Agreement or
otherwise shall be construed to impose any obligation or duty on any Other
Agent, other than those applicable to all Banks as such.
     12.14 USA Patriot Act. Each Bank hereby notifies the Company that pursuant
to requirements of the USA Patriot Act, such Bank is required to obtain, verify
and record information that identifies the Company, which information includes
the name and address of the

-46-

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

 

Company and other information that will allow such Bank to identify the Company
in accordance with the USA Patriot Act.
     12.15 Electronic Delivery.
     (a) The Company shall use its commercially reasonable best efforts to
transmit to the Agent all information, documents and other materials that it is
obligated to furnish to the Agent pursuant to this Agreement and the other
Credit Documents, including all notices, requests, financial statements,
financial and other reports, certificates and other information materials, but
excluding (i) any Borrowing Notice, Conversion/Continuation Notice or notice of
prepayment, (ii) any notice of a Default or an Event of Default or (iii) any
communication that is required to be delivered to satisfy any condition
precedent to the effectiveness of this Agreement and/or any Advance hereunder
(all such non-excluded communications, collectively, “Communications”), in an
electronic/soft medium in a format reasonably acceptable to the Agent to such
e-mail address as designated by the Agent from time to time. In addition, the
Company shall continue to provide Communications to the Agent or any Bank in the
manner specified in this Agreement but only to the extent requested by the Agent
or such Bank. Each Bank and the Company further agrees that the Agent may make
Communications available to the Banks by posting Communications on IntraLinks or
a substantially similar electronic transmission system (the “Platform”);
provided, that upon written notice to the Agent and the Company, any Bank (such
bank, a “Declining Bank”) may decline to receive Communications via the Platform
and shall direct the Company to provide, and the Company shall so provide, such
Communications to such Declining Bank by delivery to such Declining Bank’s
address in accordance with Section 14.1. Subject to the conditions set forth in
the proviso in the immediately preceding sentence, nothing in this Section 12.15
shall prejudice the right of the Agent to make Communications available to the
Banks in any other manner specified herein.
     (b) Each Bank (other than a Declining Bank) agrees that an e-mail notice to
it (at the address provided pursuant to the next sentence and deemed delivered
as provided in clause (c) below) specifying that a Communication has been posted
to the Platform shall constitute effective delivery of such Communication to
such Bank for purposes of this Agreement. Each Bank (other than a Declining
Bank) agrees (i) to notify the Agent in writing (including by electronic
communication) from time to time to ensure that the Agent has on record an
effective e-mail address for such Bank to which the foregoing notice may be sent
by electronic transmission and (ii) that the foregoing notice may be sent to
such e-mail address.
     (c) Each party hereto (other than a Declining Bank) agrees that any
electronic Communication referred to in this Section 12.15 shall be deemed
delivered upon the posting of a record of such Communication as “sent” in the
e-mail system of the sending party or, in the case of any such Communication to
the Agent, upon the posting of a record of such Communication as “received” in
the e-mail system of the Agent, provided that if such Communication is not so
received by a Person during the normal business hours of such Person, such
Communication shall be deemed delivered at the opening of business on the next
business day for such Person.
     (d) Each party hereto acknowledges that the distribution of material
through an electronic medium is not necessarily secure and there are
confidentiality and other risks associated with such distribution.

-47-

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

 

     (e) EACH PARTY HERETO FURTHER ACKNOWLEDGES AND AGREES THAT:
     (i) NONE OF THE AGENT OR ITS AFFILIATES OR ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES
(COLLECTIVELY, THE “AGENT PARTIES”) WARRANTS THE ADEQUACY OF THE PLATFORM OR THE
ACCURACY OR COMPLETENESS OF ANY COMMUNICATION, AND EACH AGENT PARTY EXPRESSLY
DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN ANY COMMUNICATION; AND
     (ii) NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT
OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY
ANY AGENT PARTY IN CONNECTION WITH ANY COMMUNICATION OR THE PLATFORM.
     12.16 Amendment and Restatement. The amendment and restatement of the
Existing Credit Agreement pursuant to this Agreement shall be effective as of
the Amendment Effective Date, subject to the satisfaction of the conditions
precedent set forth in Section 11.1. This Agreement shall amend and restate in
its entirety the Existing Credit Agreement and shall have the effect of a
substitution of terms of the Existing Credit Agreement, but this Agreement will
not have the effect of causing a novation, refinancing or other repayment of the
Original Obligations or a termination or extinguishment of the Liens securing
such Original Obligations, which Original Obligations shall remain outstanding
and repayable pursuant to the terms of this Agreement and which Liens shall
remain attached, enforceable and perfected securing such Original Obligations
and all additional obligations arising under this Agreement. Each reference to
the Existing Credit Agreement in any of the Credit Documents, or any other
document, instrument or agreement delivered in connection therewith, shall mean
and be a reference to this Agreement.
     12.17 Confidentiality. Each of the Agent, the LC Issuers and the Banks
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority or self-regulatory body, (c) to the extent required
by applicable laws or by any subpoena or similar legal process, (d) to any other
party to this Agreement, (e) in connection with the exercise of any remedies
hereunder or any suit, action or proceeding relating to this Agreement or any
other Credit Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Company and its
obligations, or (g) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this

-48-

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

 

Section or (ii) becomes available to the Agent, any LC Issuer or any Bank on a
non-confidential basis from a source other than the Company. For the purposes of
this Section, “Information” means all information received from the Company
relating to the Company, its Subsidiaries or their business, other than any such
information that is available to the Agent, any LC Issuer or any Bank on a
non-confidential basis prior to disclosure by the Company; provided that, in the
case of information received from the Company after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
ARTICLE XIII
THE AGENT
     13.1 Appointment. Union Bank is hereby appointed Agent hereunder, and each
of the Banks irrevocably authorizes the Agent to act as the contractual
representative on behalf of such Bank. The Agent agrees to act as such upon the
express conditions contained in this Article XIII. The Agent shall not have a
fiduciary relationship in respect of any Bank by reason of this Agreement.
     13.2 Powers. The Agent shall have and may exercise such powers hereunder as
are specifically delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. The Agent shall not have any
implied duties to the Banks or any obligation to the Banks to take any action
hereunder except any action specifically provided by this Agreement to be taken
by the Agent.
     13.3 General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Banks or any Bank for any
action taken or omitted to be taken by it or them hereunder or in connection
herewith except for its or their own gross negligence or willful misconduct.
     13.4 No Responsibility for Recitals, Etc. The Agent shall not be
responsible to the Banks for any recitals, reports, statements, warranties or
representations herein or in any Credit Document or be bound to ascertain or
inquire as to the performance or observance of any of the terms of this
Agreement.
     13.5 Action on Instructions of Banks. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and under any other
Credit Document in accordance with written instructions signed by the Majority
Banks (or all of the Banks if required by Section 10.1), and such instructions
and any action taken or failure to act pursuant thereto shall be binding on all
of the Banks. The Banks hereby acknowledge that the Agent shall be under no duty
to take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement or any other Credit Document unless it shall be
requested in writing to do so by the Majority Banks. The Agent shall be fully
justified in failing or refusing to take any action hereunder and under any
other Credit Document unless it shall first be indemnified to its satisfaction
by the Banks pro rata against any and all liability, cost and

-49-

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

 

expense that it may incur by reason of taking or continuing to take any such
action.
     13.6 Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder by or through employees, agents and attorneys-in-fact
and shall not be answerable to the Banks, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. The Agent
shall be entitled to advice of counsel concerning all matters pertaining to the
agency hereby created and its duties hereunder.
     13.7 Reliance on Documents; Counsel. The Agent shall be entitled to rely
upon any notice, consent, certificate, affidavit, letter, telegram, statement,
paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and, in respect to legal
matters, upon the opinion of counsel selected by the Agent, which counsel may be
employees of the Agent.
     13.8 Agent’s Reimbursement and Indemnification. The Banks agree to
reimburse and indemnify the Agent (in the Agent’s capacity as Agent) ratably in
accordance with their respective Pro Rata Shares (i) for any amounts not
reimbursed by the Company for which the Agent (in the Agent’s capacity as Agent)
is entitled to reimbursement by the Company under the Credit Documents, (ii) for
any other expenses reasonably incurred by the Agent on behalf of the Banks, in
connection with the preparation, execution, delivery, administration and
enforcement of the Credit Documents, and for which the Agent (in the Agent’s
capacity as Agent) is not entitled to reimbursement by the Company under the
Credit Documents, and (iii) for any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, reasonable expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of this Agreement or any other document delivered in connection with this
Agreement or the transactions contemplated hereby or the enforcement of any of
the terms hereof or of any such other documents, and for which the Agent is not
entitled to reimbursement by the Company under the Credit Documents; provided
that no Bank shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Agent.
     13.9 Rights as a Bank. With respect to its Commitment and any Credit
Extension made by it, the Agent shall have the same rights and powers hereunder
as any Bank and may exercise the same as though it were not the Agent, and the
term “Bank” or “Banks” shall, unless the context otherwise indicates, include
Union Bank in its individual capacity. The Agent may accept deposits from, lend
money to, and generally engage in any kind of banking or trust business with the
Company or any Subsidiary as if it were not the Agent.
     13.10 Bank Credit Decision. (a) Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements prepared by the Company and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement.

-50-

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

 

     (b) Without limiting clause (a) above, each Bank acknowledges and agrees
that neither such Bank nor any of its Affiliates, participants or assignees may
rely on the Agent to carry out such Bank’s or other Person’s customer
identification program, or other obligations required or imposed under or
pursuant to the USA Patriot Act or the regulations thereunder, including the
regulations contained in 31 C.F.R. 103.121 (as amended or replaced, the “CIP
Regulations”), or any other applicable law, rule, regulation or order of any
governmental authority, including any program involving any of the following
items relating to or in connection with the Company or any of its Subsidiaries
or Affiliates or agents, the Credit Documents or the transactions contemplated
hereby: (i) any identity verification procedure; (ii) any recordkeeping;
(iii) any comparison with a government list; (iv) any customer notice or (v) any
other procedure required under the CIP Regulations or such other law, rule,
regulation or order.
     (c) Within ten (10) days after the date of this Agreement and at such other
times as are required under the USA Patriot Act, each Bank and each assignee and
participant that is not incorporated under the laws of the United States of
America or a state thereof (and is not excepted from the certification
requirement contained in Section 313 of the USA Patriot Act and the applicable
regulations because it is both (i) an Affiliate of a depository institution or
foreign bank that maintains a physical presence in the United States or foreign
country and (ii) subject to supervision by a banking authority regulating such
affiliated depository institution or foreign bank) shall deliver to the Agent a
certification, or, if applicable, recertification, certifying that such Bank is
not a “shell” and certifying as to other matters as required by Section 313 of
the USA Patriot Act and the applicable regulations.
     13.11 Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Banks and the Company, and the Agent may be removed at any
time with or without cause by written notice received by the Agent from the
Majority Banks. Upon any such resignation or removal, the Majority Banks shall
have the right to appoint, on behalf of the Banks, a successor Agent from among
the Banks. If no successor Agent shall have been so appointed by the Majority
Banks and shall have accepted such appointment within thirty (30) days after the
retiring Agent’s giving notice of resignation, then the retiring Agent may
appoint, on behalf of the Banks, a successor Agent from among the Banks. Such
successor Agent shall be a commercial bank having capital and retained earnings
of at least $500,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent’s resignation hereunder as
Agent, the provisions of this Article XIII shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Agent hereunder.
     13.12 Agent and Arranger Fees. The Company agrees to pay to the Agent and
the Arranger, for their respective accounts, the fees agreed to by the Company,
the Agent and the Arranger pursuant to the proposal letter agreement, dated as
of June 21, 2010 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Proposal Letter”), or as otherwise agreed from
time to time.

-51-

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

 

ARTICLE XIV
NOTICES
     14.1 Giving Notice. Except as otherwise permitted by Section 2.13(e) with
respect to borrowing notices, all notices, requests and other communications to
any party hereunder shall be in writing (including electronic transmission,
facsimile transmission or similar writing) and shall be given to such party:
(a) in the case of the Company or the Agent, at its address or facsimile number
set forth on the signature pages hereof, (b) in the case of any Bank, at its
address or facsimile number set forth in its Administrative Questionnaire or
(c) in the case of any party, at such other address or facsimile number as such
party may hereafter specify for such purpose by notice to the Agent and the
Company in accordance with the provisions of this Section 14.1. Each such
notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any other means,
when delivered (or, in the case of electronic transmission, received) at the
address specified in this Section; provided that notices to the Agent under
Article II shall not be effective until received.
     14.2 Change of Address. The Company, the Agent, any LC Issuer and any Bank
may each change the address for service of notice upon it by a notice in writing
to the other parties hereto.
ARTICLE XV
COUNTERPARTS
     This Agreement may be executed in any number of counterparts, all of which
when taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Company, the
Agent, the LC Issuers and the Banks and each party has notified the Agent by
facsimile or telephone that it has taken such action.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

-52-

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

 

     IN WITNESS WHEREOF, the Company, the Banks, the LC Issuers and the Agent
have executed this Agreement as of the date first above written.

            CONSUMERS ENERGY COMPANY
      By:   /s/ Laura L. Mountcastle         Name:   Laura L. Mountcastle       
Title:   Vice President and Treasurer     

Address:
One Energy Plaza
Jackson, MI 49201
Attention: Beverly S. Burger
Facsimile No.: (517) 788-0412
Confirmation (Phone) No: (517) 788-2541
E-Mail Address: bsburger@cmsenergy.com
Signature Page to
Second Amended and Restated Revolving Credit Agreement

 

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

 

            UNION BANK, N.A., as Agent, as an LC Issuer and as a
Bank
      By:   /s/ Jeffrey Fesenmaier         Name:   Jeffrey Fesenmaier       
Title:   Vice President     

Address:
445 South Figueroa Street
Los Angeles, CA 90071
Attention: Jeffrey Fesenmaier, Vice President
Facsimile No.: (213) 236-4096
Confirmation (Phone) No.: (213) 236-5065
E-Mail Address: jeffrey.fesenmaier@uboc.com
Signature Page to
Second Amended and Restated Revolving Credit Agreement

 

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

 

            BARCLAYS BANK PLC, as a Bank
      By:   /s/ Alicia Borys         Name:   Alicia Borys        Title:  
Assistant Vice President     

Signature Page to
Second Amended and Restated Revolving Credit Agreement

 

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

 

            DEUTSCHE BANK SECURITIES INC, as a
Co-Syndication Agent
      By:   /s/ Valerie Shapiro         Name:   Valerie Shapiro        Title:  
Vice President              By:   /s/ Michael Getz         Name:   Michael Getz 
      Title:   Associate        DEUTSCHE BANK TRUST COMPANY AMERICAS, as a Bank
      By:   /s/ Marcus M. Tarkington         Name:   Marcus M. Tarkington       
Title:   Director              By:   /s/ Carin Keegan         Name:   Carin
Keegan        Title:   Director     

Signature Page to
Second Amended and Restated Revolving Credit Agreement

 

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

 

            THE ROYAL BANK OF SCOTLAND PLC, as a
Co-Syndication Agent and as a Bank
      By:   /s/ Tyler J. McCarthy         Name:   Tyler J. McCarthy       
Title:   Director     

Signature Page to
Second Amended and Restated Revolving Credit Agreement

 

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

 

            BNP PARIBAS, as Documentation Agent and as a Bank
      By:   /s/ Pasquale A. Perraglia IV         Name:   Pasquale A. Perraglia
IV        Title:   Vice President              By:   /s/ Denis O’Meara        
Name:   Denis O’Meara        Title:   Managing Director     

Signature Page to
Second Amended and Restated Revolving Credit Agreement

 

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

 

            CITIBANK, N.A., as a Bank
      By:   /s/ Anita J. Brickell         Name:   Anita J. Brickell       
Title:   Vice President     

Signature Page to
Second Amended and Restated Revolving Credit Agreement

 

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

 

            COMERICA BANK, as a Bank
      By:   /s/ Steven J. McCormack         Name:   Steven J. McCormack       
Title:   Vice President     

Signature Page to
Second Amended and Restated Revolving Credit Agreement

 

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

 

            JPMORGAN CHASE BANK, N.A., as a Bank
      By:   /s/ Nancy R. Barwig         Name:   Nancy R. Barwig        Title:  
Senior Vice President     

Signature Page to
Second Amended and Restated Revolving Credit Agreement

 

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

 

            PNC BANK, NATIONAL ASSOCIATION, as a Bank
      By:   /s/ Arthur F. Gray         Name:   Arthur F. Gray        Title:  
Senior Vice President     

Signature Page to
Second Amended and Restated Revolving Credit Agreement

 

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

 

            ROYAL BANK OF CANADA, as a Bank
      By:   /s/ Meredith Majesty         Name:   Meredith Majesty       
Title:   Authorized Signatory     

Signature Page to
Second Amended and Restated Revolving Credit Agreement

 

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

 

            SCOTIABANC, as a Lender
      By:   /s/ J.F. Todd         Name:   J.F. Todd        Title:   Managing
Director     

Signature Page to
Second Amended and Restated Revolving Credit Agreement

 

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

 

            UBS LOAN FINANCE LLC, as a Bank
      By:   /s/ Irja R. Otsa         Name:   Irja R. Otsa        Title:  
Associate Director              By:   /s/ Mary E. Evans         Name:   Mary E.
Evans        Title:   Associate Director     

Signature Page to
Second Amended and Restated Revolving Credit Agreement

 

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

 

            U.S. BANK NATIONAL ASSOCIATION, as a Bank
      By:   /s/ Eric J. Cosgrove         Name:   Eric J. Cosgrove       
Title:   Vice President     

Signature Page to
Second Amended and Restated Revolving Credit Agreement

 

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

 

EXHIBIT A
REQUIRED OPINIONS FROM
JAMES E. BRUNNER, ESQ.
     1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Michigan.
     2. The execution and delivery of the Credit Documents by the Company and
the performance by the Company of the Obligations have been duly authorized by
all necessary corporate action and proceedings on the part of the Company and
will not:
     (a) contravene the Company’s Restated Articles of Incorporation, as
amended, or bylaws;
     (b) contravene any law or any contractual restriction imposed by any
indenture or any other agreement or instrument evidencing or governing
indebtedness for borrowed money of the Company (including but not limited to the
Company Indentures (as defined below)); or
     (c) result in or require the creation of any Lien upon or with respect to
any of the Company’s properties except the lien of the Indenture securing the
Bonds and any Lien in favor of the Agent on the Facility LC Collateral Account
or any funds therein.
     As used in this paragraph 2, “Company Indentures” means collectively,
(i) the Indenture dated as of January 1, 1996, as supplemented and amended from
time to time, between the Company (formerly known as Consumers Power Company)
and The Bank of New York Mellon (formerly known as The Bank of New York), as
Trustee, and (ii) the Indenture dated as of February 1, 1998, as supplemented
and amended from time to time, between the Company and The Bank of New York
Mellon (successor trustee to JPMorgan Chase Bank, N.A.), as Trustee.
     3. The Credit Documents have been duly executed and delivered by the
Company.
     4. To the best of my knowledge, there is no pending or threatened action or
proceeding against the Company or any of its Consolidated Subsidiaries before
any court, governmental agency or arbitrator (except (i) to the extent described
in the Company’s annual report on Form 10-K for the year ended December 31, 2009
and quarterly report on Form 10-Q for the quarter ended June 30, 2010, in each
case as filed with the SEC, and (ii) such other similar actions, suits and
proceedings predicated on the occurrence of the same events giving rise to any
actions, suits and proceedings described in the reports filed with the SEC set
forth in clause (i) of this paragraph 4) which might reasonably be expected to
materially adversely affect the financial condition or results of operations of
the Company and its Consolidated Subsidiaries, taken as a whole, or that would
materially adversely affect the Company’s ability to perform its obligations
under any Credit Document. To the best of my knowledge, there is no litigation
challenging the validity or the enforceability of any of the Credit Documents.

A-1

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

 

     5. No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by the Company of any Credit Document,
except for the authorization to issue, sell or guarantee secured and/or
unsecured long-term debt granted by the Federal Energy Regulatory Commission in
Docket No. ES10-34-000 (hereinafter the “FERC Order”). The FERC Order is in full
force and effect as of the date hereof.
     6. The Bonds executed in connection with the Original Credit Agreement
(a) are in due and proper form, (b) evidence and secure the Obligations owing
under the Agreement and (c) are valid and enforceable obligations of the Company
in accordance with their terms, secured by the lien of the Indenture on an equal
and ratable basis with all other bonds issued thereunder and otherwise entitled
to the benefits provided by the Indenture.
     7. The Indenture has been qualified under the Trust Indenture Act of 1939,
as amended, and the execution and delivery of the Supplemental Indenture will
not cause the Indenture to not be so qualified.
     8. The Company is not an “investment company” or a company “controlled” by
an “investment company” as such terms are defined in the Investment Company Act
of 1940, as amended.
     9. In a properly presented case, a Michigan court or a federal court
applying Michigan choice of law rules should give effect to the choice of law
provisions of the Agreement and should hold that the Agreement is to be governed
by the laws of the State of New York rather than the laws of the State of
Michigan, except in the case of those provisions set forth in the Agreement the
enforcement of which would contravene a fundamental policy of the State of
Michigan. In the course of our review of the Agreement, nothing has come to my
attention to indicate that any of such provisions would do so. Notwithstanding
the foregoing, even if a Michigan court or a federal court holds that the
Agreement is to be governed by the laws of the State of Michigan, the Agreement
constitutes a legal, valid and binding obligation of the Company, enforceable
under Michigan law (including usury provisions) against the Company in
accordance with its terms, subject to (a) the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally and (b) the application of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).

A-2

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

 

EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
     I,                          ,                           of Consumers Energy
Company, a Michigan corporation (the “Company”), DO HEREBY CERTIFY in connection
with the Second Amended and Restated Revolving Credit Agreement, dated as of
August 11, 2010 (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”; the terms defined therein being used
herein as so defined), among the Company, various financial institutions and
Union Bank, N.A., as Agent and an LC Issuer, that:
Article VIII of the Credit Agreement provides that the Company shall: “At all
times, maintain a ratio of Total Consolidated Debt to Total Consolidated
Capitalization of not greater than 0.70 to 1.0.”
The following calculations are made in accordance with the definitions of Total
Consolidated Debt and Total Consolidated Capitalization in the Credit Agreement
and are correct and accurate as of                     ,      :

              A.   Total Consolidated Debt    
 
           
 
  (a)   Indebtedness for borrowed money   $                    
 
           
plus
  (b)   Indebtedness for deferred purchase price of property/services   (+)
$                    
 
           
plus
  (c)   Liabilities for accumulated funding deficiencies (prior to the
effectiveness of the applicable provisions of the Pension Protection Act of 2006
with respect to a Plan) and liabilities for failure to make a payment required
to satisfy the minimum funding standard within the meaning of Section 412 of the
Code or Section 302 of ERISA (on and after the effectiveness of the applicable
provisions of the Pension Protection Act of 2006 with respect to a Plan).   (+)
$                    
 
           
plus
  (d)   Liabilities in connection with withdrawal liability under ERISA   (+)
$                    
 
           
plus
  (e)   Obligations under acceptance facilities   (+) $                    
 
           
plus
  (f)   Obligations under Capital Leases   (+) $                    
 
           
plus
  (g)   Obligations under interest rate swap, “cap”, “collar” or other hedging
agreement   (+) $                    
 
           
plus
  (h)   Guaranties, endorsements and other contingent obligations   (+)
$                    
 
           
minus
  (i)   Principal amount of any Securitized Bonds   (-) $                    
 
           

B-1

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

 

             
minus
  (j)   Junior Subordinated Debt owned by any Hybrid Equity Securities
Subsidiary or Hybrid Preferred Securities Subsidiary   (-) $                    
 
           
minus
  (k)   Hybrid Equity Securities and Hybrid Preferred Securities outstanding as
of December 31, 2002 (including subordinated guaranties by the Company of
payments with respect thereto)   (-) $                    
 
           
minus
  (l)   Agreed upon percentage of Net Proceeds from issuance of hybrid
debt/equity securities (other than Junior Subordinated Debt, Hybrid Equity
Securities and Hybrid Preferred Securities)   (-) $                    
 
           
minus
  (m)   Liabilities on the Company’s balance sheet resulting from the
disposition of the Palisades Nuclear Plant   (-) $                    
 
           
minus
  (n)   Obligations of the Company and its Consolidated Subsidiaries of the type
described in Section 1.3 of the Credit Agreement   (-) $                    
 
           
minus
  (o)   Debt of Affiliates of the Company of the type described in clause (vii)
of the definition of “Total Consolidated Debt”   (-) $                    
 
           
minus
  (p)   Debt of the Company and its Affiliates that is re-categorized as such
from certain lease obligations pursuant to Emerging Issues Task Force Issue 01-8
  (-) $                    
 
           
minus
  (q)   Non-cash obligations resulting from the adoption of FASB No. 158 to the
extent such obligations are required to be treated as debt   (-)
$                    
 
           
 
     
Total
  $                    
 
            B.   Total Consolidated Capitalization:    
 
           
 
  (a)   Total Consolidated Debt   $                    
 
           
plus
  (b)   The sum of Items A(j), A(k), A(l), A(n) and A(o) above1   (+)
$                    
 
           
plus
  (c)   Equity of common stockholders   (+) $                    
 
           
plus
  (d)   Equity of preference stockholders   (+) $                    
 
           

 

1   In the case of securities of the type described in A(k) and A(l), only to
the extent such securities have been deemed to be equity pursuant to Financial
Accounting Standards Board Statement No. 150.

B-2

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

 

             
plus
  (e)   Equity of preferred stockholders   (+) $                    
 
           
 
     
Total
  $                    
 
            C.   Debt to Capital Ratio
(total of A divided by total of B)              to 1.00

     IN WITNESS WHEREOF, I have signed this Certificate this       day of
                    , ___.

                        Name:         Title:        

B-3

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

 

EXHIBIT C
ASSIGNMENT AND ASSUMPTION AGREEMENT
     This Assignment and Assumption (the “Assignment and Assumption”) is dated
as of the Effective Date set forth below and is entered into by and between
[Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Second Amended and Restated Revolving Credit
Agreement identified below (as amended, supplemented or otherwise modified from
time to time, the “Credit Agreement”), receipt of a copy of which is hereby
acknowledged by the Assignee. The Terms and Conditions set forth in Annex 1
attached hereto are hereby agreed to and incorporated herein by reference and
made a part of this Assignment and Assumption as if set forth herein in full.
     For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
the Agent as contemplated below, the interest in and to all of the Assignor’s
rights and obligations in its capacity as a Bank under the Credit Agreement and
any other documents or instruments delivered pursuant thereto that represents
the amount and percentage interest identified below of all of the Assignor’s
outstanding rights and obligations under the respective facilities identified
below (including any letters of credit and guaranties included in such
facilities and, to the extent permitted to be assigned under applicable law, all
claims (including contract claims, tort claims, malpractice claims, statutory
claims and all other claims at law or in equity), suits, causes of action and
any other right of the Assignor against any Person whether known or unknown
arising under or in connection with the Credit Agreement, any other documents or
instruments delivered pursuant thereto or the loan transactions governed
thereby) (the “Assigned Interest”). Such sale and assignment is without recourse
to the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.

         
1.
  Assignor:                                                               
 
       
2.
  Assignee:                                                                [and
is an Affiliate of Assignor]
 
       
3.
  Borrower:   Consumers Energy Company
 
       
4.
  Agent:   Union Bank, N.A., as the Agent under the Credit Agreement.

         
5.
  Credit Agreement:   Second Amended and Restated Revolving Credit Agreement,
dated as of August 11, 2010, among Consumers Energy Company, the Banks party
thereto, and Union Bank, N.A., as Agent and an LC Issuer.
 
       
6.
  Assigned Interest:    

C-1

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

 

                              Aggregate Amount of   Amount of        
Commitment/Outstanding   Commitment/Outstanding   Percentage Assigned of
Facility   Credit Exposure for all   Credit Exposure   Commitment/Outstanding
Assigned   Banks1   Assigned1   Credit Exposure2
                         
  $       $                    %
                         
  $       $                    %
                         
  $       $                    %

7.   Trade Date:                                                              3

Effective Date:                      ___, 20___ [TO BE INSERTED BY AGENT AND
WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER BY THE AGENT.]
 

1   Amount to be adjusted by the counterparties to take into account any
payments or prepayments made between the Trade Date and the Effective Date.   2.
  Set forth, to at least 9 decimals, as a percentage of the
Commitment/Outstanding Credit Exposure of all Banks thereunder.   3.   Insert if
satisfaction of minimum amounts is to be determined as of the Trade Date.

C-2

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

 

     The terms set forth in this Assignment and Assumption are hereby agreed to:

            ASSIGNOR

[NAME OF ASSIGNOR]
      By:           Name:           Title:           ASSIGNEE

[NAME OF ASSIGNEE]
      By:           Name:           Title:        

          [Consented to and]4 Accepted:

UNION BANK, N.A., as Agent
      By:           Name:           Title:           [Consented to:]5

[NAME OF RELEVANT PARTY]
      By:           Name:           Title:          

 

4.   To be added only if the consent of the Agent is required by the terms of
the Second Amended and Restated Credit Agreement.   5.   To be added only if the
consent of the Company and/or other parties (e.g., the LC Issuers) is required
by the terms of the Credit Agreement.

C-3

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

 

ANNEX 1
TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
     1. Representations and Warranties.
     1.1 Assignor. The Assignor represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby. Neither the Assignor nor any of its officers, directors,
employees, agents or attorneys shall be responsible for (i) any statements,
warranties or representations made in or in connection with the Credit Agreement
or any other Credit Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency, perfection, priority, collectibility,
or value of the Credit Documents or any collateral thereunder, (iii) the
financial condition of the Company, any of its Subsidiaries or Affiliates or any
other Person obligated in respect of any Credit Document, (iv) the performance
or observance by the Company, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Credit Document,
(v) inspecting any of the property, books or records of the Company, or any
guarantor, or (vi) any mistake, error of judgment, or action taken or omitted to
be taken in connection with the Credit Extensions or the Credit Documents.
     1.2. Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Bank under the Credit Agreement, (ii) from
and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Bank thereunder and, to the extent of the Assigned Interest,
shall have the obligations of a Bank thereunder, (iii) agrees that its payment
instructions and notice instructions are as set forth in Schedule 1 to this
Assignment and Assumption, (iv) confirms that none of the funds, monies, assets
or other consideration being used to make the purchase and assumption hereunder
are “plan assets” as defined under ERISA and that its rights, benefits and
interests in and under the Credit Documents will not be “plan assets” under
ERISA, (v) agrees to indemnify and hold the Assignor harmless against all
losses, costs and expenses (including reasonable attorneys’ fees) and
liabilities incurred by the Assignor in connection with or arising in any manner
from the Assignee’s non-performance of the obligations assumed under this
Assignment and Assumption, (vi) it has received a copy of the Credit Agreement,
together with copies of financial statements and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase the
Assigned Interest on the basis of which it has made such analysis and decision
independently and without reliance on the Agent or any other Bank, and
(vii) attached as Schedule 2 to this Assignment and Assumption is any
documentation required to be delivered by the Assignee with respect to its tax
status pursuant to the terms of the Credit Agreement, duly completed and
executed by the Assignee; (b) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Documents as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; and (c) agrees that (i) it will,
independently and without reliance
Annex 1

 

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

 

on the Agent, the Assignor or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Documents, and
(ii) it will perform in accordance with their terms all of the obligations which
by the terms of the Credit Documents are required to be performed by it as a
Bank.
     2. Payments. The Assignee shall pay the Assignor, on the Effective Date,
the amount agreed to by the Assignor and the Assignee. From and after the
Effective Date, the Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, Reimbursement Obligations,
fees and other amounts) to the Assignor for amounts which have accrued to but
excluding the Effective Date and to the Assignee for amounts which have accrued
from and after the Effective Date.
     3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.
Annex 1

 

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

 

SCHEDULE 1
TO
TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION AGREEMENT
Administrative Questionnaire
For Form, call Brian Zimmer at (213) 236-7201 or Tawny Palovchik at
(213) 236-5414

 

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

 

SCHEDULE 2
TO
TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION AGREEMENT
US and Non-US Tax Information Reporting Requirements

 

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

 

EXHIBIT D
TERMS OF SUBORDINATION
[JUNIOR SUBORDINATED DEBT]
ARTICLE      
SUBORDINATION
     Section ___.1. Applicability of Article; Securities Subordinated to Senior
Indebtedness.
     (a) This Article       shall apply only to the Securities of any series
which, pursuant to Section      , are expressly made subject to this Article.
Such Securities are referred to in this Article       as “Subordinated
Securities.”
     (b) The Issuer covenants and agrees, and each Holder of Subordinated
Securities by his acceptance thereof likewise covenants and agrees, that the
indebtedness represented by the Subordinated Securities and the payment of the
principal and interest, if any, on the Subordinated Securities is subordinated
and subject in right, to the extent and in the manner provided in this Article,
to the prior payment in full of all Senior Indebtedness.
     “Senior Indebtedness” means the principal of and premium, if any, and
interest on the following, whether outstanding on the date hereof or thereafter
incurred, created or assumed: (i) indebtedness of the Issuer for money borrowed
by the Issuer (including purchase money obligations) or evidenced by debentures
(other than the Subordinated Securities), notes, bankers’ acceptances or other
corporate debt securities, or similar instruments issued by the Issuer; (ii) all
capital lease obligations of the Issuer; (iii) all obligations of the Issuer
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of the Issuer and all obligations of the Issuer under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) obligations with respect to letters of
credit; (v) all indebtedness of others of the type referred to in the preceding
clauses (i) through (iv) assumed by or guaranteed in any manner by the Issuer or
in effect guaranteed by the Issuer; (vi) all obligations of the type referred to
in clauses (i) through (v) above of other persons secured by any lien on any
property or asset of the Issuer (whether or not such obligation is assumed by
the Issuer), except for (1) any such indebtedness that is by its terms
subordinated to or pari passu with the Subordinated Securities, as the case may
be, including all other debt securities and guaranties in respect of those debt
securities, issued to any other trusts, partnerships or other entities
affiliated with the Issuer which act as a financing vehicle of the Issuer in
connection with the issuance of preferred securities by such entity or other
securities which rank pari passu with, or junior to, the Preferred Securities,
and (2) any indebtedness between or among the Issuer and its affiliates; and/or
(vii) renewals, extensions or refundings of any of the indebtedness referred to
in the preceding clauses unless, in the case of any particular indebtedness,
renewal, extension or refunding, under the express provisions of the instrument
creating or evidencing the same or the assumption or guarantee of the same, or
pursuant to which the same is outstanding, such indebtedness or such renewal,
extension or refunding thereof is not superior in right of payment to the
Subordinated Securities.

D-1

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

 

     This Article shall constitute a continuing obligation to all Persons who,
in reliance upon such provisions become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and they
and/or each of them may enforce such provisions.
     Section ___.2. Issuer Not to Make Payments with Respect to Subordinated
Securities in Certain Circumstances.
     (a) Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise, all principal thereof and premium and interest
thereon shall first be paid in full, or such payment duly provided for in cash
in a manner satisfactory to the holders of such Senior Indebtedness, before any
payment is made on account of the principal of, or interest on, Subordinated
Securities or to acquire any Subordinated Securities or on account of any
sinking fund provisions of any Subordinated Securities (except payments made in
capital stock of the Issuer or in warrants, rights or options to purchase or
acquire capital stock of the Issuer, sinking fund payments made in Subordinated
Securities acquired by the Issuer before the maturity of such Senior
Indebtedness, and payments made through the exchange of other debt obligations
of the Issuer for such Subordinated Securities in accordance with the terms of
such Subordinated Securities, provided that such debt obligations are
subordinated to Senior Indebtedness at least to the extent that the Subordinated
Securities for which they are exchanged are so subordinated pursuant to this
Article      ).
     (b) Upon the happening and during the continuation of any default in
payment of the principal of, or interest on, any Senior Indebtedness when the
same becomes due and payable or in the event any judicial proceeding shall be
pending with respect to any such default, then, unless and until such default
shall have been cured or waived or shall have ceased to exist, no payment shall
be made by the Issuer with respect to the principal of, or interest on,
Subordinated Securities or to acquire any Subordinated Securities or on account
of any sinking fund provisions of Subordinated Securities (except payments made
in capital stock of the Issuer or in warrants, rights, or options to purchase or
acquire capital stock of the Issuer, sinking fund payments made in Subordinated
Securities acquired by the Issuer before such default and notice thereof, and
payments made through the exchange of other debt obligations of the Issuer for
such Subordinated Securities in accordance with the terms of such Subordinated
Securities, provided that such debt obligations are subordinated to Senior
Indebtedness at least to the extent that the Subordinated Securities for which
they are exchanged are so subordinated pursuant to this Article      ).
     (c) In the event that, notwithstanding the provisions of this Section
___.2, the Issuer shall make any payment to the Trustee on account of the
principal of or interest on Subordinated Securities, or on account of any
sinking fund provisions of such Subordinated Securities, after the maturity of
any Senior Indebtedness as described in Section ___.2(a) above or after the
happening of a default in payment of the principal of or interest on any Senior
Indebtedness as described in Section ___.2(b) above, then, unless and until all
Senior Indebtedness which shall have matured, and all premium and interest
thereon, shall have been paid in full (or the declaration of acceleration
thereof shall have been rescinded or annulled), or such default shall have been
cured or waived or shall have ceased to exist, such payment (subject to the
provisions of Sections ___.6 and ___.7) shall be held by the Trustee, in trust
for the benefit of, and shall be

D-2

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

 

paid forthwith over and delivered to, the holders of such Senior Indebtedness
(pro rata as to each of such holders on the basis of the respective amounts of
Senior Indebtedness held by them) or their representative or the trustee under
the indenture or other agreement (if any) pursuant to which such Senior
Indebtedness may have been issued, as their respective interests may appear, for
application to the payment of all such Senior Indebtedness remaining unpaid to
the extent necessary to pay the same in full in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness. The Issuer shall give prompt written notice to the Trustee
of any default in the payment of principal of or interest on any Senior
Indebtedness.
     Section ___.3. Subordinated Securities Subordinated to Prior Payment of All
Senior Indebtedness on Dissolution, Liquidation or Reorganization of Issuer.
Upon any distribution of assets of the Issuer in any dissolution, winding up,
liquidation or reorganization of the Issuer (whether voluntary or involuntary,
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or otherwise):
     (a) the holders of all Senior Indebtedness shall first be entitled to
receive payments in full of the principal thereof and premium and interest due
thereon, or provision shall be made for such payment, before the Holders of
Subordinated Securities are entitled to receive any payment on account of the
principal of or interest on such Subordinated Securities;
     (b) any payment or distribution of assets of the Issuer of any kind or
character, whether in cash, property or securities (other than securities of the
Issuer as reorganized or readjusted or securities of the Issuer or any other
corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in this Article      
with respect to Subordinated Securities, to the payment in full without
diminution or modification by such plan of all Senior Indebtedness), to which
the Holders of Subordinated Securities or the Trustee on behalf of the Holders
of Subordinated Securities would be entitled except for the provisions of this
Article       shall be paid or delivered by the liquidating trustee or agent or
other person making such payment or distribution directly to the holders of
Senior Indebtedness or their representative, or to the trustee under any
indenture under which Senior Indebtedness may have been issued (pro rata as to
each such holder, representative or trustee on the basis of the respective
amounts of unpaid Senior Indebtedness held or represented by each), to the
extent necessary to make payment in full of all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution or
provision thereof to the holders of such Senior Indebtedness; and
     (c) in the event that notwithstanding the foregoing provisions of this
Section ___.3, any payment or distribution of assets of the Issuer of any kind
or character, whether in cash, property or securities (other than securities of
the Issuer as reorganized or readjusted or securities of the Issuer or any other
corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in this Article      
with respect to Subordinated Securities, to the payment in full without
diminution or modification by such plan of all Senior Indebtedness), shall be
received by the Trustee or the Holders of the Subordinated Securities on account
of principal of or interest on the Subordinated Securities before all Senior
Indebtedness is paid in full, or effective provision made for its payment, such
payment or distribution (subject to the provisions of Section ___.6 and ___.7)
shall be received

D-3

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

 

and held in trust for and shall be paid over to the holders of the Senior
Indebtedness remaining unpaid or unprovided for or their representative, or to
the trustee under any indenture under which such Senior Indebtedness may have
been issued (pro rata as provided in clause (b) above), for application to the
payment of such Senior Indebtedness until all such Senior Indebtedness shall
have been paid in full, after giving effect to any concurrent payment or
distribution or provision therefor to the holders of such Senior Indebtedness.
     The Issuer shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Issuer.
     The consolidation of the Issuer with, or the merger of the Issuer into,
another corporation or the liquidation or dissolution of the Issuer following
the conveyance or transfer of its property as an entirety, or substantially as
an entirety, to another corporation upon the terms and conditions provided for
in Article       hereof shall not be deemed a dissolution, winding up,
liquidation or reorganization for the purposes of this Section ___.3 if such
other corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated such in Article      .
     Section ___.4. Holders of Subordinated Securities to be Subrogated to Right
of Holders of Senior Indebtedness. Subject to the payment in full of all Senior
Indebtedness, the Holders of Subordinated Securities shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Issuer applicable to the Senior Indebtedness
until all amounts owing on Subordinated Securities shall be paid in full, and
for the purposes of such subrogation no payments or distributions to the holders
of the Senior Indebtedness by or on behalf of the Issuer or by or on behalf of
the Holders of Subordinated Securities by virtue of this Article       which
otherwise would have been made to the Holders of Subordinated Securities shall,
as between the Issuer, its creditors other than holders of Senior Indebtedness
and the Holders of Subordinated Securities, be deemed to be payment by the
Issuer to or on account of the Senior Indebtedness, it being understood that the
provisions of this Article       are and are intended solely for the purpose of
defining the relative rights of the Holders of the Subordinated Securities, on
the one hand, and the holders of the Senior Indebtedness, on the other hand.
     Section ___.5. Obligation of the Issuer Unconditional. Nothing contained in
this Article       or elsewhere in this Indenture or in any Subordinated
Security is intended to or shall impair, as among the Issuer, its creditors
other than holders of Senior Indebtedness and the Holders of Subordinated
Securities, the obligation of the Issuer, which is absolute and unconditional,
to pay to the Holders of Subordinated Securities the principal of, and interest
on, Subordinated Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of Subordinated Securities and creditors of the Issuer
other than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or the Holder of any Subordinated Security from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article       of the
holders of Senior Indebtedness in respect of cash, property or securities of the
Issuer received upon the exercise of any such remedy. Upon any payment or
distribution of assets of the Issuer referred to in this Article      , the
Trustee and Holders of Subordinated Securities shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction in which such
dissolution, winding up,

D-4

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

 

liquidation or reorganization proceedings are pending, or, subject to the
provisions of Section       and      , a certificate of the receiver, trustee in
bankruptcy, liquidating trustee or agent or other Person making such payment or
distribution to the Trustee or the Holders of Subordinated Securities, for the
purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Issuer, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
     .
     Nothing contained in this Article       or elsewhere in this Indenture or
in any Subordinated Security is intended to or shall affect the obligation of
the Issuer to make, or prevent the Issuer from making, at any time except during
the pendency of any dissolution, winding up, liquidation or reorganization
proceeding, and, except as provided in subsections (a) and (b) of Section ___.2,
payments at any time of the principal of, or interest on, Subordinated
Securities.
     Section ___.6. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice. The Issuer shall give prompt written notice to the Trustee of
any fact known to the Issuer which would prohibit the making of any payment or
distribution to or by the Trustee in respect of the Subordinated Securities.
Notwithstanding the provisions of this Article       or any provision of this
Indenture, the Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment or
distribution to or by the Trustee, unless at least two Business Days prior to
the making of any such payment, the Trustee shall have received written notice
thereof from the Issuer or from one or more holders of Senior Indebtedness or
from any representative thereof or from any trustee therefor, together with
proof satisfactory to the Trustee of such holding of Senior Indebtedness or of
the authority of such representative or trustee; and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Sections
      and      , shall be entitled to assume conclusively that no such facts
exist. The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself to be a holder of Senior Indebtedness
(or a representative or trustee on behalf of the holder) to establish that such
notice has been given by a holder of Senior Indebtedness (or a representative of
or trustee on behalf of any such holder). In the event that the Trustee
determines, in good faith, that further evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness to participate in any
payments or distribution pursuant of this Article      , the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such Person, as to the extent to
which such Person is entitled to participate in such payment or distribution,
and as to other facts pertinent to the rights of such Person under this Article
     , and if such evidence is not furnished, the Trustee may defer any payment
to such Person pending judicial determination as to the right of such Person to
receive such payment. The Trustee, however, shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness and nothing in this Article
      shall apply to claims of, or payments to, the Trustee under or pursuant to
Section ___.
     Section ___.7. Application by Trustee of Monies or Government Obligations
Deposited with It. Money or Government Obligations deposited in trust with the
Trustee pursuant to and in accordance with Section       shall be for the sole
benefit of Securityholders and, to the extent allocated for the payment of
Subordinated Securities, shall not be subject to the subordination

D-5

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

 

provisions of this Article      , if the same are deposited in trust prior to
the happening of any event specified in Section ___.2. Otherwise, any deposit of
monies or Government Obligations by the Issuer with the Trustee or any paying
agent (whether or not in trust) for the payment of the principal of, or interest
on, any Subordinated Securities shall be subject to the provisions of Section
___.1, ___.2 and ___.3 except that, if prior to the date on which by the terms
of this Indenture any such monies may become payable for any purposes
(including, without limitation, the payment of the principal of, or the
interest, if any, on any Subordinated Security) the Trustee shall not have
received with respect to such monies the notice provided for in Section ___.6,
then the Trustee or the paying agent shall have full power and authority to
receive such monies and Government Obligations and to apply the same to the
purpose for which they were received, and shall not be affected by any notice to
the contrary which may be received by it on or after such date. This Section
___.7 shall be construed solely for the benefit of the Trustee and paying agent
and, as to the first sentence hereof, the Securityholders, and shall not
otherwise effect the rights of holders of Senior Indebtedness.
     Section ___.8. Subordination Rights Not Impaired by Acts or Omissions of
Issuer or Holders of Senior Indebtedness. No rights of any present or future
holders of any Senior Indebtedness to enforce subordination as provided herein
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Issuer or by any act or failure to act, in good faith, by
any such holders or by any noncompliance by the Issuer with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have or
be otherwise charged with.
     Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness of the Issuer may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Subordinated Securities, without incurring responsibility to the Holders of the
Subordinated Securities and without impairing or releasing the subordination
provided in this Article       or the obligations hereunder of the Holders of
the Subordinated Securities to the holders of such Senior Indebtedness, do any
one or more of the following: (i) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, such Senior Indebtedness,
or otherwise amend or supplement in any manner such Senior Indebtedness or any
instrument evidencing the same or any agreement under which such Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing such Senior Indebtedness;
(iii) release any Person liable in any manner for the collection for such Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Issuer, as the case may be, and any other Person.
     Section ___.9. Securityholders Authorize Trustee to Effectuate
Subordination of Securities. Each Holder of Subordinated Securities by his
acceptance thereof authorizes and expressly directs the Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article       and appoints the Trustee his
attorney-in-fact for such purpose, including in the event of any dissolution,
winding up, liquidation or reorganization of the Issuer (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise) the immediate filing of a claim for the unpaid balance
of his Subordinated Securities in the form required in said proceedings and
causing said claim to be approved. If the Trustee does not file a proper claim
or proof of debt in the form required in such proceeding prior to 30 days before
the expiration of the

D-6

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

 

time to file such claim or claims, then the holders of Senior Indebtedness have
the right to file and are hereby authorized to file an appropriate claim for and
on behalf of the Holders of said Subordinated Securities.
     Section ___.10. Right of Trustee to Hold Senior Indebtedness. The Trustee
in its individual capacity shall be entitled to all of the rights set forth in
this Article       in respect of any Senior Indebtedness at any time held by it
to the same extent as any other holder of Senior Indebtedness, and nothing in
this Indenture shall be construed to deprive the Trustee of any of its rights as
such holder.
     With respect to the holders of Senior Indebtedness of the Issuer, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article      , and no implied
covenants or obligations with respect to the holders of such Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and,
subject to the provisions of Sections      .2 and      .3, the Trustee shall not
be liable to any holder of such Senior Indebtedness if it shall pay over or
deliver to Holders of Subordinated Securities, the Issuer or any other Person
money or assets to which any holder of such Senior Indebtedness shall be
entitled by virtue of this Article       or otherwise.
     Section ___.11. Article ____ Not to Prevent Events of Defaults. The failure
to make a payment on account of principal or interest by reason of any provision
in this Article       shall not be construed as preventing the occurrence of an
Event of Default under Section      .

D-7

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

 

EXHIBIT E
TERMS OF SUBORDINATION
[GUARANTY OF HYBRID EQUITY SECURITIES/HYBRID PREFERRED SECURITIES]
     SECTION ___. This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all other
liabilities of the Guarantor and pari passu with any guarantee now or hereafter
entered into by the Guarantor in respect of the securities representing common
beneficial interests in the assets of the Issuer or of any preferred or
preference stock of any affiliate of the Guarantor.

E-1

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

 

SCHEDULE 1
PRICING SCHEDULE
     The Applicable Margin shall be determined pursuant to the table below.

                                                                             
BBB-/Baa3 or Specified Rating   A/A2   A-/A3   BBB+/Baa1   BBB/Baa2   lower
Commitment Fee Rate
    0.15 %     0.20 %     0.30 %     0.40 %     0.50 %
Applicable Margin for Eurodollar Loans
    1.50 %     1.75 %     2.00 %     2.25 %     2.50 %
Applicable Margin for ABR Loans
    0.50 %     0.75 %     1.00 %     1.25 %     1.50 %

For purposes of the foregoing:
     The “Rating” from S&P or Moody’s shall mean the rating issued by such
rating agency and then in effect with respect to the Senior Debt.
     (a) If both of S&P and Moody’s shall issue a Rating, the Specified Rating
shall be the higher of such Ratings; provided that if a split of greater than
one ratings category occurs between such Ratings, the Specified Rating shall be
the ratings category that is one category below the higher of such Ratings.
     (b) If only one of S&P and Moody’s shall issue a Rating, the Specified
Rating shall be such Rating.
     (c) If none of S&P and Moody’s shall issue a Rating, the Specified Rating
shall be BBB-/Baa3.

Sch.-1

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

 

SCHEDULE 2
COMMITMENT SCHEDULE

          BANK   COMMITMENT
Union Bank, N.A.
  $ 12,000,000  
Barclays Bank PLC
  $ 11,500,000  
Deutsche Bank Trust Company Americas
  $ 11,500,000  
The Royal Bank of Scotland plc
  $ 11,500,000  
BNP Paribas
  $ 11,500,000  
Citibank, N.A.
  $ 11,500,000  
Comerica Bank
  $ 11,500,000  
JPMorgan Chase Bank, N.A.
  $ 11,500,000  
PNC Bank, National Association
  $ 11,500,000  
Royal Bank of Canada
  $ 11,500,000  
Scotia Capital
  $ 11,500,000  
UBS Loan Finance LLC
  $ 11,500,000  
U.S. Bank National Association
  $ 11,500,000  
 
       
AGGREGATE COMMITMENT
  $ 150,000,000.00  

Sch.-2